Toyota is a powerhouse – the largest auto manufacturer in the world, and the first to manufacture over 10 million vehicles per year. They employ over 360,000 people. How on earth did such a company survive and emerge from the devastation of World War II to become one of the largest corporations by revenue on the planet?
A Brief History
Toyota Motor Company was formed by Kiichiro Toyoda in 1933 as a division of Toyota Automatic Loom Works and became an independent company in 1937. They manufactured their first truck in 1935 and followed with their first passenger car in 1936. Then in 1945 the American atomic bombing of Hiroshima and Nagasaki devasted Japan and left the country’s economy and the Toyota Motor Company in ruins.
At the end of WWII, Toyota had 3000 employees but no functional facilities, and yet somehow, they attempted to rebuild and designed a new automobile. The economic devastation of the country continued, however, and Toyota was in a financial crisis and not even able to meet payroll. They cut their workforce and put a new executive team in place. The new management team visited the United States to discover new ideas about production and management. This is when the Toyota Production System (TPS) was born, along with new management principles.
Toyota Principles of Success
- Management decisions are driven by an overlying long-term philosophy, not short-term financial goals. The long-term philosophy involves the entire company culture and ensuring that the entire organization understands the higher mission of the company that goes beyond day-to-day functions and even beyond money. The goal is to create value for customers, employees, and the economy, and all members of the organization must continuously improve their skills to build that value.
- Toyota believes in investing in people and the capabilities of the organization. Employees are not just another pair of hands – they are knowledge workers who accumulate chie, which is the wisdom of experience. The company encourages innovation and the sharing of ideas from every member of the team.
- The company utilizes a system of continuous process flow. Projects do not idle; they continue so that problems surface quickly and can be solved without wasting time. This also involves a just in time inventory system so that materials come in as they are needed for production. Also related to this is the principle of heijunka, which means leveling out the workload. Slow and steady continuous work does not overburden people or systems and is in contrast to the start/stop approach of working in batches that many companies use.
- Quality is at the heart of their value proposition, and their production approach is to stop and fix problems immediately so that quality is right the first time. The company has quality controls built into every level of their production and organizational processes.
- The company uses only proven technology that supports rather than replaces people. No new technology is employed until it is tested and successful, and no technology is adopted that conflicts with company culture or disrupts continuous processes.
- Toyota believes in growing leaders from within. Leaders must know the work thoroughly, understand the company philosophy, and be able to teach others. Every employee is trained and nurtured to be exceptional in order to produce exceptional results.
- The company embraces the principle of Genchi Genbutsu, which means go and see for yourself. To solve a problem, you must see the problem personally, not use secondhand information. This applies even to high level executives.
- Toyota uses Nemawashi, the process of discussing problems and solutions with all team members affected to get their input and ideas and get a consensus on the path forward. Cross-functional teams consider all options slowly so that all alternatives are considered and then decisions are made quickly.
- Toyota has a strict management hierarchy, but it gives employees freedom to push back. Voicing opposing opinions, exposing problems, and not blindly following what they are told to do are employee behaviors that are permitted.
- Toyota strives to become a learning organization through hansei (relentless reflection) and Kaizen (continuous improvement).
At C-Suite IMPACT We Admire the Resilience and Principles of Toyota
At C-Suite, we admire the perseverance that the Toyota leadership had to emerge from a disaster and become wildly successful. We admire their people-focused culture and their relentless quest for quality, and we apply those principles in our company. We want to be a part of your relentless leadership team to help your business achieve all of its goals. We have a suite of business resources in our portfolio that you can access for all of your business needs and build the value of your business. Contact us today to learn more.