Lockdown leads Toyota chief to question core tenet for car maker

Toyota Motor Corp. Chief Executive Officer Akio Toyoda says he is starting to question long-ingrained practices at the Japanese car maker after cutting travel by 80% and spending less time in meetings as part of measures to guard against the spread of Covid-19.

The grandson of Toyota’s founder, who has spent recent weeks at a Toyota training facility, said on Tuesday he is now questioning “Genchi-Genbutsu," a Japanese phrase that translates roughly into “go and see for yourself." The principle was built on the idea that problems can be solved more quickly and efficiently by going to where they exist and analyzing root causes.

“We’re taking a fresh look at the assumptions of ‘Genchi-Genbutsu’," Toyoda, 64, said after announcing Toyota’s financial results and forecast for an 80% decline in operating profit for the fiscal year through March. The outbreak has forced automakers to shut factories and showrooms, leading to a plunge in vehicle sales.

Toyoda said it’s still important to see things for yourself, but for the right reasons and at the right times. But it’s also becoming clearer that people shouldn’t be traveling all the time just to attend meetings, he said. Underscoring the point, the CEO said he spends 30% less time in meetings, and cut related paperwork by a half.

“Until now, when employees met me, they would prepare briefing materials, or have someone else prepare them, and then use information that’s one or two weeks old for discussions," Toyoda said. “Now, I can just get on a video conference without any materials and deal with any issues then and there."

Japan places great emphasis on face-to-face meetings and paper documents. That may have to change as the government urges businesses to let employees work from home. Even “hanko" seals for official documents are being questioned, with many people working remotely. While the outbreak has accelerated shifts in Japanese work habits, the need was already clear before the health crisis. Such inefficiencies in white-collar work have come under criticism in recent years, with the emergence of new technologies to communicate and transact, and a labor shortage exacerbated by the aging population.

For Toyota, any saved time would be better used thinking about the future of the 87-year-old automaker, the CEO said. Toyoda, however, stopped well short of calling for an end to one of the 13 tenets of the Toyota Production System, the carmaker’s guiding principles. Instead, he called for a return to the main idea behind Genchi-Genbutsu, by being smarter about seeing things in person and when to see them remotely. Obtaining information outside what is presented, and making apologies in person are still critically important, the CEO said.

“We need to be bold about what we should stop doing, and what we should change."