Subscribe

Share

Big Ideas

Amazing and Perfect

Balance of novelty and performance is behind Toyota’s successful transformation.

by Aaron Lazenby

Summer 2017

Self-driving vehicles. Hydrogen-powered engines. Head-up displays. The auto industry is already adopting radical new technology that stands to change the way we drive. And more disruption is on the horizon. How does Toyota, the world’s largest manufacturer of automobiles, consistently innovate while managing the production of more than 10 million units per year?

Snapshot

Toyota

Headquarters: Aichi, Japan

Industry: Auto manufacturing

Employees: 348,877

Revenue: US$252.8 billion

Oracle products: Oracle Database, Oracle WebLogic Server, Oracle Business Intelligence Enterprise Edition, Oracle E-Business Suite, PeopleSoft applications

More

It’s all about the platform.

PJ17-LeadingStrategies-pic

The Toyota New Global Architecture (TNGA), launched in 2015, is a system of standard vehicle base designs that can be transformed into the full range of Toyota brands. So your Corolla and your C-HR may both be built with the same platform of components sitting beneath the leather seats and infotainment center. The shift to a production model based on TNGA required a complete overhaul of Toyota’s car-making process. Equipment needed to be updated, employees retrained, and supply chains redesigned. But the investment will pay off: the TNGA overhaul will allow Toyota to be more responsive to the market while saving big—including a reduction of up to 20 percent of the resources used to build new vehicles.

The TNGA transformation touched every aspect of Toyota’s business—and IT is no exception. Toyota CIO Hiroaki Kitazawa is also rebuilding his platform as part of IT-TNGA, an effort to run all enterprise applications on a common computing layer. Kitazawa’s goal is also in line with the directive of his boss, senior managing director Shigeki Tomoyama: to build a company that can use emerging technologies to make changes with rapid speed.

“Toyota is a company that likes to make improvements on a day-to-day basis,” says Kitazawa. “We wanted to be a company with the courage to overhaul our concept from fundamentals, and we wanted to execute that well.”

Profit spoke to Kitazawa at Toyota City in Aichi, Japan, about the market forces that are driving the need for change, the role of cloud computing in the large global enterprise, and the need to embrace disruption to stay ahead of the pack.

Profit: How is Toyota reacting to global changes in the auto industry?

Kitazawa: The car industry and the market environment surrounding the industry are going through a major change. Previously, cars have been largely viewed as hardware platforms. But even as the physical structure of the vehicle is becoming more and more complicated, it continues to evolve as a platform for software and systems control. This is such a fundamental shift that it’s increasingly easy to envision the entrance of an IT giant into the car industry.

So it is critical now to master the integration of the mechanical side and the software side. We are surrounded by buzzwords such as AI or machine learning or deep learning, but I don’t want these to be just buzzwords. So it is my job, on a daily basis, to find ways to drive information technology into Toyota’s work.

But I believe that must be done artfully. I joined Toyota because I like cars. I wish I had more time to drive, but I’m so busy and don’t get much opportunity to drive cars on a race circuit anymore. I want to feel and touch cars more, because I think cars are fun. So that passion for driving and love for the vehicles is integral to the Toyota experience. It must always remain the focus of our products, no matter what new technology emerges.

My outlook on cloud is that we should always select an appropriate system for the job at hand. At Toyota, we have embraced a hybrid environment that matches the very nature of our business.”

Profit: How does that mentality translate into addressing the changes in the industry?

Kitazawa: At Toyota we always emphasize the driver—the joy of being behind the wheel. So for us, a technology such as autonomous vehicles must translate into a driving benefit. Cars should not move around on their own, but drivers should be able to activate driving assistance when they need it. New technologies must be incorporated into our designs, but be built on a consistent platform that puts the driving experience first.

Profit: Toyota recently experienced a significant transformation with TNGA. How do you describe that transformation?

Kitazawa: The way I see it, cars have to be perfect—not only from the perspective of performance, quality, and safety, but cars also have to be something that’s fun for drivers. So, vehicles must be both amazing and perfect. And customers have to feel those amazing feelings, even if they simply assume that the operations of the vehicle are perfect. To achieve that balance of amazing and perfect, Toyota had to review the structure and framework of our cars and change in ways that deliver results.

To do that, we wanted to reinvent the vehicle platforms. We changed our engines and unit powertrains. We improved the kinetic performance by lowering the center of gravity. And we created more-stylish designs in the process. So it’s a reinvention of the Toyota process and products, from end to end.

Profit: What was IT’s role in that transformation?

Kitazawa: Toyota is a company that wants to make better cars. From my position, that means by making a better enterprise system to support Toyota’s overall goal to create better cars. TNGA is a companywide project to reimagine how we build our cars. So in my division, we are reimagining how we do IT. So just as cars are built upon a modern platform, Toyota’s IT will also be built upon a modern platform. How else could IT keep pace with the innovation in auto design and manufacturing?

So we are launching a new IT platform that will carry applications on top of it.

In the past, each business function—from research and development to production control—would develop its own customer applications, maintain its own infrastructure, and operate its own back-office systems. So each of our business lines would be working in a silo.

With IT-TNGA, we wanted to integrate all of those systems by standardizing on a single platform. And with this initiative, we want to dramatically improve quality, cost, and delivery time—goals that are fundamental to the system’s success. By integrating these platforms and restructuring IT, our goal is to nurture collaboration among our people because we can share and develop their knowledge in collaboration.

Profit: Does cloud computing play a role?

Kitazawa: Several years ago, I think there was more reticence about enterprise cloud computing. We had a lot of discussion in our department: “Is a cloud mature enough to entrust it with our important assets? How is the security and compliance? Do the processes align with our culture?”

But now the IT environment is changing so rapidly, it’s a challenge for in-house IT to keep pace. Take security, for example; today, there are so many kinds of targeted cyber attacks and we now understand that the cloud environment is more secure in some cases, compared with on-premises systems.

So my outlook on cloud is that we should always select an appropriate system for the job at hand. At Toyota, we have embraced a hybrid environment that matches the very nature of our business. We deal with huge volumes of information—different kinds of data from sources that must be connected. That’s ideal for the cloud. But we are a large enterprise with huge manufacturing and sales capabilities that we don’t intend to integrate with the cloud. So, the right tool for the right job.

Historically, Oracle has taken good care of our data management systems, and has played a key role in our enterprise resource planning systems. More recently, we’re working with Oracle on database encryption and security related to IT-TNGA.

I feel that Toyota and Oracle share a similar outlook. Our vision is to deliver better cars to our customers. I think Oracle is a company that wants to deliver better systems to their customers.

Profit: What role do you believe leadership plays in successfully transforming an organization?

Kitazawa: In an environment undergoing rapid change, and where the future is uncertain, we have to take advantage of our market position to meet challenges and make changes together. I have approximately 800 people working on information systems. Beyond that, we have three affiliated IT companies with more than 3,000 people working there. And on top of that, we have several thousand people working at the partner companies who we are taking good care of.

And so, altogether, all of these people are working to support Toyota’s IT. But I have to raise our flag very high so people can follow us and support us. Regardless of the fast evolution of IT, our organization must have the right vision, with people in place working to support those goals.

In other words, we want to cherish and emphasize IT members, their families, and affiliated IT companies’ members and their families, and also partners and partners’ families who are supporting Toyota’s IT. I want to realize a world where people would, looking back in the past, still feel happy to be part of Toyota. To achieve this, the most important thing is that we continue to self-innovate while working to make significant improvements in productivity.

Action Items

Photography by Shutterstock