Praise for Extreme Toyota
"This book, based on unprecedented access to Toyota, offers a revealing look at one of the world's greatest companies. The authors, professors at Japan's most innovative business school, find that Toyota's success goes far beyond its production system and draws on its unique approaches to marketing, sales, and human resource management. Toyota has reshaped auto manufacturing into a knowledge-driven industry. Toyota's ability to manage apparent contradictions drives its continuous innovation and self-renewal."
--MICHAEL E. PORTER, Bishop William Lawrence University Professor, Harvard Business School
"At IBM's Business Leadership Forum, Chairman Fujio Cho of Toyota described the single most important challenge for any global enterprise: securing a supply of high-value skills. Extreme Toyota shows how this remarkable company has invested its resources in 'training, training, and more training.' It shows how business today depends not only on operational efficiency and strategy, but on people. And it shows Toyota's genius for the soft side of management--culture, relationships, and communication. This is a must-read for executives who want to learn about the true sources of innovation, competitive differentiation, and growth in today's global economy."
--SAMUEL J. PALMISANO, Chairman of the Board,President and Chief Executive Officer, IBM Corporation
"This is the definitive book on the secret to Toyota's phenomenal success, with important lessons for all leaders. The formula is simple and profound; namely, Toyota embodies the belief and practice that success requires leaders at all levels to make good judgment calls. From top to frontline, all leaders have the opportunity and responsibility to become masters of effective action. This book is a well written and engaging guide for building successful twenty-first century companies."
--NOEL M. TICHY, Professor at the Stephen M. Ross School of Business, University of Michigan
"A very fresh and comprehensive study of Toyota. You will find an outstanding analysis of the company's unique corporate culture and DNA in this book."
--YOSHIO ISHIZAKA, Former President and Chief Executive Officer, Toyota Motor Sales, U.S.A., Inc.

HIROTAKA TAKEUCHI, EMI OSONO, and NORIHIKO SHIMIZU are business school graduates from the University of California, Berkeley, The George Washington University, and Stanford University, respectively. They are professors at one of Japan's top business schools, Hitotsubashi University, Graduate School of International Corporate Strategy (www.ics.hit-u.ac.jp). Takeuchi works closely with Professor Michael E. Porter of Harvard University, with whom he coauthored Can Japan Compete? (2000). All three authors are also frequent speakers at conferences and seminars around the world.

Preface xi

CHAPTER 1 Extreme Toyota: An Organization Powered by Creative Contradictions 1

An Amazing Track Record 1

The Hard Side of Toyota 3

The Powerful and Mysterious Soft Side 3

How Toyota Is Like a Failed, Stagnant Company 4

Management Orchestrated Contradictions,Opposites, and Paradoxes 8

Embracing Contradictions as a Way of Life 19

Conclusion 20

CHAPTER 2 Six Opposing Forces That Drive the Company's Expansion-and Keep It from Breaking Apart 23

Forces of Expansion 25

Forces of Integration 30

Six Forces Working Together 34

Resource Base 35

Six Forces in Action: Case of the Lexus 38

Conclusion 42

CHAPTER 3 The Force of Impossible Goals 43

Meet Every Customer Need 45

The Finest Cars, the Finest Dealers 51

Bypassing Japan to Make a Global Car 57

Conclusion 64

CHAPTER 4 Eagerness  to Experiment 67

Experimentation Hardware:The Eight-Step and A3 Processes 73

Experimentation Software: Values 86

Conclusion 92

CHAPTER 5  Local Customization 95

The Underdog Even at Home 98

Customizing the IMV in Asia 99

The Challenges and Benefits of Local Customization 100

Customizing the Yaris for Europe 102

Customizing the Scion for the United States Youth Segment 105

Customizing the Tundra for the United States 115

Disseminating Local Best Practices throughout the World 116

Conclusion 118

CHAPTER 6 The Founders' Philosophies 121

Tomorrow Will Be Better than Today 124

Everybody Should Win 129

Customer First, Dealers Second, and Manufacturer Last 135

Genchi Genbutsu 139

Conclusion 141

CHAPTER 7 Toyota's Nerve System-A Human Version of the World Wide Web 143

Open and Lateral Dissemination of Know-How 146

Freedom to Voice Contrary Opinions 149

Frequent Face-to-Face Interaction 154

Making Tacit Knowledge Explicit: The Toyota Way 2001 158

Formal and Informal Support Mechanisms 161

Conclusion 163

CHAPTER 8 Up-and-In Human Resource Management 165

Stable, Long-Term Employment 169

Emphasis on Training,Training, and More Training 172

Power in Teamwork 177

Action Orientation 178

Learning-Based Evaluation 180

Conclusion 183

CHAPTER 9 Toyota's Resource Base 185

Investing in Efficiency 187

Cultivating Organizational Capability and People Required for Growth 191

Making a Long-Term Commitment to People 198

Conclusion 206

CHAPTER 10 A Company Always in Danger 211

Organizational Growth Pains 212

Employee Complacency 214

Cultural Rigidity 216

Workforce Diversity 218

Insular Approach to the Capital Markets 220

Rise of New Competitors 221

Conclusion 223

CHAPTER 11 What Your Organization Can Learn from Toyota: Ten Powerful Contradictions 225

Embrace Contradictions 229

Conclusion 238

Appendix A Selected Auto Industry Figures and Comparisons 241

Chapter 1-Extreme Toyota 241

Chapter 2-Six Forces 248

Chapter 3-Impossible Goals 253

Chapter 9-Resources 254

Appendix B Literature Review 257

Literature Review Methodology 258

Notes 263

References 287

Index 297