Toyota how to success and built the empires

•  Today we’ll talk about a huge company that’s still essentially a family run business. Currently the grandson of the founderis the president of the company. We’re talking about Toyota,the 10th largest company in the world! So how does a family business in the textile industry in Japan become the largest car manufacturer in the world? How did Toyota get so big? Buckle up and let’s take a ridethrough Toyota’s history. 

• History of Toyota Part 1 The story starts with a simple farmer-carpenter and a weaver in Japan. Their son Sakichi is fascinated with machines.He wants to make weaving easier. So, he invents multiple weaving devices and looms, which are machines that make fabric.
•  His most famous invention is the automatic power loom, a machine that stops it self when a problem occurs while weaving. Sakichi becomes known as the father of the industrial revolution in Japan and “King” of Japanese inventors. Let’s pause for a moment here. Toyota has some secret symbolswoven into their history.
•  For example,if you look at Toyota’s current logo, some people believe that it reflects their beginnings in textile weaving. Take a look and see if you can see the thre ad going through the needle. Toyota’s official stance is that the inner ovalssymbolize the heart of the customer and heart of the company,and that the over lapping lines represent trust, while forming a letter ‘T’ for Toyota,and that the outer oval signifies the world embracing Toyota.

• But you judge for yourself. Now maybe you’re wondering whythe company’s name is Toyota, while the family’s name is Toyoda. In 1930 Toyota had a logo design contest.They received 27,000 design entries. The winning entry had theword “Toyoda” inside a circle. But “Toyo” with “Da” means ‘rice paddies’.
• The family preferred the word “Toyo” with “Ta” because it’s visually simpler and had 8 brushstrokes, and 8 is a lucky number in Japan. Also changing the name meant the company wouldn’t be associated with old-fashioned farming. Also in the current logo, you can see eachindividual letter that make up the word Toyota.
•  Now back to our story. Sakichi’s son is Kiichiro.The year is 1929. He’s 35 years old. And he’s in Detroit, the heart of the young automobile industry. He’s there touring all the leadingautomobile companies. The goal is to observe and learn because hewants to start making his own cars back in Japan. 

• Problem is, he’s already late in the game. Rewind 6 years prior, to 1923.The Great Kanto Earthquake happened. It destroyed much of the Tokyo railway system.So the city of Tokyo ordered 800 truck chassis from Ford, fit them with rough canvas-topbodies and used them as municipal buses. Ford saw market potential in Japan. 
• General Motors saw it too,and entered the market. At the time, there were smaller Japanese cars-makers in Japan. But Ford and GM were inexpensive compared to the Japanese domestic cars. Ford models were selling at abit less than 4000 yen, while it cost local manufacturersover 9000 yen to just produce them. 

• So the American brands were crushingJapan’s emerging motor industry. From a Japanese standpoint,entering the car market seems impossible. But this doesn’t stop Kiichiro. In 1933 he establishes a motor vehicle divisionwithin the loom factory. He decides to design his prototypeon the Chrysler built 1934 DeSoto, copying the engine from Chevrolet andthe chassis and electronics from Ford. 
• 2 years later, it’s 1935.The Model A1 passenger car prototype is complete. It uses a 6-cylinder enginewhich produces 62 horsepower. It has a 3-speed column-shiftmanual gearbox. Some of the parts have been castand forged in his factory while the vehicle also incorporatesmany genuine Chevrolet parts.

•  They then redesign the A1 into the AA sedan,a year later. This is the first passenger carToyota releases. It sells for 3,350 yen,which is cheaper than Ford and GM cars. Kiichiro knows his success is fromcopying the work of others. It was necessary to do thisto enter the market. But he believes in order to truly advanceJapan’s automotive industry, he must cultivate a drive for innovation. That’s why he establishes a research laboratoryin Shibaura, Tokyo in May 1936.
•  Now let’s pause our story for a moment.This is Clue #1 on how Toyota got big. Toyota may have started out imitating,but they didn’t stop there. The son of an inventor and an inventor himself,Kiichiro knew the value of innovation. We’ll get more into Toyota’s innovationsin Part 2 of this series. But now let’s get back to our story. Remember Kiichiro just produced

his first passenger car. 

But most Japanese consumers aren’t ready

• to buy passenger cars for households. So he decides to make the G1 truckbecause trucks are in higher demand and are more profitable in the short run. But the G1 comes with a lot ofmechanical problems. So Toyota supports early sales with freerepairs and even replacement vehicles. 
• And that’s clue #2to how Toyota got big. From their earliest days,Toyota had a good warranty system. If it broke, they fixed it. They earned the consumers’ confidence.Kiichro himself helped fixed customer cars. Kiichiro applies the “Jidoka” principle from thehis father’s loom business to car manufacturing. His father, Sakichi, has inventedthe Jidoka concept.

•  Jidoka involves asking the “5 Whys”to find the root cause of a problem, then implementing a solution toprevent the future recurrences. Here’s how Jidoka works to fix anyproblem with a car. Any mechanic can use it even today. For example,let’s say a vehicle won’t start. First you ask, “Why?”Let’s say you find out the battery is dead. 
• Then you ask the 2nd Why? Let’s sayyou find out the alternator is not functioning. Ask the 3rd Why?You learn the alternator belt has broken. Ask the 4th Why?You see the alternator belt was beyond its useful service lifeand had not been replaced. Ask the last Why?You learn the vehicle was not maintained according to therecommended service schedule. 

• Using this method,you know how to fix the car. And you also learn how to prevent itfrom happening again in the future. In this example, the root cause why the carwon’t start is because the user didn’t do regular service maintenances needed. Anyway, Kiichio uses this method to streamlinethe car manufacturing process and impact mechanical quality. 
• Now remember, he’s selling the AA sedansand G1 trucks at this time. But then World War II happens.  As with all wars,it brings extreme economic difficulties. Toyota pauses making passenger cars, andinstead makes trucks for the Japanese military. The Allies plan to bomb the Toyota factory.But fortunately for Toyota, the war ends before that happens.
•  So, the war ends. Two years later, it’s 1947.Kiichiro restarts his commercial car production. Toyota sells small-sized cars called Toyopet.But Toyota is on the edge of bankruptcy. 

• Even though it secures loans from several banks,they’re just barely getting by. Kiichiro looks to expand businessand conducts research on helicopters and a new type of gasoline engine for it.
•  It’s now 1950.  Toyota produces only 300 trucks,and he’s about to go out of business. So, Toyota reduces wagesand lays off many employees. This causes the unionto go on strike for 2 months. They demand that Kiichiro resigns as president,and he steps down in June 1950. That same month,the Korean War starts. During the war, the US military orders5,000 vehicles from Toyota. That is what revives Toyota.Couple of years later, it’s 1952.
•  A decision is made to reinstateKiichiro as president. Preparations are made to reinstate him in July.But Kiichiro dies unexpectedly in March. He’s just 57 years old.But the story of Toyota doesn’t end there. In Part 2, we’ll see the next eraof the Toyota story, hear about Toyota’s firstmass-produced passenger vehicle, how American’s didn’t like the name and furtherinnovations that changed the car industry.