Toyota Leadership Right From Akio Toyoda


    Afternoon post planned for today — initial reflections on my reader survey. Thanks to those of you who gave your feedback. Come back or check it out tomorrow. Now this morning's post:

    TOYOTA: Company; Message from Top Management

    New CEO Akio Toyoda's recent speech is on the company website. I'm struck, first, how the photo of the executives says “we are a team, we are all in this together.”

    Compare that image to the typical executive team photo (via Google image search). Lots of arms folded, maybe the CEO lording over the rest of the exec “team,” as shown to the left, in a typical photo.

    Which looks more like a team? I'll take the Toyota image any day.

    So to the CEO's speech:

    Toyoda immediately brings up an aspect of Toyota that many don't know about — their committment to their role in society. And, guess what, that role goes beyond making money.

    “Contributing to society” at Toyota means two things. First, it means, “to manufacture automobiles that meet the needs of society and enrich people's lives.” And second, “to take root in the communities we serve by creating jobs, earning profits and paying taxes, thereby enriching the local economies where we operate.”

    Toyota is, of course, currently losing money and Toyoda addresses the way the company has always faced challenges:

    So, Toyota has overcome many challenges during its seven decades of business. What has made this possible is the way we make our cars under our “customer first” and “genchi genbutsu” principles.

    Rather than re-inventing, Toyoda says it is a time for the company to recommit to its principles. Is that an admission that the company has strayed, or a message to double down and keep doing what has worked before?

    Toyoda says he wants “product-focused management” but what he describes sound more customer focused, really.

    Rather than asking, “How many cars will we sell?” or, “How much money will we make by selling these cars?” we need to ask ourselves, “What kind of cars will make people happy?” as well as, “What pricing will attract them in each region?” Then we must make those cars.

    The final part of his speech touched, again, on people:

    At the press conference in January, I talked about my desire to become “a president who is closest to the frontlines, or genba.” I believe that the essence of management lies in the genba, and Toyota employees play a vital role there.

    The word “gemba” often gets printed or translated as “genba.” I'm not the expert on Japanese language, but I've been taught by Jon Miller that they mean the same thing.

    A company's competitiveness increases when its employees have a chance to develop and improve. There is a phrase we have always had at Toyota that says: “build quality in at each work process.” When each of our employees strives to do that, the result is high-quality cars. So, I believe that the basic principle of management is to think together and develop together with employees so we truly build quality into each stage of our work.

    That seems the key to what Toyota often describes as the “Thinking Production System.” Developing people — their problem solving skills, in particular — leads to greater success for Toyota.

    These are all principles that can (must?) be applied in healthcare organizations, don't you think?

    • Gemba — *all* leaders go to gemba
    • Develop people
    • Be customer (patient) focused
    • Serve the community
    • Be a true leadership team

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    Mark Graban
    Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


    1. Bravo!

      The Toyota Production System is indeed the Thinking Production System because it is, in the best tradition of the 20th century, a cybernetic production system based, like sonar, radar, computers, and robots, Google, etc., etc., blah blah blah, upon communication (feedback/feedforward) and automatic control.

      I myself prefer to call the Toyota Production System the Toyota Management System or, if we are really getting serious, the Thinking Management System. Because, it applies to the management of EVERYTHING–including healthcare, ne c'est pas?

      In a very recent class with EMHA (Executive Masters of Health Administration) at the University of Washington in Seattle, I asked the simple question, "What is the name of our species?" Not one of them, not even the doctors, God bless them, knew the correct answer:

      Homo sapiens sapiens.

      Oh well.

      Why two "sapiens"?

      Because, we are (at least at our very best) the beings that we are aware that we are aware.

      This, however, is not lost on Toyota.

    2. What I find really interesting here is how Toyota has the humility and transparency to admit that they have wavered from their original principles and are recommitting to get back to them. After recently speaking with other organizations in healthcare I've seen that it's not unusual to get off track from original intentions and then need to reassess and recommit. When we see a company like Toyota also facing this, even decades into their journey, it doesn't feel quite so bad. Kind of like being a weekend hacker on the golf course and watching Tiger hit a stray shot…

    3. What I find most striking is that the Toyota picture reflects a level of homogeneity incongruent with an industry that is, arguably, the most global in the world.

      Of its 29-member Board, Toyota has no women and no non-Japanese Directors. Of its 50 Managing Officers, Toyota has no women and only 5 non-Japanese members.

      History is full of examples where insular, homogeneous groups reinforce prevailing attitudes and conventional wisdom, ignoring the imperative for change. Groupthink is one reason that GM struggled to change its culture and mindset, and failed to adapt quickly enough to the challenges posed their competitors.

      No amount of commitment to the basics can overcome structural blind spots and the cultural inability to react quickly in the face of adverse news.

    4. Karthik,

      I want to understand you correctly. Is it your position that Toyota's lack of diversity is the root cause of their current situation? I would think it's more likely the world economy right now, primarily lack of demand, as well as some of their own admitted missteps.

    5. No, I never suggested that lack of diversity is a root cause of Toyota's current problems. Viewing the picture, I was just struck by how Toyota's senior management team is extremely homogeneous.

      To your point about missteps, Toyota will no doubt do a 5 Whys on each one, and there will be a specific root cause identified (and, ostensibly, countermeasured).

      What they won't do is a system-level 5 Whys to understand what larger dynamics are shaping corporate performance. "Monoculture" thinking is a proven source of many systemic management failures, and it's unlikely that a "back to basics" approach can compensate for systemic gaps.

      Does that mean Toyota will not be successful again? Not at all. Very few of their competitors are positioned to exploit these gaps, and many of them share the same monoculture mindset.

    6. Great post Mark, thanks for sharing.

      Fritz Henderson as CEO of GM recently gave a very similar speech. In it he said that they will remake GM based on "customers, cars, and culture." Customers first, sure. Get the principles right (equals culture) – check. Build cars that people want – bingo.

      Why does Fritz's speech gain a very different reaction that Toyoda's? I would propose only because of our past experience with leaders from these two companies, and nothing more. So here's the test. Both leaders have made similar statements. Both leaders are trying to remake or drastically improve their companies. The speeches are over. Let the actions, leadership, and decision making begin. That's going to be what it comes down to.


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