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Will “Toyoda Restoration” do the trick for Toyota?

January 21, 2009

Jan. 20 marked a new beginning for more than just Americans, who swore in Barack Obama as their first non-white president in history. It was a big day for the auto industry too: the dawn of a Fiat-Chrysler partnership, and the appointment of a founding family member to the top job at Toyota Motor Corp for the first time in 14 years.

The Toyota move, first flagged in Japanese media a month ago, has been highly sensationalized in Japan.

The local press has likened Akio Toyoda’s nomination to another turning point in Japanese history: the return of power to the imperial family in 1867 from the Tokugawa shogunate, which paved the way for the Meiji Restoration under Emperor Meiji.


“Taisei hokan”, as that historic event is called, has been in the Toyota history lexicon ever since Taizo Ishida somewhat reluctantly took the helm from founder Kiichiro Toyoda in 1950. That year, Kiichiro — Akio’s grandfather — was forced to step down to assuage an angry workforce over sackings that were imperative to saving Toyota from the brink of collapse. Ishida, whose devotion to the Toyoda family is said to have bordered on the religious, vowed to hand back the “throne” to Kiichiro once his duty of fixing the battered company was complete.

Alas, that promise would never come to pass, due to Kiichiro’s sudden death in 1952. It was only 15 years later that the torch returned to the family, with the appointment of Kiichiro’s trusted cousin and apprentice, Eiji Toyoda.

The top job then stayed in the family until 1995, when Tatsuro Toyoda succumbed to illness. His replacement was Hiroshi Okuda, a “numbers guy” whose own father was a stockbroker. That marked the dawn of a new era of management in an industry that found itself steeped in mergers, acquisitions and capital tie-ups formed to survive in what had become a far more competitive world.

While Okuda is credited with catapulting the relatively sheltered automaker onto the world stage with an aggressive push overseas, insiders say it wasn’t always to the liking of the founding family, which preferred a more measured, grounded approach.

Within four years, Okuda made way for Fujio Cho, another “outsider”, but one with closer ties to the family. Still, both Cho and current president Katsuaki Watanabe have been seen as seat-warmers until another Toyoda was ready for the job. Cho himself told a news conference yesterday that the Toyoda family played an important role as flag-bearer and unifying force, “not like us salarymen”.

But does it?

Last week, I asked Jim Lentz, a 26-year veteran at Toyota who now heads its U.S. sales operations. He has served under two Toyodas and the three non-family leaders who followed.

“From my perspective it really doesn’t make a difference,” was his answer. “This is a company that’s not driven by the personality of one leader. This is a consensus-driven company.”

He has a point. After all, some would say it’s unnatural for the Toyoda family, which holds only 2 percent of the company, to have so much sway over Toyota’s key decisions. It’s not quite like the situation at Ford Motor, where the Ford clan collectively holds 40 percent in voting rights and where the family still occupies a special place for many inside the company built by the legendary Henry Ford.

And take Honda Motor, Toyota’s domestic rival. Its founder, Soichiro Honda, practically banned his kin from joining the company. The man despised nepotism and considered the promotion of a son, say, by a company’s chief executive to be a betrayal to the rest of the workforce. Perhaps it was his eccentric, devil-may-care yet endearing personality that made him such an icon. Even without any Honda heirs at the company, it looks as though Honda has done a pretty good job in continuing along its founder’s philosophy: chasing dreams intelligently yet fearlessly, with a dogged sense of independence. As for Toyota? It’s harder to say.

To be fair, that could change. If Akio Toyoda is indeed more in touch with his forefathers’ ways – of putting customers first and “genchi genbutsu”, or going to the source to see things as they are, in his words – that might not be a bad thing. Some say Toyota has expanded too much too fast over the past few years, and that that has come back to haunt it amid the global economic crisis.

What does Akio himself think about the restoration of a Toyoda family member at the top? I had to ask.

“I was born as a Toyoda, and I had no part in that decision,” he said yesterday.

“I don’t see myself as a flag-bearer at all. All I can say is that I will do my best to be remembered as a flag-bearer maybe after 20, 30 years.”

Photo credit: Toyota’s new leadership. From left: Current president Katsuaki Watanabe, incoming president Akio Toyoda, Chairman Fujio Cho.  REUTERS/Toru Hanai

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