Paradoxes That Drives Toyota's Success

Abstract

Toyota is the second-largest automotive company in the world. It designs and produces various kinds of products which range from super small to luxury and sports cars to SUVs, trucks, minivans, and buses. While its rivals try extremely hard to be an industrial organization, move along with the technology flow and stay up-to-date, Toyota makes progress in any movement such as, motor vehicle excellence, production quantity, earnings, innovation, stability and client reliability. In this paper, we discuss about the reasons that has given Toyota such a big success, and we focus on paradoxes and contradiction which has been implemented in its management and production process.

Paradoxes That Drive Toyota's Success

Toyota, as the second-largest company in the world, has a lot of characteristics which have driven Toyota's success. Not all of its characteristics are the same as their rivals. They do not try to compete with their rivals in common fields. They attempt to make themselves pioneer in new ideas and strategies, especially the ones which are different from the regular basis, and by this method they have put their name on top of the list of the best manufacturers. Toyota is always looking for a way to be distinguished among all vehicle companies, and for this reason they try not to be great just in the production system but also in management. There are a lot of books, researches and so many other articles which have been written about Toyota's management paradoxes and contradictions. It is always so innovative and risky for Toyota to implement the contrary ideas within the company because nobody has done that before, but when they do it based on knowledge, survey and experience it will really help to move forward. Toyota uses every single idea of its employees within the company, making ideas is not confined to the head managers. They really value their personnel and they always ask them in all levels to be involved in the process of creating new ideas for helping Toyota to be the best.

Paradoxes within Toyota

Toyota is an association that has a lot of contradictions, opposites, and paradoxes. These kinds of paradoxes are not essentially seen as bad things at Toyota. Actually, the company enthusiastically accepts and develops paradoxes instead of inactively managing them. It improves with paradoxes and it also controls the contradictory proposals to strengthen itself. It is difficult to comprehend Toyota's method because paradoxes and contrasting proposals are like permanent rules within the organization, while other organizations are still performing along with the rationality of the technological period and endeavor to get rid of those contradictions. The "Toyota way" means discovering a better way for recognizing constant innovation and continuous improvement (Osono, Shimizu, Takeuchi & Dorton, 2008). There are a lot of serious and vast efforts on researching about the reasons of Toyota's success which emphasize on so many paradoxical thoughts (slow moves and big jumps, a thrifty big spender & etc.) within Toyota which have had a tremendous effect on making Toyota as one of the best companies in the world.

Slow Moves and Big jumps

Toyota improves more like a tortoise than a rabbit in their daily process. It progresses step by step and along with experimentation, so it takes a long time to get results. For instance, the Lexus LS400 went through eight design assessments and 50 wind-tunnel tests and it took 6 years before the first model came out of the factory, but during all these procedures Toyota was making a big jump ahead. Creating Lexus was a very big movement and jump in the U.S. because it became a new brand company and the "finest dealer network in the industry" because of the way that they behave with their customers. Scion opened the youthful market for Toyota and proposed a "pure pricing" plan which they initially tell the customer the retail price and omit the price negotiation. And through the "Toyota Way 2001" booklet, they set up the Toyota institute in Japan and the Global Knowledge Center in the U.S. which caused to distribute their ideas attitudes and values all around the world (Osono et al. 2008). As we see, all of Toyota's big leaps were made gradually and through several years of effort and research.

A Thrifty Big Spender

One of the big paradoxes that you can see in Toyota is how they spend the money, in some ways they are so thrifty and in some they are more conservative. Osono et al. (2008) stated that Toyota is well-known because of its thriftiness, while it has had a typical amount of more than $15 billion in assets and cash and short term investments, simultaneously, they uphold a very small dividend disbursement of less than $3 billion each year. While they make a lot of money they are so "penny-pincher", they turn the lights off during lunchtime and the office personnel work together in one big room while there are no partitions between the desks. Toyota is also thrifty for the executive recompense compared to Nissan and Hyundai-Kia where senior managers get paid more than double of Toyota. Yamamoto, a retired factory worker in Toyota stated that whenever something breaks down they never buy a new one or send it out to be fixed, personnel in the factory repair it by themselves and struggle to reuse it. There is a strong belief that says "fix it yourself. Make the best use of what we already have. Let's endure with what we already have." (as cited in Osono et al. 2008, p. 11).

But they are not frugal in all aspects, they have a plan for their money and they never spend it in unnecessary ways. They use most of their money to develop the company through innovative ways. Osono et al. (2008) mentioned that in spite of all these frugalities, Toyota does not hesitate to spend a lot of money on investigation, expansion and manufacturing amenities, product equity, trader network, and workforce growth. They also spend a lot of money on gathering knowledgeable people and dealers from all around the world to their dealer convention and distributer's conference which is held in Japan. In this way they also invested a tremendous amount of money on establishing the University of Toyota and the Global Knowledge Center. Through these organizations they can train people in every field which can help Toyota to get more good results. They prefer to investigate their money on the field which can be profitable in long-term. Actually by these methods they train a new generation to serve the Toyota in future.