Organisation Design and change: Toyota Culture

1. FORE School of Management, New Delhi
Organizational Design and Change
WMG 21
Toyota Culture
Submitted to
Prof. Neeraj Kumar
Submitted By
Reshmi Raveendran
Roll No. 212027

2. Objective:
To Analyze the Culture of Toyota based on core values, terminal values, SOP’s, Norms of
behavior and also the role of People, Structure, Ethics and Property Rights in shaping
the culture.
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3. Contents
1. Introduction……………………………………………………………………………….….4
2. Toyota’s Culture……………………………………………………………………….……5
3. Core values…………………………………………………………………………………….6
4. Terminal values………………………………………………………………………….…..7
5. SOPs…………………………………………………………………………………………...….8
6. Norms’ of behavior………………………………………………………………….…….9
7. People…………………………………………………………………………………………11
8. Structure………………………………………………………………………………….…12
9. Ethics……………………………………………………………………………………….…14
10. Property Rights……………………………………………………………………..……15
11. Culture’ supports the strategy………………………………………………..……16
12. Learning………………………………………………………………………………………17
References
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4. Introduction
Company – ToyotaMotor Corporation (Global)
Toyota Motor Corporation (TMC) is a Japanese multinational automaker headquartered
in Toyota, Aichi, Japan.
The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's
company Toyota Industries to create automobiles. TMC is part of the Toyota Group, one of the
largest conglomerates in the world.
Toyota first caught the world’s attention in the 1980s, when it became clear that there was
something special about Japanese quality and efficiency. Japanese cars were lasting longer than
American cars and required much less repair. And by the 1990s it became apparent that there
was something even more special about Toyota compared to other automakers in Japan.
It was not eye-popping car designs or performance though the ride was smooth and the designs
often very refined. It was the way Toyota engineered and manufactured the autos that led to
unbelievable consistency in the process and product. Toyota designed autos faster, with more
reliability, yet at a competitive cost, even when paying the relatively high wages of Japanese
workers. Equally impressive was that every time Toyota showed an apparent weakness and
seemed vulnerable to the competition, Toyota miraculously fixed the problem and came back
even stronger.
Today Toyota is the third-largest auto manufacturer in the world, behind General Motors and
Ford, with global vehicle sales of over six million per year in 170 countries and employs around
325,905 people worldwide. Toyota is benchmarked as the best in class by all of its peers and
competitors throughout the world for high quality, high productivity, manufacturing speed, and
flexibility.
The incredible consistency of Toyota’s performance is a direct result of operational excellence,
understanding of people and human motivation. Its success is ultimately based on its ability to
cultivate leadership, teams, and culture, to devise strategy, to build supplier relationships, and to
maintain a learning organization.
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5. Toyota’s culture
The Toyota Way, along with the Toyota Production System, makes up Toyota’s DNA. This DNA
was born with the founders of the company and continues to be developed and nurtured in the
current and future leaders. Toyota started with the values and ideals of the Toyoda family.
Five Main Principles of Toyoda
• 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.
The "Five Main Principles of Toyoda" are a written statement of the teaching of Sakichi Toyoda
the Five Main Principles of Toyoda have been handed down to every Toyota Group Company and
serve as conduct guidelines for all employees.
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6. Core Values
a)
Open and honest communication
b)
Customer satisfaction
c)
Social responsiveness
d)
Quality in everything we do
e)
Respect for people and property
f)
Recognition and reward for effort
g)
Teamwork
h)
Fair and equal opportunities
i)
Customer first
j)
Kaizen
k)
Focus on workplace
The Toyota Way is a set of principles and behaviors that underlie the Toyota Motor
Corporation's managerial approach and production system. It can be briefly summarized
through the two pillars that support it: Continuous Improvement and Respect for People.
a) Continuous improvement, often called kaizen, defines Toyota’s basic approach to doing
business. The true value of continuous improvement is in creating an atmosphere of continuous
learning and an environment that not only accepts, but actually embraces change.
b) Respect for people: Kaizen environment can only be created where there is respect for people
hence the second pillar of the Toyota Way. Toyota demonstrates this respect by providing
employment security and seeking to engage team members through active participation in
improving their jobs
Toyota Production System
The practical expression of Toyota's people and customer-oriented philosophy is known as the
Toyota Production System (TPS). It provides members with work satisfaction, job security and
fair treatment.
