What keeps Toyota 1 step ahead? Relentless dissatisfaction

Getting better is an all-day, every-day project

Maybe the Toyota secret was out. Maybe other carmakers could adopt Toyota's methods and match the leader in quality and productivity.

Might that happen?

That's what I asked Eiji Toyoda in 1995, a few years after publication of The Machine That Changed the World. The book by the MIT team brilliantly identified and codified the principles of the Toyota Production System. Everybody was reading the book. Was the cat out of the bag? Could everybody catch up?

High above a pretty little park in Tokyo, in one of those typical Japanese meeting rooms with couches and chairs around a low table, Mr. Toyoda, the elderly honorary chairman, smiled.

Well, no, he said. We've moved beyond that.

"That" was what the MIT folks termed "lean manufacturing." (An aside: The authors didn't want to call it the Toyota system; it needed to be broader than that. A young graduate student on the MIT team came up with the word that became the Holy Grail of automakers and suppliers everywhere: lean. That graduate student was John Krafcik. Krafcik later became a top engineer for trucks at Ford, and now heads product development and strategic planning at Hyundai Motor America.)

Here we are a dozen years later. Everybody is lean, or aspires to leanness, and everybody is still trying to catch up to Toyota. Toyota has moved on from yesterday, even if only a little.

Good enough? Never

The genius of Toyota is its relentless dissatisfaction. Nothing is good enough. Every little thing can and must be made better. If you don't want to improve things, don't work at Toyota. The culture demands improvement. Toyota's is a learning culture. (Note to 37-year Toyota veteran Jim Press, now running sales and marketing at Chrysler LLC: It's going to take a while to budge the culture.)

In early 1977, Isao Makino, then president of Toyota Motor Sales U.S.A., joined U.S. heads of other automakers in writing a column for a publication called Automotive Design and Development. What was the outlook for the year?

Makino's short column is a masterpiece of simplicity and understanding.

"Since the first Toyota automobile was imported in the United States in 1958," he wrote, "Toyota has studied the needs and trends of the American market. We have learned the American car buyer is quite astute when he or she considers a purchase.

"While the prospective owner is always interested in the selling price, we have found that cost of ownership is actually the basic consideration."

Imagine the power of that insight today. Americans pay a premium for a Camry because they believe it won't break and that it will be worth a lot at trade-in time, thus reducing cost of ownership.

Makino continued: "Our front-runner in the 1977 model year will be the 1.2-liter Corolla that has achieved 49 miles per gallon highway and 36 mpg city driving during EPA simulated tests."

Thirty years later, rising gasoline prices have turbocharged Toyota's U.S. sales because of superior fuel economy, both real and perceived. The Corolla, relentlessly improved generation after generation, still exists, and still appeals to the fuel-conscious. In that same small-car segment over that time period, Toyota's domestic competitors have hopefully created and disappointedly scrapped a pile of nameplates.

Meanwhile, at Ford ...

Incidentally, Makino's column shared a page with a column signed by Henry Ford II and Lee Iacocca of Ford Motor Co. Their column whined about federal standards for clean air and fuel economy, predicting incorrectly that unless the government relented, sales would tank by 1985.

Makino concluded: "When we look to 1977 and the years beyond, we are not looking at figures on headquarters sales charts. Those figures will take care of themselves if we and our dealers dedicate ourselves to one thing - customer satisfaction. Pure and simple, that is our plan."

It's a pretty good plan, but it has to be executed every day. Makino's obsession was first in serving customers and second in building big, profitable dealers. Thirty years later, Toyota's dealers far outsell those of any other franchise. It happened day by day, year by year.

So automakers that want to catch Toyota had better start improving everything relentlessly, every day. No single BIG PROGRAM will leapfrog the leader. Toyota's people have been improving every day for a long time.

And they've moved on from there.

You can reach Peter Brown at pbrown@crain.com.