Sunday 2 September 2012
Monday 30 July 2012
Toyota - Institutionalizing Culture
Last month each of us was asked to prepare a 30 page handwritten
assignment on a company of our choice by Pundir Sir. A month later, our batch
now has a compendium of 145 companies, Indian and International.
Last week Prasad Sir had an idea – why don’t we open up our research to
the world? Let them visit our blogs to find information about their dream
company.
So here I am.
Overview
Toyota Motor Corporation is a multinational automaker headquartered in
Toyota, Aichi, Japan. In 2010, Toyota employed 317,734 people worldwide, and
was the world’s largest automobile manufacturer in 2010 by production. Toyota
is the 9th largest company in the world by
revenue.
The company was founded by Kiichiro Toyoda on 28th August, 1937 as a spinoff from his father’s company, Toyota Industries.
Following is a brief overview:
Key People: Fujio Cho
(Chairman)
Akio Toyoda (President and CEO)
Parent: Toyota
Group
Divisions: Lexus
Scion
Subsidiaries: Toyota India
Hino Motors, Ltd.
Daihatsu Motor Company Ltd
Toyota Financial Services
DENSO
Toyota Industries
Fuji Heavy Industries
Production: 7,308,039 units
Output
Revenue:
18.583 Tn Yen
Operating: 355.62
Bn Yen
Income
Profit:
283.55 Bn Yen
Total Assets: 30.650 Tn Yen
Total Equity: 10.550 Tn Yen
This phase of Toyota’s evolution was characterised by the foresight of
its founders. They first started a textile company and invented an automatic
handloom machine. After a trip to Europe, they realised that the future lies in
car-making. They sold the patent to their handloom and started the Toyota Motor
Corporation.
The Organisation – the Philosophy
Toyota’s organisation structure is a highly centralized one. It is a
family concern. Toyota’s board consists of 29 Japanese men, all of them company
insiders. The decision making is also rigid, with information flowing only one
way, back to Japan where all the decisions are made. Also, every country where
Toyota has an office in, has a Japanese boss. Such rigid power structure
results in a very high reaction time of the company to any issue that arises.
An example of this is the 8 Mn recalls it had to conduct in 2008 due to
unintended acceleration. No employee was authorized to make a decision like
this in any country. The company responded only when its US operations were in
jeopardy – it was confronted by Transportation Secretary Ray LaHood.
The company expanded rapidly in the 90s. Now we must understand that
Toyota had institutionalized what Japanese culture teaches – high discipline
and low wastage. But as the company grew, it was stretched across the globe.
Now each culture has its own way of working. So obviously Toyota’s culture was
diluted and the one thing it was built on was lost – reliability; and the rest
is history.
An other side of the story is the way it institutionalized culture.
Toyota has been hailed as the pioneer of the JIT, or Just In Time production system. Its founder,
Kiichiro Toyoda, wrote a book called The Toyota Way back in the 50s, and to this day that book is studied and applied,
either directly or indirectly, in almost every manufacturing concern in the
world.
The Toyota Way, and the resultant Toyota Production System, tries to design out overburden
(muri) and inconsistency (mura), and to eliminate waste (muda). There are seven kinds of muda that are
addressed in the TPS:
1. Waste of overproduction (largest waste)
2. Waste of time on hand (waiting)
3. Waste of transportation
4. Waste of processing itself
5. Waste of stock at hand
6. Waste of movement
7. Waste of making defective products
The elimination of waste has come to dominate the thinking of many when
they look at the effects of the TPS because it is the most familiar of the
three to implement. In the TPS many initiatives are triggered by inconsistency
or overburden reduction which drives out waste without specific focus on its
reduction.
This system, more than any other aspect of the
company, is responsible for having made Toyota the company it is today. Toyota
has long been recognized as a leader in the automotive manufacturing and
production industry.
