Three family business takeaways: lessons from Toyota
Chief executive Akio Toyoda is revered by the company’s rank-and-file employees as a gutsy race-car driver
When a Toyoda family member sneezes, a Toyota senior executive catches a cold. This may seem like an exaggeration to some Toyota watchers outside Japan, but for people deep inside or familiar with the famed carmaker, it is no laughing matter.
Looking at recent events from Toyota’s history, three key takeaways contributing to the success of the Toyota family business have become strikingly obvious: the importance of family names, professional innovation of the firm and its ownership structure.
Toyota chief executive Akio Toyoda is revered by the company’s rank-and-file employees as a gutsy race-car driver whose last name confers upon the firm a magical key that binds the entire Toyota family of stakeholders together. Some long-term Toyota shareholders still get shivers down their spines whenever they think about what could have happened to their investments if Akio had not been available in January 2009, when he got the nod from his father Shoichiro to step into the driver’s seat. Little did they both know that this would be no easy ride, especially since the 14 years before his nomination were some of the most profitable years in the company’s history.
Between 1995 and 2009, Toyota was run by three professional managers, Hiroshi Okuda, Fujio Cho and Katsuaki Watanabe. While not exactly the sexy, savvy stereotype of the modern Japanese salaryman, they were loyal executives who ensured that the up-and-coming Akio was getting sufficient experience in a variety of different roles throughout the company during their 14-year tenure.
By 2009, Toyota had become a major player in every product line in North America, the company’s most profitable market, selling the Tundra pickup truck and a range of SUVs, including the Sequoia, Highlander and RAV4. The mid-sized Camry was named the best-selling car in the United States in 2008, and Lexus the best-selling luxury brand. Toyota was at the top of its game largely because Watanabe, the salaryman who ran Toyota from 2005 to 2009, relentlessly expanded its manufacturing capacity, perhaps at the expense of quality.
An unprecedented challenge faced the automotive industry, as most car buyers could not finance their new purchases through bank loans
When Akio took the reins of power in 2009, a perfect storm was swirling around the automotive industry, catching him and many other carmakers by surprise. At the beginning of 2008, it looked like it was going to be another record year for Toyota and the rest of the industry. But oil prices, which had been steadily rising over the previous 12 months, suddenly spiralled out of control. Petrol prices at American petrol stations nearly doubled in the spring and summer of 2008. Hit by sticker shock at the pump, sales of large vehicle and trucks, including Toyota’s popular lines of SUVs and pickup trucks, took a serious beating.