Toyota Leaders Get a Lecture From a Toyoda

Toyota Names Akio Toyoda President, Apologizes to Shareholders for Losses

This was rumored for a while, but Toyota has formally named Akio Toyoda as the next President. Yes, “Toyoda” with a “d” — that’s the family name. Back when Toyota starting making automobiles, the company name was changed from Toyoda to Toyota. Two reasons I’ve heard for that – one had to do with the number of strokes in the kanji character for Toyota being a lucky number and second that it was easier and quicker to write than Toyoda.

Toyota officially confirmed 53-year-old Akio Toyoda as company president today. The grandson of company founder Kiichiro Toyoda takes over for outgoing president

Katsuaki Watanabe, who will stay on as vice chairman.


It will be interesting to see how Toyota’s strategy or direction changes with new leadership. I assume they won’t “pull a Wiremold” and ditch Lean methods… seriously, that’s a risk in many organizations (including hospitals) where a leadership change might put Lean efforts in jeopardy. The difference, at Toyota, is that “Lean” is really the Toyota Production System, which is really just the way Toyota does things (embedded pretty deeply in their DNA).

Toyoda Asks How Many Times Toyota Errs Emulating GM Failures – Bloomberg.com

This second article caught my eye yesterday, as a Toyoda family patriach lectured the company leaders for their recent business struggles.

The son of the man who started them in the auto business was upset.

“How many times have you made a mistake?” Shoichiro [Toyoda] grilled [former President] Watanabe, who sat silently among stunned audience members, according to a person familiar with the meeting.

Shoichiro scolded the president for being so anxious to boost sales and profits that he’d let Toyota emulate now bankrupt General Motors Corp. and Chrysler LLC. Toyota had become addicted to big, expensive cars and trucks and had forgotten the customers’ need to save money, Shoichiro said, according to the person’s account.

Shoichiro wasn’t just lashing out at Watanabe. He was railing against the threat to everything his family had struggled to create.

There are quotes in the article from everyone under the sun, including friends from the LEI:


“Toyota has been addicted to U.S. profits these last five years,” says John Shook, a University of Michigan management instructor and former Toyota engineer. “They’ve been slow everywhere else, particularly in China, where the growth is. Hyundai could be the big winner.”

And:


“I don’t think anybody sees Akio as a highly original kind of guy, but he’s really earnest,” says James Womack, chairman of the Lean Enterprise Institute in Cambridge, Massachusetts, which trains companies on the automaker’s methods for cutting production costs. “He’s been in the Toyota system all his life. He doesn’t know anything else but to go back to the basics.”

Toyota gets criticized in the article for overexpanding and charging too much for their newer vehicles.

The article, in a more positive light, illustrates the way Toyota is investing in its people during the production and sales downturn rather than just laying off staff.


Dozens of Toyota workers, wearing green or orange vests that signify they’re on temporary assignment, inspect unfinished trucks. These same workers cleaned parks and enjoyed yoga and Pilates on company time when a 15.6 percent sales drop forced Toyota to shut the plant for three months starting in August and then cut a second shift.

Ray Tanguay, executive vice president for manufacturing in North America, sees a silver lining in the downtime. The company is using its kaizen process to build vehicles with fewer workers, aiming for more profit when sales pick up.

“We have to go back to our core values,” he says. “This might well make us stronger.”

Kaizen-sparked improvements are taking root in San Antonio. Production manager Dan Antis says employees studied everything from workplace diversity to how to hold a screwdriver.

When you’re chasing volume, you don’t have time to teach people,” Antis says. “The kaizen we’re capable of doing after the shutdown is endless.”

What do you think about paying employees to do Yoga? My understanding was that they were taking the time for training on production skills and the Toyota Production System? Paying people for Yoga starts to sound like the infamous Jobs Bank from the Detroit Three, don’t you think?

There is, however, a nice example in the story about real employee creativity and kaizen:

Standing near the assembly line’s end, team leader William Steubing says he wanted a better way to handle a 20-pound plastic box that carries parts alongside unfinished trucks.

Initially, Steubing’s team attached the box to metal frames holding the trucks. As the Tundras moved along the line, workers reached into the box for headlights and other parts. When they emptied the box, they’d lift it off the carrier and carry it back for refilling.

