TPS Benchmarking

Toyota Seeking Top Talent: Tightwads Only Need Apply

By Jon Miller Published on March 26th, 2006

There have been several articles over the last year pointing out the challenge Toyota is facing as they expand overseas to find good people. The Toyota’s Challenge: Growing the Talent points out that Toyota is growing faster than they can develop people to fill the senior management ranks.
Bill Waddell, author of Rebirth of American Industry and blogger at Evolving Excellence likes to say what he thinks. More often than not, what he says makes me think. I think Bill is way off base in labeling the “ignorance of racism” as the Achilles’ heel of Toyota in his article on March 24.
There is a difference between racism (which is decision based on ethnicity) and decision based on shared culture, value and beliefs. When you make hiring or promotion choices based on ethnicity this is called racism. When you choose not to hire or promote someone because of incompatible work-related values or practices it is called “sound judgment”.
In America we have been taught to believe that diversity is a virtue. This idea (which could be called an assumption or theory) may be true in America. This idea is not shared in every country and culture. With diversity, as in any idea we want to sell to others, we need to first demonstrate the benefit. Once we show why having a diverse group at the executive level is good for business and good for people, we can begin to persuade.
But before persuading perhaps we should listen and attempt to learn the other perspective. It’s a somewhat culturally arrogant of Americans to judge Toyota or anyone else based on how many nationalities are represented on their board without first understanding their reasons for it. If we see evidence of a lack of diversity and cry “racism!” we are not doing root cause analysis on the process, we are blaming operator error.
I personally believe that diversity in a team is helpful in problem solving or decision making. Here is a related article. But I wouldn’t impose the value of diversity on our office in Japan or in any other country simply because as an American I thought diversity was good, without first attempting an understanding their culture. As much as Americans value diversity and inclusion, Japanese value other things.
Shared Views
Nowhere in the article is it implied that Toyota attributes the problem of a lack of non-Japanese senior managers to the fact that they are not Japanese. Rather than write off the Japanese executives at Toyota as racists because of their statements in this article and the composition of their board, I think it would be more interesting to delve into why this is.
“Getting overseas staff to share our views on management and quality is very difficult. But that task is urgent,” says Toyota spokesman Kinoshita.
There are two ways to read the above statement from the article. The first to read “Overseas staff don’t get it” and the second is to read “Toyota is having a tough time getting overseas staff to get it”. The former is critical of the overseas staff while the latter is self-critical. Based on everything I know about Toyota and it’s culture of kaizen and respect for people, I will say that the latter is correct.
On the surface it may seem easy to have shared views about quality or management. It’s probably safe to say that no one openly disagrees with “zero defects”, “safety first” or “kaizen everyday” at Toyota. It is something quite different to hold the underlying set of beliefs that result in actions supporting these things. I’m not saying that there is something uniquely Japanese to these beliefs. It’s more that there is something uniquely Toyota. But there are differences between Japan and America.
Abundance vs. Scarcity
There has been a fundamental difference in perspective between US and Japan in the past 60 years of industrial development. The 200 year history of America’s expansion Westward on the depopulated continent, and Japan’s development of landmass of limited natural and agricultural resources, has had the effect of making Americans think in terms of abundance and Japanese in terms of scarcity. I would argue that the former is more suited to the invention of the automobile while the latter is more suited to kaizen of the automobile.
This difference in position of abundance vs. scarcity was acute after Japan’s defeat in World War II. The writings of Ohno and Shingo when reflecting on Japan’s culture and history and crediting the development of TPS and kaizen were in part to this assumption of scarcity but also because the spoke no English and were probably puzzled themselves in genuine puzzlement “How did we manage to come up with a manufacturing system better than the Americans?” Culture, humility and a willingness to learn after the defeat in World War II, the economic engine of the Korean War, trade barriers keeping a captive domestic market that guaranteed a degree of demand stability, and culture –all of these things played a role.