It is a myth that "Toyota received their inspiration for the
system, not from the American automotive industry (at that time the world's
largest by far), but from visiting a supermarket." The idea of
Just-in-time production was originated by Kiichiro Toyoda, founder of Toyota. The question was how to
implement the idea. In reading descriptions of American supermarkets, Ohno saw
the supermarket as model for what he was trying to accomplish in the factory. A
customer in a supermarket takes the desired amount of goods off the shelf and
purchases them. The store restocks the shelf with enough new product to fill up
the shelf space. Similarly, a work-centre that needed parts would go to a
'store shelf' (the inventory storage point) for the particular part and 'buy'
(withdraw) the quantity it needed, and the 'shelf' would be 'restocked' by the
work-centre that produced the part, making only enough to replace the inventory
that had been withdrawn.
While low inventory levels are a key outcome of the Toyota Production
System, an important element of the philosophy behind its system is to work
intelligently and eliminate waste so that only minimal inventory is needed.
Many American businesses, having observed Toyota's factories, set out to attack
high inventory levels directly without understanding what made these reductions
possible. The act of imitating without understanding the underlying concept or
motivation may have led to the failure of those projects.
Jidoka, in Japanese, means
automation. At Toyota, it means “Automation with a human touch”. This principle of designing equipment and processes to stop and call
attention to problems immediately when someone senses a problem is a central
concept of TPS.
Following the TPS involves continuous improvement
and innovation by continuously optimizing the thought
processes that go into designing
business solutions. Its principle of Genchi
Genbutsu emphasizes
going to the source to find the facts and then making correct decisions.
Vision and values
One of the work ethics Toyota follows is basing the management decisions on a long term philosophy, even at the
expense of short-term financial goals.
On these lines, Toyota adopted the Global Vision 2020 in 2007, based on
its guiding principles:
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 challenging goals by
engaging the talent and passion of people,
who believe there is always a better
way.
I recently read that a vision statement must be unattainable and
inspirational; unattainable so as to make it everlasting, to make people
continuously in pursuit of it.
Product and Market Mix
 |
| Toyota RAV4 Electric |
 |
| Toyota Prius Hybrid |
 |
| Toyota Corolla |
 |
| Toyota 4Runner |
 |
| Toyota Pickup |
Toyota’s product line, across geographies and models, consists of Electric Technology, Cars, SUVs, Crossovers, Electric Hybrid vehicles and Pickup Trucks. It also sells Plug-in Hybrids and All electric vehicles.
Its manufacturing facilities are spread across the globe. It has
manufacturing facilities in North America (Toyota Motor North America) and
Canada. It also has nine manufacturing plants in Europe (Toyota Motor Europe):
UK, France, Portugal, Poland, Turkey, Russia and the Czech Republic.
 |
| Toyota Venza Crossover |
In India, Toyota operates in an 89:11 partnership with Kirloskar India
Ltd. (Toyota Kirloskar Motor Pvt Ltd). The company is headquartered in
Bangalore, Karnataka and has two plants there: at Bidadi and Bangalore. The
total manufacturing capacity of both the plants combined is
150,000 vehicles per annum. On 16th March, 2011 the company announced plans to hike production capacity to
210,000 units due ti high demand of its models Etios and Fortuner.
Toyota’s slowing global sales have put it behind GM into the no.2 worldwide
sales position. But GM’s advantage is tiny based on unit sales.
Toyota’s US market share is 13.3%, as against Japan
where it enjoys 45.8% of the market share. Toyota’s market share in India is a
measly 3%. However, Toyota plans to increase this figure to 10% in the next 6-7
yrs, hence the measures described above.
Corporate Social Responsibility
“Seeking Harmony between People, Society and the
Global Environment, and Sustainable Development of Society through
Manufacturing”
Toyota puts it like this in their own words:
We, TOYOTA MOTOR CORPORATION and our subsidiaries, take initiative to
contribute to harmonious and sustainable development of society and the earth
through all business activities that we carry out in each country and region,
based on our Guiding Principles.
We comply with local, national and international laws and regulations as
well as the spirit thereof and we conduct our business operations with honesty
and integrity.
In order to contribute to sustainable development, we believe that
management interacting with its stakeholders as described below is of
considerable importance, and we will endeavour to build and maintain sound
relationships with our stakeholders through open and fair communication.
