The Key Factors of Toyota's Success

In 2008, for the first time, Toyota's sales outstripped General Motors', and Toyota took the title of "the world's biggest automaker," a title GM had held since 1931. Toyota's success has been attributed to an innovative production system anchored by a set of company values collectively known as "The Toyota Way."

The Toyota Production System, or TPS, is the company’s renowned production model. The principles of TPS are sometimes referred to as “lean manufacturing.” Established in the years after World War II, TPS is designed to get the most out of every available resource, be it human or machine. One of the overriding goals of TPS is the elimination of waste. Wasteful practices, termed “muda” in Japanese, can be everything from the idleness of employees to an overabundance of inventory.

One of Toyota’s key company values is known as “kaizen,” a Japanese term that means “continuous improvement.” Following the kaizen principle, the company focuses on ongoing, incremental innovations as opposed to sudden “game changing” ideas. Kaizen is seen as the responsibility of every employee, not just those in research and development. Matthew May, in his book “The Elegant Solution,” estimates that Toyota implements a million new ideas a year, most of them coming from ordinary factory workers.

Another core value is known as “genchi genbutsu,” a phrase which roughly translates as “go to the spot.” It is the practice of thoroughly understanding a problem by confirming information through personal observation. For example, a manager will go to the factory floor to observe a process and interact with workers to understand a situation rather than relying on computer data or second-hand information. The practice applies to executives as well as managers. Toyota Chairman Akio Toyoda has been known to visit auto dealerships unannounced to personally inspect vehicles outside of the factory.

Sometimes overlooked in the analysis of Toyota's success is its people. Kaizen shows that the company expects employees to contribute to the self-improvement process, and also illustrates that it values their input. Another element of eliminating waste is to recognize that the people in the factories must interact with the technology. The more seamlessly this takes place, the more efficient the factory will be. People are organized into small work teams to facilitate management, enhance motivation, and improve problem-solving.