A remarkable article about Toyota appeared in the CNN site yesterday that exposes Toyota’s Achilles heel – the ignorance of racism. It also raises some serious doubt about their vaunted "Respect for People" principle.
The point of the article is that Toyota is having management staffing problems. They do not have enough qualified Japanese staff to control their growth – almost all of which is occurring outside of Japan. Despite 75% of their personnel being from other countries, and having had a U.S. sales presence for almost 50 years and a manufacturing presence for over 20 years, all 26 Toyota board members are Japanese. All of the senior decision makers at headquarters are Japanese, as well.
Mitsuo Kinoshita, the guy in charge of Toyota HR, says, "Getting overseas staff to share our views on management and quality is very difficult." Really? That is either self-delusion or a tribute to incredibly poor training if 20 years of U.S. manufacturing has not produced anyone who understands Toyota’s views on management and quality. Or it could be that the Toyota management mind is such that, at the end of the day, they cannot ever come to accept the notion that a non-Japanese can be their managerial equivalent.
Their ‘Japanese only’ headquarters culture is a self-fulfilling prophecy. They point out that employee turnover at non-Japanese plants is much higher than it is in the land of the rising sun, which means "a 20-year track record means a lot more for a Japanese plant than factories elsewhere." With that excuse for refusing to allow non-Japanese folks into the inner circle, it seems to be a safe bet that good people will continue to leave Toyota, keeping the turnover rate churning. Staff turnover is an accurate measure of long term management performance and, by their own admission, Toyota is not doing well. It is self-serving of them to write this off to American culture.
Why would a smart, hard working non-Japanese man or woman stay with Toyota for very long when (1) there is a glass ceiling limiting the chances for promotion, and (2) there is good money to be made taking those skills to other companies or out on the consulting trail?
Mr. Kinoshita says that Toyota’s insistence on micro-managing and controlling everything from Japan is because, "We’re afraid of slipping, so we can’t help but interfere." How much respect does that show for people? It seems to me that the cornerstone of respect is trust, and trust for anyone non-Japanese seems hard to come by at Toyota.
Even Taichi Ohno and Shigeo Shingo were deluded by national pride into downplaying their own contributions. So much of their writing was couched in terms of how Japanese look at things and do things – attributing much of the Toyota Production System to this unique Japanese outlook and value system – yet very, very few Japanese companies have duplicated Toyota. Toyota founder, Sakichi Toyoda, was every bit the racist Henry Ford was and could be just as cruel in his opinions about the West as Ford was when it came to the ‘International Jew’. That proud, but ignorant, value system does not seem to have completely evolved out of Toyota.
In a post a few days ago, I included a quote by Massaki Imai, founder of the Kaizen Institute and vaunted TPS guru, where he said, "Japanese companies developed a very effective system of management, particularly in the manufacturing sectors, and the rest of the world has much to learn from these practices." I beg to differ, Mr. Imai. "Japanese companies" did not develop "a very effective system of management" – Toyota did. They are simply one Japanese company that was built by some very intelligent and capable individuals. The fact that they were Japanese was not the reason for their success. If it were, Japan would not be losing manufacturing jobs at a rate greater than the U.S., and there would not be such a thriving market for lean consultants in Japan.
Toyota says they are stepping up to the problem by establishing training and education facilities in Japan, the U.S., Thailand and England to develop capable managers. That strikes me as a worthwhile endeavor, but not one that will solve the problem. If 20 years of demonstrated performance results by some very capable American managers in Toyota plants is not enough to convince the boys in Toyota City that someone who is not Japanese is qualified for advancement, then a sheepskin from Toyota U is not going to do it.
In Rebirth of American Industry, I demonstrated how forty years of business success blinded GM and Ford to the flaws in their management system. They were so sure of the ‘rightness’ of their model, they were incapable of recognizing and adopting improvements from external sources – namely Toyota. Toyota is doomed to follow the same course if they do not develop the intellectual and moral integrity needed to take off their racial blinders.