We expect our business partners to support this initiative and act in
accordance with it.
We also participated in the formulation of and observe the standards
outlined in the Charter of Corporate Behaviour of the Nippon Keidanren (Japan
Business Federation), an alliance of Japanese leading corporations.
Awards and Distinctions
Toyota is known for its quality standards. Every year, JD Power and
Associates recognises the best assembly plants in the world. The competition is
fierce and Toyota has been a consistent winner.
It won the JD Power and Associates Gold Plant Quality Award in 1991,
1995, 1996, 2001, 2010 and 2012. In 2011, it also won the JD Power and
Associates Platinum Plant Quality Award.
Toyota production facilities took the top three Asia Pacific honours
including the Platinum Award, a global award that goes to the best plant
overall regardless of region, which went to Higashi-Fuji, Japan plant.
The Toyota nameplate finished sixth overall with 101 PP100 and had a 3
PP100 improvement. It also earned four segment awards overall. 4Runner was tied
Following are some links regarding the same:
Observations and Analysis
Any organisation is like a tree, whose values form the roots of the
organisation.
With huge expansions in the 1990s, Toyota lost touch with its culture in the overseas markets. A rigid
corporate structure, with control residing in Japan, made the matters worse.
The no. of recalls in 2008-09 suggests how far Toyota has moved from its
principles on a thought process level.
Going forward, Toyota must develop a system which can be followed across
boundaries to align its business units with its philosophy.
The decision making needs to change as well. Steps like reducing the
board of directors from 27 to 11 are a good start. The control needs to be passed on to regional heads
to capitalize on their regional knowledge and to improve reaction times.
Emerging markets present a huge opportunity, though they
still form only 40% of the company’s sales. However, Toyota must make the most
of it. In the markets where it already is a big player, it must aggressively
work on rebuilding its image as a reliable auto maker, something that helped it
surpass GM for a while in the later half of the last decade.
Whether or not this is going to work for the
company, no one really knows. However, it is a better plan than just sitting
around and waiting for the mess of recalls to fix itself, and by doing so they
are making a point to the public that they can bounce back and improve the
quality of their vehicles.
Total Links: 8
Videos: 1
Sunday 22 July 2012
Monk(ey)ing Away...
So we saw a video in the last class. I don't know about everyone, but I found it interesting. It was a nice departure from the normal text-book study method, and that's true about the whole POM course here in NITIE. In fact, that's what an MBA education should be, because a picture is worth a thousand words. Coming back to the movie...
It is about three Chinese monks who live in a monastery on the top of the mountain. It's really fun to watch.
Background
After the cultural revolution and the fall of the political Gang of Four in 1976, the film was one of the first animations created as part of the rebirth period. It is also referred to as The Three Buddhist Priests. The film is based on the ancient Chinese proverb "One monk will shoulder two buckets of water, two monks will share the load, but add a third and no one will want to fetch water." If you watch the film, you'll notice that the film does not contain any dialogues, allowing it to be watched by any culture, and a different music instrument signifies each monk. It was released in 1980.
Interpretation
When the 1st monk was alone, he was solely responsible for whatever happens at the temple, and hence did his work diligently. Here the productivity was maximum as there were no distractions and no opportunities to shun responsibility.
Then a 2nd monk enters the picture. This leads to the 1st monk trying to kart off the work to the 2nd monk, who soon realizes what's going on. So they come up with a solution where both of them carry a single bucket. Here it can be observed that the productivity has reduced as they can carry only a single bucket in one pass. This could have been avoided if they both had assumed responsibility and had come up with a solution like each bringing 2 buckets of water on alternate days.
In any case, this is an example of continuous innovation. When the circumstances changed, the process was changed too so that the result could be optimised.
During the course of my employment I have worked with people from at least 5 different nationalities, and I have learned that it is not often that two people have similar opinions about people and situations. Everyone on my ship was almost equally competent and experienced and being more qualified was certainly not enough to persuade them to go about working in a certain way.
