Analysis Of Change Initiative At Toyota Motor Corporation Management Essay

Over the past several decades change management has become one of the mostly discussed topics across different industries on the market. The importance of change management has turn out to be a crucial task for managers and leaders of not only the big global corporations but also small and medium sized enterprises. Research suggests that the change management is fundamental issue that has to be considered especially when it comes to introducing and adjusting new strategies and policies that will influence the company’s future perspectives and developments. It is essential part of the long-term competitive success formula (Pettigrew and Whipp, 1991).

Although many research findings imply that change management can be defined in different ways depending on the industry and the company, there is a common ground on which the perceptions of the roles of the managers are build on. It is argued that people are the main drivers of change and innovation in the competitive environment of the business world. For this reason, human resources departments play a major role in choosing the right people for the right position and train and develop their employees to become goal and future oriented. Findings suggest that in order for a company to have a successful change management implementation, human resources managers have to be able to cope with both transformation and change within a single company (Urlich, 1997).

According to Urlich (1997) “transformation entails fundamental cultural change within a firm…HR managers managing transformation become both cultural guardians and cultural catalysts”. Since nowadays many companies operate on a global scale, the main issue in managing transformation is to lead the company through adaptation and acceptance of new culture without influencing the old beliefs and values.

On the other hand change is usually related to introducing a certain degree of newness to the company, starting from employing new employees up to introducing new strategies and reshaping the overall corporate culture, mission, and vision of a company. More precisely change can be considered to be interrelated with transformation. It is defined as “…the ability of an organization to improve the design and implementation of initiatives and to reduce cycle time in all organizational activities” (Urlich, 1997). In order for a change to be enacted and successfully accepted within a company, it is argued that change has to happen at three different levels 1) organizational, 2) team and 3) individual. When the new strategies and initiatives are accepted at all of the three levels, the implementation of change is successful (Hirtz, 2008).

In order to have a successful change management implementation across the different levels of processes within a single company, research findings emphasize on the importance of having change agents. According to some historical data on human resources, the main drivers for change within a company were considered to be the human resource managers (Urlich, 1997). Being a global company inflicted with differences among the team members, individuals, and the overall organizational structure, the role of the change managers have changed over the years. It is claimed that nowadays the managers and the leaders at all levels within a single company are obliged to assert the need for change and its productive implementation. They are the key to successful understanding of cultural, social, political, and legal differences and the main drivers of motivation to the company as a whole (Hartley et al., 1997).

In today’s business world companies are striving to achieve a high level of change management implementation. In order to do so, an important factor that has to be taken into consideration is the time scale and planning. According to Caudwell (2004), a successful change management should be carefully planned and it should consist of an identified beginning and an ending that will provide desirable outcomes. However, research suggests that during the “change” implementation, managers often forget to go back and look at the results that they get at the very beginning of the process, which is the reason why many companies failed to transform and change according to their initial plans. For this reason, findings imply that the change management has to be perceived not as a one-time implementation project, but as an on-going, long-term and future oriented strategy (Caudwell, 2004).

Lewin’s Force Field Analysis Model

More than fifty years ago Kurt Lewin, using his experience in social psychology and human behavior, developed the widely known force field analysis model in order to explain how changes can happen within a single company. The force field analysis model, or also known as the “3-step model” was primarily developed to help change managers identify the so called “driving” (or external) and “restraining” (or internal-individual and group behavior) forces that might influence the change within a single company (Burns, 2004a). In order for a successful and effective change to happen, Lewin proposed that there are three stages that every company and the individuals and groups being part of that environment should go through. Graphical depiction of the model is shown in Figure 1.

Figure 1

Note: Table is taken from http://rapidbi.com/management/kurt-lewin-three-step-change-theory/

The first stage is the so-called “unfreezing” stage where the current situation should be carefully analyzed by producing disequilibrium between the driving and the restraining forces. By identifying the “field”- term referring to the current individual attitudes and beliefs within a group – change agents are ready to move on, from the so-called “status quo” position, into the next stage called the “move” or “change” stage (Burnes, 2004a). At this point change managers are required to develop a plan that will initiate the urge for change among their employees. The change agents are expected to influence their employees and initiate acceptance and adaptation to the new processes, by strongly focusing on motivation and support. Finally, the third and the last stage is the so called “refreezing” stage where the role of the change managers is to successfully implement the change strategy (in terms of norms, practices, policies, and culture) and make sure that these newly accepted changes are not subject to deterioration (Burnes, 2004b)

Even though Lewin’s model is one of the most widely used contributors to understanding the change management within a company, there are some critics that have been developed over the past fifty years. Research suggests that the implication of the model is useful in identifying the need, the type, and the resources needed to implement a certain degree of change within a company. It implies that the change occurs only at the times when the need for change is identified and that, once the individual’s beliefs and attitudes are influenced and the social conflict is resolved, the change is accepted as a positive influence (Greener and Hughes, 2006). Findings propose that the model is based on simplistic assumptions that the companies operate as “static” and “mechanistic” environments and that the change would follow a clear pattern (Burnes, 2004a).

Victor and Franckeiss (2002) suggest that in today’s highly globalized and highly competitive business world, influenced by the differences in cultures, economies, and politics, change management is a phenomenon that occurs constantly and is planned, revised and updated on a regular basis. It is considered to be a “must-do” element of their day-to-day activities, and their future growth and expansion plans (Victor and Franckeiss, 2002).

