Inside the Mind of Toyota Management Principles for Enduring Growth

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Abstract

Many companies aspire to reach the portals of growth and success. Only a few, though, leave a mark and bequeath a lasting legacy. For those who blaze a trail, the capable thinking and sound decision-making of leaders who are able harness the talents and cooperation of team members to attain organizational goals are hailed as the moving forces. How the philosophies of company founders are passed on to the next generations are a totally different matter. In this respect, Toyota Motor Corporation stands out.

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The successors of the company founders continually strive to maintain a quality-driven workforce, first and foremost, by turning to a set of standards and continually ingraining a tradition of excellence that is uniquely Toyota.

Inside the Mind of Toyota

Management Principles for Enduring Growth

In Inside the Mind of Toyota: Management Principles for Enduring Growth, a mind-boggling question is posed: “Why is Toyota alone in its ability to transmit and propagate continuously the spirit, words, and actions of its historical leaders?” (Hino, 2005, p.

27). It presupposes that Toyota Motor Corporation’s leaders have set the tone for service which is authentic, and has gone to great lengths to transmit it to generations down the line in order to carry on the company’s tradition of excellence. The fact that Toyota has painstakingly been sustaining the founding philosophies of its leaders is very evident in the way the organization has grown by leaps and bounds through the years. It highlights that more than any growth strategy or tactic, it is the very corporate culture or core values of a company – and the way these are efficiently transmitted to, embodied and practiced by, the succeeding generations, that can be a critical factor for a company’s success.

As to the question on why Toyota is alone in its efforts to transmit or propagate its prized heritage or quality-oriented way of doing things to succeeding generations, the answer lies, not so much because it can boast of having visionary and extraordinary leaders (because many other firms have such strengths), but because very few other companies can actually lay claim to continuously passing on to the next generation a highly precise method of doing business aimed at excellence. The legacy bequeathed by Toyota’s founding leaders “manifests itself as the veneration of principles” (Hino, 2005, p. 27).

Toyota founders and successors refer to their company’s unique business stance and guiding principles as their DNA, because just like DNA fibers, it is made to permeate not just the leadership ranks but the main cog or human resources responsible for keeping business operations brisk and alive. In this respect, Toyota can be singled out as one among the few organizations capable of ensuring, with utmost patience, dedication and zeal, and in a highly scientific and professional manner, that the “spirit, words, and actions of its historical leaders” (Hino, 2005, p. 27) or valuable components of its DNA, are preserved, finetuned, and adhered to in order to maintain the company’s momentum and competitive edge.

Indeed, Toyota’s solid and expertly managed business structure and enviable industry position are the way they are today because of the efforts of the company’s key founders, and the innovative men to whom the legacy was passed on.

Turning attention to the second generation of company owners, of special note is how Kiichiro Toyoda, Saikichi Toyoda’s son, exemplified his father’s inventiveness and broad vision to help sustain Toyota during his generation and enhance its corporate value. Kiichiro embodied his father’s keen business sense and wisely documented the unique strategy laid down by Saikichi. He “created more evolved genes (tacit knowledge) which he then wrote down and codified int the form of `documented procedures’ (formal knowledge)” (Hino, 2005, p. 30) to which subsequent leaders added their own sensible inputs that proved highly beneficial to succeeding generations. “This documentation principle makes a decisive difference between Toyota and other companies” (Hino, 2005, p. 33). It is something not replicated by other organizations, underscoring anew how Toyota is “alone” or unique in transmitting the good business sense and actions of its founders.

Kiichiro’s career highlights underscore how he made things happen for the company and in a way, it reflects some of the reasons why other companies do not quite measure up to Toyota’s highly successful business culture. As listed in researcher Yoshinobu Sato’s book, Sources of Toyota Management (as cited in Hino, 2005, p. 28), Kiichiro nurtured “broad ideas on what an organization should be and how to manage it, (and had) the will to take up the challenge of diversified technical innovation and commercialization” (Hino, 2005, p. 28).

