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Toyodas vs outsiders battle for the soul of Toyota

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Old 03-01-10, 08:36 AM   #1
jruhi4
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Default Toyodas vs outsiders battle for the soul of Toyota

An informative and eye-opening read that elaborates on Jim Press' recent defense of Akio Toyoda and his veiled criticisms of Akio's non-Toyoda predecessors:

A scion's battle for the soul of Toyota
by Hans Greimel, with contributions by James B. Treece and Lindsay Chappell - Automotive News

As he sat high atop Toyota Motor Corp.'s new 46-floor office building in Nagoya at the end of 2007, an aging Shoichiro Toyoda was discussing the risks of the company's rapid growth. He was clearly worried.

The Japanese auto juggernaut already was showing cracks in its facade. In fact, the gleaming Midland Square skyscraper, dubbed the company's "third" headquarters, behind offices in Toyota City and Tokyo, symbolized its overreach.

"He said he was already aware that Toyota had expanded too quickly," recalls a longtime associate who was at that meeting with the honorary chairman. "He also did not want the Toyoda family fortune and legacy to decline."

It had been 12 years since the last Toyoda commanded the executive suite. But within a year, Shoichiro's son, Akio Toyoda, would be chosen as the company's youngest president.

Today, the 53-year-old "prince," as Akio is known in the Japanese media, is at the center of what insiders and experts describe as a battle for the soul of the world's biggest automaker.

On one side is the Toyoda family, led by Akio Toyoda, wielding the influence of the clan name in a drive to restore the values that transformed a parochial Japanese loom maker into a global paragon of engineering excellence, skilled manufacturing and product quality. Shoichiro just turned 85 but left the board of directors only last June -- and he still lingers in the background as an abiding presence.

On the other side are the forces of a new modern corporate culture -- forged during the last decade of voracious growth and shaped in large part by nonfamily members -- that prizes growth, global expansion and a Western-style dedication to pleasing investors.

"As you well know, I am the grandson of the founder, and all the Toyota vehicles bear my name," Akio Toyoda testified before the U.S. House Committee on Oversight and Government Reform last week. "For me, when the cars are damaged, it is as though I am as well."

Toyoda, grandson of founder Kiichiro Toyoda, said the company's traditional priorities -- first, safety; second, quality; third, volume -- have become "confused.

'Anti-family ... pirates'
One outsider -- and former high-ranking Toyota executive -- paints a dramatic picture of the inner turmoil at Toyota.

The company's former North American chief, Jim Press, says Toyoda is battling "anti-family, financially oriented pirates," and only scion Akio can turn things around.

"Akio Toyoda is not only up for the job, but he is the only person who can save Toyota," said Press, who left Toyota in 2007 after 36 years, for the former Chrysler LLC."The root cause of their problems is that the company was hijacked, some years ago, by anti-family, financially oriented pirates," Press wrote, referring to the company's move away from Toyoda family leadership over the past decade.

"They didn't have the character necessary to maintain a customer-first focus. Akio does."

Press didn't name names. But the Toyoda name took a back seat starting in 1995, when the independent-minded and aggressive Hiroshi Okuda became president after Tatsuro Toyoda, Akio Toyoda's uncle, suffered a stroke. Okuda was followed by Fujio Cho and then Katsuaki Watanabe.

Much of Akio Toyoda's task will be imparting his own stamp onto a corporate culture largely transformed by Okuda.

Okuda was the first non-Toyoda family member to head the automaker in nearly 30 years. Okuda, a former executive vice president for finance, favored professional management over the family's reliance on personal ties.

That approach was billed as a check on nepotism in a publicly traded company.

Okuda aspired toward a more Western-style, financially driven company. He listed Toyota on the New York Stock Exchange in 1999, forcing it to adopt U.S. accounting principles. Toyota's skimpy dividends had been a sore point with institutional investors; Okuda boosted them sharply.

Rather than rely on informal ties to influence minicar specialist Daihatsu Motor Co., Okuda increased Toyota's ownership of the company to a controlling 51 percent.