Mark Graban says
You raise some very valid questions here, Bill. One thing that might be worth clarifying: Gary Convis is one of two Americans who were named “managing officers” of Toyota corporate. I believe that’s the highest post and is basically the board that you speak of as being all Japanese.
My experience with Toyota people is that they would probably admit they are not perfect in the “Respect for people” area, much as they’re not perfect with quality or 5S within their plants.
Bill Waddell says
I don’t know what a “managing officer” is, but the current directors of Toyota are:
Mark Graban says
From an online article:
Convis: Okuda is one of the brightest people on the planet. In a world environment that doesn’t embrace change easily, he’s a very unique individual. As an example, he has recently restructured the traditional Toyota board alignment. They realize that in being global they have to make decisions quicker. They needed to be more strategically driven by a smaller but highly developed group of people, so they narrowed the board down to senior managing directors and above. The new body was called managing officers. I am one of the first three non-Japanese executives to be given that responsibility, which speaks to change in itself. The three individuals have the Toyota DNA; my wife says I’m three-quarters Japanese.
Bill, you raise some good questions, but I’d be careful about drawing conclusions. Have you reached out to Toyota people to talk about this? Being slow to embrace outsiders is one thing, but to imply they are racist… I don’t see the need to stir up that pot.
How many of the two contributors on your blog are non-American or of other ethnic groups? I’m sure you wouldn’t want anyone reading too much into that.
Bill Waddell says
C’mon – it’s easier for an African American to get a seat at Denny’s than for a non-Japanese to get a seat on the Toyota board.
… and comparing the fact that the 2 bloggers on Superfactory are white guys to a company with 210,000 foreign employees and millions of foreign customers without a single foreign presence on the board for over fifty years is a bit of a stretch, dont ya think?
Curmudgeonly asking, that is.
Mark Graban says
I know, it was a purposefully ridiculous comparison. But, Convis is saying “they narrowed down the board” and put 3 non-Japanese on there.
You can choose to read that article as half-empty or half-full. Is Toyota really as diverse as it could be? No, but they seem to make an effort at changing that and I think you’re choosing to view it negatively.
Mark Graban says
I don’t think GM or Ford have any Japanese or Chinese on their boards. There’s a token European on each board. I’m just saying…
Bill Waddell says
And my comment comparing Toyota to Denny’s was hyperbola to make a point.
Perhaps I am casting Toyota in too negative a light, but there is a very real, widespread problem with Japanese management arrogance in many companies. It strikes me as the U.S. getting a dose of its own ‘ugly American’ medicine in some regards.
I have received documents from a fellow in the Philipines who is doing a master’s thesis on the relationship between Bridgestone in Japan and its global subsidiaries that are an appalling management indictment. A potential consulting client is telling me horror stories of the havoc raised on its previously profitable medical supply manufacturing business since they were acquired by a Japanese parent that is trying to micro-manage the plant from across the ocean. It seems as though very many Japanese managers have assumed that their nationality has somehow endowed them with the wisdom of Ohno and Shingo when, in fact, many of them are not fit to carry Shingo’s stopwatch for him. It is getting them into trouble.
The blog has really just scratched the surface of the horrendous Toyota labor relations record in India
The blog readers all know that I am not in the least hesitant to blast American management when it is apropriate. Just because they are Toyota, I am not about to give them a free pass. There is a very real problem here and the Japanese need to fix it.
Finally, the thrust of the article is Toyota’s acknowledgement of the wrong problem. The real problem is internal – “Why doesn’t Toyota allow foreigners to participate in strategic decision making?” They, however, think the problem is “Why aren’t any foreigners competent enough to participate in strategic decision making?” Solving the problem as they perceive it through more education will not solve the real problem.