Analysis of change initiative at Toyota

Toyota Motor Corporation is a multinational corporation with its headquarters located in Toyota city and Tokyo- Japan and it is the world’s leading automaker. Since its establishment in 1937, the company has successfully managed to expand globally entering the US market in 1957, Asia, Middle East, and China in 1962, and Europe and Africa in 1987. Today Toyota has its overseas bases in 27 countries and regions, as well as 52 production bases and 8 overseas offices. Toyota employs approximately 320,808 employees in their directly affiliated companies around the globe not counting the substantial number of indirectly employed dealers and suppliers. One of the main differentiation strategies of the company is that they managed to keep the same organizational culture and strategy throughout the years of their existence. The company has their own “Guiding Principles at Toyota” and the “Five Main Principles of Toyoda” that have been successfully implemented in every Toyota subsidiary, factory, and even among their dealers and suppliers. The main purpose of their principles is to keep their stakeholders motivated and prompt to change at any time (Toyota, 2010). More detailed information on the Toyota principles can be found in Figure 2.

Figure 2

“Guiding Principles at Toyota”

Honor the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world.

Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities.

Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities.

Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide.

Foster a corporate culture that enhances individual creativity and teamwork value, while honoring mutual trust and respect between labor and management.

Pursue growth in harmony with the global community through innovative management.

Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships.

“Five Main Principles of Toyoda”

Always be faithful to your duties,

thereby contributing to the Company and to the overall good.

Always be studious and creative, striving to stay ahead of the times

Always be practical and avoid frivolousness.

Always strive to build a homelike atmosphere at work that is warm and friendly.

Always have respect for God, and remember to be grateful at all times.

Note: Table is taken from the official web page of Toyota Motor Corporation.

Since the birth of Toyota, the company’s philosophy has been based on successfully “contributing to the society”, meaning identifying the local cultural and social differences and creating products that will satisfy the needs and wants of the local customers all around the world. Throughout the years the company has managed to keep up with its corporate principle of delivering “glocal products” by creating a business model that is mainly a mixture of localization for their global markets (Toyota, 2010).

Although keeping their unique corporate culture and values, and implementing the same business strategies and principles of doing business all around the globe, they have managed to differentiate and bring innovativeness to the international markets. The key behind this success is in the regiocentric management orientation. The company has effectively managed to spot the differences and similarities in the home and host countries and develop local view that allowed them to bring changes into their company, starting with the development of few global names of their products with localization content, and developing special training and support programs that will sustain the cultural differences and will allow their new employees to merge with the company much easier (Toyota, 2010).

Toyota is one of the worlds widely known companies not only because of their successful business plan that has been implemented at home and overseas, but also because of their revolutionary change that made their management strategy stay the same over the years. By developing the Toyota Production System or TPS which is the “method of managing people engaged in work that emphasizes frequent rapid problem solving and work redesign”, the company has set the global model for successful performance and productivity (Thompson et al, 2003). The model was originally developed in the 1970’s and it was mainly used to facilitate production and improve the speed. Over the last several decades the model was widely accepted by many companies operating in different industries. The reason behind the adoption of the model lies in the efforts of Toyota to bring constant change through experimenting and applying new concepts to the already existing processes (Spear, 2004).

But what is the main drive behind successfully applying the TPS strategy? According to Parks (2002) Toyota has been the only company that has managed to apply the process without facing major failures. He claims that for introducing such innovative approach, the whole organizational culture and management should undergo the necessary changes. At Toyota the changes always start with their stakeholders. All the ideas and possible solutions to the existing problems are generated from their employees from all over the world. The solutions are discussed and are implemented as part of their experimental processes after which the final assessment is done. After the decision is made, extensive “cross-functional” training programs are inducted in order to “have productive multifunctional workers” who will understand the processes and the implementation of the new strategies. In order to get the desired results, strong change management is needed that will provide guidance and will result in disciplined and effective implementation of the change strategies (Parks, 2002).

Having a strong management that promotes “open and fair corporate activities” involving all of the company’s employees, introducing diversity programs that support the different cultural backgrounds, and following a clear set of rules (“The Code of Conduct”) enacted by extensive on-site training activities, is the key factor for success of Toyota’s change management processes and strategies (Toyota, 2010).

Conclusion

Although the importance of having an effective change management has been introduced more than five decades ago, it seems that in today’s business world its significance and implementation has a greater influence and application among the companies operating in different industries. Globalization and internationalization had significantly influenced the companies to embrace the change management strategies. Operating on different markets around the world requires compliance with the local cultures, economies, and politics which are the main factors for success of an international company. The main issue is to manage to create synergies between the “home” business strategy and corporate culture and the “host”- local cultures and procedures. Although it might seem like a logical transformation that has to be done, without implementing strong change management policies that will be based on the differences and similarities of the markets and the people, administering change can turn out to be one of the most difficult processes.

Following the example of Toyota, in order to have efficient change management teams and change strategies that would be accepted within a company, managers should stress out the importance of all of their employees. By becoming part of the problem solving and decision making processes, managers would get the opportunity to understand the cultural backgrounds of their employees and eliminate the factors that might influence their behavior. On the other hand the employees would feel involved and motivated and the implementation of the possible changes would result in positive outcomes. This is the reason why over the years Toyota has managed to keep the same organizational culture and strategy, yet always being able to bring innovativeness and set benchmark for other companies on the market to follow.