The top 100 global brands are together valued worth more than $1 trillion but none of them are from India-though almost all are either already present in the country or are seeking a foothold here to tap the world's second-biggest consumer force.
In the latest "World's top 100 brands" list by Interbrand, a leading international brand consultancy, and Business Week magazine, the biggest soft drinks firm Coca-Cola has retained its top position despite a fall in its brand value to $65.32 billion from $67 billion in 2006. Together the 100 brands are worth about $1.15 trillion-more than the combined market value of over 4,000 listed companies in India. The study described brand value as "the dollar value of a brand, calculated as net present value or today's value of the earnings the brand is expected to generate in the future". Internet search engine, Google emerged as the biggest gainer despite its 20th rank with a rise of over $5 billion in its brand value.
Coca-Cola is followed by Microsoft, IBM, GE, Nokia, Intel, Toyota, McDonald's, Disney and Mercedes-Benz in the top ten. Seven of the top ten brands are from the US, except for Nokia of Finland, Japan's Toyota and Mercedes-Benz of Germany.
The US is the biggest home to the top brands with as many as 52 coming from the country. Germany has grabbed the second position with just 10 brands, followed by nine from France, eight from Japan and six from the UK.
There are only four Swiss brands on the list, three from South Korea, two from Italy and one each from Sweden, Spain, Finland and Bermuda. The top four brands each have a brand value of more than $50 billion, while even the last ten have been given a value of more than $3 billion.
Even though none of the Indian brands figure in the list, the country is high on radar on most of the names mentioned in the elite list.
BusinessWeek noted that global banking giant Citigroup, ranked at 11th position, was opening thousands of branches worldwide, but still has been focusing on looking more local. "It's a strategy of selling itself as a neighbourhood bank but one with the resources of the global giant it is," the magazine quoted the bank's global consumer group chairman and CEO Ajay Banga as saying.
Reference: Financial Express
Monday, July 30, 2007
Toyota vs. Its Competititors - A Case Study
Akio Toyoda sat on stage as Toyota Motor Corp. president Katsuaki Watanabe introduced nine other executives. When Toyoda's turn came, he made a five-second bow to shareholders gathered in Toyota City, Japan, for the June 22 annual meeting. Two hours later, at a private board meeting, he was named head of Japanese sales.
The second event signalled that Akio, 51, had stepped closer to his apparent destiny as patriarch of a carmaking dynasty that his great-grandfather Sakichi funded and his grandfather Kiichiro started in 1937 by copying General Motors Corp.'s Chevrolets.
In seven decades, the Toyodas have driven their company to global dominance. They manufacture vehicles in 27 countries and regions and sell them in more than 170. They employed 299,394 workers and brought in $195.7 billion US in sales in the fiscal year ended on March 31, almost double a decade earlier. Through holdings in 14 Toyota Group suppliers, they oversaw another 126,638 people and $119.2 billion in revenue as of March 31.
In this year's first quarter, Toyota passed GM for the first time to become the world's biggest automaker by unit sales. Toyota sold 2.35 million vehicles -- 88,000 more than GM did. Toyota held on to the lead in the first half, although GM outsold it by 38,000 vehicles in the second quarter.
A dominant Toyota faces unfamiliar challenges. For most of their automaking history, the Toyodas were underdogs struggling against Detroit's juggernaut.
When the Toyodas, who started in business by manufacturing weaving looms, built their first prototype automobile in 1935, Ford Motor Co. had been making cars for three decades.
After the Second World War, demand for vehicles in Japan was so weak the Toyodas opened dry-cleaning stores. To thwart protectionist pressures in the U.S., Toyota joined with GM and began building cars there in 1984.
The next challenge for Toyota -- and the family that runs it -- is managing size.
Quality has been dented by recalls in the U.S. and Japan. Rivals are undercutting Toyota in the U.S. The company is offering an average of $5,083 in rebates, discounted financing and other incentives on its Tundra full-size pickup truck as gasoline prices rise.