Okuda-ization of Toyota
And he took control of Toyota's massive cash stockpile, spending money at unprecedented rates. He used the cash to open factories from India to Indiana, to raise Toyota's shareholdings in Toyota Group companies, to launch stock buybacks, and to raise r&d budgets, especially for alternative powertrains. The results included global expansion and the innovative Toyota Prius hybrid.

When Cho became president in 1999 -- long after he led the expansion in the United States with the construction of the Georgetown, Ky., assembly plant in 1988 -- the tenor subtly changed, but a new type of tension -- new to Toyota, at any rate -- was introduced.

While Okuda wholeheartedly was pushing rapid overseas expansion and the goal of grabbing 15 percent of global market share, a lower-key Cho endorsed the target as a mere rallying cry for the troops. Okuda was a calculating finance wizard, Cho an old-school manufacturing boss. Okuda was a hard-headed judo expert, Cho a quiet listener with a natural curiosity for the world beyond Toyota's corporate halls.

Cho's most lasting legacy is the codification of training, designed to ensure that the rapidly expanding automaker continued to follow the Toyota Way espoused by the founding family.

Okuda handed Cho the presidency, which is typically the hands-on, operational boss in a Japanese company, and assumed the normally ceremonial role of chairman. But soon the two engaged in a tug-of-war, and Okuda was not just ceremonial.

Cho and his successor, Watanabe, gave Akio Toyoda increasingly important and wide-ranging assignments, from running China to running all Asian manufacturing.

Okuda was surprisingly open in opposing Akio Toyoda's rise, dropping oblique comments to the effect that a person's family name shouldn't automatically qualify him for an executive post.

All the while the company kept expanding by leaps and bounds. Global sales shot up from 5.2 million vehicles in 1999 to a peak of 8.9 million in 2008 on the eve of Akio's ascension.

A wrong turn
Increasingly, Akio Toyoda is saying the company took a wrong turn.

"We pursued growth over the speed at which we were able to develop our people and our organization," Toyoda said last week during his congressional testimony. "The pace at which we have grown may have been too quick."

But does the greenhorn CEO have what it takes to right the course?

Akio joined the family business in 1984. But he was initially rebuffed by his father, himself president from 1981 to 1992. "Nobody will want to be your boss," his father told Akio, according to unofficial corporate lore. The gist: People would handle him with kid gloves.

Akio Toyoda spent his career rotating through the company's most important posts -- handling quality control, domestic sales, China and international operations, among other duties.

The American-educated fan of car racing and field hockey consistently sidestepped public comment about his famous forefathers. Insiders say that would have been considered gauche and presumptive. Plus, they say, talk of following their footsteps might work against his climb.

Toyota still operates by the consensus of its elder executives. And the inexperienced Toyoda has called back many of the old guard to serve as his inner circle, including Yoshi Inaba, who was brought back from semiretirement and sent to head U.S. operations for a second time.

Critics say Akio Toyoda needs their experience to compensate for the lack of his own. His oft-repeated mantras from the Toyoda family precepts, such as "customer first" or genchi genbutsu -- Japanese for "go and see" -- are merely hollow catch phrases, they say.

'The Child President'
The increasingly skeptical Japanese media have now rolled out a new nickname: The Child President.

"There are two different camps at Toyota, the family members and the professional managers," says Masaaki Sato, a noted Japanese auto industry watcher who has written such books as The House of Toyota and The Toyota Leaders. "Nobody in the company is speaking out against Akio, but many of them -- especially at the top -- harbor doubt in their hearts."

Sato took issue with Akio Toyoda's claim to Congress that his name was on the cars, saying it was arrogant to assume a family member should be at the helm.

"In this day and age," he said, "It's a big mistake to assume that a Toyoda family member should be at the head of such a big global company just because he's a Toyoda."

Although he has spoken publicly about the need to turn the company around, it must be remembered that Akio Toyoda was part of the upper management that steered the company wrong. He was promoted to executive vice president, a board-level position, in 2005, at the height of Toyota's growth frenzy.

