Wednesday, July 2, 2008


By: Stewart, Thomas A., Raman, Anand P.,
Harvard Business Review,
July/August 2007, Vol. 85, Issue 7

HBR Interview with Katsuaki Watanabe, Toyota's 65-year-old president

In the history of the modern corporation, Toyota's march to the top from its humble beginnings as a textile machinery manufacturer in the mill town of Koromo -- now Toyota City -- is one of the most remarkable examples ever of managing for the long term.

There are three keys to building a stronger foundation: We must improve product quality, keep reducing costs, and, in order to attain those two objectives, develop human resources. We have to create a stronger foundation at every stage of the supply chain, from product development to after-sales service. Our products must be the best in the world; we must be the first to offer them to customers; we must manufacture them at the lowest cost; and we must sell them through the best service networks. My focus is on how Toyota can achieve all those things at the same time.

Hidden problems are the ones that become serious threats eventually. If problems are revealed for everybody to see, I will feel reassured. Because once problems have been visualized, even if our people didn't notice them earlier, they will rack their brains to find solutions to them. That's the DNA we've all inherited through the Toyota Production System.

Toyota way and Toyota mindset

Our guiding principles define Toyota's mission and values, but the Toyota Way defines how we work. To me, it's like the air we breathe. The Toyota Way has two main pillars: continuous improvement and respect for people. Respect is necessary to work with people. By "people" we mean employees, supply partners, and customers. "Customer first" is one of the company's core tenets. We don't mean just the end customer; on the assembly line the person at the next workstation is also your customer. That leads to teamwork. If you adopt that principle, you'll also keep analyzing what you do in order to see if you're doing things perfectly, so you're not troubling your customer. That nurtures your ability to identify problems, and if you closely observe things, it will lead to kaizen: continuous improvement. The root of the Toyota Way is to be dissatisfied with the status quo; you have to ask constantly, "Why are we doing this?" People can apply these concepts throughout the world, not just in Japan. The question is how long it takes to train people to develop the Toyota mind-set.

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