How Toyota Became #1 - PCC - ebook

Everyone knows that Toyota has had an amazing twenty-five- year run, rising from a humble Japanese start-up to a thriving global giant. But how did it pass Ford and GM to become the world?s largest auto manufacturer? And how does it continue to thrive while so many competitors are struggling and failing? Journalist David Magee dug deeply into Toyota?s past and present, interviewing senior executives who rarely talk to the press, along with many other sources. The powerful lessons that he distills, especially about corporate culture, are valuable for managers in all industries.

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In just 25 years, Toyota has gone from being a little known Japanese start-up to the world's largest auto manufacturer. In the process of achieving this impressive feat, Toyota has leapfrogged longtime giants General Motors and Ford, who have been competing for the global number one and number two spots aggressively for more than 70 years.

The popular wisdom has always been that this meteoric rise is the direct result of Toyota's mastery of lean production, but it turns out this is only a small part of the story. A much larger factor in Toyota's ongoing success in the marketplace is the impact of its deep-seated and unique corporate culture. Toyota's corporate culture encapsulates the company's unique approach to business, and is the true driving force behind the company's competitive advantage in the marketplace.

Key Thoughts

"I was surprised at what I found as I interviewed key managers at Toyota. Despite the company's incredibly successful, even meteoric rise, it was nearly impossible to get anyone inside the company to talk about the numbers. The reason, I learned, was that the criteria and qualities leading to Toyota's rise to the top had little to do with sales results or profit margins. Numbers are simply by-products of daily work, and not the key to competitive greatness. The story lines of most importance in revealing the real nature of an organization lie far beneath the numbers. More than an automaker or manufacturing company, Toyota is a professional lifestyle--a proven and time-tested way of progression, improvement, ambition and betterment. The company's business mantra is not so much about quarterly earnings and net profit as it is about striving each day to develop people. It is not so much a business plan as a philosophy."

David Magee

A Brief Corporate History of Toyota (. . . Thus Far)

■ Toyota Motor Company Ltd. was registered as a Japanese corporation in 1937. The company's founder was Kiichiro Toyoda, who had no experience in automobile design or manufacture. Toyota produced its first prototype in 1935, and the AA went into production in 1936.

■ Kiichiro Toyoda funded his new corporation by selling the Toyoda Automatic Loom Works, a highly successful machine making company established by his father Sakichi Toyoda, who died in 1930. The sale gave Kiichiro Toyoda one million yen--the equivalent of about $20 million in today's currency.

■ When Kiichiro Toyoda set up Toyota in 1935, he established his father Sakichi Toyoda's business principles as the operating principles for his new company. These five principles were:

Be contributive to the development and welfare of the country by working together, regardless of position, in faithfully fulfilling your duties.Be ahead of the times through endless creativity, inquisitiveness, and pursuit of improvement.Be practical and avoid frivolity.Be kind and generous; strive to create a warm, homelike atmosphere.Be reverent, and show gratitude for things great and small in thought and deed.

■ During the company's first seven years in business, Toyota sold only about 1,500 cars. It did, however, have more success selling trucks.

■ Toyota's operations grew when the Japanese government mandated that all automakers had to be majority-owned and controlled by Japanese citizens. This effectively ended the importation of U. S. vehicles into Japan.

■ With the outbreak of World War II, Toyota was required to focus all its efforts on military production.

■ After the war ended, the United States government allowed Toyota to begin making vehicles again in occupied Japan. Toyota released the Toyopet--its first affordable car for the masses--in 1947. Toyota sold more than 100,000 Toyopets in its first year of production.

■ In 1950, Toyota struggled because a severe recession hit Japan. The company was forced to lay off employees, and it recorded a financial loss. Impressively, this would be the only year Toyota would lose money, as the company has never recorded a financial loss since then.