Not long ago, Toyota Motors president Fujio Cho welcomed 1,700 new employees at a traditional Japanese "joining-the-firm ceremony." Last year was stellar for Toyota, but Cho skipped through the rosy stats, including record overseas production for the 13th straight year, to dwell on an almost apocalyptic vision of rising competition, particularly from South Korea and China. "Toyota's lead is growing smaller," he warned. "If we stop and relax, we could soon find ourselves facing a threat to our survival as a company."
Sure, in public, Toyota now looks and sounds increasingly, confidently American as its sales center shifts to the United States. But its spiritual center is Toyota City, a huge company town of 400,000 people outside the industrial city of Nagoya. Employees from all over the world come here for indoctrination in the "Toyota Way." This phrase is repeated like a mantra, and embodies a deeply Japa-nese ethic of constant self-improvement and fear of complacency. This near-religious inspiration is one reason Toyota consistently ranks as one of the most respected firms in Japan, and one of those university graduates would most like to work for.
At Toyota's museum in Nagoya, humble beginnings take pride of place. The first third of the museum is a vast display of looms--homage to the company's origins as a manufacturer of textile equipment. Museum officials explain, with zeal, that it's all part of the Japanese tradition of monozukuri , or "making things," a word that evokes the joy of crafting a product as perfectly as possible. "This is the big word for describing what Toyota's about," says senior managing director Yoshimi Inaba.
Dwelling on history helped Toyota keep its focus while other Japanese giants lost their way. (Sony insurance, anyone?) A clear identity has helped Toyota maintain high standards across 170 nations, including 51 production factories in 26 countries. For years Toyota assembly lines worldwide copied the Motomachi Factory in Toyota City, where the sense of teamwork among the 3,600 employees is, at times, overwhelming.
The plant is decorated with photos of company sports teams. Upbeat slogans (written by employees) hang from the ceiling. Each production team has its own cheery melody that rings out when a member needs to catch management's attention. Combined with perky beeps and electronic signals that mark important events, the plant sounds like a gigantic pinball machine.
Each worker can pull a cord to stop the production line at any time. Workers grab parts from trolleys that move with the line, one of many timesaving innovations proposed by the workers themselves. Toyota says it implemented 90 percent of the 540,000 ideas employees offered last year. Since 1999, the company has completely reconfigured all basic production processes--welding, painting and assembly.
This devotion to kaizen , or "continuous improvement," was summed up by outgoing chairman Hiroshi Okuda in the slogan "Beat Toyota." It applies equally to the production line and the bottom line. "Our spirit is, 'OK, so we've made $10 billion. Why can't we make $11 billion?'" says Inaba.
Viewed from Toyota City, the company's new taste for risk may reflect American influences only superficially. Toyota used to package great craftsmanship in bland designs like the Lexus, but looks now to the "J factor," or boldly Japanese elements, says car expert Akira Fujimoto. Consider the roof of the new Prius hybrid, which peaks just in front of the centerline between the two doors. Toyota chief designer Wahei Hirai calls this "perfect imbalance." Adjusting an imaginary kimono over his chest, he explains that to wear a kimono perfectly, "it has to be just a bit off center." As if Toyota wasn't already Japanese enough. Rivals, beware.