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• Organization and Leadership Evaluation at Toyota Motors

  1. Description of Toyota

  Toyota Motor Corporation, based in Toyota city, Aichi, Japan, was incorporated in Japan in 1937. As an employee of Toyota, and a test driver of new models, I have had firsthand experience with the company’s superior styling, comfort and high performance products. I believe that Toyota’s global position as leader, key designer and producer of passenger cars, minivans, commercial vehicles, related parts and accessories will continue in the long term.  Growing clientele in global markets such as North America, Europe, Asia and Africa and large portfolios, namely Lexus, Daihatsu and Hino will continue to dominate the auto industry for years to come. According to Madoh, Alenazi, Alkhamees & Panwar (2019), Toyota ranks first in auto manufacturing and is the eighth largest company in the world. Presently, the company’s annual revenue is in excess of $213 billion with a production line overseen by 364,445 people as of 2017.

  1.1 Company Objectives

  Greenspan (2017) summarizes Toyota’s mission statement into six strategic objectives as follows:

  • Deliver world-class products with technologies that promote safety of customers.
  • To enhance optimization of energy and infrastructure to local communities
  • Produce cars that captivate, inspire, and refresh customers.
  • Implement the “Genchi-genbutsu” ideology to meet the needs of various segments.
  • Foster mutual trust with partners, pioneer new technology and improved technical capabilities.

  Empower local communities by upscaling research and development functions in various markets.

  1.2 Three leadership practices of current leader

  Ethnography research: Toyota, through its business executive, president and current leader, Akio Toyoda has succeeded in cascading its lean management practices beyond employees into customer experience through strict adherence to the “genchi genbutsu” approach. The loosely translates to “go and see”, is implemented by leaders who prefer to capture customer experience in the field rather than stay in the office analysis metrics, trends and data. In characteristic “genchi genbutsu” fashion, Mr. Toyoda perpetuates the company’s strategic intent to perceive the customer as part of the company, Mr. Toyoda and his team of anthropologists regularly visit customers in their work stations and residences to understand how they live, act, and interact with company products as a basis of improvement. Such interactions inform design and functional adjustments on the products to meet specific customer needs.

  Management by walking around:  Mr. Toyoda has manages his workers by wandering through the workplace, having random discussions with employees on the factory floor, the issues on the ground and possible solutions.

  Covert executive programs: The company chief executive has infused a culture which enables senior employees to make clandestine appearance at the factory floor for work so as obtain first-hand experience of customers and juniors.

  Journey mapping: Toyota under the leadership of Mr. Toyoda habitually does on journey mapping visits to customers to work with them to gain insight into their work procedures, their sentiments, and desired outcomes. Such interactions inform design and functional adjustments on the products to meet specific customer needs.

  • How the current leader has affected organizational culture

  Principally, the leader has sustained constancy of purpose toward improvement and service. Consequently, he has constantly resisted the urge for quick short term rewards and always pursues for long term goals. For instance, Mr. Toyoda maintained a “no layoff” culture during mass product recalls (Netland, Powell & Hines, 2019). Instead he urged workers to work harder for a return to profitability. Similarly, the leader adopted a new philosophy that utilizes transformative power of leadership to reorient culture. Consequently, he does not personalize, blame, or punishes employees. Instead he sees systemic problems, not problems in people; he applies leadership in pursuit of change, to transform the system, as a strategy for achieving long term profits (Hawkins, 2017). Correspondingly, the leader has effected less dependence on mass inspection and systematically emphasized on quality. In so doing, the company has maintained a much smaller inspectorate department compared to production. Netland, Powell & Hines, (2019) perceive this is a sign of the leader’s confidence in quality standards which he believes will erase the need for inspection in future.  In the same way, the leader promotes healthy relations with suppliers and customers. Under Mr. Toyoda’s leadership, suppliers, customers and workers are treated as integral members of the Toyota family. Thus, they are handled with trust and friendship (Netland, Powell & Hines, 2019). Mr. Toyoda’s leadership has also brought a culture of continuous process improvement of the system, quality and decrease diseconomies of scale. Further, on the job training has proved effective for enhancing employee productivity. It also encourages a culture of objectivity. Still, the company has entrenched practice supervision with the aim of enabling people, machines and implements to perform optimally. In so doing, the leader has banished blaming, personifying, and punishing others from the company edit. For instance, Mr. Toyoda did not apportion blame during the mass recall in of cars in 2011. He accepted blame as the leader of the system, and took steps to restore Toyota’s brand image (Hawkins, 2017). Further still, the CEO drives out fear by instilling the basic understanding fear that breeds bad data and bad data is in turn processed into bad information. Fear drives out objectivity, and employees working under duress will withhold vital information that could have transformed the company (Hawkins, 2017). Also, Mr. Toyoda’s leadership has broken from departmental barriers by looking at the company as a system, not a disjointed corporate complex. Finally, Mr. Toyoda succeeded in ridding Toyota of slogans, and targets such as “zero defects”, “new benchmarks” as they promote adversarial relationships (Hawkins, 2017).

