Reinvent or Invent Continuous Improvement,

Reinvent or Invent

Continuous Improvement, the Quest for Number One, and Coming Back from the (Bankrupt) Dead -- Company and Product Reinvention at Toyota, Home Depot, and Delta Airlines

Reinventing a company's image can be as difficult or almost as difficult as creating a new company from scratch. This is especially true if the company has experienced a kind of brand death or stagnation in its product lifecycle. The reasons for such problems can be complex. Perhaps the company has grown bereft of new ideas. Perhaps it has become out of touch with new technology or the needs of its core consumer base. Perhaps it has become entrenched in outmoded organizational standard operating procedures. Perhaps it has lost the support of its higher level or lower level management and employees. Perhaps it faces new competition, or has expanded beyond its capacity. The reasons for a company's struggles and subsequent loss of revenue can be due to an image problem, problems with the product or the product's image, or a combination of a variety of these difficulties.

Companies usually make a strategic choice, after evaluating the reasons for the company's problems, to focus on reinventing the company's core product or the organization as a whole. The Toyota Motor Company has always focused upon the latter. Indeed, one of the most extraordinary aspects of Toyota is its focus on continuous improvement of all standard operating procedures, to eliminate waste, and to constantly set a new standard of excellence for itself. Toyota is always in competition, not simply with other manufactures like General Motors and Toyota, but with itself. Most companies that are successful stick to a basic, tried-and-true formula, until changes in consumer taste, rising costs of operation, or new technology force them to vary this formula. Despite the fact that it has now trounced the once-dominant GM, and profits and praise are heaped upon it while other car companies quake in fear, the company maintains a rigorous, self-scrutinizing image. In a March 5, 2007 interview with BusinessWeek, Toyota President Katsuaki Watanabe said he feared that Toyota might grow complacent ("Why Toyota Is Afraid of Being Number One," BusinessWeek, 2007)

Toyota has mastered what the American public wants, as evidenced by the Rav4 and the Camry's success, but it has been also successful in retooling its image. "With a deft combination of marketing, public relations, and lobbying, Toyota has done a remarkable job over the past 20 years of selling itself as an American company. Toyota is afraid to be No. 1 -- or at least what that implies. And not just because one of its slogans is 'Run scared.' it's because the extra scrutiny could undo much of the hard work of the past 20 years. 'We constantly need to think about the potential backlash against us,' Toyota CEO Katsuaki Watanabe [said]...It's very important for our company and products to earn citizenship in the U.S. We need to make sure we are accepted' [by the American public]" ("Why Toyota Is Afraid of Being Number One," BusinessWeek, 2007). The company is sensitive to anti-Japanese sentiment, given the struggles in Detroit, and to prevent a consumer backlash, the company is targeting the American heartland, not simply with car commercials but with community outreach programs.

In many states, resentment of imports runs high. Toyota has combated this by sponsoring child literacy programs in Texas as well as simply creating a new pickup like the Tundra, designed to appeal to consumers in 'red state' import-hating areas. It has also been increasing the money it spends in lobbying politicians from the states were its plants are located "more than doubling since 2002 the amount it spends each year, to $5.1 million," and invested in popular charitable organizations in those states ("Why Toyota Is Afraid of Being Number One," BusinessWeek, 2007). The company constantly asks itself -- how is Toyota perceived where the company is located, on a grass-roots level?

In the early1980s, when a film parody of Japanese corporate ethics entitled "Gung Ho" was released, Toyota showed this movie to its employees as an example of how not to manage Americans. Then, in 1986, Toyota after GM laid off 3,000 workers, Toyota rehired them to work in its new plant in Fremont, California and the head of the United Auto Workers local at the time recalled that Toyota company executives and plant bosses were "eating in the same cafeteria as the rank and file" and noted that never happened when GM was running the factory ("Why Toyota Is Afraid of Being Number One,"BusinessWeek, 2007) in short, Toyota has been 'out-American-ing' the Americans, and turned its image around by acting like an American, democratic company that cares about its workers, the quality of American's lives, and also, with the development of its small and hybrid cars (where SUV-touting GM and Ford have lagged behind) the global environment.

Initially, the Home Depot strove to turn its flagging profits and image around through product innovation, although it has never been as rigorous in its self-examination as Toyota. Still, after expanding to the point that industry analysts worried that it had overextended itself, and after the more female-friendly Lowes stores with their superior store layout threatened its dominance, the Home Depot "sanded down its rougher product edges a little to make itself much more appealing to a broader consumer demographic," including women (Casey, 2004, p.1). However, the Home Depot's success over competitors like Lowes has not been nearly as complete as Toyota's dominance over Detroit and while Toyota enjoys status as the most successful and respected car company in America, the Home Depot's ability to survive at the top is far more uncertain. Initially, the Home Depot focused more on product reform, rather than changing its company structure. To keep itself "fresh and exciting "it stressed "evolving product selection" (Casey 2004, p.1). While in its early years of branding itself "the home center targeted [male] professional contractors and serious do-it-yourself home improvement buffs" to lure female consumers in the first phase of reinvention it included a "kitchen and bathroom design center complete with high-end designer Kohler fixtures and Ralph Lauren and Disney licensed lines of paint" (Casey 2004, p.1).

Now, determined to once again rule supreme, Home Depot's new CEO is striving to centralize and toughen up its management, going against conventional wisdom. The "cultural overhaul is taking Home Depot in a markedly different direction from Lowe's, where managers describe the atmosphere as demanding -- but low-profile, collaborative, and collegial" ("Renovating Home Depot," BusinessWeek, 2006). The Home Depot organizational overhaul is again decidedly masculine: "Importing ideas, people, and platitudes from the military is a key part of [new CEO] Nardelli's sweeping move to reshape Home Depot, the world's third-largest retailer, into a more centralized organization ("Renovating Home Depot." BusinessWeek, 2006).