Toyota’s Organizational Efforts to Improve Productivity

Toyota’s Organizational Efforts to Improve Productivity

Introduction

Kiichiro Toyoda founded Toyota Motor Corporation, Ltd in 1937. It was a by-product of his father Sakichi Toyoda’s company (Toyota Industries corporation), which use to manufacture automatic looms. Kiichiro Toyoda’s life is the reason why Toyota has the standards and regulates its business the way it does today. Kiichiro Toyoda first lived with his grandparents until he was three years of age and then began living with his father. He was raised in company housing, all around the textile industry so he grew up seeing people design, create and fix machines a majority of his childhood. It is said that the idea of “Genchi Genbutsu”, which means to go to the source and find the facts to make correct decisions, was a framework Kiichiro tapped into when developing the company later in life. In doing so, he reverted back to childhood experiences learned from growing up in the textile industry and used that in developing “Toyota Way” (www.Toyota_Global.com).

In 1914 Kiichiro entered H.S in Sendai. While attending high school he took a specialty course in engineering. By 1917 Kiichiro had graduated and began taking courses at Tokyo Imperial University, which is now called the University of Tokyo. In 1920 Kiichiro graduated with his degree in engineering and by July he left home to take over his father’s company. When he went home, he had found out that the company was already being run by his sister’s husband that she married in 1915, so Kiichiro decided to go straight back to school. It is then that he went back to school to study business, law and social systems. This came to a halt because an engineering position became available and he left the school within a year’s time. Ten years later, Kiichiro’s father died and he overtook the business, renaming and implementing automobiles because this had been a passion of Kiichiro for along time.

The start of World War I is when it first peaked his interest because of the high demand on cars but at the time he was still in grade school. Prototypes began developing 4 years before the inception of the Toyota Motor Corporation. Basic parts from Ford and Chevrolet were used because at the time, those were the only companies that could be serviced everywhere. This correlates with quadrant 2 of the competing values model known as the open systems model because; this is the time period when innovation is key and the acquisition of knowledge as well as people was at high demand for Toyota (Quinn,1988, p.47). Toyota had no knowledge of the automobile industry because it was a textile industry, so Kiichiro recruited several experts in the field and a majority of these people were colleagues from the University of Tokyo or friends he grew up with.

Kiichiro’s life growing up is a primary example of how Dreyfus, Dreyfus, and Athanasian would describe their theory “The Evolution of Mastery” (Quinn, 1988, p.47). The Evolution of Mastery explains how an early manager begins out as a novice then excels through 5 stages to become a master. Kiichiro began his journey as a novice growing up in the textile industry learning everything around him, becoming and advanced beginner as he takes up engineering as a specialty, progressing to the competence stage in college where an appreciation and a true understanding of business is learned, changing into the proficiency stage where he takes grip of the company and finally becoming a Master of his business where today Toyota is the world’s largest automobile manufacturing company, overtaking both General Motors and Ford. Its market capitalization is more than five times that of Ford and General Motors and it is also the most productive automobile manufacturer in the world. As the world continues to focus on reducing emissions and fuel costs, the newly created market of hybrids is also gradually taking off. Once again, Toyota is the market leader in this new segment. Toyota’s success and its increase in productivity have been due to the fact that it has made tremendous efforts toward achieving this status. It has focused on creativity and innovation as the two core elements to provide the consumers what they need. It has done so by focusing not only on profits but also on quality, quantity and the environment (Nakagawa, 2007).