GM lost its sales crown of 76 years after it stumbled over quality and cost issues -- and similar woes threaten to bedevil Akio. "What do you do when you pass a rabbit you've been chasing for 70 years?" says John Shook, a University of Michigan management instructor and a former Toyota engineer.
"Akio has a chance to articulate the first truly new vision for Toyota since Kiichiro. If he doesn't, you'd have to expect decline to set in at some point."
For now, Toyota is enjoying undisputed supremacy. It earned 51.2 per cent, or $14.2 billion, of the $27.7 billion US in net income the world's 17 largest carmakers made in the most recent annual reporting period, says Ashvin Chotai, an analyst at Global Insight Inc.
By 2013, Toyota will build 12.4 million vehicles a year compared with GM's 10.2 million, predicts Michael Robinet, a CSM Worldwide Inc. analyst.
"Toyota has staying power," says Wendy Trevisani, who bought 1.3 million Toyota shares in the 18 months ended in June for Thornburg Investment Management.
Toyota's growth engine is straining. Its shares fell 6.2 per cent to $62.98 this year through July 23 compared with a 14 per cent increase to $34.92 at GM as of July 20. Investors worry that Toyota's expansion will boost costs and damage profits, says Christian Takushi, an analyst at Swisscanto Asset Management AG, who disagrees with that assessment.
"Toyota shares are mispriced," says Takushi, whose company held one million of them in March. "They deserve to be trading at a premium."
Akio Toyoda's appointment to head Toyota's Japanese sales unit lands him in a troublesome spot. During the first half of 2007, Japan's industrywide vehicle sales, excluding minicars, fell 10.5 per cent to 1.8 million, their lowest since 1975.
Akio will introduce new models quickly and open megadealerships, predicts Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. That may spark consolidation and weaken Akio's support among dealers left behind, he says.
"Toyota is not the kind of simple company that will change just because Akio becomes president," Matsumoto says. "He needs charisma, and right now, because he's been very low-key, he doesn't have it."
Referenced from Bloomberg
The second event signalled that Akio, 51, had stepped closer to his apparent destiny as patriarch of a carmaking dynasty that his great-grandfather Sakichi funded and his grandfather Kiichiro started in 1937 by copying General Motors Corp.'s Chevrolets.
In seven decades, the Toyodas have driven their company to global dominance. They manufacture vehicles in 27 countries and regions and sell them in more than 170. They employed 299,394 workers and brought in $195.7 billion US in sales in the fiscal year ended on March 31, almost double a decade earlier. Through holdings in 14 Toyota Group suppliers, they oversaw another 126,638 people and $119.2 billion in revenue as of March 31.
In this year's first quarter, Toyota passed GM for the first time to become the world's biggest automaker by unit sales. Toyota sold 2.35 million vehicles -- 88,000 more than GM did. Toyota held on to the lead in the first half, although GM outsold it by 38,000 vehicles in the second quarter.
A dominant Toyota faces unfamiliar challenges. For most of their automaking history, the Toyodas were underdogs struggling against Detroit's juggernaut.
When the Toyodas, who started in business by manufacturing weaving looms, built their first prototype automobile in 1935, Ford Motor Co. had been making cars for three decades.
After the Second World War, demand for vehicles in Japan was so weak the Toyodas opened dry-cleaning stores. To thwart protectionist pressures in the U.S., Toyota joined with GM and began building cars there in 1984.
The next challenge for Toyota -- and the family that runs it -- is managing size.
Quality has been dented by recalls in the U.S. and Japan. Rivals are undercutting Toyota in the U.S. The company is offering an average of $5,083 in rebates, discounted financing and other incentives on its Tundra full-size pickup truck as gasoline prices rise.
GM lost its sales crown of 76 years after it stumbled over quality and cost issues -- and similar woes threaten to bedevil Akio. "What do you do when you pass a rabbit you've been chasing for 70 years?" says John Shook, a University of Michigan management instructor and a former Toyota engineer.
"Akio has a chance to articulate the first truly new vision for Toyota since Kiichiro. If he doesn't, you'd have to expect decline to set in at some point."