  1. SWOT analysis

  2.1 Strengths

   Strong market position and brand recognition

  Toyota Corporation as the largest automaker by portfolio size has maintained a commanding market share and brand name globally. For instance, the market penetration in the Japan for Toyota and Lexus brands stood at 45.5% in the 2012 fiscal year (Nkomo, 2013). By the same token, the company robust product marketing strategy has yielded an impressive  market share of 12.2% in the United States and Canadian markets, a further 13.4% market share in eastern sub regions of Asia such as Hong Kong,  Macau, Mongolia, North Korea, South Korea, and Taiwan. In addition, Toyota’s clientele is growing in Europe where it has exceeded 4.3% market.  Similarly, the company has gained traction in the Chinese market with a market share of 7% and is rapidly growing in Oceania, Africa, South America, Central America and the Middle East regions. From the vantage of a strong market position, the company has the capacity to protect its competitive edge to entrench its dominance in various markets to new markets (Madoh, Alenazi, Alkhamees & Panwar, 2019).

   Extensive production and distribution network

  Toyota has engendered a global production and marketing network. Nkomo (2013) notes that with Toyota’s extensive network of 50 affiliates and manufacturing plants in 27 countries, Toyota supplies more than 7,435,781 vehicles globally, in addition to 3,940,000 automobiles in Japan and an additional 3,495,000 cars in other production sites. Further, the company has a wide marketing and distribution network aided by its geographical spread, product differentiation and spreading of risks, and a wider reach which essentially improves sales (Nkomo, 2013).

  2.2 Weaknesses

  Product recalls could affect brand image

  Toyota has been hit by massive product recalls in recent years. In 2 011, the company recalled 111,000 cars and Lexus models as a result of substrate elements and erratic hybrid systems (Nkomo, 2013). In subsequent years, the company recalled a further 181,000 automobiles in Japan due to oil leakages and uncharacteristic sounds emanating from loose bolts in sub transmission components  and the irregular torque vectoring.  In the same way, the company became the subject of a government probe into the recalls.  A February 2012 preliminary investigation by the National Highway Traffic Safety Administration to ascertain claims of defective power window master switch in the driver’s door in 2007 Camry and RAV4 models further whittled the company’s credibility (McDermott, nd). Potential penalties from future probes could also hurt the company’s bottom line.

  Poor allocation of resources as compared to peers

  Survey of investment data reveals Toyota’s comparatively low return on equity (ROE) and return on assets (ROA) in relation to its competitors. The same data also show Honda Motor and Nissan Motor gaining ground with ROE of 4.8% and 8% respectively (Nkomo, 2013) as Toyota's ROE remains 2.7% in 2012. Inferentially, with regard to shareholder confidence, Lower ROE and ROA indicate that the company is not using the shareholders' money to generate high returns for them. In the long run, this could cause irretrievable damage to shareholder worth and confidence

  2.3 Opportunities:

   Growing global automotive industry: Toyota showed remarkable resilience to stave off the impacts of the 2008-2009 economic and financial crises. For instance, from 2011 the company rebounded with a growth of 8.9% in 2012 to peak at $1,563.9 billion (Nkomo, 2013). Toyota effectively leveraged on this recovery to gain more customers and salvage its balance sheet.

  Growing partnership with BMW: Toyota’s strategic partnership with BMW in December 2011 to deliver sustainable mobility to their customers has yielded new inventions in the area of fuel efficiency and mutual development of fuel cell system, design of architecture and parts of a sports vehicle, and further explorations in the field of lightweight technologies (Nkomo, 2013). Moreover, BMW Group and Toyota have a binding agreement to escalate collaborative study and research on lithium-air batteries, to stimulate ecofriendly emissions. Further collaboration on power-train electrification and joint research and development on lightweight technologies have also been realized. Presently, the synergy has resulted in result had significant cost-cutting effects on the customer, and a marginal increase in profit (Li, 2018). In addition, a healthy price plasticity of demand has seen demand for Toyota vehicles rise due to this partnership.

  2.4 Threats

  Strong competition: Globalization and consolidation of market share in external markets presents a significant challenge to Toyota. In light of the moderate to high concentration ratio in many external markets, except Africa, the oligopolistic outlook portentously means that market share is still attainable for competitors (Madoh, Alenazi, Alkhamees & Panwar, 2019).  The net effect of enhanced competition is that vehicle unit sales when large inventory comes into play, may further dilute the benefits of economy of scale. 