Episodic Versus Continuous Change – Toyota’s Philosophy

The success of Toyota is primarily driven by its management philosophy and practices. Toyota is also one of the first companies to adopt and implement lean manufacturing. When examining how Toyota was successful at its efforts to improve productivity, it is important to understand the type of change Toyota was able to implement within the organization. There are two types of change. Episodic change follows the sequence of unfreeze-transition-refreeze while continuous change follows the sequence freeze-rebalance-unfreeze. As far as Toyota is concerned, it is one of the most successful examples of an organization that was able to effectively implement continuous change. Toyota chose to focus on change that continued to evolve and that was incremental in nature (Weick & Quinn, 1999). This required the organization to continuously adjust and adapt to new markets, new environmental changes, new global challenges and new competitors. However, instead of freezing one strategy and implementing a new one, Toyota altered its structure and its strategy as per the needs of the markets it was catering to as well as the needs and preferences of its consumers. Throughout its years in business, Toyota has never believed in short-term success. It has always looked at the big picture and has worked toward establishing itself as a reliable and trustworthy entity.

Theoretically speaking, “change is a phenomenon of time. It is the way people talk about the event in which something appears to become, or turn into, something else, where the something else is seen as a result of outcome. In organizational development theory, change is “a set of behavioral science-based theories, values, strategies and techniques aimed at the planned change of the organizational work setting for the purpose of enhancing individual development and improving organizational performance, through the alteration of organizational members’ on-the-job behaviors (Weick & Quinn, 1999, p. 362-363).

Over the years, the theory of change has continued to evolve. There are four basis process theories of change: life cycle theories involve an event sequence of start-up, grow, harvest, terminate and start-up; teleological theories have an event sequence of envision/set goals, implement goals, dissatisfaction, search/interact and envision/set goals; dialectical theory has an event sequence of thesis/anti-thesis, conflict, synthesis and thesis/antithesis; and evolutionary theory has an event sequence of variation, selection, retention, and variation (Weick & Quinn, 1999, p. 363).

Toyota’s efforts to improve productivity were successful because it did not fall into the trap of episodic change. By avoiding doing so, Toyota was able to demonstrate a consistent performance as opposed to infrequent or discontinuous results. Despite the fact that the automobile industry is intensely competitive and involves a product lifecycle that evolves very rapidly, Toyota was able to adopt an approach that was stable through its ups and downs. It did not opt for a route that would require it to abruptly change strategies because of a change in the external environment. Instead, it adopted an approach where it was able to implement a continuous process of improvement and development (Nakagawa, 2007).

Under ideal conditions, an ideal organization is capable of continuous adaptation and while there is no ideal organization in the real world, Toyota comes pretty close since it is one of the leading companies in the world. Organizations that choose to implement episodic change are those that have a short-term outlook. Toyota on the other hand, is an organization that has shown a stable performance for the last twenty years. Episodic change results in nothing but chaos and by avoiding a chaotic approach, Toyota has been able to improve its productivity (Weick & Quinn, 1999).

Toyota Production System and the Toyota Way

Another important strategy used by Toyota to improve its productivity has been the implementation of the Toyota Production System and the Toyota Way Philosophy. Taichi Ohno was the inventor of the Toyota Production System and Lean Manufacturing (Ohno, 1998). As mentioned previously, the Toyota Production System is characterized by Lean Manufacturing techniques that have enabled it to produce top quality passenger cars. In addition, Toyota’s continuous change and improvement strategy, commonly known as the Kaizen process has enabled Toyota to improve both productivity and quality (“Manufacturing Intelligence,” n.d.).

The success of the Toyota Production System functions smoothly because it believes in empowering team members and focusing on optimum quality. It also emphasizes on continuous improvement and eliminating any waste in human, natural and corporate resources. The Toronto Production System is an inherent part of Toyota’s philosophy and a major reason why Toyota is the world leader in both quality and productivity. The influence of this system is reflected in each and every aspect of Toyota’s operation and is the basis for all values, knowledge and procedures. The success of the Toyota Production System functions smoothly because it believes in empowering team members and focusing on optimum quality. It also emphasizes on continuous improvement and eliminating any waste in human, natural and corporate resources. The Toronto Production System is an inherent part of Toyota’s philosophy and a major reason why Toyota is the world leader in both quality and productivity. The influence of this system is reflected in each and every aspect of Toyota’s operation and is the basis for all values, knowledge and procedures (“Toyota Production System,” 2010).