During the shutdown, workers designed a conveyor to do that job. Now, as a truck moves forward, the conveyor tilts up a corner of the empty box and snaps it off the carrier. The box falls onto the conveyor and rolls back for refilling. The change saves 11 seconds of walking per truck.

Steubing and his co-workers also got training in welding and metal cutting. Then they recycled old conveyors, spending $2,000 compared with $90,000 that Toyota engineers had planned for a motorized conveyor.

I’d say it’s better to be spending time on Kaizen instead of yoga… interesting times for Toyota.


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

7 Comments on "Toyota Leaders Get a Lecture From a Toyoda"

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  1. Monique says:

    I really like this post. Core values made them succeed, why deviate now and get greedy. What humbleness to recognize the need to recalibrate and the courage to teach workers new skill in light of touch times.

  2. Mike says:

    Good post, Mark. The only issue I have is with Shoichiro's claim that they had to remember that the customers need to save money. People are astute enough to understand the difference between cost and value and if they perceive the value of the Toyota product to be equal to the price they will gladly pay it. I seriously doubt Toyota will rush out and cut their prices by one third or something dramatic like that, but if they did, I might consider giving up my Hondas. Otherwise, any price adjustments they make will be mere tokens.

  3. Peter P Patterson, MD MBA says:

    Loved the post Mark.
    The Bloomberg article in many ways seems to me an exercise in Monday morning quarterbacking. It's obvious to anyone who can read a newspaper that we are in the midst of a global economic downturn. The pundits now get to act like magpies and second-guess Toyota’s management decisions. Frankly I'm suspicious, especially when some pundits predict a sustained contraction in the global market for motor vehicles. There will almost certainly be a rebound and within five years, my bet would be that the global market will be larger than it was before the sharp downturn. The real question is who will be best positioned to take advantage of the rebound. Toyota’s continued investment in creativity and innovation will keep them well-positioned. Yoga may in fact be a great way to clear the mind and prepare for creative thinking (grin).

    Definitely more to come here, perhaps as soon as Thursday's news conference, referred to in the Motor Trend article. I predict we'll see a leapfrog strategy for Toyota in China. Hyundai watch out! Stay tuned.
    /Dr. Pete

  4. curiouscat says:

    Toyota should do better. Toyota should challenge itself to do better. Toyota's failures however do not seem to me to be huge. Moving slowly in China is fine for Toyota. I think the main problem Toyota had was expanding too fast not, failing to expand in China fast enough. But even with expanding too fast they hardly are in big trouble.

    They seem to have remained firmly committed to sound management practices. And that is plenty from this shareholder. It is not easy to find companies I trust with my investment (I can find more investments that are worth investing in because I believe the odds are with me at the price offered…). The biggest worry I really have is whether Toyota will fail to plan for the long term. I hope they will. Don't get all excited because for a couple quarters you actually post losses. Yes address the causes of those losses but don't gut good long term ideas just because the economy created losses for a short period.

    What other companies do I trust? Google and Amazon for two. I like Tesco, I hope they will do the right thing but I need to see more evidence they are willing to commit to good management ideas over the long term. Danaher I have hope for. Their ludicrous executive pay worries me a great deal though. Either paying money you don't think they deserve or they really believe one guy is worth a huge percentage of their profits which says they really don't get what a good system is about.

  5. Anonymous says:

    Very nice post. I am reminded of all the presentations on Lean and Toyota I went to two or three years ago that bragged about Toyota having the largest market capitalization in the world as proof that my organization should be more like them. These "experts" that were bragging about Toyota are now the same ones that are pointing out Toyota's misguided strategy.

    Who was wise enough out there to identify Toyota's problems two or three years ago? That's the guy (gal) that I really want to listen to.

  6. Peter P Patterson, MD MBA says:

    Well … here's the press conference:

    www2.toyota.co.jp/en/about_toyota/message/index.html

    Six of Toyota's best plotting a comeback. Truly inspirational address by Akio Toyoda.
    /Dr. Pete

  7. Jason Yip says:

    I would suspect that the Yoga and Pilates was about developing core strength to avoid injury.

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