For now, Toyota is enjoying undisputed supremacy. It earned 51.2 per cent, or $14.2 billion, of the $27.7 billion US in net income the world's 17 largest carmakers made in the most recent annual reporting period, says Ashvin Chotai, an analyst at Global Insight Inc.
By 2013, Toyota will build 12.4 million vehicles a year compared with GM's 10.2 million, predicts Michael Robinet, a CSM Worldwide Inc. analyst.
"Toyota has staying power," says Wendy Trevisani, who bought 1.3 million Toyota shares in the 18 months ended in June for Thornburg Investment Management.
Toyota's growth engine is straining. Its shares fell 6.2 per cent to $62.98 this year through July 23 compared with a 14 per cent increase to $34.92 at GM as of July 20. Investors worry that Toyota's expansion will boost costs and damage profits, says Christian Takushi, an analyst at Swisscanto Asset Management AG, who disagrees with that assessment.
"Toyota shares are mispriced," says Takushi, whose company held one million of them in March. "They deserve to be trading at a premium."
Akio Toyoda's appointment to head Toyota's Japanese sales unit lands him in a troublesome spot. During the first half of 2007, Japan's industrywide vehicle sales, excluding minicars, fell 10.5 per cent to 1.8 million, their lowest since 1975.
Akio will introduce new models quickly and open megadealerships, predicts Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. That may spark consolidation and weaken Akio's support among dealers left behind, he says.
"Toyota is not the kind of simple company that will change just because Akio becomes president," Matsumoto says. "He needs charisma, and right now, because he's been very low-key, he doesn't have it."
Referenced from Bloomberg
Thursday, July 26, 2007
Rest of Asia exporting more Japanese cars
Japanese automakers are scrambling to increase exports from production bases in other Asian nations to take advantage of improved worker skills and trade deals.
Asia replaced North America as the largest overseas production base for Japanese automakers in 2006, with output reaching 4.13 million vehicles. Though these vehicles were intended to meet local demand, about 400,000 were shipped to other regions. The figure is expected to reach 600,000 in 2008, more than 10% of production.
In one example, Honda Motor Co. is boosting exports from Thailand to Australia and New Zealand by 40%, or 47,000 units.
Nissan Motor Co. this fiscal year is doubling exports of its Tiida subcompact from Thailand to Australia to roughly 10,000.
Last year, Toyota Motor Corp. exported 100,000 IMVs (Innovative International Multi-purpose Vehicles) to more than 90 countries from Thailand. It will step up exports this year and continue doing so in the future.
Suzuki Motor Corp. plans to triple output capacity to 300,000 vehicles a year at its second Indian assembly plant in 2008. Half will be shipped to Europe and the Middle East. Nissan will launch a new plant in India in 2009 and export subcompact cars to Europe from there.
At a joint venture for export models in the Chinese province of Guangdong, Honda doubled output of subcompacts to 50,000 a year this past spring. The cars are bound for 10 countries, including the U.K., Germany and France. Beginning this month, they will be shipped to Poland and the Czech Republic as well.
One reason for all these exports is the improved quality of Asian-made automobiles, thanks to technology transfers and parts suppliers setting up local operations.
Trade deals are another reason. Thailand signed a free-trade agreement with Australia in 2005, shedding a 15% tariff on passenger cars. More may be on the way. The Association of Southeast Asian Nations and India have agreed with the European Union to launch trade negotiations.
In fiscal 2006, Honda earned nearly 10% of its group operating profit in Asia and Suzuki generated about 40% of its group pretax profit in India alone.
Referenced from Nikkei Weekly
Asia replaced North America as the largest overseas production base for Japanese automakers in 2006, with output reaching 4.13 million vehicles. Though these vehicles were intended to meet local demand, about 400,000 were shipped to other regions. The figure is expected to reach 600,000 in 2008, more than 10% of production.
In one example, Honda Motor Co. is boosting exports from Thailand to Australia and New Zealand by 40%, or 47,000 units.
Nissan Motor Co. this fiscal year is doubling exports of its Tiida subcompact from Thailand to Australia to roughly 10,000.