John Hunter says
>>> Why would a smart, hard working non-Japanese man or woman stay with Toyota for very long when (1) there is a glass ceiling limiting the chances for promotion, and (2) there is good money to be made taking those skills to other companies or out on the consulting trail? <<< If they want the most money Toyota is not the best choice. Ford, GM and in fact most any American company pays the people at the top of the organization chart alot more than Toyota does. So if they can get to the top and can choose Toyota or some American company they should choose some other one that pays alot more if that is what they want. If what they want is power they probably don't have as much in Toyota, if they view it as power to impose your will on what happens - as you have to work within a system. If they view the power as how big an impact their actions with have then it depends but Toyota might well be a good choice. If you want to be respected by peers (based on your big office, high paycheck, obvious responsibility, nice title...) I am not sure that is working for highly paid executives at GM, Ford... now. They have the big paycheck and maybe even a nice title but is that working? Maybe it is. I'm not sure what those peers think of executives at Toyota. I can imagine that 10-15 years ago you would be seen as a fool who could get paid much more working elsewhere. And you could be more the rugged individual not having to fit yourself into what the people running Toyota from Japan thought you should do (I know I heard this numerous times myself). I am not sure what the thought is now in the country clubs (with the executive peers) about whether Toyota executives like Convis are to be respected or whether they are chumps (without knowing his salary, I still have no doubt he could make much more money elsewhere). I respect him but that is just me. That said, I agree with you Toyota has plenty of room to improve in many ways. And there is no question they should worry about losing great people that they have invested in for 10 or 20 years. To some extent (in America anyway) they are going to lose people, I believe. So many other companies will be willing to pay huge amounts and give huge amounts of authority to people they hope can come fix their companies that if Toyota stays on the top of the respected company list they are going to lose people (so few companies in America believe in the benefit of deep knowledge of the company that only decades of experience can bring that their is no hesitance to bring in some new person to fix things quickly and dramatically). And they will have to take some steps to limit this or deal with the negative consequences. One way to do this will be to make it obvious what happens when those people leave. I will be willing to bet they will have great difficulty fixing companies (but they will get big paychecks. If I am Toyota my strategy would be to try and develop people that cared more about creating a great company that created jobs for their city etc. and not focus on those most focused on money because I really can't see any long term strategy to keep those people. The tricky part is in giving people the opportunity to make a difference. In the system I designed (if I were Toyota) the only people I would really feel our system failed with are those that left because they thought they could not make a difference staying at Toyota but that could. For some people making a difference is only satisfying if they are one of the leading executives. And I would feel we failed if we lost people that could contribute in that way to Toyota but they left. This is even more true because I believe Toyota does need more diversity at the highest level to maximize their success going forward so anyone that had that potential that left is a huge loss. I don't think it would help Toyota to just hire people from other companies to increase the diversity (for other companies this could work fine because they work in a climate where they don't place much value in the experience of the organization and such quick fixes are how pretty much everything is done). They need to keep grooming (hopefully they are now) people to grow into those roles from within.
Mark Graban says
Bill, you are confusing your argument. Using Imai (not a Toyota employee) and Bridgestone (a separate company) to indict Toyota isn’t very effective. We all know you (and I both) slam American companies. That’s a smokescreen too. To say they have no outsiders on the board, but Gary Convis says they changed the board structure and now have 3 non-Japanese on the board, well that’s his word against yours. I’ll trust Convis on that one. He seems to think he’s “on the board.”
Yes, I think you’re casting Toyota in too negative a light. I know they aren’t perfect. I’m not arguing you there. The India thing seems like a real problem. But to accuse them of thinking foreigners are dumb seems like a stretch.
Bill Waddell says
See the Toyota Annual Report:
There are 26 Directors – all Japanese.
In addition, there are 48 people listed as Managing Officers, including Convis and a handful of others with wetern sounding names. As I stated, I do no know what a “Managing Officer” is.
I don’t know why they do it, but at the end of the day, the fact is that Toyota board is and always has been an exclusively Japanese group. You are welcome to make as much or as little as you care to about their utter lack of diversity.
GM and Ford have long had European Directors because they have long had European plants and a big European market. They do not have a similarly sized Asian business presence yet, although that is changing
Hopefully their strategy to train someone to the point that Toyota feels they are qualified to become a member of their board will succeed.
