2.19.2007

How Toyota Thinks Today

How does Toyota think? Good insight into the answer comes from two recent experiences I’ve had. One was hearing a speech by a Toyota executive; the other was reading the cover story in The New York Times Magazine yesterday.


            The story, written by Jon Gertner, carries the headline “How Toyota Conquered the Car World.” Gertner gets it right. He focuses not on tools or methods, but overall strategy and approach.


He comments that “Toyota is as much a philosophy as a business.” Perhaps his most insightful statement in the lengthy article is when he says, “Toyota’s executives recognized early on that improving the process by which cars are designed and built is just as important as improving the vehicles themselves.” Toyota, Gertner says, is “different – in some deep, cellular way – from many American companies. Nothing in its DNA, to borrow a fashionable term among business-school academics, is focused on short-term gains.”


            The article won’t teach you the details of the Toyota Production System – that is not Gertner’s intent – but it is a good historical profile of how Toyota developed and what the company is all about.


            I also encountered the perfect embodiment of Toyota thinking when I heard a speech delivered at the recent Automotive News World Congress in Michigan by Jim Lentz, executive vice president of Toyota Motor Sales USA. (Lentz is one of the people quoted in Gertner’s article.)


            Lentz was not the only sales or marketing person to speak at the event. For example, Mike Jackson, vice president of marketing & advertising for GM North America, delivered an entertaining presentation on GM’s latest advertising approaches and its use of a range of media.


            But even though he is in sales, Lentz did not talk about advertising. He did not talk about marketing. He didn’t discuss media, new or old. He said nothing about sales. And he even said very little about product.


            Lentz talked about customers.


            He spoke at length about demographic trends, and what Toyota sees as the five generations of customers – “traditionals,” baby boomers, and generations X, Y and Z – who will all be seeking different things in cars and trucks.


            He discussed what he called the “new urbanism,” meaning the trend of people moving back into major cities, and how that is affecting what people want in vehicles.


            He talked about the strong movement toward living healthier and more environmentally conscious lives, which Toyota calls LOHAS – Lifestyle of Health and Sustainability. This has an impact both on product – i.e., demand for “green” vehicles such as hybrids – and on the need for Toyota to be a good corporate citizen.


            And Lentz discussed the effort Toyota makes to understand its customers. He specifically talked (as Gertner does in his article) about the research that went into development of the new Tundra truck:


 


            “Our Japanese and American designers, engineers and product planners didn’t just ‘go and see’ the market… they ‘lived the market.’


            You name it and they did it. I’m talking about customer visits to… construction sites… mining camps… ranches… farms… truck stops… tack stores… drilling operations… car carrier companies… and even the world’s largest snowplow manufacturer.


            We also sent them out for two weeks at a time in 5th-wheel trailers on 1,000-mile camping trips where they did what typical American families do on vacation.


            They also spent time with personal and recreational use truckers… saw trailer hitches installed… hopped into cabs of big rigs… and even drank stale coffee in out-of-the-way diners.


            They did everything they could to live in the shoes of work customers and then used that knowledge in developing the next Tundra.


            For instance… during ranch visits… they noticed the difficulty drivers encountered while lining up their tow hitch with trailers they wanted to pull. Many needed another person on hand just to guide them through the process.


            So… on the new Tundra… we’ll offer an available wide-screen rear backup camera hidden in the tailgate handle to serve as an extra pair of eyes, making trailer hookups much easier and smoother.”


 


            Do all car companies send their people out on these kinds of road trips? I’d be surprised if they do.


            But perhaps the most telling point was when Lentz noted that, while Toyota this year is celebrating its 50th anniversary of doing business in America, it wasn’t always a great success here. The first product introduced in America, the Toyopet Crown sedan, was a flop.


           


            “That fact is never far from my thoughts,” said Lentz. “I have a framed original brochure of that 1957 sedan hanging in my office. It reminds me that we’re NOT invincible… that we must always listen to our customers… and always consider what they want.”


 


            A never-ending focus on the customer combined with a relentless determination to avoid complacency and never be satisfied. That is what a lean strategy is all about – and that is why Toyota has indeed conquered the car world.


 

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