Last year, Toyota Motor Corp. exported 100,000 IMVs (Innovative International Multi-purpose Vehicles) to more than 90 countries from Thailand. It will step up exports this year and continue doing so in the future.
Suzuki Motor Corp. plans to triple output capacity to 300,000 vehicles a year at its second Indian assembly plant in 2008. Half will be shipped to Europe and the Middle East. Nissan will launch a new plant in India in 2009 and export subcompact cars to Europe from there.
At a joint venture for export models in the Chinese province of Guangdong, Honda doubled output of subcompacts to 50,000 a year this past spring. The cars are bound for 10 countries, including the U.K., Germany and France. Beginning this month, they will be shipped to Poland and the Czech Republic as well.
One reason for all these exports is the improved quality of Asian-made automobiles, thanks to technology transfers and parts suppliers setting up local operations.
Trade deals are another reason. Thailand signed a free-trade agreement with Australia in 2005, shedding a 15% tariff on passenger cars. More may be on the way. The Association of Southeast Asian Nations and India have agreed with the European Union to launch trade negotiations.
In fiscal 2006, Honda earned nearly 10% of its group operating profit in Asia and Suzuki generated about 40% of its group pretax profit in India alone.
Referenced from Nikkei Weekly
Tuesday, July 24, 2007
Building of Jet Airways by Naresh Goyal - Case Study
Naresh Goyal started working in the airline industry right after college in his great uncle's marketing agency for Lebanese International Airlines. His salary was so low -- $40 per month -- that he had to sleep on the floor of his office.
But he moved up the ranks quickly, becoming a publicist for the airline and from there, moving on to other international airlines.
After a few years, he started Jet Air, a marketing organization that represented several international airlines in India. His mother sold her own jewelry to give him money to start the business.
In the early '90s, he looked into buying an airline in Scotland since there was no "national" carrier there, but his plan came to nothing. At home, though, things were changing.
From 1953 until 1992, the only airlines allowed to be based in India were owned and operated by the government. They were less than hospitable -- there were no printed schedules, and service was abominable.
But when the government opened the airline industry to private competition, Goyal jumped at the opportunity. Naresh realised that there was a huge market for good value and a high level of service in a marketplace that had never seen that before.
Goyal now runs an airline that flies from India to 50 destinations. Starting in August, Jet Airways will have a European hub in Brussels.
Goyal still remains true to his marketing roots, which were showcased in a lavish press conference recently. He might not be able to bring one of the airline's Boeing 777s into the Grand Ballroom of the Waldorf-Astoria to show off the upgraded cabins of Jet Airlines, but he did the next best thing: He brought life-size replicas of the cabins and showed off the flight attendants' newly designed mustard-colored ensembles.
Goyal markets service and comfort as the keys to his airline. For about $10,000, passengers in first class get a private suite, complete with closing doors; a full bed; a flat-screen television; and a meal that might be served at a top restaurant in any city. Business and coach offer levels of comfort too, with televisions and ergonomically designed chairs.
With globalization and India's economy opening up, Goyal is counting not only on the Indian diaspora looking to travel around the world, but businesspeople who increasingly need to go to the Indian subcontinent for work.
Referenced from Rediff and Forbes.com
But he moved up the ranks quickly, becoming a publicist for the airline and from there, moving on to other international airlines.
After a few years, he started Jet Air, a marketing organization that represented several international airlines in India. His mother sold her own jewelry to give him money to start the business.
In the early '90s, he looked into buying an airline in Scotland since there was no "national" carrier there, but his plan came to nothing. At home, though, things were changing.
From 1953 until 1992, the only airlines allowed to be based in India were owned and operated by the government. They were less than hospitable -- there were no printed schedules, and service was abominable.
But when the government opened the airline industry to private competition, Goyal jumped at the opportunity. Naresh realised that there was a huge market for good value and a high level of service in a marketplace that had never seen that before.
Goyal now runs an airline that flies from India to 50 destinations. Starting in August, Jet Airways will have a European hub in Brussels.
