Chinks in the Vaunted Toyota Way Toyota's Case Study

Excerpt from Case Study :

Chinks in the Vaunted Toyota Way

Toyota's dominance of global auto industry has often been attributed to the culture of customer centricity supported by cultural values, systems and processes that permeate the company (Liker, 2003). When cultural values are strong enough, the roles of people, processes they need to manage and systems all combine to make challenging organizational objectives attainable (Nelson, Quick, 2008). The case study illustrates how successfully Toyota has been able to create a scalable, highly effective values-based framework that standardizes processes, eliminating the potential for error. Toyota has defined the intersection of people, processes and systems so they can continually be improved over time, mitigating risk and variation in each area as well. The Toyota Production System (TPS) is the framework that the company relies on for managing its supply chain, coordination, planning and execution throughout its manufacturing operations. Studies of the TPS indicate that the knowledge sharing is so pervasive throughout this loosely coupled framework of suppliers, that it is typical to see intelligence and knowledge transformed into competitive advantage over time (Dyer, Nobeoka, 2000). Toyota has learned how to transform collaboration and shared task ownership into several significant advantages, including reducing their time-to-market and through cross-supplier collaboration (Liker, 2003). The chinks in the Toyota armor are considered in the case to be from a lack of scalability and agility of the systems, processes and roles that comprise the TPS. The most glaring example of this is an analysis of competitor's cars to the component level where Toyota finds they are superior only 50% of the time, or every other component. That's a mediocre position for the company to be in, and one that requires strategic change to fix.

QUESTION 1. Describe Toyota's culture from the perspective of espoused values and enacted values.

ANSWER: The espoused values of the Toyota culture are captured in the fourteen Toyota Way principles mentioned in the case (Nelson, Quick, 2008) and expanded upon in a related book that explores each of the principles in detail (Liker, 2003). Analyzing the fourteen principles, the five dominant themes of long-term philosophy, the right process producing the right results, adding value to an organization by developing people, and how continuously solving root problems drives organizational learning (Liker, 2003). These five foundations groups illustrate the espoused values of the company and also are shown through analysis to be critical to the formation of the TPS (Liker, 2003) and the capacity of this network to create a knowledge sharing network over time (Dyer, Nobeoka, 2000). The foundation of the fourteen principles is based on a strong customer-centric culture throughout the company, which is what many consider to be its greatest strength in terms of staying agile or able to transform itself over time (Hannagan, 2004). As with many organizations however, there is a dichotomy or disconnect between espoused values and those that are enacted. The premise of the case study is based on the dichotomy of espoused quality values and the actual results being attained by the TPS and its suppliers (Liker, 2003). While there are many, many factors that contribute to this disconnect, the majority of them are based on processes over time becoming less relevant and useful to customers and the company itself (Davenport, 1992). Losing focus on the customer and their needs can quickly lead to confusion and a myriad of competing objectives and goals over time (Nelson, Quick, 2008). This is what happened to Toyota on the quality and customer-focused dimensions of their business.

QUESTION 2.Using the perspective of the functions of organizational culture, explain the impact of The Toyota Way.

ANSWER: The functions of organizational culture work together to enable greater stability, behavioral control throughout an organization, and also provide a strong sense of identity as well (Nelson, Quick, 2008). Often these three strategic aspects of culture are also defined in terms of the level of cooperation, control, commitment, decision making autonomy and quality, clarity of communication, and perceptual congruence throughout an organization. When these factors are applied to The Toyota Way, it is apparent that the functions of the organizational culture are very effective in galvanizing the many manufacturing, vehicle assembly, and marketing operations into a synchronized strategy to attain strategic plans and goals (Dyer, Nobeoka, 2000). Organizational culture as exemplified with The Toyota Way has also made it possible for the company to be self-critical of the processes that are not working and need improvement (Davenport, 1992). Kaizen, or continual improvement is a by-product of having an organizational culture honest and open enough to allow for both good and bad news to be communicated clearly and accurately (Liker, 2003). The functions of organizational culture also can dictate the drastic change and improvements are needed (Nelson, Quick, 2008). This is the case with the quality management problems Toyota faces in the context of the case study, and the evidence of 50% of their components being inferior to those of their competitors based on an analysis (Nelson, Quick, 2008). What makes the Toyota Way so innovative is the lack of focus on blaming and scape-goating and the focus instead on how to resolve a very challenging problem through shared communication, collaboration and trust (Liker, 2003).

QUESTION 3. Using the perspective of the effects of organizational culture, explain the impact of The Toyota Way.

ANSWER: The effects of organizational culture based on the fourteen principles of The Toyota Way are foundational to the future growth of the company and set the foundation for trust throughout the company's entire value chain (Liker, 2003). These effects include the ability of the TPS to on-board a supplier and within one year have them so well educated on internal processes they can quickly assist others on the specifics of order management, pricing and managing returns (Dyer, Nobeoka, 2000). The Toyota Way as a value-based framework for ensuring the TPS continually can scale and stay agile enough in meeting customers' needs without slowing down innovation enabled through cross-supplier communication (Hannagan, 2004). Toyota has also found that the greater the level of trust throughout and between their suppliers, the more galvanizing effect it has on the fourteen principles becoming engrained in their most critical business units as well (Liker, 2003). Trust is the galvanizing force that unifies the To9yota Way together, making it possible to communicate more clearly, accurately and efficiently than would have ever been the case before (Dyer, Nobeoka, 2000). For Toyota, the challenge is to make the effects of its organizational culture lead to greater resiliency and ability to overcome significant obstacles on the path back to being the world leader in auto manufacturing quality as well. The effects of culture are accumulative and difficult to change, unless there is a strong catalyst or driving force making a company re-evaluate its performance and perspective (Nelson, Quick, 2008). This is exactly what is happening to Toyota today. Their focus needs to be on re-energizing The Toyota Way and making it as effective as possible as a foundation for future growth.

QUESTION 4. What challenges does Toyota face as it attempts to maintain The Toyota Way while pursuing vigorous global expansion?

ANSWER: The greatest challenge will be educating and assimilating new suppliers, partners, employees, and members of the selling and distribution channels into The Toyota Way. Resistance to change is often the single leading cause of company initiatives failing over time (Nelson, Quick, 2008). Toyota will need to guard against this by concentrating on learning opportunities that promote autonomy of employees, mastery of a specific skill set, and purpose of learning to excel at the specific job. These three factors of autonomy, mastery and purpose have continually been shown to be foundational elements in ensuring the TPS stays focused on consistency of results while also ensuring a continual level of improvement (Dyer, Nobeoka, 2000). Toyota…

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