This week’s New Yorker includes an interesting analysis of the success of Toyota, the car manufacturer that recently surprised many by selling 160,000 more automobiles in this year’s first quarter than GM, the world’s leader in automobile sales for 77 years running. These first quarter results may mean the end of GM’s run as annual sales leader, a significant event in the history of the automobile industry. New Yorker’s James Surowiecki discusses how this shift reflects Toyota’s quiet domination as the industry’s most profitable and innovative firm, despite many people’s perception of the company as being less of a leader and more of an astute follower, often being attacked “for being better at imitation than at invention.” But Surowiecki argues that Toyota, while not the sexiest name in the business, may be the most consistently, and successfully, innovative:
If Toyota doesn’t look like an innovative company it’s only because our definition of innovation—cool new products and technological breakthroughs, by Steve Jobs-like visionaries—is far too narrow. Toyota’s innovations, by contrast, have focussed on process rather than on product, on the factory floor rather than on the showroom. That has made those innovations hard to see. But it hasn’t made them any less powerful… Most innovation focusses on what gets made. Toyota reinvented how things got made, which enabled it to build cars faster and with less labor than American companies.
But there’s an enigma to the Toyota Production System: although the system has been widely copied, Toyota has kept its edge over its competitors… Over the years, more than three thousand books and articles have analyzed how the company works… The diffusion of Toyota’s concepts has had a real effect; the auto industry as a whole is far more productive than it used to be. So how has Toyota stayed ahead of the pack?
The answer has a lot to do with another distinctive element of Toyota’s approach: defining innovation as an incremental process, in which the goal is not to make huge, sudden leaps but, rather, to make things better on a daily basis. (The principle is often known by its Japanese name, kaizen—continuous improvement.)… It rejects the idea that innovation is the province of an elect few; instead, it’s taken to be an everyday task for which everyone is responsible.
The New Yorker: The Open Secret to Success
