With reference to an organization of your choice, discuss the ways in which

innovation can influence organizational change

Toyota Motors Corporation (TMC) has become one of the biggest car manufacturers of the
world from a humble start seventy years ago. Toyota’s has been one of the most phenomenal
success stories in the ultra-competitive automobile industry and can be a great benchmark for
any company. This success can be attributed to the ability for Toyota to innovate and to
change, which is also part of its mission statement which is “Through our commitment to
quality, constant innovation and respect for the planet, we aim to exceed expectations and be
rewarded with a smile”. Change refers to the adaptation of business objectives, strategies and
operations to accommodate changes. These changes can occur due to exogenous factors or
because of endogenous ones. Innovation emphasizes on the necessity for businesses to renew
themselves in the competitive and technologically advanced market place with increasingly
sophisticated customers. This essay would show how innovation has influenced change in
Toyota.

As mentioned above, the key success of Toyota is innovation and Toyota Production System,
is actually the innovation that made the company successful globally. The secret behind this
system is the strong and constant devotion to the highest quality. The crucial element of TPS
was the philosophy of kaizen, or continuous improvement. At Toyota, this element has been
developed itself in the incremental and constant improvement on a day-today basis of
Toyota’s procedures which are design to eliminate waste and inconsistency. This system has
changed the way production are carried out. It has brought in the participation of all
employees in the process of improvement of the company’s procedures. According to the
CEO, this requires an organization’s willingness to stop production — repeatedly — and trust
that these interruptions will ultimately result not only in better products, but also in more
efficient and profitable operations. This is referred as “automation with a human touch.”
Toyota believes that the workers are the main reason behind the success of their company as
every task is completed with teamwork and new ideas (Hartmann and Halecker, 2015)
According to Macharia Brown (2005) The Toyota production system, closely related to lean
manufacturing, has become the paragon for manufacturing across industries. Similarly,
Toyota’s supply chain structure and relations with suppliers has become a source of
competitive advantage. Therefore, every member of the Toyota supply chain went through a
change to decreases overproduction, stock on hand, and work in process. As a result, cost is
reduced throughout the entire supply chain. This practice is a contrast to automakers that
merely focus on reducing their own stock by pressuring suppliers to hold excess inventory.
Under such a system, cost of extra inventory is transferred to other links within the supply
chain. At Toyota, production schedules are (when to produce and how much to produce,
when to order and how much to order) pulled through the entire supply chain eliminating
coordination issues. Toyota pressures suppliers to share information (vertically and
horizontally) so that waste is reduced throughout the supply chain in order to lower cost

However, to reduce cost Toyota started a program of buying products manufactured locally to
their plants instead of shipping in all components from Japan. This created more suppliers
and more complexity in the Toyota system. This added additional strain on the engineering
teams and the business as they also were growing at a fast pace. As per the CEO has impact
the quality, this growth stretched their resources and their supply base. It became harder for
them to stay focused on quality when they were growing so fast. In fact, Katsuaki Watanabe,
the former president of Toyota, admitted in 2006 that the company had quality problems and
the management system broke down and solutions were not developed and implemented.
This was because, Toyota had too many layers of management not getting to the process to
help lead solutions despite having all the technological access. This is clearly an effect of
diseconomies of scales.

Another innovation brought by Toyota was its hybrid car Prius. It was the best sold car in
America as it allowed customer to save money on gas and to shrink their carbon footprint.
Toyota was bound to bring change in the way they were producing car in order to answer to a
demand for eco-friendly cars due to climate change. This innovation has answered to eco-
conscious consumers who see Prius and other hybrids as an investment in the environment
and in our collective future. According to some research, the possible changes that have been
considered during the production of hybrid car are related to the technological improvements,
scheduling of operations, elimination of operations wastes etc. Hence, it is said that the
higher authorities of Toyota must concentrate on the change management to eliminate their
productivity issue, to which the company is unable to fulfil the growing demand of the
market. Innovation are further supported by Governments in all major regions who are
implementing EV mandates and incentives to promote fewer carbon emissions and protect
the environment.

However, Toyota has recalled 1.9 million of its top-selling Prius hybrid cars because of a
software fault that have cause the vehicle to slow down suddenly. According to BBC(2014)
this issue has halted the sales of some other car models of Toyota. Customers were reluctant
to trust the carmaker who has seen its reputation to suffer with those recalls. The
Management of Toyota said it would update the software of the vehicles to remedy the
problem for free. In addition, according to MacDuffie , Toyota acknowledged nearly three
years ago that it may have “pushed the edges” too fast in product development. It has since
slowed its product development time frame and reintroduced more physical prototyping into
its process to better answer to the problem in order to get back the customer trust.

Toyota is highly recognised for this production system which has encouraged workers to
become highly productive. Also, they brought everyone in the production chain to become
efficient with the aim to reduce cost. However, this process has increased cost further as
Toyota is experiencing a rapid growth leading to diseconomies of scales. Prius hybrid car
another innovation of Toyota has helped in reducing carbon emission but despite all
technology there had been deficiencies in the cars. This brought down the reputation of
Toyota which forced them to slow down production and focus on improving their process.
Thus, it can be said that innovation can bring positive and negative changes in an
organisation.