Barry Huff says
I have enjoyed reading the comments. As someone who has read all of Ohno’s and most of Shingo’s books and Eiji’s Autobiography, I would like to make a few comments. The Toyota auto company has grown out of the ashes of the War and grew up in a fairly rural area. The company had several near misses with bankruptcy in those early years. It was a struggle to create the Toyota Production System and Taiichi Ohno even said that he would not likely have been allowed to go forward at any other Japanese or I suppose any company other than Toyota. The company has a history of doing it at the Shop Floor level. They know that’s where the money is made. I think the struggle is still a part of Toyota’s collective memory. That memory and single mindedness can have its drawbacks, hamper creativity and design. I personally think the makeup of their Board simply represents this conservative mentality and their collective memory that things could always get tough again. For example, when you look at the Toyota Board, ask yourself regardless if they are Japanese, how many of these people are Toyota insiders and how many are from companies or experiences outside of Toyota, for example other big Japanese companies. My guess is many are clearly within the Toyota inner circle. This is in contrast to many Western and European companies who have many Directors coming from many different backgrounds and companies. Before I would single out Toyota for its practices, it would probably be good to look at the many other large Japanese companies and their Board Makeup. For example how does the boards of Honda, Mitsubishi, Fuji, Sony, National, Canon, etc look. Are they any different than Toyota. I suspect that Toyota may be very conservative even when compared to other Japanese companies. I have read a book by Setsuo Mito titled something like The Honda Book of Management. In that book he describes in detail the workings of Honda’s open Board Room. The book is worth reading, although it is a little old now.
Amado Solchaga Alzate says
I´have read this article and I really surprised about it, TOYOTA wants excellence¡ but they don´t believe that others than Japaneses can manage the company, and probably they are right.
I am a Toyota dealer´s client in Mexico, d at this moment, this Dealer, Toyota del Bajío S.A de C.V. city: León, Province: Guanajuato, Country Mexico, This DEALER has sold me a used Sharan (VW) Car, february 03 2006, Now, april 27 2006,The car doesn´t work. I have reclaimed them because the car doesn´t work with the automatic transmission, and it cost $10,000 dlls, replace it, I bought the car and it cost to me $14,000 dollars, and the Dealer doesn´t want to respect and repair it,They knew that the car was not ok, and never told me about it, and they sold me the car¡¡¡¡¡. and now, I´m paying the car¡¡¡¡¡ with Toyota Financing, even more, the dealer doesn´t want to face me and talk as a civilized persons. Can you imagine ¡¡¡¡¡ How can Toyota Head Office could believed that the overseas mangerial people are efficent and effective, If don´t have respect for the people. What about the trade´s name¡¡¡¡¡¡¡
I´m a very worry for that, it cost me and Iám paying for a car sold by Toyota without any quality sales process. They Said “TOTAL SATISFACTION” for the client¡¡¡¡¡
If someone can help me I would really appreciate.
Name: Amado Solchaga Alzate
Amado Solchaga Alzate says
Continuing with my comments about my posted at this site 27 april 2006 about a car sold by Toyota del Bajío S.A de C.V., they finally has faced me, but with their lawyer.
He told me that is very difficult to know if an Automatic transmmission is good or bad, so they sold me the car and they did not know the aut. transm. condition. OF COURSE, I BELEIVED IT ¡¡¡¡I´m sure, they did´not know if the the car was ok or not. But, Now, the problem is that if they evaluate and make a diagnostic for used cars to be sold later, they have the responsability to check the car conditions pretty well. Of course, I think it didn´t happens. I´m sure they have a diagnostic mistake, Ok ¡¡¡, it can happens to anybody¡¡¡, but any way, they have to face their responsability and given me a TOTAL SATISFSACTION as a TOYOTA´S CLIENT. IF THEY FACE THE PROBLEM, AND GIVE A TOTAL SATISFACTION TO MY DEMAND, THAT´S WOULD BE AN EXCELLENCE ¡¡¡¡ Don´t you think?????.
Meanwhile, we are still talking about it and I will wait for a reasonable response…….It will continue….
Best Regards every body
Toyota Group Current Employee says
Absolutely True..Blog more..and expose the Japanese arrogance and plagiarism..