Transformational Leadership at Toyota

There is a well known car maker company that in the last decades has been an icon in operational excellence in the automotive industry. This company is Toyota Motor Corporation, which has its roots in Japan. Currently, is the company that is having the highest annual profits, stock shares are increasing, its sales are continuously growing, being the number one car seller in Japan and the fourth in North America, behind General Motors, Ford and Chrysler.

Most of Toyota’s success comes from its excellent quality reputation as well as its efficient management and operational system named Toyota Production System (TPS). This TPS started being developed since its foundation in the 1920’s, and has its roots with its founders, the Toyoda Family. One remarkable thing about this leadership example, is its exemplar consistency of transformational leadership and philosophy to do things with excellence.

The company was initiated by Sakichi Toyoda, who was a brilliant engineer and inventor. Since the beginning he had the philosophy of continuous improvement. In 1894, he started designing and building manual looms that were cheaper and worked better than existing looms. After seeing the hard work to operate the manual looms, he continued his research to design power operated looms, which initiated a revolution in Japan as well as his company named Toyoda Automatic Loom Works.

These looms were very famous in Japan as well as his invention to automatically to stop the looms when a thread broke. Sakichi Toyoda had his son, Kiichiro Toyoda, who in reality was the starter and founder of Toyota Motor Company. Sakichi Toyoda could initiate his son in the powered looms business and continue growing his business “but his vision was that the world was changing and power looms would become yesterday’s technology while automobiles were tomorrow’s technology” (Liker J. , The Toyota Way, 2004).

Kiichiro Toyoda was a frail and sickly boy, who many believed that did not have the physical capacity to become a leader. But his father disagreed and Kiichiro persevered (Liker, 2004). Kiichiro Toyoda initiated his journey towards the start up of the company, but he needed to overcome many roadblocks like World War II, when his initial factory almost was closed, he did negotiate with the Americans, during the occupation, and started building trucks again. There were inflation issues, that undermined the car sales, and to avoid bankruptcy he

had to apply drastic cost cutting policies, that included voluntary pay cuts to managers and 10% cut in pay to all employees. This action was part of a negotiation made bi Kiichiro to avoid a massive lay-off and maintain his policy against firings. This was not enough and he asked 1,600 workers to retire voluntarily, but this was not accepted and stoppages and public demonstrations initiated. Kiichiro took a different approach to solve this situation, and he accepted responsibility of the situation and resigned as president.

This action, helped to relief workers dissatisfaction and more employees started to leave voluntarily. Even that the economic issues were not caused by Kiichiro, his action set a precedent that he lead by example and is one of the values that Toyota has embedded into his organizational culture. ReferencesMcShane, S. L. , & Von Glinow, M. (2005). Organizational behavior. New York: The McGraw-Hill Companies. Liker, J. (2004). The Toyota Way, 14 management principles. New York: The McGraw-Hill Companies.