Changing a Company’s Culture

Changing a Company’s Culture

Background

Toyota Motor Corporation is one of the world’s most valuable corporations thanks to its corporate culture. The Forbes magazine ranks the company 213th in its world’s most valuable brands with a market capitalization of $200.7 billion. Takeshi Uchiyamada is the CEO of the company, leading an army of over 136,000 employees whose efforts saw the company record $265.2 billion in sales (Forbes, 2019). It is worth noting Toyota’s success is attributed to its new organizational culture that allows employees to keep improving the way vehicles are manufactured.  In this case, employees are required to navigate through a workplace culture that demands them to constantly come up with fresh ideas about new products that can fulfill customer satisfaction in the marketplace (Takeuchi, Osono, & Shimizu, 2008).  

The secret to Toyota Success

The innovation spirit that characterizes the organizational culture at Toyota is the secret to its success. This spirit of innovation is a result of various features that define the company’s organizational culture.  For example, the company’s workplace culture promotes teamwork whereby employees are required to leverage the power of teamwork to take advantage of their talents and capabilities (Toyota, 2019). Employees at Toyota have developed a mantra whereby they play a key role in their respective teams. The team building success at Toyota is attributed to the company’s teambuilding training programs (Toyota Global, 2019).

Moreover, the company’s organizational culture is typified by continuous improvement through learning whereby the company portrays itself as a ‘learning organization (Ledeneva, 2012).’ The ability of the organization to promote continuous improvement through learning is evidenced by the fact that it makes use of information it gained through activities of employees to develop programs and policies.  By doing so, the company has forged a workplace culture that harbors innovation since it encourages employees to develop solutions to existing problems. As a result, the company has been able to dominate the markets because of its ability to improve processes and output (Levin, 2013).

Another feature of Toyota’s organizational culture is quality. The company’s ability to dominate markets across the world is due to the ability to provide its esteemed customers with high-quality vehicles (Takeuchi, Osono, & Shimizu, 2008). The high-quality products provided by the company is founded on its innovative workplace culture that strives to build a culture that fixes the problem and where quality is obtained the first time.

Culture before the company changed its culture

Before Toyota developed the new organizational culture premised on organizational effectiveness,  the firm’s profitability was hampered by a series of safety concerns and recalls.  In this case, the company’s organizational cultured harbored an attitude whereby employees failed to sufficiently challenge design problems, and there was an inability among employees to work together as a team. The lack of teamwork is attributed to the miscommunication at the organization whereby vital information was not relayed properly to members of the top management (Fernando, 2010).

Additionally, the previous company culture at Toyota was typified by the absence of synergy between the management and low level employees (Fernando, 2010). Top leaders at the company did not delegate their authority, and the whole organizational structure was centralized in nature (Gardner & McClatchy, 2010).  For example, the decision about recalling defecting products was only left to executives based in Japan, not to executives heading regional markets across the world.  The desire by Japan-based executives to make decisions was frustrating to other executives since they felt they were not in charge of their respective portfolio. This hampered the innovation spirit and curtailed any efforts by the employees at the organization to come together and share their ideas about a particular product.  The centralized corporate culture is the reason for widespread safety concerns and vehicle recalls that dented Toyota’s brand image in 2009, forcing the company’s founder, Akio Toyoda, to implement a series of changes that resulted in the current organizational culture premised on innovation and team work (Ledeneva, 2012).

Steps the company took to change its culture

Lewin’s Theory of Change can be used to explain the process Toyota took to implement a series of change to regain its former glory after the devastating product recalls in 2009. Based on this theory, there are four steps of change: diagnostic, unfreezing, movement, and refreezing.  Under the first step of diagnostic, Toyota increased quality control expenditures in an attempt to define the scope of the problem regarding product recalls (Ledeneva, 2012). The assessment found out that root cause of the problem was a more centralized organizational structure whereby top-level executives only made key decisions and lack of sophisticated communication plan that could allow employees to freely share their ideas (Ledeneva, 2012). After identifying these problems, Toyota entered the unfreezing part of Lewing’s Theory of Change whereby it ‘unfreezed’ these problems in the production process. Typically, unfreezing requires changes, and this was implemented by the company’s President who shook up management and reorganized the entire organizational structure (Levin, 2013).  For instance, the company’s president announced the appointment of a new CEO immediately after the recall problem, Mr. Mark Hogan who was the former General Motors executive (Ledeneva, 2012). Additionally, a new sales manager for the North American region was appointment as well as the appointment of two non-Japanese individuals to serve in the Board. All these steps were followed by moving production to the bestselling markets of Europe and the US and finally reestablishing production levels.

Impact of new organizational change in employees

After the implementation of the change process aimed at decentralizing management and improving communication among key stakeholders within the company, there were improvements in employees’ satisfaction in the company. The graph below summarizes the changes in Toyota’s number of employees over the years.