Through the years, many companies have tried to, but ended up failing to replicate, Toyota’s efforts, particularly in the way it has produced significant output and made industry strides mainly through a system that has been proven to work. This model manufacturing system is what is called the Toyota Production System (TPS). This sophisticated method or system which has motivated its key executives and workforce to attain organizational objectives rests on following a set of rules aimed at reaching an ideal. In the TPS, various elements that include machines, materials, tools, people and information come together to produce the right mix and quantity of products aligned with Toyota’s just-in-time, zero-defect and zero-waste targets. Toyota workers are trained to focus intently on increments and details that, in the long run, will have huge impact to operations and the company as a whole. In effect, it entails working towards the bigger picture or end goal. Toyota employees are made to understand just what they are working for and in so doing, become motivated enough to strive to do their best and contribute to the realization of that goal. Such is not the case with many other companies. Although many are driven by similarly lofty ideals, employees in majority of organizations then and now are not inspired to be passionate enough to engage in work they may be genetically encoded for. The reason may be the lack of a cohesive business structure that lays down the foundation on how things should be done, how manufacturing processes should be implemented, how quality control measures must be adhered to, how stakeholders must be dealt with, and so on. As far as Toyota is concerned, even company executives who have managed the firm and move on can attest to the fact that employees are spurred to action and actively engage in carrying out the company’s goals. This is because from day one, they have had ample formal training or indoctrination of the business precepts laid down by the company founders.

“The Toyota organization brings out the best even in ordinary people. As it does so, it steers extraordinary people clear of the `charismatic leadership’ trap” (Hino, 2005, p. 27) or hero worship that other companies fall into.

Aside from heaping too much adulation on their company founders or leaders which can backfire on the organization (it places too much focus on individual ability, which may detract from other important areas of concentration), many companies fall by the wayside mainly because they end up finding systems too cumbersome and time-consuming, or lack the long-range vision or even power to inspire or compel their workforce to do things the Toyota way. Key to Toyota’s success in efficiently propagating its core values and culture, and in effect its DNA, is the all-out support extended by its top management. It can be noted that at Toyota, company heads that include Taiichi Ohno (who created TPS) are the embodiment of continuous improvement or what is known as kaizen. This, and a drive for quality plus an overarching respect for people, make Toyota distinguishable from other companies.

Also working to Toyota’s advantage is its very flexibility or ability to adapt to the forces of change. While it strives to remain committed to excellence, it is flexible enough to confront current realities, tackle concerns, and address pressing issues. There is, for instance the reality of bringing on board new executives/workers who must learn and relearn the ropes of running the business and most importantly, of embodying the company’s culture. In recent years, for instance, among the pressing concerns that Toyota has had to deal with is the reality of “top brass – the ones who transformed a lean upstart into a global powerhouse… nearing retirement,” (Welch and Rowley, 2007, para. 2), As part of its proactive approach, Toyota’s management had “launched a slew of education initiatives, and even uses a business school in Tokyo to teach” (Welch and Rowley, 2007, para. 1)

One strategy that Toyota has adopted to ensure that its culture is safeguarded and its distinct way of doing business sustained is to let its seasoned professionals mentor the younger or fresh batch of employees (Welch and Rowley, 2007, para. 4).

Part of the basic tenets imparted to young upstarts and veteran executives at Toyota is what is known as Genchi Genbutsu, which entails that one must observe and determine what is really going on or find a solution to a problem, not in some conference room or office space, but at the site of the problem, whether it is at the shopfloor or assembly line, or out in the streets, and speak to the people concerned.

As with other organizations dealing with fluctuating business cycles, competition and external threats, though, Toyota is not immune to encountering kinks or cracks in its armor. In recent years, for instance, it has seen “quality slipping” ((Welch and Rowley, 2007, para. 9). Then again, Toyota is not one to sit idly by, rest on its past laurels, and do nothing. It has instead “redoubled training for factory hands… (and) dispatched Japanese workers abroad to teach their overseas colleagues how to build cars. At Toyota, the focus on quality never ends, and it is also this strong-willed outlook to turn every setback to a competitive strength and to do whatever is necessary to emerge with a win-win situation, that sets it apart from the rest of the pack. The secret to Toyota’s competitive edge, it may be gleaned, is not in the way it uses the most modern technological breakthroughs -- because any company can do this -- but more in the way it has continuously upheld its corporate culture.

Because other companies seek to do less, settle for mediocrity, or soar high but fail to sustain the momentum of progress and growth through sound business principles and wisdom honed by experience and hard work, Toyota finds itself “alone” or in a unique position as far as propagating the invaluable business precepts laid down by its visionary leaders is concerned.

References

Hino, S. (2005, November). Inside the mind of Toyota: management principles for enduring growth. New York: Productivity Press

Welch, D., Rowley, I. & Lakshman, N. (2007). Toyota’s all-out drive to stay Toyota.

BusinessWeek Online. Retrieved November 18, 2008, from

http://www.businessweek.com/magazine/content/07_49/b4061064.htm