Goyal still remains true to his marketing roots, which were showcased in a lavish press conference recently. He might not be able to bring one of the airline's Boeing 777s into the Grand Ballroom of the Waldorf-Astoria to show off the upgraded cabins of Jet Airlines, but he did the next best thing: He brought life-size replicas of the cabins and showed off the flight attendants' newly designed mustard-colored ensembles.
Goyal markets service and comfort as the keys to his airline. For about $10,000, passengers in first class get a private suite, complete with closing doors; a full bed; a flat-screen television; and a meal that might be served at a top restaurant in any city. Business and coach offer levels of comfort too, with televisions and ergonomically designed chairs.
With globalization and India's economy opening up, Goyal is counting not only on the Indian diaspora looking to travel around the world, but businesspeople who increasingly need to go to the Indian subcontinent for work.
Referenced from Rediff and Forbes.com
Monday, July 23, 2007
Global Auto makers' report card (H1 2007)
Referenced from The Globe and Mail
General Motors Corp.: GM is now being challenged in its long-standing position as the world's top auto maker by surging Toyota. But the company vows to regain the Number One spot by dramatically reducing its costs, slashing low-profit sales to rental companies and other fleets, and revamping its product lineup as sales of trucks and sport utility vehicles slump. It is closing plants and cutting jobs to try to become competitive with Asian-based car makers, and 2007 is expected to show some improvement on 2006, when it lost $2-billion (U.S.).
Ford Motor Co.: Ford continues to lose market share in North America, as the markets for its sport utility vehicles and pickup trucks weaken. The company lost a whopping $12.7-billion (U.S.) in 2006, and it is in the process of eliminating thousands of jobs, while closing plants in Canada, the United States and Mexico. Its goal is to return to profitability by 2009 by shifting its focus to growing segments such as crossover utility vehicles and passenger cars.
DaimlerChrysler AG: The German-American auto giant signed a deal this spring to sell off about 80 per cent of its Chrysler arm to private equity firm Cerberus Capital Management LP. Chrysler has a deep cost-cutting plan and will eliminate 13,000 jobs by the end of 2009, mostly by offering buyouts to employees. While all the North American car firms are losing ground to the Japanese, Chrysler has not been hit as hard as GM and Ford. To boost sales of its key minivans, Chrysler recently dramatically cut prices of the product line in North America.
Toyota Motor Corp.: Toyota has been reporting record sales and profits, driven by dramatic growth in North American and European markets. Earlier this year, it surpassed General Motors for global sales for the first time, taking the lead in the January-to-March quarter. Toyota has a reputation for high quality, but it has also been an innovator. It is the top player in the gas-electric hybrid market with the Prius, and the company has now sold more than a million hybrids. It is also a leader in using fuel cells, which power cars from electricity generated from hydrogen.
Honda Motor Co.: Like Toyota, Honda has made huge inroads in the North American car market with double-digit sales increases. And it is also active in emerging markets such as China and India. While Honda has done well with its gas/electric hybrids, it has also hit some speed bumps; it decided earlier this year to stop production of its slow-selling hybrid Accord, which was designed for extra power rather than fuel efficiency.
Nissan Motor Co.: The Japanese auto maker saw sales decline in 2006 in its two largest markets, Japan and the United States, although the numbers have picked up sharply in North America in the past few months. Nissan has also put in place a series of cost-saving measures to try to boost profitability. It is behind Toyota and Honda in developing the hybrid market, but is putting on a big push to catch up in green technologies.
Volkswagen AG: The German company is the biggest European car maker, posting strong results in Europe and Asia, but has been less successful in North America where it has lost money for the past several years. Volkswagen has been cutting thousands of jobs to improve its competitive position, but it owns a range of strong international brands including Audi, Bentley and Skoda.
BMW AG: The German-based luxury car maker saw a dip in profits in its most recent quarter, after spending bags of money launching new models. But it predicts a turnaround in the balance of the year, and record profits for 2007. BMW is planning to boost production at its plant in the United States – its biggest market – to insulate it from exchange-rate fluctuations. The company has also turned the Mini brand into a big success by targeting aging boomers, and it also owns Rolls-Royce.