Yet Akio is still a Toyoda. And although the family owns and votes only 2 percent of the company's stock, it benefits from a hard-to-measure extra clout that the Japanese call plus alpha.

At a press conference in January 2009, after Akio was named the next president, he called his father, Shoichiro, a "flag" around which the company traditionally rallied in tough times.

The son then added: "I am not yet that flag, but I intend to do my best so that maybe 20 or 30 years from now, people may look back and refer to me as a flag."

The reign of Toyoda
The house of Toyoda has long held sway at its namesake company. A look at the carmaker's presidents and their starting dates.
1937: Kiichiro Toyoda founds company; Risaburo Toyoda appointed first president
1941: Kiichiro Toyoda
1950: Taizo Ishida
1961: Fukio Nakagawa
1967: Eiji Toyoda
1981: Shoichiro Toyoda
1992: Tatsuro Toyoda
1995: Hiroshi Okuda
1999: Fujio Cho
2005: Katsuaki Watanabe
2009: Akio Toyoda

http://www.autonews.com/apps/pbcs.dl...303019934/1117
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Old 03-01-10, 09:16 AM   #2
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For the last 4 toyota presidents, why are their terms so short?? That was when toyota was doing great.
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Old 03-01-10, 11:46 AM   #3
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Great read, thanks!
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Old 03-01-10, 11:52 AM   #4
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Quote:
Originally Posted by TLe2006 View Post
For the last 4 toyota presidents, why are their terms so short?? That was when toyota was doing great.
Many units sold but quality went down.
Toyota is where it is now are because of the last few president's bad management.
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Old 03-01-10, 12:46 PM   #5
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Great post.

Interesting, but not surprising to see, that during Toyota's true glory years (late '60s to mid 90s...from the 2000GT to the MkIV Supra), a Toyoda was in charge.

Hopefully the return of a leader with the Toyoda name will bring back with it good cars and good times!

I thinking there is something very powerful and spiritual about this. The return of a Toyoda leader along with a legitimate new sports car the FT-86 (not to mention LFA)...hmmm
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Old 03-01-10, 01:17 PM   #6
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Fascinating read. That being said, I see the 'Toyoda name' argument as being a side distraction to the real issues, which are how the future corporate direction will be charted, how they will mange the recall mess, and how they maintain that trademark Toyota quality. The article suggests that by becoming Westernized, the company lost its focus; yet it did produce the brilliant Prius during that time. Now I get why Mr. Press was talking about 'anti-family' forces which I thought was a colloquialism at first, actually he is referring to the Toyoda battle.
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Old 03-01-10, 01:52 PM   #7
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This entire mess started, one can argue, when Okuda listed the company on the New York Stock Exchange.

Toyota became too influenced by Western management and accounting practices.

The words of Jim Press are harsh but true. There may be possibly corporate sabotage involved from those that became jealous of Toyota's success and excellence in the industry. Nothing would surprise me at this point.

I've said this before, but the whole dedication from some executives of pleasing investors has got to stop. Investors do not run Toyota; Toyota is run by it's own executives.

Akio Toyoda recently said that he sent a CLEAR message to stockholders and investors that from now on quality will be the #1 priority.

Toyota needs to diminish the influence of the media as well as stockholders and investors in the company, and needs to focus on their core values, the values the company has believed in since it was founded.

Toyota also needs to completely shut out finance people from upper management positions.

This article has a few misconceptions and false points.

Quote:
Originally Posted by Automotive News
On the other side are the forces of a new modern corporate culture -- forged during the last decade of voracious growth and shaped in large part by nonfamily members -- that prizes growth, global expansion and a Western-style dedication to pleasing investors.
This is exactly the sort of corporate culture that has been the downfall of many Western corporations, and even a few Eastern corporations .

Quote:
Originally Posted by Automotive News
Okuda was the first non-Toyoda family member to head the automaker in nearly 30 years. Okuda, a former executive vice president for finance, favored professional management over the family's reliance on personal ties.
Toyota should be ashamed of having made a finance guy like Okuda, as well as a guy like Watanabe as a CEO.

