Takeuchi,Emi Osono and Norhiko Shimizu have spent over six years studying the gigantic Japanese automobile corporation and have uncovered remarkable reasons for Toyota's success. Read further to have excerpts and interpretations of their ground breaking research.
Toyota is a conundrum from the outside-it seems to be a staggering giant on the verge of collapse.It pays relatively low dividends as compared to it's rivals and hardly lets go of employees(even if they grossly underperform) and scarcely welcomes fresh talent. Their dividends average only twenty percent of earnings as compared to rival Daimler-Chrysler's 47.5%.On the other hand it has accumulated over $20 billion in cash.
Toyota mangers also rise through the hierarchy very,very slowly-the average age of top cadre officials is 61 in Toyota,the age by which most officials in other corporates retire.
Toyota encourages conflicts, opposition and contrasts-leading people to innovate and think of new solutions. Contradictions are imposed at every possible junctions so that employees are able to think of innovative ways and solution to go about the problem.People do not have to blindly follow the orders of higher authorities-they are given much freedom and liberty to follow any course of action. Learning from experience and mistakes is an integral part of Toyota's functioning.
Hugemongous-that's how meetings in Toyota are held. Everyone from workers onwards to retailers are encouraged to discuss problems and even give constructive criticism without fear of repercussion.
Toyota sees employees not just as a pair of hands but as knowledge workers who accumulate chie - the wisdom of experience on the company's frontlines.
Toyota sets near impossible goals to achieve and forces it's employees to stretch beyond the maximum limit.It also successfully customizes itself to local standards and expectations. This also brings up the point of experimentation,another key feature that has made Toyota remarkably tolerant of failure and equally adept at innovation.
There are two contradictory forces at work here-forces of expansion that usher the winds of change to push the company forward and forces of integration which prevent Toyota from being blown down by the very same (winds of change).
Here are a list of the key contradictions that drives Toyota forward.
Toyota has a strict hierarchy,but it allows employees to push back.
I have already explained this one,no need to go through it again. Now lets have a look at the others.
Toyota moves at a snails pace,but at the same time manages giant leaps.
For instance Toyota made a late,sluggish entry into American and European markets-it's growth till date has been slow in those regions.But at the same time Toyota was the first company to come up with a truly eco-frindly,green car.
Toyota is highly efficient yet uses it's time in seemingly wasteful ways.
Hordes of people,many of whom who do not even participate attend their regular meetings. Senior executives spend an unnecessary amount of time visiting dealers and use an unholy number of multilingual coordinators-a post most companies have stashed as it erodes communication between the offices and head-quarters.
Toyota is frugal,but is ready to splurge on key areas.
In Japan the entire staff works in the same room,without even partitions or dividers as it occupies a lot of space and in Japan,space costs serious money. But at the same time we find that Toyota has invested over $22billion in research over the past decade and has spent over $170mn competing in the formula one circuit.
A paradox : Simple communication co-existing with a complex social network
As an unspoken rule,communication in Toyota must be as brief and simple as possible.At the same time employees must make sure that everyone knows what is happening and that each and everyone has a say.To ensure this there is a special A3 rule which states that any idea or plan must be conveyed on the briefest and simplest terms on a sheet of paper no larger than 11 inches by 17 inches,which is then put on display publicly for the benefit of all employees.
It is not however work alone that creates strong communication links within the company. Toyota lays stress on building complex complex social networks where employees are encouraged to attend parties and join in any of the numerous available clubs. This is done to ensure that everyone feels at home,feels secure,does not feel neglected or shunned and most importantly is comfortable communicating with his co-workers openly.
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