General Motors Corp.: GM is now being challenged in its long-standing position as the world's top auto maker by surging Toyota. But the company vows to regain the Number One spot by dramatically reducing its costs, slashing low-profit sales to rental companies and other fleets, and revamping its product lineup as sales of trucks and sport utility vehicles slump. It is closing plants and cutting jobs to try to become competitive with Asian-based car makers, and 2007 is expected to show some improvement on 2006, when it lost $2-billion (U.S.).
Ford Motor Co.: Ford continues to lose market share in North America, as the markets for its sport utility vehicles and pickup trucks weaken. The company lost a whopping $12.7-billion (U.S.) in 2006, and it is in the process of eliminating thousands of jobs, while closing plants in Canada, the United States and Mexico. Its goal is to return to profitability by 2009 by shifting its focus to growing segments such as crossover utility vehicles and passenger cars.
DaimlerChrysler AG: The German-American auto giant signed a deal this spring to sell off about 80 per cent of its Chrysler arm to private equity firm Cerberus Capital Management LP. Chrysler has a deep cost-cutting plan and will eliminate 13,000 jobs by the end of 2009, mostly by offering buyouts to employees. While all the North American car firms are losing ground to the Japanese, Chrysler has not been hit as hard as GM and Ford. To boost sales of its key minivans, Chrysler recently dramatically cut prices of the product line in North America.
Toyota Motor Corp.: Toyota has been reporting record sales and profits, driven by dramatic growth in North American and European markets. Earlier this year, it surpassed General Motors for global sales for the first time, taking the lead in the January-to-March quarter. Toyota has a reputation for high quality, but it has also been an innovator. It is the top player in the gas-electric hybrid market with the Prius, and the company has now sold more than a million hybrids. It is also a leader in using fuel cells, which power cars from electricity generated from hydrogen.
Honda Motor Co.: Like Toyota, Honda has made huge inroads in the North American car market with double-digit sales increases. And it is also active in emerging markets such as China and India. While Honda has done well with its gas/electric hybrids, it has also hit some speed bumps; it decided earlier this year to stop production of its slow-selling hybrid Accord, which was designed for extra power rather than fuel efficiency.
Nissan Motor Co.: The Japanese auto maker saw sales decline in 2006 in its two largest markets, Japan and the United States, although the numbers have picked up sharply in North America in the past few months. Nissan has also put in place a series of cost-saving measures to try to boost profitability. It is behind Toyota and Honda in developing the hybrid market, but is putting on a big push to catch up in green technologies.
Volkswagen AG: The German company is the biggest European car maker, posting strong results in Europe and Asia, but has been less successful in North America where it has lost money for the past several years. Volkswagen has been cutting thousands of jobs to improve its competitive position, but it owns a range of strong international brands including Audi, Bentley and Skoda.
BMW AG: The German-based luxury car maker saw a dip in profits in its most recent quarter, after spending bags of money launching new models. But it predicts a turnaround in the balance of the year, and record profits for 2007. BMW is planning to boost production at its plant in the United States – its biggest market – to insulate it from exchange-rate fluctuations. The company has also turned the Mini brand into a big success by targeting aging boomers, and it also owns Rolls-Royce.
How Toyota develops exceptional people
Excerpts sourced from Rediff.com
Leading Toyota authorities Jeffrey Liker and David Meier give you the keps to growing top performers from within through a detailed preocess of preparation, traning, and follow-up. Here are Toyota's secrets to building an exceptional workforce . . .
No one seems to be sure of the exact course of events that led to the development of the Toyota Production System (TPD) as it is today, but we are sure that without highly capable people the current system would quickly disintegrate. We know that in the early development of TPD, its chief architect, Taiichi Ohno, wanted to press forward with some of this ideas and discovered that people were not ready.
When he went to work to achieve single-piece flow in a machine shop and he needed multiskilled workers, he encountered resistance and learned that he had to be patient and to think about developing people who would be able to support the methods. He could not simply order people to flow the rules (although he was known as being very forceful when necessary).
