As I fidgeted through a 14-hour flight to Japan in a well-worn Boeing 777, I wondered what I would find. I figured Toyota had gotten some bad breaks, but I wondered about how committed this ponderous and bureaucratic company was to change.
After overnighting in Tokyo, I moved on to Nagoya, Japan's third-largest city -- one hour and 40 minutes away by Shinkansen bullet train -- where Toyota occupies several office buildings. I met with executive vice president Yukitoshi Funo, one of Akio's key advisers. Funo, who holds an MBA from Columbia and formerly oversaw U.S. sales, told me there had been an upheaval at Toyota. "[Akio] has dramatically changed the way the company is managed," he said through an interpreter. "There are two major pillars to how he manages: First, be fast; and second, be flexible. Usually Japanese companies are based on a 'bottom up' management style, which slows down the pace of decision-making. In looking at other companies, we realized the need for a certain level of 'top down' to move quickly."
Akio shrank the board of directors by half and took out layers of management. Funo revealed a more significant development: Akio has begun meeting informally with his five top advisers every Tuesday morning to review the company's operations. They work so closely together that Funo called it "pit work" management. No agendas or written reports are allowed, and decisions are made on the spot. "Basically, the six people have a very strong personal bond. So it's not a very emotional or heated debate as we have a very good understanding among each other." They can move quickly. After Akio visited Tesla Motors (TSLA) in California in 2010, the Tuesday morning meeting signed off on a $50 million investment in the electric-car maker. Subsequently Toyota agreed to buy $60 million worth of Tesla batteries to power its all-electric RAV 4 crossover.
Funo said Akio has made another fundamental change in the way Toyota is managed. Traditionally, Toyota has rotated its top executives, so a sales specialist could be assigned to purchasing, or a product engineer to manufacturing. Now they stay within their specialties so that they can leverage their experience. "It's very American," said Funo. "I'm not really sure how what he learned at Babson [the Boston college where Akio studied business] has affected how he is running the company. But he is not typical Japanese management." That turned out to be an understatement.
The next day I made the 40-minute car ride to Toyota City to meet with Takeshi Uchiyamada, Toyota's top engineer and another participant in the Tuesday morning meetings. In 1993, Uchiyamada accepted the challenge of Toyota's elders to develop a car with 50%-better fuel economy; today he's known as the father of the Prius. More than 3 million of the hybrids have been sold since 1997, and it has been expanded into a sub-brand with additional models.
