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BELTEJAR, Jan Robert V.

29 January 2011

LS 142 Written Analysis of Case No.1 Dr. Antonette Palma-Angeles

On Innovation and Differences Between Toyota and Apple Credited as one of the reasons for Toyota’s success in the global marketplace, “Just-in-Time (JIT)” systems and lean manufacturing have entered the jargon of business, with companies in the United States and in other parts of the world replacing their old systems (primarily Material Requirements Planning, or MRP) that incur carrying costs, with JIT which makes use of a “pull system,” ensuring that parts are assembled together into a finished good only when there is an order or concrete demand for it. Toyota’s own system dubbed the “Toyota Production System” or TPS makes use of JIT and another concept, jidoka, to ensure maximum efficiency in production and in refining production processes. Jidoka, or “automation with a human touch,” ensures that production is halted immediately after a problem arises through the automatic stoppage of equipment, preventing the production of defective finished goods.1 Defects are likewise easily identified as operators of equipment with problems or defects can communicate their problems through what is called the “andon” or a “problem display board,” ensuring that the problem is recognized and can be addressed immediately and facilitating continuous production of goods by other operators using other machines that have no error or problems. Furthermore, operators can operate or inspect several machines at a given time, since equipment with defects will automatically come to a halt if a problem arises in the production of goods.2 JIT, on the other hand, is a system used to eliminate waste completely and to produce products in the most efficient way possible. It makes use of a coordinated network of producers of parts (equipment, with their operators) who adhere to a pull system policy, where standardized parts are produced once an order is given, the assembly line is replete with the needed produced parts, and the said produced parts, once used for the order, are replenished instantaneously in anticipation of another order of the said standardized parts, which can be used for cars (in Toyota’s case) or products of different types. The success of this highly coordinated system relies on a number of factors, such as cohesion of the group, an organizational support system, a common goal for the group, trainings, as well as a system of exposing problems and addressing them effectively. Such systems are present in Toyota. According to Liker and Hoseus’ “Toyota Culture: The Heart and Soul of the Toyota Way,” Toyota’s organizational chart “stands on its head,” giving due importance to “core value-added worker” who is coached, taught and supported by leaders through “clarifying and reinforcing common goals, specifying and integrating team roles and job tasks, articulating standardized work, providing training for required job competencies…assisting in resolving issues, and ensuring earned recognition.”3 This, in turn, gives rise to a corporate culture of transparency in identifying (genchi genbutsu) and resolving problems, encouraging innovation in the way goods are produced, problems are resolved, technologies from other companies or countries are seamlessly incorporated and shaped to bring about an optimal level of production and quality, and which ensures that adaptations are carried out smoothly, from orders from the top brass of the company to operators of equipment and production managers. In their book, Liker and Hoseus further asserts that innovation, or “continuous improvement,” is “driven by hoshin-kanri…a system of setting objectives for improvement, starting at the very top of Toyota and coming to agreements at every level down to the team member.” This process of seeking and coming to agreements not only guarantees harmony among the Toyota
Toyota Motor Corporation. “ Toyota Production System.” Accessed from http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/; accessed on January 26, 2011.

1 2 3

Ibid.

Jeffrey Liker and Michael Hoseus, Toyota Culture: The Heard and Soul of the Toyota Way (New York: McGraw-Hill, 2008) : 46, http://books.google.com.ph/books? id=mfqDBQLlinkC&pg=PA12&lpg=PA12&dq=relation+of+TPS+of+Toyota+to+Japanese+culture&source=bl&ots=qKeDjzY4IY&sig=qMFASaxCLXGJUgPUCqf714X7MRY&hl=tl&ei=a75CTeuLGsKq rAeouqHxDw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CCMQ6AEwAg#v=onepage&q&f=true.