Quote:
Originally Posted by Automotive News
That approach was billed as a check on nepotism in a publicly traded company.
What a ridiculous notion if this came from Okuda. Toyota wouldn't be where it is today if it wasn't for the Toyoda family.

Quote:
Originally Posted by Automotive News
And he took control of Toyota's massive cash stockpile, spending money at unprecedented rates. He used the cash to open factories from India to Indiana, to raise Toyota's shareholdings in Toyota Group companies, to launch stock buybacks, and to raise r&d budgets, especially for alternative powertrains. The results included global expansion and the innovative Toyota Prius hybrid.
Toyota had strong R&D budgets before Okuda came into power. Also the point about the Prius is entirely wrong.

The Prius project was originally conceived thanks to the vision of former honorary chairman Eiji Toyoda. It was under his guidance that then-president Tatsuro Toyoda first initiated the Prius project in 1993.

Eiji Toyoda is also the man responsible for the Lexus brand. In 1983, he had the vision of creating a separate luxury brand for Toyota.

Okuda simply continued the Prius project, but he did not think of it nor did he initiate the project.

Quote:
Originally Posted by Automotive News
Cho and his successor, Watanabe, gave Akio Toyoda increasingly important and wide-ranging assignments, from running China to running all Asian manufacturing.

Okuda was surprisingly open in opposing Akio Toyoda's rise, dropping oblique comments to the effect that a person's family name shouldn't automatically qualify him for an executive post.
Akio Toyoda was being given different roles for experience, nothing wrong with that. However not surprised that a "financial pirate" like Okuda opposed Akio's rise.

Quote:
Originally Posted by Automotive News
Toyota still operates by the consensus of its elder executives. And the inexperienced Toyoda has called back many of the old guard to serve as his inner circle, including Yoshi Inaba, who was brought back from semiretirement and sent to head U.S. operations for a second time.

Critics say Akio Toyoda needs their experience to compensate for the lack of his own. His oft-repeated mantras from the Toyoda family precepts, such as "customer first" or genchi genbutsu -- Japanese for "go and see" -- are merely hollow catch phrases, they say.
Akio now has roughly 30 years of experience working at Toyota. There is nothing wrong with calling back elder executives to former posts. He rightfully values the experience and wisdom of elder executives. Critics really don't know much about Akio Toyoda if they think he is using "hollow catch phrases" .

Quote:
Originally Posted by Automotive News
Sato took issue with Akio Toyoda's claim to Congress that his name was on the cars, saying it was arrogant to assume a family member should be at the helm.

"In this day and age," he said, "It's a big mistake to assume that a Toyoda family member should be at the head of such a big global company just because he's a Toyoda."
Regardless of the day and age, it's an even BIGGER mistake to run a company using Western-style management and accounting practices. That will only serve to a run a company into the ground .

If he really is a "noted" auto industry watcher, maybe Sato should check his facts. Akio Toyoda is NOT president "just because he's a Toyoda". He has 30 years of experience working at the company, and not just as some finance guy or accountant. He had a variety of roles within the company.

Quote:
Originally Posted by Automotive News
Although he has spoken publicly about the need to turn the company around, it must be remembered that Akio Toyoda was part of the upper management that steered the company wrong. He was promoted to executive vice president, a board-level position, in 2005, at the height of Toyota's growth frenzy.
By 2005 Toyota had already made quite a few bad decisions, and Akio likely did more good than harm as executive vice president. This is nothing but an unfounded assumption Akio "helped" steer the company wrong.

----------------------------------------------

Some of the critics and so-called "industry watchers" also should check the fact that Shoichiro Toyoda last year held a meeting with 400 executives and criticized some former top executives like Watanabe and Cho for causing some of Toyota's current problems.

The fact is, Toyota became the great company it is known for, and achieved it's reputation thanks to the Toyoda family. It's current problems are due to decisions made by non-Toyoda family members.
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Old 03-01-10, 01:52 PM
 
 
 
 
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