Toyota’s emphasis on continuous improvement as well as its commitment to produce cars that had fewer defects and were more durable has contributed to its productivity improvements. Toyota has also been a leader in automobile innovation and has been able to use its lean manufacturing system to add provide more value to the end-user. That is the reason why customers are pulled toward Toyota cars unlike other automobile manufacturers who generally have to use push strategies to convince customers to purchase their cars. Productivity has also become more efficient at Toyota because lean manufacturing has enabled the company to minimize waste and inventory as well as improve its manufacturing process. Thus, it is indeed the Toyota Way that has helped the company improve productivity (Nakagawa, 2007). Toyota abhors inventory and it believes that too much inventory is a primary reason why production systems become inefficient (Greeley, 2013).

The Toyota Way is based around five core values. These include Challenge and the commitment to maintain a long term vision and meet all challenges with courage and creativity; Kaizen and focusing on continuous improvement simply because no process can ever be perfect and every process has some room for improvement; Genchi Genbutsu and emphasizing on going to the source to find the facts and using those facts to make decisions and achieve goals; Respect and a promise to always respect others and to build trust; and Teamwork in order to attain both personal and professional growth for both the employees and the organization (“Toyota Production System,” 2010).

The Toyota Way has some key principles which include the commitment to eliminate, not just reduce waste; to build quality into everything; to create efficient systems and to treat people and partners well and with respect; maintain core competencies; choose friends and associates carefully. Toyota’s focus on innovation has also enabled it to be an industry leader. It is also the mass producer of hybrid automobiles and has over half the world’s market for hybrids (Nakagawa, 2007).

Overall, the commitment to strive for continuous improvement and a firm belief in the philosophy that perfection is something that should be aimed for on a regular basis, Toyota has been able to demonstrate to its customers, suppliers and the community in general that with the right principles and the right organizational philosophy, there is no limit to what an organization can achieve. Episodic change and focusing on the short-run results in organization achieving short-term success and losing its momentum on the way but with Toyota and its emphasis on continuous change, it has proven to be one of the most successful companies in the world (“Manufacturing Intelligence,” n.d.).

Not only is Toyota a profitable organization, it is also one of the most decent employers. It allows its employees to empower themselves; to innovate and to create; it enables them to respect each other and themselves and to trust each other; it allows them to take responsibility for their actions and makes them realize that without their optimum performance, the organization could not possibly achieve its goals. All these principles and more have enabled Toyota to successfully turn its efforts into maximum production. Toyota is a leader in the automobile industry and has demonstrated that with the right processes, the right mind-set and the right beliefs, an organization has the power to dominate (Nakagawa, 2007).

References

Greeley, B. (2013, September 26). Does this man look efficient? Bloomberg BusinessWeek. Retrieved from http://www.businessweek.com/articles/2013-09-26/work-efficiency-lessons-from-toyotas-productivity-guru

Manufacturing intelligence and visual inspection systems to improve productivity and quality. (n.d.). ATS International. Retrieved from http://www.ats-global.com/gb/en/80_automotive/653_manufacturing-intelligence-and-visual-inspection-systems-to-improve-productivity-and-quality.html?do=articleNakagawa, T. (2007, May 14). What Toyota can teach you about personal productivity. Lifehack. Retrieved from http://www.lifehack.org/articles/lifehack/what-toyota-can-teach-you-about-personal-productivity.htmlOhno, T. (1988). Toyota production system: Beyond large scale production. New York: Productivity Press.

Toyota production system and what it means for business. (2010, April). Toyota Forklifts. Retrieved from http://www.toyota-forklifts.eu/SiteCollectionDocuments/PDF%20files/Toyota%20Production%20System%20Brochure.pdf

Weick, K. E., & Quinn, R. E. (1999). Organizational change and development. Annual Review of Psychology, 50, 361-386. Retrieved from https://www.uzh.ch/iou/orga/ssl-dir/wiki/uploads/Main/Weick_Quinn.pdf

(www.Toyota_Global.com).