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7. Terminal Values
Toyota aims at building a corporate culture where teamwork and individual creativity thrive and
where people approach their work with pride and with passion. Toyota honors the spirit of
diversity in recruiting, training, and promoting capable individuals.
Vision
• Toyota will lead the way to the future of mobility, enriching lives around the world with the
safest and most responsible ways of moving people.
• Through our commitment to quality, constant innovation and respect for the planet, we aim to
exceed expectations and be rewarded with a smile.
• We will meet our challenging goals by engaging the talent and passion of people, who believe
there is always a better way.
Mission
Toyota is dedicated and committed to:
Ensuring that products are of outstanding quality, value for money and instill pride of ownership
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8. SOP’s
The foundations of TPS are built on standardization to ensure a safe method of operation and a
consistent approach to quality.
a) Kaizen - Continuous Improvement -Kaizen is the heart of the Toyota Production System.
Like all mass-production systems, the Toyota process requires that all tasks, both human and
mechanical, be very precisely defined and standardized to ensure maximum quality, eliminate
waste and improve efficiency. Toyota Members have a responsibility not only to follow closely
these standardized work guidelines but also to seek their continual improvement.
b) Just In Time
The 'just in time' approach to production that has now gained almost universal acceptance in
world manufacturing was actually pioneered by Toyota. It allows the entire production process
to be regulated by the natural laws of supply and demand. The result is that the right parts and
materials are manufactured and provided in the exact amount needed - and when and where
they are needed. Production is 'pulled' by the customer rather than being 'pushed' by the needs
or capabilities of the production system itself.
c) Jidoka
In Japanese 'jidoka' simply means automation. At Toyota it means 'automation with a human
touch'. This principal, jidoka, of designing equipment and processes to stop and call attention to
problems immediately when they sense a problem is a central concept of TPS.
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9. Norms of Behaviour
In Toyota, norms are not explicitly formalized in rules, but are more inherent in the culture of
the organization
E.g.: TPS gives power to the employees on the front lines to pull a cord and stop the
manufacturing line when they see a problem.
The “Toyota Way” and the “Toyota Code of Conduct” serve as important guiding tools when
Implementing the daily business operations to realize the “Guiding Principles at Toyota”.
“Toyota
Way” describes the values and methods to be shared for the people of the global TOYOTA
organization.
The “Guiding Principles at Toyota” summarize the corporate philosophy and reflects TOYOTA’s
vision of what kind of company TOYOTA would like to be.
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10. The present “Toyota Code of Conduct” provides a basic code of conduct and serves as a model
and compass. It also provides detailed Explanations and examples of the actions and issues that
all must be aware of when carrying out Actual business activities.
Code of Conduct involves:
•
Compliance with Laws and Regulations - With sound social norms in mind
•
Use and Management of Assets and Confidential Matters- Ensuring asset maintenance and
confidentiality management -
•
Insider Trading - Act as an investor with sound common sense
•
Activities Promoting Safety - Enhancing vehicle safety
•
Environmental Preservation Activities- Building environmentally and people friendly vehicles
•
Research and Development Activities - Developing vehicles from the standpoint of our
customers
•
Procurement Activities- Reasonable and sincere transactions
•
Production and Distribution Activities - Building vehicles that win customer trust and faith
•
Sales Activities - Winning the trust of customers and dealers
•
Overseas Business Activities- To become a global company trusted worldwide
•
Profitability Enhancement Activities- Building a stronger profit foundation -
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11. Influence of People in shaping the culture
Toyota doesn't just produce cars; it produces talented people. Toyota's remarkable success is
through a 4P model for excellence- Philosophy, People, Problem Solving, and Process
Toyota and other such learning organizations believe that people are the organization’s most
Significant asset so they invest in the skills and knowledge of people.