leadership and its workers, but likewise imparts the message to the employees that they have a stake in the company’s success, are valued enough for top management to solicit their opinions and agreement to objectives, and are long-term part and parcel of team that determine the success of the company. This empowers even the rank and file employees of Toyota to render outstanding service and dedicate their work to the success of the organization and a company as a whole.4 As regards innovaton, Apple likewise prides itself with fostering a culture of innovation. According to an interview on Andy Hertzfeld, who was part of the original Macintosh team, conducted by Burt Helm of Bloomberg Businessweek, Apple “operates for artistic values rather than for commercial purposes.” Apple is renowned for not relying on focus groups and benchmarking with competitors. Apple also encourages and tolerates risk and idealism by letting their product designers come up with novel designs that are then submitted to Apple CEO Steve Jobs for approval. In the words of former Apple designer Robert Brunner, “Decisions just happened.” Helm’s article further stated that in the early 1980s to the early 1990s, “people like Jobs, John Couch, or Jean-Louis Gassee, who led Apple Research & Development from 1981 until 1990, made final decisions based on their personal likes and dislikes.”5 Responsibility is pushed down as far as possible, enabling design teams to innovate by themselves, in a way they deem fit. Micromanaging was not encouraged by decisionmaking based on the personal tastes of top management, as rejection for certain ideas or designs were made in a general manner (e.g., “I don’t like it,” or “It sucks,” as Job would say). This ensured that a culture of innovation and a desire to improve on work was fostered in a considerably unrestricted manner,6 subject only to the tastes of Apple’s head honcho, Steve Jobs. This style of managing employees and workers has led to the creation of such iconic and commercial successes as the MacBook, the iPod, the iPhone and the iPad (to name a few), as well as some flops, such as the Lisa and Newton.7 A comparison between Toyota and Apple’s manner of fostering innovation and management style leads one to conclude that the differences are the result not only of differences in the temperament of top management, but also of cultural differences. This becomes clearer when certain business processes and activities, such as decision-making, incorporation of existing technologies, and manner of dealing with subordinates, are compared and contrasted. On decision-making, the starkest contrast can be seen between Apple’s quick and direct style and Toyota’s lengthy, consensus-backed style. As has been mentioned, Toyota employs a system of continuous improvement that is marked by set objectives and agreements within every level of the organization’s hierarchy, ensuring that consensus is first reached before a definitive decision is finalized and upheld. This reflects the Japanese people’s collectivist belief that the individual, by himself, is “not regarded as a mature state.” Trompenaars, in his work Riding the Waves of Culture, explains this Japanese belief by citing the translation of the Japanese word for a mature individual as a “person-among others,” someone who serves the interest not of himself, but of the group and who derives his status by competent service to the said group.8 Therefore, the ringi process is observed, where “proposals circulate and are initialed by agreeing participants,” though this can result in delays.9 This is in contrast to the decision-making process in Western and individualistic cultures, where decisions are made by a person of authority (usually the CEO or seniors managers) in, as Trompenaars put it, “a few fateful seconds,” which may, in turn lead to delays in implementation due to problems on
Jeffrey Liker and Michael Hoseus, Toyota Culture: The Heard and Soul of the Toyota Way (New York: McGraw-Hill, 2008) : 48, http://books.google.com.ph/books? id=mfqDBQLlinkC&pg=PA12&lpg=PA12&dq=relation+of+TPS+of+Toyota+to+Japanese+culture&source=bl&ots=qKeDjzY4IY&sig=qMFASaxCLXGJUgPUCqf714X7MRY&hl=tl&ei=a75CTeuLGsKq rAeouqHxDw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CCMQ6AEwAg#v=onepage&q&f=true.

4

5 6 7 8 9

Burt Helm, “Apple’s Other Legacy: Top Designers,” Bloomberg Businessweek, September 26, 2005, http://www.businessweek.com/technology/content/sep2005/tc2005096_1655_tc210.htm (accessed January 25, 2011) Ibid. Ibid. Fons Trompenaarss and Charles Turner-Hampden, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed (New York: McGraw-Hill 1998), p. 65 Ibid, p. 62

