Toyota Creativity and Innovation Assessment - Assignment Example

Assessing Creativity and Innovation at Toyota BM5001 – Business Toolkit By Word Count 970 Introduction Headquartered in Toyota since 1937, Toyota Motor Corporation is an industry leader in the design, manufacturing, assembly, and sale of passenger cars, recreational and sport-utility vehicles (SUVs), minivans, and trucks and related parts and accessories (Yahoo Finance). Having a global presence through manufacturing or assembly lines in Africa, Asia & Oceania, Europe, Latin America and the United States, Toyota constantly produces reliable, durable and high-quality vehicles. The Group is also one of the leading companies to commercially engage in the mass-production and sale of hybrid cars (Business Week). Toyota employs its expertises in a variety of other fields such as housing (Toyota Home), financial services (Toyota Financial Services), technology & communications, marine, biotechnology & afforestation and GAZOO (Toyota). Toyota Motor Corporation operates in 554 subsidiaries and 228 affiliated companies worldwide, while it employs nearly 321,000 people. 1. What makes them innovative/creative? In 2007, while celebrating its 70th anniversary, Toyota Motor Corporation sold 9.34 million vehicles making a profit of $13.7 billion. Having surpassed in size and profitability General Motors’ and Ford’s combined market cap, Toyota is widely regarded as one of the most successful companies of the planet (Watanabe, Stewart & Raman, 2007). At the same time, Toyota is one of the most remarkable examples of a company that employs innovation at every business operation, as analyzed below. Implementation of kaizen business philosophy One of the reasons for Toyota’s success is the implementation of kaizen philosophy. Focusing on respect for people, the Toyota Way views the company’s internal and external customers as equally important, encompassing elements of personal discipline and improved morale in all employees, suppliers and customers. By highly valuing its human capital and instilling respect among co-workers, Toyota nurtures the feeling of teamwork. Employees and management work together to identify possible problem areas, make necessary changes, monitor results and adjust their practices through suggestions for improvement. These quality circles lead to kaizen that represents the Toyota mindset of continuous improvement (Watanabe, Stewart & Raman, 2007). Consistency in quality at any cost A part of continuous improvement philosophy is Toyota’s consistency in quality at any cost. Toyota’s management doesn’t hesitate to postpone projects if they see that there are problems that cannot be dealt with immediately. Instead of risking the company’s reputation and produce low-quality products, they prefer to stop production and postpone growth to ensure sustained reputation in terms of enhanced quality. Toyota invests in new technologies and new processes and trains its human resources to be the best company and produce the highest-quality vehicles in the world (Watanabe, Stewart & Raman, 2007). Innovative manufacturing processes Toyota is globally known for its innovative manufacturing processes. The company’s manufacturing processes at Takaoka reflect Toyota’s kakushin or radical innovation in the production methods. Launching a pioneer “simple, slim and speedy” production system that eliminates the involvement of engineers in the movement of components to avoid possible loss of their value, the production line becomes faster, while lead times, assembly line and logistics are reduced by 50%. Besides, the use of robots in the transfer bar allow the assembly line to move by 1.7 times faster than before; a new painting process that applies three coats at the same time reduces the painting time by 40%; the employment of high-precision instruments replaces the visual inspections in the measurement of several parameters (Watanabe, Stewart & Raman, 2007). All these innovations allow more flexibility that increase productivity. As the assembly line moves faster, the Takaoka plant is able to produce sixteen models on two lines, twelve more than what it used to produce on three lines. This translates to 250,000 units on each line per year, an increase of 12.6% compared to 222,000 vehicles of the old plant on each line. Global Link Production System Toyota has built numerous plants in different countries overseas. To be able to increase efficiency, the company has developed a global link production system. Using its innovative technologies in Japan, Toyota transfers the production of different models between the different plants in no time to be able to maintain stable production in all plants and be responsive to changes in demand. It also reduces capital expenditure because it uses its Japan resources to balance global demand and highly utilizes capacity at all plants (Watanabe, Stewart & Raman, 2007). 