Page 59 - Toyota Under Fire

TOYOT A UNDER FIRE

capabilities in the Toyota Business Practices template simply can-
not provide the kind of oversight and insight necessary for the
company to maintain those central advantages. Outsiders would
not understand management’s decisions and how they were ar-
rived at well enough to play the needed role on the board.
That being said, Toyota’s board plays a very different role
from that typically played by the boards of American companies.
In American companies, where directors are primarily outsiders,
many with full-time jobs of their own, the board meets some-
where between four and eight times a year to review a set of plans
made by management. In contrast, a Toyota board member’s full-
time job is either being an executive of the company or just being
a board member. Therefore, the board has the time to be inti-
mately involved in exhaustive monitoring of both internal per-
formance and external forces, which Toyota considers essential
for sound strategy and planning. Board members spend a sig-
nificant amount of their time at Toyota factories, literally walk-
ing the shop floor, and visiting offices and dealerships around
the world. Toyota’s value of genchi genbutsu demands their pres-
ence at the work site to check processes firsthand.* As a result,
when the board sets operational goals and strategies, they are not
the plans of a small group of current executives that have been
signed off on by a board of outsiders after a high-level overview.

* There is also a separate global “board” of managing officers who are one level
below the senior executives who serve on the board of directors. These manag-
ing officers run specific operations in a region, such as manufacturing or sales.
For instance, Jim Lentz, CEO of Toyota Motor Sales, USA, and Tetsuo Agata,
president of Toyota Engineering and Manufacturing North America, are man-
aging officers. The managing officers regularly report to the board to give an
even more detailed picture of daily operations.

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