the rank and file’s absorption or understanding of the decision, or even because of their dislike of the said decision. This manner of decision-making, in turn, may be the result of Westerners or individualistic cultures’ perception of organizations not as identity or status-giving bodies but as instruments for their personal gain and the furtherance of their individual interests.10 Thus, in this line of thinking, one is not beholden by personal or communal ties to the organization and its other members, which renders consultation with other members of the organization (e.g., the rank and file employees) unnecessary and a waste of time. A clear difference can also be noted when comparing Apple and Toyota’s attitudes towards adopting and improving on existing technologies. Apple prides itself in creating novel products that use technology that have never been employed before. Also, according to Helm’s article in Bloomberg Businessweek, Apple makes “wildly imaginative products with a consistency few [can] companies rival.” Apple has always emphasized the value of novelty and the need to protect intellectual property, as evidenced by its suit against HTC and Nokia on iPhone-related patents.11 This may have sprung from a Western notion, which Trompenaars calls “proprietary notions,” wherein that which we produce or conceive (and is therefore “inside of us”) is “ours.” Toyota, on the other hand, has been accused of taking (or even stealing) the best of Western technology and adapting it to suit its products (and its consumers’) requirements, resulting in a better product. This accusation is unwarranted, as perception as regards the ownership of technologies and its adaptation varies greatly between Westerners and Asians. According to Trompenaars, because of Asian’s outward orientation in connection to the environment, the incorporation of elements from the external environment (such as technologies from competitors or firms in different industries) and its adaptation and improvement is not an act of copying or stealing, but rather, an act of “celebrating that environment,” by making use of what it offers and by further improving on it. Moreover, the value of improvement, as contained in concepts such as kaizen and inculcated in the Japanese themselves, serve as the impetus for utilizing what can already be found in the external environment and building on it to achieve a higher quality of the said object or technology.12 Finally, one can note a significant difference between Apple and Toyota on the matter of dealing with subordinates and other members of the organization, and according status and authority as may be inferred from their decision-making processes, among other things. As has been mentioned, Toyota employs ringi thus showing the value placed on the sentiments and consensus formed with its employees. This value is complemented by Toyota’s commitment to investing in each team member by means of trainings and by viewing the employer-employee relationship as a long-term relationship. 13 This maybe explained by what Trompenaars asserts as the Japanese collectivist belief that “an organization is not merely an instrument” of its founders but is more like “a large family, community or clan which develops and nurtures its members…”14 Status is also accorded to the most senior member of the organization, in respect mostly to seniority, as well as to the assumed experience and trainings that the said person with seniority brings along with him/her. This necessarily results from the assumption that respect must be accorded based on seniority, and thus ascription, more than achievement, serves as the basis for promotion. As Trompenaars reveals, however, this practice has not necessarily been detrimental to corporations, as he claims, “It is certainly not evident that Japan’s habit
10 11 12 13

Fons Trompenaarss and Charles Turner-Hampden, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed (New York: McGraw-Hill 1998), p. 62

Tony Bradley, “Apple Suit Against HTC Highlights Patent Issues,” PCWorld Business Center, March 4, 2010, http://www.pcworld.com/businesscenter/article/190684/apple_suit_against_htc_highlights_patent_issues.html (accessed January 27, 2011) Fons Trompenaarss and Charles Turner-Hampden, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed (New York: McGraw-Hill 1998), p. 150

Jeffrey Liker and Michael Hoseus, Toyota Culture: The Heard and Soul of the Toyota Way (New York: McGraw-Hill, 2008) http://books.google.com.ph/books? id=mfqDBQLlinkC&pg=PA12&lpg=PA12&dq=relation+of+TPS+of+Toyota+to+Japanese+culture&source=bl&ots=qKeDjzY4IY&sig=qMFASaxCLXGJUgPUCqf714X7MRY&hl=tl&ei=a75CTeuLGsKq rAeouqHxDw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CCMQ6AEwAg#v=onepage&q&f=true.

14

Fons Trompenaarss and Charles Turner-Hampden, Riding the Waves of Culture: Understanding Diversity in Global Business, 2nd ed (New York: McGraw-Hill 1998), p. 64

of promoting by seniority has weighed its corporations down beneath piles of dead wood.” 15 In this regard, Apple differs, as Apple CEO Steve Jobs first became chairman of the company in March of 1981, at the young age of 26.16 The fact that the young Jobs was elevated to the position of chairman at such a young age mirrors the underlying belief of achievement oriented cultures (of which the United States is one) that status must not be accorded based on such uncontrollable factors as age and social class but on people’s performance and what they contribute to the organization.

15 16

Ibid., p. 110 Glen Sanford, “Company History 1976-1981,” Apple-History.com, http://www.apple-history.com/?page=history&section=h6 (accessed 28 January 2011)