How Toyota became the most innovative car company in the world

This weekend's New York Times Magazine featured a great cover story on Toyota, which explained how the Japanese company has become the acknowledged leader in the global automobile industry. At a time when Ford and GM are downsizing and rightsizing, the incredible Toyota engineering team continues to get things right. The latest product is the Toyota Tundra, a new full-size truck designed with Red State America in mind. With Toyota, small incremental innovations snowball over time into huge improvements in productivity, efficiency and output. By the end of 2007, Toyota could pass GM as the world's largest car company. Already, the company's stock market capitalization is $240 billion - higher than that of GM, Ford, Daimler Chrysler, Honda and Nissan combined. If Toyota were a baseball team, surmises Jon Gertner of the New York Times, it would be the type of team that wins 150 out of 162 games.

Anyway, if you're looking for some Japanese management buzzwords to inject into your cocktail conversations, the article explains concepts like kaizen ("continuous improvement") and genchi genbutsu ("what customers want in a car or truck and how any current versions come up short"). What's cool is that Toyota engineering and design teams actually make archaeological visits to truck graveyards in Michigan, where they examine the rusting hulks of old trucks: "With so many retired trucks in one place, they also gained a better sense of how trucks had evolved over the past 30 years - becoming larger, more various, more luxurious - and where they might go next." (In addition to this great quote about evolution, the article highlights the importance of Toyota's DNA -- both topics, of course, that relate directly to the Endless Innovation blog!)

Comments

[David Carlson]

I think it is strange that most of the US car manufacturers have had such poor design and product strategies. They are not selling what people are looking for. How could it happen?

[Dominic Basulto]

I think there are several factors at work here: (1) it's very time-consuming and expensive to reconfigure a Detroit manufacturing plant to make new types of cars. Essentially, the cars that we will be forced to buy four years from now are being determined today. (2) the profit margins on big SUVs and trucks are much higher than on tiny, fuel-efficient vehicles. Thus, there is a built-in bias to the types of vehicles that make the auto companies the most cash (3) the pension and health care liabilities at these Detroit automakers are massive. To make things worse, the unions won't let the companies become any more nimble, for fear of losing jobs.

[Juno888]

They are not selling what people are looking for. How could it happen?

[KP]

This makes no sense! Toyota has made very few innovations as far as the auto industry is concerned. You would be hard pressed to find a technology which toyota was the primary inventor. The only thing they are innovative in is social engineering and marketing.

[Car Advice]

We can't deny the fact that Toyota is lined-up as one of the best trusted company when it comes to automobile. They already made and established it's name on the automobile industry.

[Van Leasing]

I visited this blog first time and found it very interesting and informative.. Keep up the good work thanks..

[statistician,manager student]

I am looking for toyota's innovations techiques in sustaining their top position in the market,so if all you share your ideas ,i would be great.

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