Japanese companies did develop an effective system of manufacturing management. They listened and put into practice the teachings of Deming, Juran, Drucker, Ford and others while many US firms did not listen to these men. Facing scarcity the Japanese were eager to listen and learn. Toyota took it further than any other company. Why?
Nagoya Business Style
The culture at Toyota is a product of the business culture of the Nagoya area. There was a good Wall Street Journal article in 2005 about the character of the people and culture of the Aichi Prefecture (home to Toyota). They are tightwads. The article contained statistics on spending and savings to back up anecdotes.
In Japan today books about “Nagoya business style” are in vogue, thanks to booming Toyota and Toyota-related companies around Nagoya. There are television programs on the subject. There is also saying is that goes like this:
Three businessmen go out to dinner. The one from Tokyo thinks, “How can I pay for all three dinners politely?”
The one from Osaka thinks, “How can I pay for only myself and not the others?”
The one from Nagoya thinks, “How do I get them to pay for me?”
These differences probably exist in every country. You could replace Tokyo, Nagoya and Osaka with regions or cities in your country and make this story work. The point is that a fierce frugality and focus on cost reduction is what has made Toyota successful. They do not want to dilute this by bringing in anyone at their executive level who does not share the same values.
Remote Control from Japan
“We’re afraid of slipping, so we can’t help but interfere” says Kinoshita, and concludes however that this can not go on much longer.
In some ways Toyota is a family business. One of the things about a family business is that they tend to have very strong characteristics influenced by the founders. Family businesses can also be slower to let people from the “outside” run the company, since the perception is that those not in the “family” don’t share the same values as strongly. The Japanese are unique in wanting to run things by remote control from overseas. The Toyota culture, if we accept from the moment that it is a product of a family business from the provincial Nagoya area is compulsively frugal. If they are like the rest of us, the people at Toyota probably don’t understand why people in other countries aren’t like themselves.
Based on my experience working with Japanese stationed in the US, the 20 years of experience developing and getting factories up and running is not always matched with 20 years of learning about the culture and mindset of local people. After all, the Japanese company knows what works for them and wants to see that replicated. They come from completely different religious, educational, and social backgrounds and typically do not have social anthropologists on staff to help them bridge the gap. Developing shared values beyond the “Values” section of a company’s brochure is essential but not easy.
It’s one thing if Toyota was micro-managing operations from across the ocean. TPS runs on visual management, problem response systems, built-in quality and just in time to insure high levels of quality, safety and productivity. So they don’t need to micromanage operations, once TPS is in place as a way of thinking.
It’s more likely that they are constantly auditing standard work, adherence to the spirit and practice of kaizen, and doing OJT with their non-Japanese counterparts. It’s how they learned and it’s how they teach. In other words making sure that through practice they are learning the values and beliefs of Toyota. Lean manufacturing is easy, Lean thinking is not so easy.
Employee Turnover
Toyota recognizes that in their overseas operations people are more mobile and able to go to work for another company. This in my view is their biggest challenge and one that may cause them to slow their growth or erode their quality and profitability. The Japanese tend to identify more strongly with the group and make long-term commitments to a company than people in America do, keeping turnover low. As an aside, employee turnover in Chinese companies is completely out of control and has similar implications for growth, quality and profitability.
Diversity vs. Harmony
Toyota is doing very well. They have no reason to do as Sony or Nissan and bring in a foreigner at a very high level of their management team to shake things up. Toyota wants to change (in the direction of better or kaizen) but Toyota does not want to be changed. They want the people that rise to senior executive levels to have the values that made Toyota successful. This is not something that you can articulate in a memo and check off of a checklist.
Which is easier? Developing non-Japanese to be more like the “ideal” Toyota senior executive, or changing the definition of “ideal” to include experiences, values and perspectives that non-Japanese executives bring? What would you do if you were Toyota?
The Japanese believe that homogeneity (genuine or not) is a virtue because it promotes harmony. For Toyota as a global company their first challenge is to find or develop people who also share their values, including harmony. Form follows function, and what an executive team that promotes this type of harmony looks like in terms of national and ethnic composition remains to be seen.

