The vision and the principles
An entrepreneur must have vision, willing to accept risks, and determine to succeed regardless of difficulty and failures. We know about Bill Gates and Steve Jobs but following is another story of another entrepreneur: Kiichiro Toyoda who found Toyota (Noted: The name Toyoda was written with 10 strokes, not a lucky sign so he changed to Toyota that has 8 strokes, a better luck with money as eight is a symbol of money).
Toyoda was a textile company. It makes looms and sewing machines for Japanese market. The owner’s son Kiichiro Toyoda went to Europe and the U.S. to buy raw materials for textile and fascinated by automobile technology so he stayed and learned how to build cars. He went home and convinced his father to let him started a car company.
The first car was produced in 1934 with most parts imported from the U.S. then continues its growth to be one of the biggest automobile companies in the world. The idea of making car was not new, when Mr. Toyoda entered the market, there were hundreds of competitors but he insisted that he would compete with all of them via his vision “To be the only transportation company for the world that build the best quality product at the price that people can afford.”
During the war, Toyota factories were bombed and destroyed. After that Japan experienced extreme economic difficulty. The company was almost bankrupted several times but through determination Mr. Toyoda was able to keep the company operate through many failures. Each time it failed, he considered a lesson to be learned. When they built trucks that failed, managers must learn the reason why they failed and fixed it. When cars they built did not meet the quality expected, they must rework the entire assembly line to correct them. Each time people wanted to gave up, they were reminded about the vision of the future and it kept the company operated throughout the difficult time.
Mr. Toyoda often asked his workers: “Does our product have a competitive edge such as better performance, better quality, better price, better feature, and better services over our competitors? If not then fix it.” He created the six principles for his company: The first is its goals of “Do the impossible”. The second is everything must follow the “Plan, Do, Check, Act” (PDCA) or the method of learning and improving toward perfection. The third is “Giving customers what they want everywhere we do the business”. It is about think big but focuses on every detail. For example, when Toyota started to sell its minivan in the U.S. market, it could not compete with the minivans of Ford and GM. A number of Toyota executives were asked to travel throughout the U.S in a minivan to understand what it would take to meet U.S. customer needs. After three years of reviewing and learning, they developed the next generation minivan (The Previa). It was so successful that both GM and Ford stopped build minivans and abandoned the market. The fourth is “Going to the market and satisfy customers” based on priority: “Customer is first because they buy the products; the Dealer is second because they sell our products, and the Manufacturer is last because we do not exist without them”. The fifth is to share all information with employees so everyone is committed to make the company succeed. This “Shared destiny” philosophy allowed Toyota to get commitments at every level of the company. The sixth is “Keep inventing new things nonstop” which means always stay few steps ahead of the competitor by constantly training for new skills and new knowledge. Toyota spent a large amount of budget for employee trainings, more than any company in the world. When Toyota was considered a “Low cost car, it responded by develop the Lexus that captured a larger market of luxury cars and competed with all top brands like BMW and Mercedes. A European executive lamented: “You should not provoke them; they know how to do the impossible. That is their first principle.”
The vision, goals and six principles strengthen Toyota and make it one of the best and largest automobile companies in the world. It happened within 60 years since it started. (1934-1994) In the first twenty years, it builds cars for the local market. In the next twenty years, it exports cars to other countries, and then by the next twenty years it becomes the biggest and most profitable automobile in the world. And it all started with a single vision.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