When asked in class about the solution to the problem of sharing load, a lot of them came up with different solutions. But the best solutions are always the simplest ones. here too the solution was quite simple - measure the centre using a scale.
Towards the end we see that the monastery catches fire. When this happens, all the monks forget their hostility and try to put out the fire. The dilemma of who will carry the water was quickly forgotten and a system arose out of the initial chaos. They all put out the fire quickly. Drastic innovation adds an altogether new dimension to the process and fundamentally changes it. That's what the monks did when faced with the fire at their temple.
Many a times crisis situations are encountered where any kind of system is in place. I myself faced several of those when I was working on ships. However, every time the crisis hit, the entire team came together to solve the issue and take the ship back to the normal state. Forgotten were the hierarchies; gone were the differences. In one instance, the ship's crew fought fire for 52 hours non-stop. Not only the ship's entire crew came together, but a ship passing nearby also lent it's help in the form of human resources.
In the end we see that the monks resolve the situation by fixing a pulley and dividing their roles - hooking the bucket, roping it in and transporting to the monastery. A fairly simple solution!!
And before you leave, I must tell you that this film won a few awards too:
It is about three Chinese monks who live in a monastery on the top of the mountain. It's really fun to watch.
Background
After the cultural revolution and the fall of the political Gang of Four in 1976, the film was one of the first animations created as part of the rebirth period. It is also referred to as The Three Buddhist Priests. The film is based on the ancient Chinese proverb "One monk will shoulder two buckets of water, two monks will share the load, but add a third and no one will want to fetch water." If you watch the film, you'll notice that the film does not contain any dialogues, allowing it to be watched by any culture, and a different music instrument signifies each monk. It was released in 1980.
Interpretation
The movie can be interpreted to understand certain management principles too.
When the 1st monk was alone, he was solely responsible for whatever happens at the temple, and hence did his work diligently. Here the productivity was maximum as there were no distractions and no opportunities to shun responsibility.
Then a 2nd monk enters the picture. This leads to the 1st monk trying to kart off the work to the 2nd monk, who soon realizes what's going on. So they come up with a solution where both of them carry a single bucket. Here it can be observed that the productivity has reduced as they can carry only a single bucket in one pass. This could have been avoided if they both had assumed responsibility and had come up with a solution like each bringing 2 buckets of water on alternate days.
In any case, this is an example of continuous innovation. When the circumstances changed, the process was changed too so that the result could be optimised.
During the course of my employment I have worked with people from at least 5 different nationalities, and I have learned that it is not often that two people have similar opinions about people and situations. Everyone on my ship was almost equally competent and experienced and being more qualified was certainly not enough to persuade them to go about working in a certain way.
When asked in class about the solution to the problem of sharing load, a lot of them came up with different solutions. But the best solutions are always the simplest ones. here too the solution was quite simple - measure the centre using a scale.
Towards the end we see that the monastery catches fire. When this happens, all the monks forget their hostility and try to put out the fire. The dilemma of who will carry the water was quickly forgotten and a system arose out of the initial chaos. They all put out the fire quickly. Drastic innovation adds an altogether new dimension to the process and fundamentally changes it. That's what the monks did when faced with the fire at their temple.
Many a times crisis situations are encountered where any kind of system is in place. I myself faced several of those when I was working on ships. However, every time the crisis hit, the entire team came together to solve the issue and take the ship back to the normal state. Forgotten were the hierarchies; gone were the differences. In one instance, the ship's crew fought fire for 52 hours non-stop. Not only the ship's entire crew came together, but a ship passing nearby also lent it's help in the form of human resources.
In the end we see that the monks resolve the situation by fixing a pulley and dividing their roles - hooking the bucket, roping it in and transporting to the monastery. A fairly simple solution!!
Humans have a propensity to stay the same. However, that's not how nature works. As they say - Change is the only unchanging phenomena in this world. In keeping with this, it is important that new ways of improvement are continuously implemented. Change should not be the last resort.
And before you leave, I must tell you that this film won a few awards too:
- Won the outstanding film award at China's Ministry of Culture.