He needed people with thinking capability because of the challenges resented by the application of his new ideas. In fact, the real purpose of creating flow was to bring problems to the surface, which would force people to think about solving the problems and to help them to develop their abilities. A select few front-office experts could not possibly deal with all the situations that would surely arise as Ono pressurized the system, thereby forcing failures. He needed capable masses.
The development of capable masses requires a clear plan. It requires time and patience. Above all its takes persistence and the willingness to stick with it and to deal with the individual peculiarities and challenges of each person.
When Taiichi Ohno discovered the importance of highly capable people, he sought a method of teaching that would support his needs. He believed he had found such a tool in the Job Instruction (JI) Method taught by the American occupation forces after World War II.
It has been the primary teaching tool for all of Toyota since 1950s. Today the capabilities of Toyota employees are a hallmark of the company. We often talk to managers of other companies who view the capability of Toyota employees to be some sort of anomaly or option that is open only to Toyota.
The truth is that Toyota does like to start with good people who posses the capability to become exceptional employees. The people whom Toyota selects must have the capacity and desire to learn. Those are the only absolutes. In fact if one were to look closely at Toyota employees, one would find a broad spectrum of humanity similar to that in any other company -- with all the beauty and blemishes found anywhere.
Toyota employees bring to bear issues similar to those of other companies, such as attendance problems, resistance to change, lack of motivation, and even reluctance to accept the philosophy of TPS.
What allows Toyota to be successful in spite of these challenges is the efforts and interest in drawing out the best of the employee's abilities and initiating possible solutions (rather than a shrug and the 'What are you going to do?' attitude we hear from other companies). Perhaps Toyota has recognized the reality of human behavior and limitations, and it has created systems that minimize those limitations or take advantage of human desire.
People are carefully selected to join Toyota based on their potential and a judgment that there is a fit with the job and with Toyota's culture. They must have some general problem-solving capability and be willing to work as part of a team.
People develop specific capabilities after they are hired at Toyota. It is Toyota's expectation that it will mold the individual to fit the needs of the organization as well as support the interests of the individual. It is this mutuality of purpose that leads to more satisfied employees who are able to perform in exceptional ways.
One must not assume that Toyota is completely altruistic in its efforts to develop employees and to provide engaging activities. The objective is to provide benefits for the employees, which in turn also returns benefits to the company.
Toyota often creates situations in which there is an equal balance between reward and punishment in order to encourage the desired behavior. For example, given the critical nature of attendance on the performance of the system, a high emphasis is placed on having great attendance (perfect attendance is preferred).
On the reward side, Toyota Motor Manufacturing Kentucky (TMMK) has an annual award ceremony for all employees who achieved perfect attendance in the previous year (over 60 percent in 2005). The award ceremony includes entertainment from some top acts in the country including jay Leno, Bill Cosby, and Brooks and Dunn. In addition, each person has his or her name placed into a hat, and 14 winners are drawn, each receiving a brand new car (a mix of Camrys and Avalonds). To sweeten the pot, each team member with consecutive years of perfect attendance will have his or her name added to the hat an additional time for each year of consecutive perfect attendance.
In 2006 there were more than 400 employees who had achieved 15 consecutive years of perfect attendance (the length of the program)!
On the punishment side, repeated unexcused absences are one of the easiest ways to lose a job at TMMK. The policy is fairly strict and is weighted heavily on attendance history and also the circumstances. Consideration is given for good reasons, but repeated absences for poor reasons are sure to lead to discipline. A flat tire is not considered a 'good' reason, for example, but the effort a team member makes to reduce the time loss is in his or her favor.
If a team member has a flat tire and misses the entire day, it is not viewed favorably. And apart from the fear of being fired, sitting home while all your team associates are at the big bas hoping to win a car is its own punishment.
Leading Toyota authorities Jeffrey Liker and David Meier give you the keps to growing top performers from within through a detailed preocess of preparation, traning, and follow-up. Here are Toyota's secrets to building an exceptional workforce . . .
No one seems to be sure of the exact course of events that led to the development of the Toyota Production System (TPD) as it is today, but we are sure that without highly capable people the current system would quickly disintegrate. We know that in the early development of TPD, its chief architect, Taiichi Ohno, wanted to press forward with some of this ideas and discovered that people were not ready.
