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Case 4-1 Toyota Motor Corporation

Toyota Motor Corporation is a leading, globalmanufacturer of motor vehicles. It has seven key operatingprinciples that drive what the company does and how it doesit:

• Honor the language and spirit of the law of everynation and undertake open and fair business activities to be a goodcorporate citizen of the world.

• Respect the culture and customs of every nation andcontribute to economic and social development through corporateactivities in their respective communities.

• Dedicate our business to providing clean and safeproducts and to enhancing the quality of life everywhere throughall of our activities.

• Create and develop advanced technologies and provideoutstanding products and services that fulfill the needs ofcustomers worldwide.

• Foster a corporate culture that enhances bothindividual creativity and the value of teamwork, while honoringmutual trust and respect between labor and management.

• Pursue growth through harmony with the globalcommunity via innovative management.

• Work with business partners in research andmanufacture to achieve stable, long-term growth and mutualbenefits, while keeping ourselves open to newpartnerships.

The company consists of three business units: automotiveoperations, financial services, and all others. The company wasstarted by Kiichiro Toyoda in 1937 and is headquartered in Toyota,Japan. The company has a workforce of more than 348,000 employees,and it sells its vehicles in 190 countries and regions. The companyhas won many industry awards including most trusted brand,longest-lasting vehicles, and best overall value.

Toyota has established itself as an industry leader inquality, reliability, and efficiency in its automotive operations.Its methods for product development, production, and operationshave served as the benchmark for others in the industry. One set ofpractices that has enabled Toyota to achieve a sustainablecompetitive advantage is the Toyota eight-step problem-solvingprocess that it deploys throughout its global operations. The stepsinclude the following:

• Step 1: Clarify the problem

• Step 2: Break down the problem

• Step 3: Set the target

• Step 4: Analyze the root cause

• Step 5: Develop countermeasures

• Step 6: Implement countermeasures

• Step 7: Monitor results and process

• Step 8: Standardize and share success

Clarifying the problem (step 1) involves Toyotamanagement and employees working in teams to obtain directexperience with the problem for themselves to understand the natureof the problem. Breaking down the problem (step 2) focuses onfurther analyzing the problem and decomposing it into subproblemsthat are more specific and manageable. Setting the target (step 3)involves Toyota management and workers agreeing to challenginggoals for solving a problem (e.g., reducing defects) as well asmapping out a plan and timeline for achieving the objectives.Analyzing the root cause (step 4) refers to collecting empiricaldata to understand the underlying causes of a problem. This step istypically helpful in terms of identifying multiple causes of theproblem. Developing countermeasures (step 5) focuses on teams ofToyota managers and workers brainstorming specific solutions toremove the root causes of a problem. Implementing countermeasures(step 6) is the actual deployment of the selected countermeasure.Monitoring results and process (step 7) is based on a processcalled Plan-Do-Check-Act (PDCA) that supports the effectiveimplementation and continuous improvement of a countermeasure.Basically, PDCA involves implementing a countermeasure, evaluatingits effectiveness, modifying the countermeasure to further improveit, and then implementing that countermeasure as a cyclicalprocess. Standardizing and sharing success (step 8) focuses on“institutionalizing” the new practice or process into Toyota’soverall production and operational system. This could involveredesigning a process, changing rules and policies, job redesign,and realigning the culture of the organization. This also involvescommunicating the new practices or processes to others in theToyota organization so that they may also learn from the success ofthe change and obtain guidance about how they can achieve similarresults.

The decision-making and problem-solving process used atToyota Motor Corporation has enabled it to produce some of the mostpopular and reliable vehicles in their respective market segmentsincluding the Camry sedan and the RAV4 sport utilityvehicle.

DiscussionQuestions

1. What do you think of Toyota’s 8-Step Problem SolvingModel? Do you think you could use it at any of the employers whereyou have held part-time jobs or internships as a student? Why orwhy not?

2. Do you think that it would be better for Toyota touse a more informal approach to decision-making and problem solvingso that management and workers have more flexibility to addressissues they face in performing their jobs? Why or whynot?