  1. Bill Waddell

    March 26, 2006 - 3:28 pm

    I happen to think that when you believe that only people of your own race, color, creed or national oigin can share your beliefs about manufacturing, then you are a racist. We are not talking shared belief in Shinto here – we are talking about a shared belief in the best way to weld sheet metal. If only a Japanese can know how to make cars the way Toyota wants, then the same arguement can be used to exclude anyone who is not of management’s race color, creed or religion from any business.
    We were a backward, ignorant nation when we hung out the signs saying “Irish Need Not Apply”, and when the Jim Crow laws kept African Americans from decent jobs. Toyota’s track record is perfectly in keeping with that backward thinking.
    And what does Toyota’s philosophy say about you, Jon? Blog and consult to your heart’s content, but according to Toyota, you cannot possibly understand the Toyota Production System – you are cursed with non-Japanese genes.
    The flaw in your arguement is that, of course it is hard to groom the next executives when you want them to fit a precise mold, but why would it be easier to train a Japanese for that role than an American? Especially if they both have long, succesful track records in Toyota companies? When you allow race to become an issue in determining someon’s ‘trainability’ you, my friend, are a racist.

  2. Jon Miller

    March 26, 2006 - 6:52 pm

    Hi Bill,
    I don’t see Toyota’s philosophy as having anything to do with ethnicity (which you call race).
    The pope in the Vatican just picked his new cardinals. It was a multi-ethnic group but not as diverse as it could have been, considering regions of the globe in which the Catholic Church is seeing growth. The pope chose based on the shared views on doctrine, not their ethnicity or citizenship. The Catholic Church has had 2,000 years to develop their multi-national leadership team. Toyota has had 20.
    A similar debate may have raged centuries ago among monks.
    Toyota’s words are shared “views on quality and management” and this has nothing to do with ethnicity. If Toyota analyzed the DNA (to use an over-used term) of these shared views, they could probably create a battery of tests to find the executives who already had these views at Toyota.
    Japanese companies tend to train their own talent rather than hire in seasoned executives. This takes longer, and Toyota simply has not had enough time yet to develop them. But this should change soon.
    As for Toyota’s track record, I don’t have the full details on all of their hiring practices. The fact that the Toyota board is loaded with Japanese is a historical accident, nothing to do with a notion of ethnicity. It just so happens that the 26 top executives learned the Toyota way while working at Toyota in Japan. It’s a Japanese company. Go figure.
    How long have non-Japanese executives candidates been working for Toyota? Perhaps 20 years? How long did the 26 Japanese top executives work at Toyota before making it to the top level?
    Take the age at which the youngest of the 26 started as a board member, subtract 20 to 25 years (age starting at Toyota), and that’s how long it took for them to rise through the ranks. I’d have to look it up but more than 20 years, I suspect.
    I don’t know whether it takes 20+ years to teach a person to think the Toyota way. Toyota may think so, and if so who am I to second guess them? Though it’s beginning to change, seniority is still more important in Japanese companies than ambition or merit.
    I enjoy the vigorous debate, but whether Toyota has a racist philosophy or not is something two non-Toyota managers like us probably can not settle.

  3. Bill Waddell

    March 26, 2006 - 7:55 pm

    The Catholic Church – which is vastly more integrated in every area except religion (for obvious reasons) than Toyota is not really an appropriate comparison – of course they have a pro-Catholic bias.
    A better comparison would be an American company that had an all-white Board of directors for all of their 50 year existence; with 75% of their employees black or hispanic, and 85% of their customers black or hispanic, and many of those employees with more than 20 years of service. If that company were challenged about their lack of diversity on their board, and they responded with “Getting black and hispanic staff to share our views on management and quality is very difficult”, they would be in federal court so fast their heads would spin. The fines for such blatant racism would bankrupt them – and rightfully so. That is where Toyota is.

  4. Martina

    March 30, 2006 - 8:59 pm


  5. Diane

    May 6, 2007 - 5:13 pm

    When you’re on the top, you’ll always have people (& other car manufactuers) trying to pull you down. Go Toyota!! I’m on my 2nd Toyota heading towards 200,000 miles and Sears & Firestone are both convinced it will make it–at least to that.

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