How Toyota Financial Turns Failure Into Innovation

Learning from failure is an acquired skill that few companies ever truly master. Sure, the executive team may talk a great game about “failing fast and moving forward,” and the CEO will undoubtedly declare how much he values risk-takers and innovators (and wishes he had more of them), but the C-suites in many companies are rife with people who will still fiercely protect their turf and patrol hierarchical boundaries. When it comes to genuine teamwork and collaborative spirit, the executive mind-set often looks more like The Hunger Games than the Super Bowl.

So it’s a refreshing change to read Tim Scannell’s illuminating cover story (“This C-Suite Recognizes That Failure is Part of Innovation”) about the tightly knit group of top executives at Toyota Financial Services (TFS). The lineup includes the CEO and CIO, the VPs of sales, product marketing and finance–and the general counsel. “It is a C-suite dream team,” Scannell writes, noting that many of the members rose up through the ranks at TFS together over the past decade, developing the kind of trust that enables collaboration.

The story opens with a candid admission of failure from recently retired CEO George Borst about his disastrous decision (circa 1997) to upgrade multiple legacy IT systems all at once. “Even though it was my fault,” he says, “people were blaming IT for not having the capability to do it.” That mistake–characteristic of one overconfident exec flying solo on a major business decision–is unlikely to happen at today’s TFS.

Our story details the steps (and missteps) TFS took to build a truly collaborative C-suite, and shares specific examples and advice to guide others looking to capture the same magic. CIOs are reminded to think more about long-term strategy (short-term thinkers don’t inspire confidence) and to encourage fellow execs to raise their own technology IQ (by not oversimplifying everything for them).

CIO Ron Guerrier keeps IT closely linked with business sectors throughout the company. “I know everything I do in terms of technology systems is a part of this longer value chain, and it’s to meet the needs of that end customer,” he says. “I need to show that IT is adding value along the way.”

While Guerrier is one of the driving forces behind the company’s Innovation Lab, where both business and IT projects are vetted, he doesn’t run the employee innovation competitions. General Counsel Katherine Adkins does. “It’s not about her better position or my worse position,” Guerrier says. “If she does this right, and I do my part right, we’re all better.