  Natural disasters could impact production structure: with over half of its production plants in Japan, an area characteristically prone to seismic activity and other natural disasters could affect the company in future. Japan is also known for disruptions from floods. According to Nkomo (2013), the country has been on the receiving end of devastating earthquakes in recent. In 2011, the Tohoku earthquake, brought production to a halt, causing a further loss of an estimated 150,000 cars in Thailand. Similar could cause have a debilitating influence in production as work stoppages cause revenue plunge (Nkomo, 2013).

  1. Leadership Evaluation of current Toyota Company President

  Mr. Akio Toyoda’s has consistently portrayed the transformation leadership style. Consequently, this approach is analyzed.

  3.1 strengths of the Leader

  Charismatic, intellectually stimulating, and transformative personality

  The Toyota President has distinguished himself over the years as a man of unbridled passion for success. His high standard of moral and ethical conduct naturally augments his transformative credentials (Steers & Shim, 2013). He has also put forth a radical vision for the future and has repeatedly questioned the company’s norms. A case in point was his decision to abandon the “kakushin” or “revolutionary change” which his predecessors had favored in the redesigning plants and operations. His aversion to Toyota’s penchant for high technology, costly production processes, and overly expansionist approaches also cemented a shift to lean management, as decision making is synonymous with very few top executives. Toyoda’s new focus is on building high quality and affordable vehicles for the middle and low-end consumer. Toyoda’s emphasis has also been on superior styling and performance and is evidenced by willingness to effect far-reaching design changes (Netland, Powell & Hines, 2019). To achieve this goal, Toyoda repeatedly cascades intent to the lowest worker on the production floor. 

  Strong drive for achievement

  One example of this was seen in Toyota’s global leadership in production of hybrid cars. The hybrid varieties were championed by the leader to fulfill customers’ desire for high performance engines and high fuel efficiency. His response to failure during the mass recalls of 2011, his speeches to customers in the aftermath, and return to productivity showed strength of character and a strong desire for success Steers & Shim, 2013). As a hands-on leader, Mr. Toyoda has taken the “genchi genbutsu” or “see it for yourself” ideology to new levels as was the case when he visited Toyota dealership in Ann Arbor, Michigan to personally inspect the recall of pickup trucks (Tabuchi & Maynard, 2009).

  Hands on Leadership

  As a transformative leader, Mr. Toyoda has maintained perpetual presence among employees and customers. In this role, he has maintained constant communication with them on strategies to improve quality in the production line. As a result, Mr. Toyoda is a routine visitor on site, at dealerships, production plants and loading areas. 

  3.2 Weaknesses of current leader

  Mr. Toyoda’s weaknesses vastly reflect inherent challenges with the transformational leadership style.

   Assumption of Motivation

  Mr. Toyoda’s style presumes that they have support of subordinates and shared common goals. He also assumes that subordinates will always share his outlook, vision, and goals. In practice, this has proved unattainable as dynamics in the market may dictate a shift in approach (Hall, Johnson, Wysocki & Kepner, 2002). Lack of awareness on his part, and fidelity to company tenets may render change impossible as the production staff and the leader are out of sync.

  Prioritization and Personalization of Power

  Implementation of lean management principles at Toyota has bequeathed the leader with a small cohort of individuals on whom leadership responsibilities rest (Hall, Johnson, Wysocki & Kepner, 2002). Whereas this approach could lead to high number of quality trainings, other team members may be left out as preferred individuals’ benefit.

  Unidirectional Influence

  As a transformative leader, Mr. Toyoda constantly influences his team to do pursue organizational goals. In the grand scheme of things, the organization remains the biggest beneficiary of employee output and critics may construe the one-dimensional style of management to be dictatorial (Hall, Johnson, Wysocki & Kepner, 2002). Secondly, transformational leaders’ positive outlook as principal motivators and influencers of change may sideline them from subordinates. Moreover, their overenthusiastic demeanor may predispose them to ignore deep-rooted human resource issues (Hall, Johnson, Wysocki & Kepner, 2002). Further, their outlook may be difficult to replicate as well as denying the leader opportunity for introspection.

  3.3 Actionable items to improve effectiveness of current leader

  Moderation of transformational leadership approach with direct leadership:  Mr. Toyoda’s transformational style can be most effective if moderated with direct leadership style as research promotes this approach in manufacturing sector (Mesu, Sandes, van Riemsdijk, 2015).

  Incremental Delegation of Tasks: Whereas lean leadership has proven effective at Toyota, in principle, the leader should consider delegating tasks in an incremental manner, to enhance task-related decision-making (Gözükara & Şimşek, 2015). This will also achieve job autonomy which may effectively improve various portfolios the Toyota hierarchy.

  Systematic disassembly of highly hierarchical structure: The Company’s leadership structure has vested decision making power in the hands of the leader and few associates (Hall, Johnson, Wysocki & Kepner, 2002). The leader should instigate further change at the company to include more top leadership.

   

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