When he went to work to achieve single-piece flow in a machine shop and he needed multiskilled workers, he encountered resistance and learned that he had to be patient and to think about developing people who would be able to support the methods. He could not simply order people to flow the rules (although he was known as being very forceful when necessary).
He needed people with thinking capability because of the challenges resented by the application of his new ideas. In fact, the real purpose of creating flow was to bring problems to the surface, which would force people to think about solving the problems and to help them to develop their abilities. A select few front-office experts could not possibly deal with all the situations that would surely arise as Ono pressurized the system, thereby forcing failures. He needed capable masses.
The development of capable masses requires a clear plan. It requires time and patience. Above all its takes persistence and the willingness to stick with it and to deal with the individual peculiarities and challenges of each person.
When Taiichi Ohno discovered the importance of highly capable people, he sought a method of teaching that would support his needs. He believed he had found such a tool in the Job Instruction (JI) Method taught by the American occupation forces after World War II.
It has been the primary teaching tool for all of Toyota since 1950s. Today the capabilities of Toyota employees are a hallmark of the company. We often talk to managers of other companies who view the capability of Toyota employees to be some sort of anomaly or option that is open only to Toyota.
The truth is that Toyota does like to start with good people who posses the capability to become exceptional employees. The people whom Toyota selects must have the capacity and desire to learn. Those are the only absolutes. In fact if one were to look closely at Toyota employees, one would find a broad spectrum of humanity similar to that in any other company -- with all the beauty and blemishes found anywhere.
Toyota employees bring to bear issues similar to those of other companies, such as attendance problems, resistance to change, lack of motivation, and even reluctance to accept the philosophy of TPS.
What allows Toyota to be successful in spite of these challenges is the efforts and interest in drawing out the best of the employee's abilities and initiating possible solutions (rather than a shrug and the 'What are you going to do?' attitude we hear from other companies). Perhaps Toyota has recognized the reality of human behavior and limitations, and it has created systems that minimize those limitations or take advantage of human desire.
People are carefully selected to join Toyota based on their potential and a judgment that there is a fit with the job and with Toyota's culture. They must have some general problem-solving capability and be willing to work as part of a team.
People develop specific capabilities after they are hired at Toyota. It is Toyota's expectation that it will mold the individual to fit the needs of the organization as well as support the interests of the individual. It is this mutuality of purpose that leads to more satisfied employees who are able to perform in exceptional ways.
One must not assume that Toyota is completely altruistic in its efforts to develop employees and to provide engaging activities. The objective is to provide benefits for the employees, which in turn also returns benefits to the company.
Toyota often creates situations in which there is an equal balance between reward and punishment in order to encourage the desired behavior. For example, given the critical nature of attendance on the performance of the system, a high emphasis is placed on having great attendance (perfect attendance is preferred).
On the reward side, Toyota Motor Manufacturing Kentucky (TMMK) has an annual award ceremony for all employees who achieved perfect attendance in the previous year (over 60 percent in 2005). The award ceremony includes entertainment from some top acts in the country including jay Leno, Bill Cosby, and Brooks and Dunn. In addition, each person has his or her name placed into a hat, and 14 winners are drawn, each receiving a brand new car (a mix of Camrys and Avalonds). To sweeten the pot, each team member with consecutive years of perfect attendance will have his or her name added to the hat an additional time for each year of consecutive perfect attendance.
In 2006 there were more than 400 employees who had achieved 15 consecutive years of perfect attendance (the length of the program)!
On the punishment side, repeated unexcused absences are one of the easiest ways to lose a job at TMMK. The policy is fairly strict and is weighted heavily on attendance history and also the circumstances. Consideration is given for good reasons, but repeated absences for poor reasons are sure to lead to discipline. A flat tire is not considered a 'good' reason, for example, but the effort a team member makes to reduce the time loss is in his or her favor.
If a team member has a flat tire and misses the entire day, it is not viewed favorably. And apart from the fear of being fired, sitting home while all your team associates are at the big bas hoping to win a car is its own punishment.
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