Extreme Toyota p 1 - 50

Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer
Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer

Emi Osono
Norihiko Shimizu
Hirotaka Takeuchi

P 3
Hard Side of Toyota: Toyota productions system, allowing the manufacture of higher quality, more reliable products at lower cost; and faster response to fluctuating market demands in meeting current orders and faster product development cycles.

Soft Side
Practices related to HR, culture
- a shift from the industrial (focus on lines, machinery, automation) society to the knowledge (smarts in people) society; growth depends not just on operational efficiency but also people and org. capability
- Toyota positions people at the center of all things.
- Factory workers accumulate wisdom from work on the lines; ideas come from anywhere, even outside the firm

• Toyota’s mgmt is predominantly male & Japanese & they have no plans to relocate their head office from rural setting to central Tokyo
• Many people attend Toyota meetings, including several who do not participate in the discussion, and many whose responsibilities bear no relation to operational or financial performance. In its sales org they deliberately assign more employees to regional offices than other auto co.
• Structure is formal & bureaucratic; many top execs are inaccessible to middle mgrs. & reflective of rigid hierarchies in Japanese culture
o Visitors meeting a middle mgr wear a visitor badge 7 receive a 35 degree bow from reception
o Meeting with an exec means no badge & a 90 degree badge
• Up and In culture – instead of our rise through the ranks or pushed out. Employee retention is high & employees work hard & compete with each other.
• No clear strategic focus. They seem to try anything & everything to stay ahead of all the others, and tries to be good at all of it.

- the company actively embraces and cultivates contradictions instead of passively coping with them
- we are constantly confronted with 2 opposing propositions, sometimes 3, sometimes 4. It is a way of deliberately introducing a positive level of tension into the workplace on a regular basis. Each organizational unit avoids making any kind of compromise and we argue it out till the end across the units.. This process ensures that we come up with the best solution.

1) Moving gradually and also taking big leaps

Content is accumulated gradually, over many years, however the results enable the company to make great leaps forward

2) Cultivating frugality while spending huge sums (R&D, manufacturing facilities, brand equity, dealer networks, HR development)

3) Operating efficiently as well as redundantly

Toyota holds a lot of meetings attended by a lot of people, many of whom do not participate in the discussion.

4) Cultivating stability and a paranoid mindset

Constantly hammer in messages like “Never be satisfied”
“There’s got to be a better way”
“Reform business when business is good”
- doing nothing and changing nothing is the worst thing to do in the new century
“No change is bad”
Creating a list of high expectations, some which may be close to impossible to conceive.

You have to put your life on the line in order to make something good. If you compromise in the process, nothing good will come of it. If you listen to this person’s and that person’s opinion, your spiky horns get dull. You have to keep sharpening your horns.

Seize every opportunity to instill an atmosphere of urgency.

5) respecting bureaucratic hierarchy and allowing freedom to dissent

The voicing of opinions contrary to those of top management or headquarters is an everyday occurrence.
Dissenting against your bosses, not blindly following their orders, bringing bad news to them and generally not taking them too seriously are all permissible behaviours.
Voicing concerns about the status quo does not illicit any fear or stigma about bad mouthing the company.
They portray confidence they are doing the right thing by providing constructive criticism.

6) Maintaining simplified and complex communication
Constantly describe yourself in easily understood terms. A3.

Relentless focus on the human being as the center of production and consumption drives continuous success.

Taylorism – management scientist Frederick Taylor prescribed scientific methods & procedures such as time and motion studies to eliminate conflict and contradiction in the workplace and increase efficiency on the factory floor.
- learning by doing and being forced to reconcile our unique perspective with those of others who disagree with us

6 Opposing Forces driving the company’s expansion, and keeping it from breaking apart:

Expansive Forces
1) Impossible Goals
a. Solutions should be found that are not compromises or an easy way out of conflicting demands but is optimal
2) Experimentation
a. Includes 8 step problem solving process, the practice of defining objectives and breaking down complex tasks using A3 analysis, and the institutionalization of new practices in the organization
3) Local Customization
a. Customizes its products and operations to match the level of consumer sophistication in each locale

Integrative Forces
4) Founders’ philosophies
a. Continuous improvement mindset/kaizen
b. Values of respect for people and their individual capabilities
c. Teamwork
d. Humility
e. Putting the customer first
f. Seeing things first hand/genchi genbutsu
5) Nerve system – open communication, cross training of knowledge to ensure everyone knows everything
6) Up an in
a. Performance evaluation assess the ability to handle issues creatively, resilience, and trust from other employees/jinbo

- the six forces keep the company in a state of disequilibrium, where contradictions coexist generating healthy tension and instability.
- all companies facing a shortage will carefully and creatively allocate them to maximize returns. Danger lies in overabundance of resources.

- setting goals that seem difficult or even impossible to achieve, pushes beyond conventional practices and drives continuous reinvention & growth

p 44
The #1 enemy is it’s own success, causing people to coast and not move to the next challenge, stay on top of things, challenge the current situation, or doing anything that might disturb the current success in the efforts to gain future success. What are you going to do next?

- the essence of strategy is choosing what not to do