the toyota way 14 management principles

Topics: Toyota, Kiichiro Toyoda, Toyota Production System Pages: 66 (18103 words) Published: April 23, 2014
Toyota and Why It Is So Successful
Robert B. Austenfeld, Jr.
(Received on May 10, 2006)

1. Introduction
The purpose of this paper is to describe one of the most successful companies in the world and explain the reasons for that success. Fortune magazine’s February 20, 2006 edition featured this headline on its cover: “The Tragedy of General Motors” and a story of GM’s woes by Carol J. Loomis. Two weeks later, Fortune’s next edition on March 6, 2006 had this headline on its cover: “How Toyota Does It: The Triumph of the Prius.” This stark contrast is typical of the stories circulating in the media these days. At a time when a company that was once admired and for many years held the lofty position of the world biggest automaker appears on the brink of bankruptcy1), Toyota is about to overtake it in global sales this year (O’Dell, 2005). Why is Toyota continuing to thrive at a time when other carmakers are struggling to survive?

At the outset I would like to acknowledge the main source for much of the information in this paper: The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer by Jeffrey K. Liker (2004).

This paper is organized as follows:

The history of Toyota


The Toyota Way




Summary and conclusion

As of May 2006 GM was still struggling to stay out of bankruptcy. ― 109 ―

Papers of the Research Society of Commerce and Economics, Vol. XXXXVII No. 1

2. The History of Toyota
For organizational convenience I will discuss Toyota history as follows: • The start
• The 1940s
• The 1950s
• Etc.
The start. The Toyota Motor Corp. (TMC) had its beginning in 1933 when it was established as a division within the Toyoda Automatic Loom Works, Ltd. The founder of Toyota was Kiichiro Toyoda (1894–1952), the son of Sakichi Toyoda (1867–1930). The values that have underpinned Toyota success started with Sakichi who was the son of a carpenter. According to Liker (2004) he was greatly influenced by Samuel Smiles book Self-Help first published in 1859 (p. 17). This book focused on inventors and how their success was mostly due to hard work and persistence. Sakichi went from carpentry, which he had learned from his father, to making looms for weaving. He then came up with many inventions that resulted in remarkable improvements in looms. For example, by 1924 he had developed the famous “Type G” automatic loom, but not without much of that “hard work and persistence.” One of the important features of Toyoda’s looms was a device that would automatically stop the loom should a thread break. This prevented any defective cloth from being produced. This concept of building into a machine features that prevent poor quality is know as jidoka and would become one of the TMC’s two “pillars” of the Toyota Production System (TPS).2) According to Wikipedia (Sakichi Toyoda, 2006) Sakichi is often referred to as the “King of Japanese Inventors” and as the “father of the Japanese industrial revolution.”


The other is just-in-time.
― 110 ―

Robert B. Austenfeld, Jr:

Toyota and Why It Is So Successful

In 1926 Sakichi started the Toyoda Automatic Loom Works that, due to the superiority of the Toyoda looms, became highly successful. Even today, Toyota produces highly praised spinning and weaving machines. However, to Sakichi’s credit he recognized that more than weaving machines, the automobile was the wave of the future. Therefore he encouraged his son, Kiichiro to get into the automobile business. Drawing on the resources of the Toyoda loom business, in 1930, Kiichiro began doing research into small gasoline-powered engines (History of Toyota [HOT], 2006) and, as mentioned, an automobile division was established within the Toyoda loom works in 1933. But it wasn’t just to increase the Toyoda fortunes that caused the elder Toyoda to encourage his son. As quoted in Liker (2004, p. 18) from Reingold (1999), this is what Sakichi told Kiichiro:


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Toyota and Why It Is So Successful
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