Toyota workers share a common goal: continuous improvement. Their shared vision motivates
them to make improvements beyond merely meeting their customers’ needs.
Respect for people: The employees respect each other, make every effort to understand other,
take responsibility, and do their best to build mutual trust. They believe in communicating
sincerely to achieve this.
Teamwork: Toyota also stimulates personal and professional growth, shares the opportunities
of development, and maximize individual and team performance through:
• Commitment to education and development
• Respect for the individual.
•
Realizing consolidated power as a team.
The company's four-stage process for building and keeping quality people is:
Attract, Develop, Engage, and Inspire.
In order to build a culture of continuous improvement, Toyota makes the following efforts:
•
Encouraging problem solving at all levels of your organization
•
Making management accountable to employees
•
Inspiring the people to be committed to the company, family, and community
•
Turning the HR department into the arbitrators of fair and consistent daily practices
•
Using a top-down and bottom-up planning process to involve everyone in achieving
breakthrough goals
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12. Structure
As Company grows
Structure expands
Response time slow
E.g.: Toyota recalled 242000 Prius and Lexus hybrid cars made between March and October
2009 because of a braking problem.
The organizational structure of Toyota may give us some insight into the handling of this crisis
and ideas for the most effective way for Toyota to move forward. Companies such as Toyota that
have a rigid corporate culture and a hierarchy of seniority are at risk of reacting to external
threats slowly. It is not uncommon that individuals feel reluctant to pass bad news up the chain
within a family company such as Toyota. Toyota’s board of directors is composed of 29 Japanese
men, all of whom are Toyota insiders. As a result of its centralized power structure, authority is
not generally delegated within the company; all U.S. executives are assigned a Japanese boss to
mentor them, and no Toyota executive in the United States is authorized to issue a recall. Most
information flow is one-way, back to Japan where decisions are made.
Toyota had a pattern of slow response on safety issues because of its organizational structure.
In order to overcome this problem, Toyota decided to Establish a structure for the swift
realization of the Toyota Global Vision too swiftly communicate the voices of the customers and
information from frontline operation level of each region, to the Executive Levels.
Thus it is observed, that Toyota has a Geographic Structure because:
•
Geographic structure allows Toyota to adjust its structure to align its core competences with the
needs of customers in different geographic regions
•
Geographic structure allows some functions to be centralized and others decentralized
•
Central Support Function: responsible for overseeing the activities of the managers heading each
Region
•
Within each region, it is observed that Toyota has a highly vertical structure with minimum 7
levels
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13. Toyota Manufacturing- UK organizational structure
Toyota is a modular organization as all nonessential functions are outsourced. The idea
Behind this format is to retain only the value-generating and strategic functions in-house, while
the rest of the operations are outsourced to many suppliers. By managing relationships with
hundreds of suppliers, Toyota achieves efficiency and quality in its operations.
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14. Ethics
Toyota promotes its business activities from “both a global and local” standpoint so as to
•
contribute to the development of local economies and society.
Toyota’s ability to recover from disaster: When Toyota vehicles were recalled, Toyota’s gold
•
standard of quality fell like a house of cards. The reason was aggressive growth that created
an unmanageable risk. Toyota was expanding too much and too quickly started surfacing its
car-quality ratings. However Toyota Accepted Responsibility and recovered from the crisis
and was able to maintain its reputation.
Toyota’s Human System Model: Toyota used Lean projects as a vehicle for developing people
•
and culture.
Toyotas organizational structure is such that the employees collaborate and work in teams.
•
From there it moves to safe workplaces.
Organizational supporting processes -Toyota still want people to have a job for life, even
•
though this is not common outside Japan. Toyota has fair HR policies and rewarding policies
•
Toyota’s management has Created a Harmonious and Lively Work Environment
•
Sustainability Initiatives
a) Activities Promoting Safety- Enhancing vehicle safety b) Environmental Preservation Activities-Building environmentally and people friendly
vehicles.
