Toyoda, 53, bowed in apology after addressing the news conference and answered other questions, some in English, after an official tried to end the late-night session. By reducing complexity from their products -- for instance by cutting the number of suppliers and using common parts across different products -- manufacturers who have followed the Toyota Way have cut costs and increased profitability -- but left themselves terribly exposed to the unexpected.
In January, Toyota temporarily suspended U. Since its launch last May, Toyota has sold more than , of the newest version of the Prius worldwide, including around , in Japan, , in the United States and 29, in Europe. Toyota Prius owners have complained that on bumpy roads and on ice, the regenerative brakes of the vehicle appear to slip and it lurches forward before the traditional brakes engage. Stable and paranoid, systematic and experimental, formal and frank: The success of Toyota, a pathbreaking six-year study reveals, is due as much to its ability to embrace contradictions like these as to its manufacturing prowess.
The company succeeds, say the authors, because it deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically.
Three forces of expansion lead the company to change and improve: impossible goals, local customization, and experimentation. We studied Toyota for six years, during which time we visited facilities in 11 countries, attended numerous company meetings and events, and analyzed internal documents. The company succeeds, we believe, because it creates contradictions and paradoxes in many aspects of organizational life.
Employees have to operate in a culture where they constantly grapple with challenges and problems and must come up with fresh ideas. The hard and the soft innovations work in tandem. Like two wheels on a shaft that bear equal weight, together they move the company forward. Toyota believes that efficiency alone cannot guarantee success.
Make no mistake: No company practices Taylorism better than Toyota does. Toyota therefore invests heavily in people and organizational capabilities, and it garners ideas from everyone and everywhere: the shop floor, the office, the field. At the same time, studies of human cognition show that when people grapple with opposing insights, they understand the different aspects of an issue and come up with effective solutions.
So Toyota deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture of tensions generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically. In the following pages, we will describe some key contradictions that Toyota fosters. We will also show how the company unleashes six forces, three of which drive it to experiment and expand while three help it to preserve its values and identity.
Finally, we will briefly describe how other companies can learn to thrive on contradictions. In fact, it resembles a failing or stagnant giant in several ways. Toyota pays relatively low dividends and hoards cash, which smacks of inefficiency. For instance, its payout of By any standard, the company pays executives very little.
Their compensation was lower than that of their counterparts at the 10 largest automobile companies, save Honda. For example, the company started production in the United States gradually. It began in by forming a joint venture with GM called New United Motor Manufacturing, in Fremont, California, and opened its first plant in Kentucky four years later. However, the launch of the Prius in Japan in was a huge leap. Toyota came up with a hybrid engine that combined the power of an internal combustion engine with the environmental friendliness of an electric motor much earlier than rivals.
In the early s, the company faced near bankruptcy, but over the past 40 years, the company has recorded steady sales and market-share growth. The company assigns many more employees to offices in the field than rivals do, and its senior executives spend an inordinate amount of time visiting dealers. Toyota also uses a large number of multilingual coordinators—a post that Carlos Ghosn abolished at Nissan soon after he became CEO in —to help break down barriers between its headquarters and international operations.
In Japan, the company turns off the lights in its offices at lunchtime. Staff members often work together in one large room, with no partitions between desks, due to the high cost of office space in Japan. At the same time, Toyota spends huge sums of money on manufacturing facilities, dealer networks, and human resource development.
When making presentations, they summarize background information, objectives, analysis, action plans, and expected results on a single sheet of paper. They felt they were doing the right thing by offering executives constructive criticism. However, digging into Toyota is like peeling an onion: You uncover layer after layer, but you never seem to reach the center. After we had written a half-dozen case studies, a pattern finally emerged. We identified six forces that cause contradictions inside the company.
Three forces of expansion lead Toyota to instigate change and improvement. Not surprisingly, they make the organization more diverse, complicate decision making, and threaten its control and communications systems. To prevent the winds of change from blowing down the organization, Toyota also harnesses three forces of integration.
Established practices become standardized and create efficiencies. Episodes of unintended acceleration in Toyota vehicles have been linked to up to 19 crash deaths in the United States over the past decade. Toyota is also mulling a recall of Prius, its top-selling hybrid, for a braking problem. The news conference came after U.
Until recently, the year-old Toyota was considered the paragon of lean production, quality control and continuous improvement. But the crisis generated by the recalls and the way the company has handled itself publicly have led to widespread criticism.
Toyoda, 53, bowed in apology after addressing the news conference and answered other questions, some in English, after an official tried to end the late-night session. Gasgoo not only offers timely news and profound insight about China auto industry, but also help with business connection and expansion for suppliers and purchasers via multiple channels and methods. Buyer service: buyer-support gasgoo.
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