Shoichiro Toyoda
1925–



Honorary chairman, Toyota Motor Corporation

Nationality: Japanese.

Born: February 17, 1925, in Nagoya, Japan.

Education: Nagoya University, BS, 1947; Tohoku University, PhD, 1955.

Family: Son of Kiichiro Toyoda (founder, Toyota Motor Corporation) and Hatako (maiden name unknown); married Hiroko Mitsui, 1952; children, two.

Career: Toyota Japan Motor Company, 1952–1961, director; 1961–1967, managing director, corporate planning office; 1967–1972, senior managing director; 1972–1981, executive vice president; 1981–1982; president; Toyota Motor Sales Company; 1982–1992, president, Toyota Motor Corporation; 1992–1999, chairman; 1999–, honorary chairman; Keidanren, chairman, 1994–1998.

Awards: Blue Ribbon, government of Japan, 1972, 1984; Deming Prize, 1980; Honorary Doctorate, Asian Institute of Technology, 2003.

Address: Toyota Motor Corporation, 1 Toyota-cho, Toyota, Aichi 471, Japan.

■ Shoichiro Toyoda was president of the Toyota Motor Corporation from 1982 to 1992. In the early 1960s he was influential in instituting total quality control in all company operations. He approved and furthered the expansion of Toyota's production system into the United States, and he approved the development of the Lexus and the Prius hybrid. He was Toyota's first genuinely global manager. Deferential and reserved on the outside, Shoichiro ran the company with a stronger hand than his cousin and predecessor, Eiji Toyoda. After retiring in 1992 Shoichiro became chairman of Toyota in 1992 and later honorary chairman of the company. Between 1994 and 1998 he served as chairman of the Keidanren. In the early 2000s he was considered Japan's leading voice on international cooperation and globalization.

Shoichiro Toyoda. AP/Wide World Photos.
Shoichiro Toyoda.
AP/Wide World Photos
.

TOYOTA'S CROWN PRINCE

Shoichiro Toyoda was born in Nagoya on February 17, 1925, to Kiichiro and Hatako Toyoda. Being the eldest son in a traditional Japanese family firm, Shoichiro seemed destined to run the company from the time of his birth. His grandfather Sakichi Toyoda founded Toyoda as a textile company. Shoichiro's father was responsible for creating the Toyota Japan Motor Company. Growing up under the tutelage of his mother, Shoichiro learned all that was going on in his father's car and truck company, and he absorbed the lessons.

Shoichiro graduated from high school in 1945. He wanted to learn engineering at Nagoya University, but World War II and the American occupation of Japan changed the destinies of both Toyota and of Shoichiro. Kiichiro was making trucks for the Imperial Japanese Army, and his plant was within a few days of being bombed by American B-29s when Japan surrendered. There might well have been no Toyota for his son Shoichiro to return to. Like many other young Japanese men, Shoichiro was conscripted to labor in the fields, raising potatoes and barley to feed the army, navy, and civilian population. This interrupted his education and he did not receive his BS in engineering until 1947.

Shoichiro then entered Tohoku University in Sendai, about five hundred miles north of Tokyo, where he continued his studies in engineering. In the meantime, his father involved him in a project to produce a reliable passenger car for the world market. When he would come home to visit, Kiichiro would have his son study and work with Toyota's designer, Shisaburo Kurata. He also worked with the Toyota keiretsu (network) of suppliers. In 1955 he received his doctorate. By this time he had become a family man, having wed Hiroko Mitsui in 1952 and become the father of two children.

In the last years of Kiichiro's life, Toyota Japan Motor Company resumed making trucks and passenger cars. General Douglas MacArthur, though, brought unionization to Japan, and F. Edwards Deming introduced quality control. Toyota was unionized, and its workers demanded job security, which Kiichiro could not provide because the company was losing money. Kiichiro resigned shortly before his death in late March 1952. Shoichiro had been ready to travel to America to manage a sewing-machine manufacturing operation, but his father's death changed that. He was 27, and he was not yet ready to run Toyota. He was made a director. Toyota soon began to prosper by making trucks for the American army fighting in Korea.

SHOICHIRO CHAMPIONS TOTAL QUALITY CONTROL

The company presidency passed into the hands of Taizo Ishida, who was not a member of the Toyoda family. This proved to be an important lesson for Shoichiro; it showed him that Toyota could remain a family firm even when it was necessary temporarily to turn to someone outside the family to run the company.

The major influence on the maturing Shoichiro would be Eiji, who was now the most powerful family member in the company. Eiji would shepherd Shoichiro as a young executive and, over two decades later, shape him into his successor as company president. Eiji was responsible for giving Shoichiro his grand vision, to make Toyota a global automotive company, and training him to realize that vision.

