Whatever happens to Toyota following the forced recall of millions of its autos, its story will remain legendary. Toyota’s rise from humble origins as the “offspring” of a family textile machinery company in a remote area of central Japan to become the dominant global automobile maker and a synonym for quality is astonishing. Along with a small number of other Japanese corporate icons — for example, Sony, Honda and Canon — Toyota was the bright star of the Japanese economic miracle and global challenge.
It remains to be seen whether Toyota’s current problems are temporary or irreversible. Its current humiliation notwithstanding, it retains tremendous advantages — and in any case, the competition is not that much greater. But, to ensure its global position, Toyota — and most other Japanese multinational corporations — needs a cultural transformation.
As was vividly illustrated by the obfuscating delays by its chairman and CEO (and grandson of the founder), Akio Toyoda, in responding to calls to appear before the US Congress, Toyota has a serious global communication problem. That problem is a reflection of a broader Japanese weakness in foreign languages, especially English. But as a dominant global player and the world’s biggest automobile company, that excuse is just not good enough.
I have had a close acquaintance with Toyota for three decades. In the 1980s, as Western corporations in diverse sectors faced the onslaught of what was seen as the daunting Japanese challenge, I accompanied Western managers to Japan to learn about the country and its management and production techniques. This invariably included visits to Toyota factories. It was well worth it — and almost certainly still is — as the Toyota Production System deserves admiration and emulation.
In the course of the decade, however, I noticed a subtle change. By the latter part of the decade, Western management delegations continued to be politely received, but more often than not professional guides were appointed to show them around, and there was no dialogue with the Toyota managers, who previously had been keen to teach and learn. On the contrary, there was an undisguised sense of condescension toward the visiting foreign executives.
As Toyota proceeded to globalize, in the late 1990s it established a greater European manufacturing presence and a European headquarters. My institute, IMD, was contracted to undertake a series of executive development programs for Toyota Europe.
The “normal” pattern is that when we do a program for, say, the global management team of Nokia, a proportion of the participants will be Finns from Helsinki’s head office. To be successful globally, one must have the capacity both to receive and transmit information; the foreign executives must learn about Nokia, and Nokia must understand the dynamics of the markets in which it operates. To that end, virtually all global companies (including Sony, the one Japanese exception) have adopted English as their working language.
Toyota, however, had different plans. The IMD program would be for the Europeans, and no Japanese from the head office would attend. The message was clear: It was up to the Europeans to learn the Toyota “way,” and it was not necessary for Toyota to learn about the business and cultural dynamics of the European societies in which they are operating.