- Won the Best animated film prize at the first Golden Rooster Awards in 1981.
- Won four international awards including a Silver Bear for Short Film at the 32nd Berlin Film Festival in 1982.
Monday 16 July 2012
Goal Setting and Management - Tower Building
Never thought building a tower with small wooden cubes could be so enlightening. But as I said before, leave it to Prasad Sir to find a lesson in anything.
This time we were given the following table and asked to write our analysis in the last row.
Discussion related to the various factors given above
Gap if any between Tower height Performance so far achieved and Achievable performance of tower (Factor 3 and 7)
In Sc1, the height achieved was equal to the achievable height. Though the target was achieved and the management might be commended, the limits of productivity were not pushed and hence potential was wasted.
In Sc2, even the achievable performance was not reached. This shows poor planning and wastage of the collective intellectual resources of the team.
In Sc3, scenario 2 is repeated but with a greater intensity. The result is same, that is the team did not utilize their full potential and performed below expectations.
In Sc4, the above scenarios are repeated with the worst effect as the gap between their actual and achievable performance was the greatest.
Gap if any between goal proposed by the manager and mutually agreed goal by team (Factor 4 and 6)
In any scenario, the goal that a manager sets for his personnel would be higher or equal to the goal that the team sets for itself. This is due to the presence of people with diverse background, experience, knowledge and judgement.
In Sc1, not only the overall aspirations of the group are low, the target set by the team is even lower. This organisation is headed for some very tough times ahead as the competition only gets tougher.
In Sc2, the manager is able to convince the team regarding the potential of the group and consequently the target set by the manager is not lowered by the team. I would say this scenario is the best one out of all the four given scenarios.
In Sc3, though the aspirations are high, the manager is not able to convince the team of their own potential. It should be remembered all the while that it is the manager who is responsible for the team's performance; in fact that is his Raison d'être.
Sc4 represents a grave situation for the organisation as not only the team, but also the manager has very low sense of the true potential of the organisation. Such companies, despite being extremely promising, would fade out in today's fast-paced world.
Gap if any between goal proposed by the manger and the goal proposed by the worker(Factor 4 & 5)
Gap if any between achievable performance and potential tower (Factor 3 and 8)
This time we were given the following table and asked to write our analysis in the last row.
Discussion related to the various factors given above
Gap if any between Tower height Performance so far achieved and Achievable performance of tower (Factor 3 and 7)
In Sc1, the height achieved was equal to the achievable height. Though the target was achieved and the management might be commended, the limits of productivity were not pushed and hence potential was wasted.
In Sc2, even the achievable performance was not reached. This shows poor planning and wastage of the collective intellectual resources of the team.
In Sc3, scenario 2 is repeated but with a greater intensity. The result is same, that is the team did not utilize their full potential and performed below expectations.
In Sc4, the above scenarios are repeated with the worst effect as the gap between their actual and achievable performance was the greatest.
Gap if any between goal proposed by the manager and mutually agreed goal by team (Factor 4 and 6)
In any scenario, the goal that a manager sets for his personnel would be higher or equal to the goal that the team sets for itself. This is due to the presence of people with diverse background, experience, knowledge and judgement.
In Sc1, not only the overall aspirations of the group are low, the target set by the team is even lower. This organisation is headed for some very tough times ahead as the competition only gets tougher.
In Sc2, the manager is able to convince the team regarding the potential of the group and consequently the target set by the manager is not lowered by the team. I would say this scenario is the best one out of all the four given scenarios.
In Sc3, though the aspirations are high, the manager is not able to convince the team of their own potential. It should be remembered all the while that it is the manager who is responsible for the team's performance; in fact that is his Raison d'être.
Sc4 represents a grave situation for the organisation as not only the team, but also the manager has very low sense of the true potential of the organisation. Such companies, despite being extremely promising, would fade out in today's fast-paced world.
Gap if any between goal proposed by the manger and the goal proposed by the worker(Factor 4 & 5)
The manager in the first three scenarios seems to be Theory Y manager; he assumes that the employees are highly motivated and enthusiastic and sets a high target for them.