Under Ishida, Toyota began to export cars to Europe and America. The Toyota Corona Crown was the first Japanese car to be marketed abroad. Its success in the 1950s and early 1960s was limited. The Motomachi plant was opened in 1959 to produce Toyota cars. The director of the construction committee was Shoichiro, supervised by Eiji. Shoichiro was sent abroad to gain expertise on how to construct a plant for passenger cars. In 1961 he was promoted to managing director of the corporate planning office.

Shoichiro quickly recognized that Toyota's cars and trucks were not of the quality foreign consumers were looking for. Americans would not buy what many of them saw as under-powered, unattractive, and undependable vehicles. Toyota would have to improve its entire production process, but doing so was easier said than done. While the company talked about improving quality control, it had little contact with American experts on the matter, and its workers were still inexperienced in this area.

Shoichiro saw a solution: Quality-control operations needed to be integrated into every step of production. They had to be systematic and a part of every Toyota department and operation. In the early 1960s he prevailed upon Eiji and Ishida to implement a total-quality-control program. The board agreed, and Shoichiro set the goal of having a program in operation by 1964. He brought in experts, but the company's workers complained and revolted. Production expert Taiichi Ohno felt that Shoichiro was wasting his time and Toyota's money. Within a year, though, Shoichiro's critics knew he had been right. The number of defects in Toyota cars fell by half. Ohno discovered that quality control actually enhanced his lean, just-in-time assembly-line process. Toyota was on its way to global competitiveness and Shoichiro, more than any other individual, was responsible.

TOYOTA'S FIRST GLOBAL MANAGER

Eiji served as president of Toyota from 1967 to 1981. He was highly skilled both as a car person and a manager. He was determined to make Toyota a global motor company and believed that it could supersede General Motors to become the leading automaker in the world. Eiji felt that this could be accomplished by marketing highly reliable, fuel-efficient cars primarily in the North American market, and rising oil prices after 1974 encouraged this belief. He sought to gradually conquer market share, first from Chrysler, then from Ford, and ultimately from General Motors. Toyota entered the American market again in the mid-1960s with the Corona, but sales began to really mushroom in the 1970s as American baby boomers sought more fuel-efficient cars.

By the time Eiji stepped down as president, millions of Americans were now turning away from Chryslers, Fords, and Chevrolets to Corollas. Shoichiro did not take full control of the company until 1985. In the meantime, Eiji continued to guide Toyota's worldwide success. Eiji reorganized Toyota's manufacturing and sales divisions to form the Toyota Motor Corporation in 1982, and he named Shoichiro to be its first president.

Shoichiro continued to refine the philosophy he learned from Eiji. Years later, he summed up his views in an address he gave before the Asian Institute of Technology. Production, said Shoichiro, required human capability, whether it was in building motor vehicles or nations. Human capability added value to economies and societies, and it induced and sustained technological progress. Basic technology and applied technology, though, had to work together. Building high-quality cars, moreover, was a rewarding act in itself that "brings excitement and joy to the people involved." The Toyota production system built people was well as vehicles. "We have to prepare people and help people develop themselves through the accumulation of experience by performing round and round of work day after day," said Shoichiro, who noted the need for "building human beings by going through the process of building products." Shoihiro saw Toyota's highly trained and motivated workforce as an enormous investment in the future, for "skilful people thus developed can then rise up to yet greater product-building challenges. This is a continuous process of building human capability through OJT, or on-the-job training."

In the same speech Shoichiro recalled how he learned that "building people" meant more than just giving them skills and the ability to work with precision. Building people also meant inculcating a strong sense of mutual responsibility and teamwork directed to ever-higher goals. Long-term thinking had to take precedence over short-term profits. Investing in Toyota's people was investing in Toyota's future. Problems had to be observed by managers personally on the spot in order to fully understand them; this was known as genchi gembutsu (Go and see for yourself). Solutions must be arrived at via the process of nemawashi , in which alternatives are discussed and weighed until a final course of action is decided upon through consensus. At this point the decision must then be implemented quickly. Shoichiro had always been attentive to the "four S 's of the Toyota production system: sifting, sorting, and spickand-span. Thorough attention to them helped "identify glitches on shop floors and visualize troubles caused by overburdening, non-value-adding activity and unevenness." The right procedure was destined to yield the right results. The lesson of kaizen (continuous improvement) remained integral to Shoichiro's management philosophy.

Shoichiro then recalled another series of lessons learned during his presidency in the 1980s and his chairmanship in the 1990s: "Global competition is growing increasingly fierce, and we are right in the middle of it." Toyota had to become a global power and maintain its power by institutionalizing its philosophy. In order to stay competitive and become even more competitive, Shoichiro had to "find suitable ways to pass on our 'management philosophy' firmly rooted in the idea of making things, to later generations of Toyota workers" in Japan and elsewhere.

