Toyota: Contending Productively with ParadoxHaving written several previous posts on how Toyota operates (see, for example, here, here, and here), I want to note what Hirotaka Tekeuchi, Emi Osono, and Norihiko Shimizu, all of Hitotsubashi University's Graduate School of International Corporate Strategy in Tokyo, have to say about the company in the June issue of the Harvard Business Review.
Tekeuchi, Osono, and Shimizu (TOS) report conclusions they have drawn from six years of research into how Toyota is run. They argue that the fundamental source of the company's long-time success is its "culture of contradictions," what I would call handling paradox with finesse, something which I have always thought is an essential part of sophisticated management.
TOS say that Toyota "deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises." The result is ongoing innovation that maintains the company's competitive strength.
TOS identify six forces that create contradictions at Toyota. There are three forces of expansion that drive toward change and improvement, but also complicate decision making and challenge the company's control systems:
- Tough goals
- Local customization
- Values from the founders Prime examples of these values are continuous improvement, respect for people and their capabilities, teamwork, humility, putting the customer first, seeing things firsthand.
- Up-and-in people management People who fall short of performance requirements are provided with help in enhancing their capabilities (as opposed to being fired, as would happen in an up-or-out model).
- Open communication This is promoted through disseminating know-how laterally, giving people the freedom to voice contrary opinions, having frequent face-to-face interactions, making tacit knowledge explicit, and creating support mechanisms for disseminating best practices and company values. These support mechanisms include the Toyota Institute, the Global Knowledge Center, and the University of Toyota. Also included are informal employee groups, such as committees, study groups, and social groups.
The above summary naturally leaves out most of the details contained in the TOS article, so if you want to get a fuller picture of what they are reporting, by all means read the article in its entirety.