Shoichiro Toyoda, one of Japan’s foremost post-war industrialists, who was President of Toyota from 1982 to 1992 and helped the company become the world’s largest car maker, died last week. During his tenure, Toyota accelerated the spread of its global presence and laid the basis to become the world’s largest global car maker in 2008.
In South Africa, Toyota has been the best-selling vehicle brand for over forty years.
The Financial Times obituary recounts that Toyoda made an enormous mistake early in his career when he gave approval for Toyota to export its “Crown” vehicle to the US. American customers complained that the Crown did not have sufficient power to be driven on US highways. In his book published in 2015, “Believe in the Future, Step by Step”, Toyoda wrote that he learned a lesson from the mistake. The company went on to develop the Corolla, the model that became the world’s most popular car. As president of Toyota, he had to deal with the trade tensions between the US and Japan, the country’s banking crisis in the 1990s and the ensuing stagnation.
While Shoichiro Toyoda confronted unique challenges, key aspects of the company’s management processes and culture have remained consistent throughout its history. There are no secrets to the process, and its techniques are widely known, yet they remain elusive to many companies. The Toyota Production System has brought about a revolution in manufacturing by improving quality and efficiency.
Today the methods used by Toyota have been adopted by many companies and government departments around the world. The Toyota Production System is the basis of “lean production” that would cut waste and reduce production times. It has yielded great success on factory floors, hospital wards, and in office processes.
The Toyota way does not mean the company is perfect. There have been big mistakes and recalls of its cars, but overall, the quality of its products is greatly respected.
What is remarkable about Toyota is the way the company has stuck to fundamental principles and its unique approach to management. The company is also unique in the way the founding family, the Toyodas, have left an indelible mark on the company’s culture. In his book “The Toyota Way,” Jeffrey Liker writes, “There was a remarkable consistency of leadership and philosophy throughout the history of Toyota.”
Toyoda, as it was then known, started off in the late 1800s as a manufacturer of looms, and it was only in 1937 that the company began building cars. Throughout these years it has been guided by the tenets of its founder. Sakichi Toyoda’s philosophy has been summarised into five principles.
In this era of generic guidelines and corporate mission statements, and widespread cynicism about edicts, it is easy to be dismissive of such principles. Although partly a statement of sound common sense, these principles are a reminder of what is expected at work.
- Always be faithful to your duties, thereby contributing to the company and to the overall good.
- Always be studious and creative, striving to stay ahead of the times.
- Always be practical and avoid frivolousness.
- Always strive to build a homelike atmosphere at work that is warm and friendly.
- Always have respect for spiritual matters, and remember to be grateful at all times.
Further principles were brought in from the experience with the loom to develop the Toyota Production System, the system that is behind the magic of the company’s manufacturing processes. The core of the system is just-in-time parts delivery and production, supported by a ticket system to notify suppliers or other parts of the plant about what is needed. This supports the principle of built-in quality – quality built into every stage of production, something that is required because no excess inventory is kept. Then there is standardisation of processes and labour harmony. Part of Toyota’s success is also continuous improvement based on learning and research: the “Kaizen” system, which requires that workers give suggestions.
Another key “Toyota Way” principle is to base management decisions on a long-term philosophy, even at the expense of short-term financial goals.
What accounts for Toyota’s remarkable consistency and success?
Leadership and tradition have certainly played a large role.
The upholding of principles, the high level of trust, and the sense of duty in Japanese society account for the environment in which the Toyota system evolved. The Japanese case of starting out in a small market where there was a demand for products with variety is another. The cash flow constraint which did not allow large amounts of inventory to be held is another factor. But Japanese goods were not always known for their high quality. That took time.
There was also an element of chance in the success of Japanese manufacturing. That was in large part thanks to the lectures of William Edwards Deming, an American statistician and quality control expert. Deming had been brought to Japan by General Douglas MacArthur, who oversaw the post-war occupation. He was in Japan to advise on a census, but also gave lectures to Japanese engineers on better design to improve service, how to achieve uniform product quality, and the improvement of product testing. Japanese firms used Deming’s techniques long before they were widely used in the US.
Unlike much of the Western world, where the tyranny of quarterly reporting often undermines incentives to longer-term investment and improvement, Japanese companies are more likely to be afforded a longer-term outlook.
There is an argument that corporate Japan lacks the innovation and agility of US companies, and it certainly has had its share of management disasters. This has some validity, but it is the case that Japanese manufacturing and service standards are certainly among the best in the world.
Much of corporate South Africa and the government desperately need to take on the Toyota Way. Even if you think you are good, there is always the need for continuous improvement. And the Toyota Way has been repeatedly proven to be effective as a means of instilling good management.
In 1997, the Mandela government introduced the “Batho Pele” or ‘people first’ principles to improve the delivery of government services. The principles are to regularly consult with customers, set service standards, increase access to services, ensure higher levels of courtesy, provide more and better information about services, increase openness and transparency about services, remedy failures and mistakes, and give the best possible value for money. It sounds a bit like the “Toyota Way”.
The dire state of Eskom and the other state-owned agencies, the collapse of municipalities, and endemic corruption have made these an irrelevance in today’s South Africa.
The Toyota principles embody respect for and trust in fellow employees, suppliers, and customers, and they are consistently upheld. That is why Shoichiro Toyoda could write “Believe in the Future, Step by Step”.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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