TOKYO, Dec. 21, 2020—Bureaucracy is back at Toyota. This time, it’s going to be tougher than before to fight it as the rank and file of the entire corporate group, not just top brass, are mired in support of the establishment’s management policy.
It’s vital for Toyota to address problems of the return to bureaucracy and conservatism and shedding fossil fuel-powered engines, which requires layers of hierarchy and so is a symbol of bureaucracy.
But illustrating the company’s reluctance to change, Toyota CEO Akio Toyoda, who also serves as the Japanese auto industry lobby Japan Automobile Manufacturers Association chairman, Dec. 17 told an on-line news conference that eliminating gasoline-powered powertrains means ‘the auto industry’s business model will die.’ Toyoda expressed frustration at the Japanese government’s recent announcement to ban sales of all new gas-powered motor vehicles as part of the zero emission policy by 2050;. Toyoda said EVs generate lots of carbon dioxide in the electricity generation process, asking whether prime minister Suga and other lawmakers want to eliminate gas vehicles ‘with that knowledge.’
Is that how Japan’s largest company CEO’s views automobiles!? — that cars should be powered primarily by internal combustion engines, even beyond 2035, the year when the Japanese government wants to ban manufacturing gas-powered cars altogether, so that parts and components suppliers can survive and their jobs protected. I thought Toyoda wanted his company morph into ‘a mobility’ platform, not just manufacturing and selling cars, but traveling to the space, as the company has signed with the Japanese government’s space program, and build an experimental mobility city called the Woven City. And many more non-auto undertakings. But what he said yesterday was that Toyota will not leapfrog to the next dimension. Too bad.
The surrounding global and industry situations were so much different in 1997 than now. In that yearend, while world environmental leaders gathered and signed a CO2 reduction accord called the Kyoto Protocol in the ancient Japanese city at the conclusion of week-long negotiations, Toyota released the first-generation Prius model, the world’s first gas-electric motor hybrid car, with an ad campaign of ‘We got there in time for the 21st century.’
The man who engineered the hybrid drama was Hiroshi Okuda, who served as CEO from 1995 to 1999. Among many accolades and criticisms he received were the launch of the Prius, the overhauling of the Toyota board, replacing 17 of its 19 members, and the China business. The bottom-line of Okuda’s philosophy was to rid bureaucracy and infuse new ideas.
Akio Toyoda has introduced lots of great new ideas to his company, including the Woven City, e-Palette EV bus/transport system and countless others. He also downsized the boardroom. And yet, he’s failing to rid the corporate structure of bureaucracy like Okuda and other predecessors did. As if to epitomize this, two of his confidants who directly advise (or do nothing so bureaucracy encroaches in the company as in many others when nothing is done) remain as chairman and vice chairman, Takeshi Uchiyamada and Shigeru Hayakawa. Both have been directly reporting to Akio for years, much longer than what officers in comparable positions serve. Some insiders say that they are known for doing nothing. Akio has been CEO since 2009.
Toyota Motor Sales, which was merged into Toyota Motor in 1982, commanded reputations as active — and aggressive — sales company. When a dealer locked horns in selling its brands in competition with Nissan Motor, Toyota would flood the dealer with incentives that Nissan could not possibly match to win customers. It relied a lot on referrals from existing Toyota customers for new sales clues as part of its winning strategy.
Thanks partly to the return of bureaucracy and perhaps with a streak of arrogance and over-confidence, such referrals are no longer treasured by Toyota for selling cars in Japan. When someone who had known Toyota for decades has asked for the company’s intervention for his purchase of a Toyota brand car at a Tokyo dealer, that person would be disappointed as he is likely to be told that Toyota no longer makes such interventions to its dealers. A Toyota spokesperson told me recently that while the company would be amenable to talk to affiliated Toyota sales companies, it cannot guarantee whether the intervention would accommodate purchases. I’ve talked to another Toyota public relations person but was told that since the company classifies me as a member of the foreign media, the person could not talk to me — despite the fact that I’ve known that person, as well as the first person, for years!
The experiences reminded me of the stuffy Toyota corporate culture of the 1970s and 1980s. Working as a U.S. wire service reporter, there was no way that I could compete against the Nikkei newspaper that fielded dozens of reporters and editors to cover Toyota, in Toyoda City (it was renamed later to Toyota), Nagoya and Tokyo. Nikkei would ‘scoop’ that Toyota would merge Toyota Motor Sales with Toyota Motor Manufacturing. As a foreign journalist, there was no way but to call up Toyota Tokyo’s public relations for comment but was told, unsurprisingly, to physically ‘go to’ Toyoda city and Nagoya for comments.
Maybe history is repeating itself.
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Insight Into the Future