How Toyota lost its way

[whynot]

An excellent article, particularly for the students of business management ...

http://money.cnn.com/2010/07/12/news...ion=2010071204

Some selective quotes from the article:

...

"Toyota had no more loyal or forceful advocate than Jim Olson during the nearly two decades he served as the company's chief American spokesman. But Olson now believes the company has mismanaged its success. In a book to be published in November, The Little Red Box of Management Tools, Olson writes that "internal distrust and flawed communication are the root causes of its current crisis." Toyota, he argues, did not delegate authority to overseas divisions commensurate with their responsibility. "This division between decision-making and execution," Olson writes, "slows the company down and prevents communication and planning."

Nowhere is that tendency clearer than in Toyota's U.S. business, which has grown into a vast engineering, manufacturing, and sales operation that ranks not only as the third-largest automobile company in the U.S. but also as Toyota's most successful unit. The U.S. now provides an estimated two-thirds of the company's profits, which were $2.3 billion last year. But Toyota has blocked the U.S. operations from becoming too powerful by using the ancient principle of divide and conquer. Rather than organize around a single headquarters, like its major competitors Honda and Nissan, Toyota kept its operations separated in a functional structure that forced each to report back to Japan. "

...

"As Toyoda almost certainly knows, size alone isn't the explanation for his company's troubles. Like GM before it, Toyota has gotten smug. It believes the Toyota Way is the only way. One highranking Japanese executive, known for his deep understanding of the company, says he has detected an attitude that "what we have been doing is right, and therefore we seem to know the world better." If that outlook persists, Toyota may come to stand for something different in the eyes of consumers -- the company that couldn't understand the lessons of its greatest crisis."

[Dr Smith]

Thanks for the link, a great read.