2. What type of innovative challenges do they face? In their effort to become the top company in the world in terms of sustainable quality, Toyota has grown very rapidly. From 1995 to 2007, the Toyota factories have increased from 26 to 63, while the production from 2000 to 2006 has increased by 3 million cars. This ambitious agenda has definitely put an increasing pressure on the management and operating processes. As a result, the system has been overstretched in an effort to anticipate the challenges of globalization and growth (Watanabe, Stewart & Raman, 2007). Inflexibility in capacity utilization Because of their global expansion, Toyota often faces a relative inflexibility in terms of capacity utilization. Due to fluctuations in local demand and the distinct characteristics of the local markets, the company needs to be able to maintain stable production in all plants. By being responsive to demand changes, it maintains its market share. Although Toyota uses its Japan resources to anticipate local demand in overseas markets, capacity utilization is a constant challenge (Watanabe, Stewart & Raman, 2007). Emerging markets requirements Toyota has taken slow steps in China, India, Brazil and Russia and waits for these economies to grow to decide on which manufacturing facilities to set up and which vehicles to sell. In majority, the consumers of these countries cannot afford high-cost vehicles. Toyota needs to adjust its technologies and manufacture low-cost vehicles to target the consumers of emerging markets without compromising on the quality standards that have made the company number one globally (Watanabe, Stewart & Raman, 2007). Global expansion factors In regards to global expansion, Toyota needs to thoroughly study the distinct characteristics of each region and match its product development practices with the market trends. This is a challenge that encompasses different factors such as energy, environment, safety, petroleum prices, technological advancement and many more. The company has to come up with the right combination of fuel, technology, and supply/production system to produce the right vehicle for the right location at the right time (Watanabe, Stewart & Raman, 2007). Human Resources challenge Understanding the Toyota Way is a major challenge for the managers, who are not Japanese. The Toyota Way is a philosophy that encompasses elements from the Japanese culture (kaizen, kakushin), invests in human resources and organizes its assets in the core areas to achieve long-term sustained competitive advantage. Non-Japanese managers cannot be part of this philosophy too soon. It takes years to be part of the Toyota Way because it is a never-ending, dynamic process (Watanabe, Stewart & Raman, 2007). Moreover, Toyota management employs an open door policy revealing the problems so that all Toyota’s people work together. An innovative and creative idea can be the answer to a particular problem related to a new model launch, a niche market, new facilities, and so on. This is a philosophy that is not easily understood by non-Japanese employees as there are elements of cultural diversity and different mentality that need to be addressed (Watanabe, Stewart & Raman, 2007). 3. What are the benefits of a creative/innovative approach and is there a downside? An innovative organization aims at the infusion of innovative ideas and the design of an innovative organizational structure to enable these ideas evolve as an inherent part of organizational culture with the least possible resistance from organizational members (Becker, 1964). This approach generates benefits, but has also a downside: the challenge of organizational culture. The major downside for Toyota is its global operations and any problems associated to ethical considerations. The corporate culture of Toyota is defined by the Japanese philosophy as reflected primarily on the kaizen philosophy and a series of other Japanese techniques employed in the company (kakushin, genchi genbutsu). Globalization implies global citizenship and Toyota’s philosophy is imposed to employees working in different countries around the globe (Khor, 2001). Toyota’s global expansion and its effort to apply this philosophy to totally different cultures may potentially lead to cultural conflict. Not all cultures are prepared to accept the Japanese philosophy of doing business. The way Toyota focuses on its human capital and values its human resources instils in its employees a problem-solving management culture. This makes organizational members feeling almost obliged to identify problem areas and suggest possible improvements. However, training non-Japanese managers on the kaizen philosophy may take twenty years. The expansion of Toyota in the United States has revealed many relevant problems (Kleiner, 2005). In Western societies, Toyota employees are