Guided by this philosophy, Shoichiro took part in several key decisions during his presidency that would forever change the face of Toyota. He recognized that he presided over a company that in many ways was still quite conservative, even provincial. In contrast to companies based in cosmopolitan Tokyo, Toyota was rooted in Aichi Prefecture, the Midwest of Japan. Shoichiro recognized that Toyota would have to become a truly global company and he its first truly global manager. If the company was to meet his goal of capturing 10 percent of worldwide vehicle sales by the year 2000, it would have to become less provincial. The key to Shoichiro's new global strategy was the United States. Here Shoichiro saw enormous investment opportunities, as American consumers were beginning to recognize the quality of Japanese cars—and American producers the danger. Americans were now writing books such as Theory Z and The Art of Japanese Management showing how Shoichiro's countrymen were upstaging American companies and attracting American consumers. The most important and central decision of Shoichiro's presidency was therefore to begin making cars in America for Americans.

Shoichiro set the goal of capturing 10 percent of worldwide vehicle sales by the year 2000. He recognized that he was setting out to challenge not only Detroit but possibly also Washington. As American steel and auto plants closed down, a protectionist backlash began to surge in the United States, and even the Japanese Ministry of International Trade and Industry (MITI) strongly recommended Toyota reduce its exports to the United States. Eiji and Shoichiro agreed to voluntary limits on Japanese cars exported to the United States, a move that could seriously cripple Toyota's profits.

The first step in Toyota's global strategy was taken when Eiji signed an agreement with General Motors to set up a joint production venture, New United Motor Manufacturing, Incorporated (NUMMI), in Fremont, California. NUMMI went into operation at the end of 1984 producing Toyotas and Chevy Novas under the titular leadership of Shoichiro's brother Tatsuro. The venture was a prime example of genchi gembutsu . Shoichiro was reassured that Americans could learn the Toyota production system and would buy cars made by Japanese companies in America. He could see that Toyota, in order to become more global, would have to become more American. Shoichiro would hire Americans, learn from their expertise, venture into their markets, and discover what they wanted in a car or truck. Robert McCurry of Chrysler became executive vice president of Toyota Motor Sales USA in 1984. Gary Convis came from Ford, via NUMMI, and in 1999 became president of Toyota Motor Manufacturing in Kentucky.

Within a year after NUMMI began production, Shoichiro was ready for the next step, and it was a major one: Camrys, which heretofore had been made in Japan, would now be made at an American plant. Toyota opened the Camry plant in Georgetown, Kentucky, in 1988. Shoichiro entrusted the operation to one of his brightest production experts, Fujio Cho, and the plant became the prototype for five other Toyota plants in North America. Now firmly in charge of his company, Shoichiro knew the American business culture better than most of his colleagues.

SHOICHIRO'S MANAGEMENT STYLE

Shoichiro's goals were the same as Eiji's but his management style contrasted sharply. Shoichiro was very close-mouthed and less prone to listen to others than Eiji. Shoichiro was a little less "Japanese" and slightly more "American" in his approach than the more consensus-bound Eiji. He gradually replaced the board and upper-management ranks with his own people. He sometimes disagreed with his mentor. When Eiji wanted to market a luxury car in America, Shoichiro rejected the idea for almost a decade. Finally, he listened, and the result was the Lexus. Listening to Americans such as McCurry and Convis provided valuable knowledge about what their countrymen wanted to buy, which was cars with Japanese quality and American flashiness.

Despite his great power and accomplishments, Shoichiro rejected any efforts at self-promotion, coming from a culture in which the individual was subordinate to the company. Author Maryann Keller, in her 1996 book Collision , quotes the deferential Shoichiro: "I am a son unworthy of his father. I am surrounded by these worthy souls and that is how I manage to get by even though I am mediocre." Notwithstanding his grand push into the United States, Shoichiro remained fluent only in Japanese. While he could rely upon Cho and others for English proficiency, he remained highly intuitive in his conversations with Americans, trying to make sense of a gesture here and there to determine what was being discussed.

Shoichiro faced a double challenge in the 1990s. The Japanese economic miracle suddenly began to evaporate when the Nikkei crashed in 1989. By 1990 the stock exchange had lost two-thirds of its value. The yen rose in value, strangling Japanese exports. The Japanese home market entered a prolonged period of recession that lasted through into the 2000s. Shoichiro now faced a resurgent U.S. auto industry that was far ahead of Japan in marketing trucks and SUVs. A more serious threat was emerging at home from Honda, whose trendy, popular cars sold well with young Japanese who found the Toyota Corolla reliable but a bit too functional for their taste. Toyota's market share in Japan slipped from 40 percent in 1993 to 38 percent in 1996.

