Speed Review: How Toyota Became #1

Speed Review: How Toyota Became #1

Speed Review: How Toyota Became #1

Leadership Lessons from the World's Greatest Car Company

by David Magee

How Toyota Became #1: Leadership Lessons from the World’s Greatest Car Company discusses the Toyota Production System and compares sales and profit figures with other automakers. It also weighs stories of product hits and flops from other car companies against those of Toyota. But the main focus of the book is on the people and principles of the business.

Review

Did You Remember Your Horenso?

Author and journalist David Magee –– who wrote books on Ford and Nissan –– originally intended to write a how-to for auto manufacturing and sales by comparing Toyota operations to those of its competitors. However, early in his interviews with Toyota executives in Japan and America, he discovered a deeper story.

How Toyota Became #1: Leadership Lessons from the World’s Greatest Car Company discusses the Toyota Production System and compares sales and profit figures with other automakers. It weighs stories of product hits and flops from other car companies against those of Toyota. But the main focus is on the people and principles of the business. Magee believes Toyota managed rapid progress, “by sticking to the same principles … while constantly changing and upgrading the specific methods and processes.”

There is No “I” in Toyota
Some might expect a Japanese company to observe a strict hierarchical culture. Toyota does hire on the basis of how a person will adapt to the culture more than on skills, but Magee found that all workers are taught to think for themselves and consider the good of the team and the customer. The concept of Team Toyota reaches far beyond the racetrack. Magee depicts a firm where managers function as facilitators more than bosses, executives frequent the assembly line to observe operations first-hand, and humility is considered a virtue.

Keeping everyone informed plays a crucial role in the quest for higher quality. Sharing ideas is so important to Toyota culture, they coined a word for the ritual of giving regular detailed reports on issues and problems: horenso. Employees are often heard asking, “Did you remember your horenso?”

Toyota’s management principles –– a set for every aspect of business from production to dealer service to plant security –– could apply to any industry. Through comparison of management behavior at other auto-makers, Magee reveals that the big difference at Toyota is not so much the statements of principles and processes, as their execution.

The author provides numerous examples, which highlight the Toyota philosophy that no item is too small to be subjected to continuing improvement. Also, no one is shamed or shunned for noting problems at Toyota. In 2005, in Japan alone, Magee says the number of employee suggestions surpassed 600,000 and most were approved.

Quick action is expected when employees notice a problem, or a process that can be streamlined. Toyota takes rapid solutions seriously: Each station on the assembly line has a cord to stop the line when pulled by an employee upon finding a problem. Imagine that happening in a U.S. plant.

Serving the Customer
It shouldn’t surprise anyone that customer satisfaction is Toyota’s goal and all the principles are executed with that in mind. For instance, while planning the Lexus and Scion lines, Toyota sent teams to America to live the customers’ experience. This degree of attention and respect for local markets and cultures enhances Toyota’s reputation as a global, not a Japanese, company.

Magee quotes current president Katsuaki Watanabe, who amazingly claims not to know the company’s stock price, as saying, “I believe it is vital that we faithfully hold to our belief that no growth can come without improving quality.” Quality means customer satisfaction and that means fixing problems in line with the company’s philosophy of valuing long-term results over the short-term profit revered by most competitors. Investments in product development reach staggering figures ($1 billion for Lexus development), all for an uncertain, distant quality payoff.

For easy reference, Magee provides appendices that outline Toyota’s guiding principles, the pillars of Toyota’s mission, and comparisons of sales and stock prices with major competitors. You might not find Toyota executives quoting profit numbers, but How Toyota Became #1 supports the theory that solid financial data result from Toyota’s dedication to quality.

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