more individualistic as opposed to their Japanese peers, who believe more to the success of the team than to individual success. In Latin America plants, the problem of teamwork deteriorates due to low educational level of Toyota workers, who have strong individual ambitions and seek for a way to lift themselves from poverty. These motives often outsmart the interests of the team. If Toyota faces a cultural conflict, it would face the dilemma of either coping with the employment of universal ethical principles and culture for all its units around the globe, or accept autonomous organizational structures to meet the needs of local employees overseas. This may threaten the company’s public image as an innovative organization that values teamwork and manufactures highest-quality vehicles (Volti, 2005). 4. Conclusions The development of successful Human Resources Management is one of the top priorities of Toyota. In effect, the Toyota Way principles have determined the company’s successful operations and have increased productivity in Japan as they have been accepted by the Japanese people (Yasuda, 1991). Heavy investment in human resources; long-term strategy in managerial decision-making; processed problem-solving; and continuous improvement are the four components of the Toyota Way that reflect the Toyota philosophy. Toyota leaders believe in consensus decision-making and thoroughly consider all suggestions. Through employee empowerment and guidance, Toyota management encourages employee involvement considering the process of decision-making as important as the quality of the decision. Through constant promotion of creative thinking, leadership in Toyota takes the shape of mentoring as leaders demonstrate the ability to understand how work gets done at all organizational levels. Avoiding the superficial judgement of any situation to ensure effective decision-making and leadership, the Toyota Way develops critical thinking and firsthand knowledge (Liker, 2004). Continuous improvement or the kaizen business philosophy is another top priority in Toyota. In the context of business, continuous improvement means involving all organizational members to the decision-making aiming to make improvements without spending more money (Imai, 1986). According to the kaizen philosophy, any organization can change direction and instead of engaging into large capital investments to take big decisions, it can focus on smaller investments. For instance, many managers decide on investing in new machinery instead of checking the existing infrastructure first (Wittenberg, 1994). Toyota employs kaizen, starting with small changes, such as involving all employees to managerial decision-making, and managing for the long-term to achieve big changes. On the other hand, the more the company grows, the more it reassigns its principle of Human Resources Management on its subsidiaries overseas. Toyota needs to adjust its traditional teamwork taking into account cultural diversity. To keep employees satisfied and continue paying genuine respect to its human capital, Toyota needs to take into consideration the mentality of employees in its subsidiaries overseas and apply methods that are suitable to increase employee productivity. Moreover, globalization has imposed the creation of a flatter hierarchy in Toyota because not all its employees were able to assimilate its philosophy (Robbins & Finley, 1995). Globalization has increased the risk of employee demoralization as a result of their diverse cultural background. References Becker, S.W. (1964). The Innovative Organization. Centre for Continuing Education of the University of Chicago. BusinessWeek http://bx.businessweek.com/toyota-motor-corp/ Imai M. (1986). Kaizen: the Key to Japans Competitive Success. McGraw-Hill/Irwin Khor, M. (2001). Global Economy and the Third World. New York: New Publishers Kleiner, A. (2005). Leaning toward utopia: The Toyota Production System has revolutionized industry. Strategy and Business, Issue 39, pages 76-87 Liker, J. (2004). The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS. p. 37. Ann Arbor, Michigan: University of Michigan. Retrieved: 2008-03-25 Robbins, H., Finley, M. (1995). Why Teams Don’t Work: What Went Wrong and How to Make it Right. Princeton, N.J.: Peterson’s/Pacesetter Books. Volti, R. (2005). Society and Technological Change. New York: Random House Toyota website http://www.toyota.co.jp/en/index_non_automotive.html Watanabe, K, Stewart, T.A., Raman, A.P. (2007). Lessons from Toyota’s Long Drive: An Interview with Katsuaki Watanabe. Harvard Business Review, pages 74-83 Wittenberg, G. (1994). Kaizen—The many ways of getting better. Assembly Automation, Volume 14, Issue 4, Page 12 - 17 Yahoo Finance (http://finance.yahoo.com/q/pr?s=TM) Yasuda, Y. (1991). 40 Years, 20 Million Ideas: The Toyota Suggestion System. Cambridge: Productivity Press. Read More