To carry out the great investment offensive of the 1980s, Shoichiro had expended a lot of capital on new plants in the United States, Japan, and the United Kingdom. The development of the luxury-brand Lexus was also very expensive. Protectionist pressures were rising in the United States, causing the Japanese government to persuade Shoichiro to slowdown his expansion plans. Also, Shoichiro could not find enough young Japanese to work for Toyota, in spite of Japan's now chronic recession. The company seemed to be aging, as was its chairman, Eiji, who turned 79 in 1992.

Shoichiro was compelled by the unwritten rules ( kata ) of the company to replace Eiji as chairman and choose a successor himself. He was further motivated to find a successor due to his new and growing responsibilities as chairman of the Keidanren, the Japanese Federation of Economic Organizations. Toyota needed a new full-time president. At first Shoichiro could not find anyone qualified to succeed him. Toyota shikata (protocol) required that a member of the Toyota family take over, but Akio, Shoichiro's son, was not yet experienced. The succession devolved to Shoichiro's brother Tatsuro, whom Kiichiro and Hatako had never prepared for the job. The board crowned Tatsuro president in 1992, but Shoichiro pledged that his brother would receive strong direction. Shoichiro continued in the early and mid-1990s to direct the firm from above while executive vice presidents Hiroshi Okuda and Fujio Cho aided Tatsuro from below.

TOYOTA EMERITUS: JAPAN'S GLOBAL CONSCIENCE

Shoichiro's vision extended beyond Toyota. Just before turning the leadership of the company over to Okuda, who had become Toyota president in 1999, Shoichiro was elected chairman of the Keidanren, where he devoted himself to addressing the problems of globalization on a grander scale. He joined forces with Robert Rubin of the United States and Dominique Strauss-Kahn of France in defending free trade. In a Financial Times article of May 19, 2003, the three insisted that the right kind of free-trade system would help both rich and poor, so long as its benefits were widely shared and felt. Shoichiro, writing on the eve of the 2003 U.S. invasion of Iraq, stressed that any global trading system of which Japan was a part had to further the economic development of poorer countries. As Toyota moved, now under his and Okuda's protégé Fujio Cho, toward becoming both Japan's and the auto industry's most global corporation, Shoichiro insisted that globalization must benefit all.

In their article in the Financial Times , Shoichiro, Rubin, and Strauss-Kahn averred that the leadership of the industrial powers must "make clear to everyone why helping the world's poor is in the interest of us all." Knowing that both Japan and Toyota were highly vulnerable in any collapse of the global trading system, with economic nationalism, competitive devaluations, and imposition of trade barriers, Shoichiro joined forces with those who rejected what Thomas Friedman called the "let them eat cake" approach to globalization. As Shoichiro and colleagues noted in the Financial Times , the world's industrial powers "must ensure that the global economy works for rich and poor alike, and also address a parallel agenda of improving education, access to healthcare and social safety nets."

See also entry on Toyota Motor Corporation in International Directory of Company Histories .

sources for further information

Dreyfuss, Joel, "Slow Decision, Quick Action," Fortune , August 3, 1987, p. 35.

Ingrassia, Paul, and Joseph B. White, Comeback: The Fall and Rise of the American Automobile Industry , New York: Simon and Schuster, 1995.

Keller, Maryann, Collision: GM, Toyota, Volkswagen, and the Race to Own the 21st Century , New York: Currency Doubleday, 1993.

Liker, Jeffrey K., The Toyota Way, 14 Management Principles from the World's Greatest Manufacturer , New York: McGraw-Hill, 2004.

Maynard, Micheline, The End of Detroit: How the Big Three Lost their Grip on the American Car Market , New York: Currency Doubleday, 2003.

Togo, Yukiyasu, and William Wartman, Against All Odds: The Story of the Toyota Motor Corporation and the Family that Created It , New York: St. Martin's Press, 1993.

Toyoda, Eiji, Toyota: Fifty Years in Motion: An Autobiography of the Chairman, Eiji Toyoda , Tokyo: Kodanshi International, 1987.

Toyoda, Shoichiro, "Commemorative Speech by Dr. Shoichiro Toyoda, Honorary Chairman of Toyota Motor Corp., on the Occasion of Award of Honorary Doctorate by the Asian Institute of Technology," Bulletin, Asian Institute of Technology , http://www.misu.ait.ac.th/newsandevents/NewsById.cfm?NewsID=2721

Toyoda, Shoichiro, Robert Rubin, and Dominique StraussKahn, "Sharing the Benefits of Global Trade," Financial Times , May 19, 2003.

—David Charles Lewis



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