In Sc1, the employees are either complacent or are not confident or trusting of their own capabilities.
Same is the case with Sc2 and Sc3 also. The employees have the same attitude as above.
In Sc4, while the goal set by the manager is low, the workers have high faith in their abilities and are highly motivated, and hence set a higher goal for themselves.
Gap if any between goal proposed by the worker and mutually agreed goal by team (Factor 5 and 6)
Sc1 shows that while the goal set by the workers is low, manager has been able to motivate them to some extent and the final target lies somewhat in the middle.
Sc2 shows a leader present as a manager. He has been able to convince workers who are either very lazy or highly under-confident.
Sc3 also shows that though the manager has set higher goals, the workers have been able to get them reduced to a level they feel achievable.
Sc4 depicts what can be called a poor management. Though the workers have set a high target for themselves, the manager has been unable to appreciate the capabilities of his own team. These managers are always an anchor weighing down the performance of the company and eventually even the workers become complacent.
Gap if any between achievable performance and potential tower (Factor 3 and 8)
Everyone in this world has infinite potential. So "achievable" is just the limit that is set in the minds and not in the real world. In all the scenarios, the performance potential is higher than the actual performance that the company would be able to deliver.
Gap if any between actual performance achieved and goal mutually agreed by manger and the worker (Factor 6 and 7)
In Sc1 and Sc4 the expectations are exceeded as the actual height is more than the height previously envisaged.
In Sc3 it is exactly equal while in Sc2 the height has actually reduced. This might probably be due to the unrealistically high expectations by the manager of his employees. A manager should have a correct estimate of his team's capacities and capabilities.
Gap if any between actual performance achieved and achievable goal (Factor 7 and 3)
Barring Sc1, the achievable goal is higher than the goal finally achieved, in varying degrees. It is a manager's job to properly assess the capacities and capabilities of his team and set goals accordingly so that an optimum, but increasingly higher, balance is reached between team's potential and actual performance.
Gap if any between actual performance achieved and the potential (Factor 7 and 8)
The actual performance of the team is the sum total of the assessment of the manager of his team and himself, and the self-assessment of the team of the organisation's capacities and capabilities. Care has to be taken at every step of the way - assessing, planning, target setting and execution - so that the final result is as high as possible. Ultimately it should lead to an ever upward spiral towards the potential.
Saturday 14 July 2012
Lord of the Rings..
Recently Prasad Sir introduced us to a strange looking contraption hanging from the ceiling on the Teacher's Terrace, and we were supposed to identify the problem and then solve it.
Often during the course of life a lot of problems present themselves, and then not so often there are problems that really test us. We normally solve these problem through our experience and judgement and move on to the next one in line, 'coz believe it or not, there IS a line, whether we see it or not. So in a sense we all are managers by birth. But a true manager is one who can not only solve the problem presented to him, but can also identify the problem that might not be so obvious, or even anticipate the problem before it comes into being.
I believe that is the sole purpose of the course I am going through here.
Anyways, back to the interesting puzzle. We were taken to the terrace and asked to look around and, no prizes for guessing, people had already noticed the hanging wooden toy from a distance.
A child might enjoy playing around with it, but leave it to Prasad Sir to find teaching in everything. So we were told there's a problem hidden.
Being bright students that we are (:P), one of us quickly suggested that we try to take the ring off the toy.
And then the fun began. People did try, got bored and went off. Now don't underestimate the curiosity of India's future leaders, 'coz a lot of them came back later and solved it.
Here's how I did it. To remove the ring:
- Raise the ring as high as it would go and hold it there.
- Move one of the wooden squares to the other side by passing it through the slit in the top part.
- Bring both the squares together by moving the thread.
- One of the balls will still remain stuck after its square block is taken to other side.
- Lower the ring, tilt it and remove through the slit and the ball.
- Pass the ring through the slit back onto the square
- Raise the ring as high as possible.
- Pass one of the wooden squares through the slit and to it's correct side.
So it can be said that it's not only important to be a goode problem solver, but an excellent identifier as well.
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