•
Procurement Activities- Reasonable and sincere transactions
•
Toyota’s Corporate Social Responsibility: Toyota contributes to society by operating its
business in an open and fair manner. Through active public relations activities, investor
relations and philanthropy, TOYOTA aims to be a “good corporate citizen” that is trusted by
the international community.
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15. Property rights
•
Use and Management of Assets and Confidential Matters- Ensuring asset maintenance and
confidentiality management Toyota endeavors to manage and protect confidential information (e.g., its trade secrets) and to
use such information in an appropriate manner.
•
Intellectual Property -Toyota carefully analyzes patents and the need for patents in each area of
research to formulate more effective R&D strategies
E.g.: Policy is the licensing to other companies of patents in the area of hybrid
•
Human Relations Activities -At Toyota, human relations activities are constituted by a range of
voluntary activities aimed at improving the quality of teamwork and human relationships
between employees. These activities are held both within and outside the workplace, and helps
employees to create fulfilling lives and widen the circle of human interaction.
•
Toyota has been maintaining a people-centric culture that sustains consistent growth,
innovation, profitability, and excellence.
•
Encouraging problem solving at all levels of your organization
•
Making management accountable to employees
•
Turning HR department into the arbitrators of fair and consistent daily practices
•
They promote a policy of equal payment for each job and pay their employees well.
•
Using a top-down and bottom-up planning process to involve everyone in achieving
breakthrough goals.
•
The employees of Toyota realized that if they want to protect their property rights such as
keeping their jobs and benefits, they must internalize values and norms.
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16. Does the ‘culture’ support the strategy?
Lean is not sustainable without the culture to support it
The key for the Toyota Production System was the "Respect for Humanity" system.
Operational Excellence achieved through understanding people
The incredible consistency of Toyota s performance is a direct result of operational excellence.
Toyota has turned operational excellence into a strategic weapon. Toyota’s continued success
stems from a deeper business philosophy based on its understanding of people and human
motivation. Its success is ultimately based on its ability to cultivate leadership, teams, and
culture, to devise strategy, to build supplier relationships, and to maintain a learning
organization.
The Toyota Way - Sharing the Toyota Way Values
The Toyota Way, along with the Toyota
Production System, makes up Toyota s DNA. This
DNA was born with the founders of our company
and continues to be developed and nurtured in
our current and future leaders.
The Toyota Way has two pillars that support it:
Continuous Improvement and Respect for People.
Management Role: The management has taken effort in defining and explaining what the goal
is, sharing a path to achieving it, motivating people to take the journey and assisting them by
removing obstacles. They have engaged the minds of people to support and contribute their
ideas to the organization.
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17. Learning
•
Build quality into workplace systems
•
Eliminating huge costs of hidden waste
•
Turn every employee into a quality control inspector
•
Accept responsibility
•
Companies generally can’t predict when crises might occur. However, good internal risk
assessment programs can help identify those areas of the business where management should
be on the alert.
•
Robust risk management programs help a company address problems as they pop up on the
internal corporate radar screen – and before they explode in public.
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18. References
Books
•
The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer Hardcover
by Jeffrey Liker
•
Toyota Culture – The heart and soul of Toyota way by Jeffrey Liker
•
Case: Toyota Struggles With Organizational Structure , Case written by Berrin Erdogan, Carlene
Reynolds, and Talya Bauer to accompany Carpenter, M., Bauer, T., & Erdogan, B. (2009) in
Principles of management
•
Organization Theory, Design and Change by Gareth R Jones, Mathew(sixth edition)
Case study : How Toyota manages its environment (pg 93)
Case study: Toyota’s Paranoid Culture (Pg 207)
Case study: Toyota a learning organization (Pg 357)
Website
•
•
http://www.toyota-global.com/
The recovery of trust: case studies of organizational failures and trust repair (Toyota)
www.ibe.org.uk First published in February 2012.
•
Toyota Recall: Five Critical Lessons Posted by Michael Connor, January 31, 2010 in the magazine
– Business Ethics (The Magazine of Corporate Responsibility)
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