Business Insight Zone

While Detroit struggles, Toyota shines, and not by accident: it got to be the biggest because it’s the best. Here’s the Company of the Day text:

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Simple words with complex application: Muda, Mura, Muri. These three Japanese words, which lie at the heart of the legendary Toyota Production System, describe undesirable forms of waste, unevenness, and overburden — exactly the things that Toyota has spent decades squeezing out of its processes. Decade after decade, the giant auto maker, now the largest in the world, has pursued this mission without much fanfare. Its top executives are little known outside the automotive world. And while it has pursued the high end of the market with the Lexus make and the hipster segment with the Scion marque, overall Toyota’s model lineup remains mostly stable from year to year. There is no blockbuster model expected to “save” the company — because it never needs saving.

The contrast to Detroit could hardly be more plain. All of the Big Three US car makers are restructuring themselves, trying this and trying that, but who knows if even these radical moves will be enough to turn their fortunes? General Motors has lost its worldwide #1 ranking in cars to Toyota, which has also displaced Ford for the #2 spot in the US market. Conditions don’t look to get much better for GM, Ford, and Chrysler: on top of years of weak financial performance, they now face a US automotive market depressed by high gasoline prices and a nasty slump in housing. Yet Toyota seems to thrive in all economic weather, thanks to its constant dedication to eliminating waste, unevenness, and overburden. The company crowns no heroes and does nothing that seems fancy, but also never deviates from its focus on making things in a better way today than yesterday, and making them better again tomorrow. Unlike its US competitors, Toyota need never announce a sudden restructuring, because it is forever restructuring itself, hour by hour and day by day.

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The best article I’ve read on Toyota lately is this one from Fast Company:

No Satisfaction at Toyota

Well worth checking out, not just for details about how Toyota builds cars in the U.S., but about the company’s culture and what sorts of lessons other companies could take from it. Key excerpts:

• “Toyota’s competitiveness is quiet, internal, self-critical. It is rooted in an institutional obsession with improvement that Toyota manages to instill in each one of its workers, a pervasive lack of complacency with whatever was accomplished yesterday.”
• “[S]hutting down Top Coat Booth C liberated a handful of maintenance engineers — who turned their attention to accelerating the next round of changes. Success, in that way, becomes the platform for further improvement. By the end of this year, Buckner and his team hope to have cut almost in half the amount of floor space the paint shop needs — all while continuing to paint 2,000 cars a day. For Buckner, the paint-shop improvements aren’t ‘projects’ or ‘initiatives.’ They are the work, his work, every day, every week. That’s one of the subtle but distinctive characteristics of a Toyota factory. The supervisors and managers aren’t ‘bosses’ in any traditional American sense. Their job is to find ways to do the work better: more efficiently, more effectively. . . . “We’re all incredibly proud of what we’ve accomplished,” says Buckner, a little puzzled that his attitude might be considered unusual. “But you don’t stop. You don’t stop. There’s no reason to be satisfied.” “
• “The process is, in fact, paramount — so important that “Toyota also has a process for teaching you how to improve the process,” says Steven J. Spear, a senior lecturer at MIT who has studied Toyota for more than a decade. The work is really threefold: making cars, making cars better, and teaching everyone how to make cars better. At its Olympian best, Toyota adds one more level: It is always looking to improve the process by which it improves all the other processes.”

Toyota’s relentless focus on improving itself has made it the best — and the biggest — car maker in the world. Would that more companies would take to heart the lessons in excellence that Toyota has been teaching for all these years.

Category: Company of the Day, Transportation