Section 3. Promotion of Internal Reforms
Item 2. Reinventing Toyota's Business Approach
Revision of the Guiding Principles at Toyota
In conjunction with the establishment of the Guiding Principles at Toyota in January 1992, Toyota also established the Corporate Ethics Committee and Toyota Environment Committee, both chaired by President Shoichiro Toyoda. The two committees were set up to initiate ways of putting the guiding principles into practice. At a training session held for executives in June that year, in-depth discussions were held on the management issues and solutions connected to each of the guiding principles. Furthermore, numerous other opportunities were taken in order to share the Guiding Principles at Toyota among all stakeholders, including all training sessions for employees (from new recruits through to general managers and deputy general managers), as well as social events held for affiliates and business partners.1
In September 1992, Toyota implemented a change of guard in senior management, the first such change since the merger of Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. 10 years earlier. Chairman Eiji Toyoda was appointed honorary chairman, President Shoichiro Toyoda was made chairman, and Executive Vice President Tatsuro Toyoda was promoted to president. Upon assuming his new position, President Tatsuro Toyoda spoke of his aspirations with respect to the Guiding Principles at Toyota:
In pursuing our business based on the Guiding Principles at Toyota, I hope we will create a lively corporate culture that respects the individual, one which delivers a company that is 'alert, attentive, and considerate, and that is characterized by possessing dreams and being creative.' In more specific terms, I want Toyota to tackle the important issues of developing a long-term solid management foundation, respond to the environmental issues facing the world today, develop technology that meets society's needs, and promote internationalization based on harmonious coexistence and mutual prosperity. Furthermore, in managing the company we should always remember to talk to other stakeholders and be sincere in our words and actions, carefully approach the numerous issues we face in a calm manner and look beyond their superficial appearance, and have the courage to boldly face change when it greets us.
President Tatsuro Toyoda took on his new position during the turmoil that followed the collapse of the bubble economy, when demand for new vehicles had weakened considerably. Like other automakers, Toyota passed through a stage of continued lackluster performance, but this was interrupted in December 1994 when interim consolidated results showed earnings growth for the first time in five periods. Based on these results, in February 1995 President Tatsuro Toyoda announced to the company's employees that he wanted to position the period between the present to the beginning of the 21st century as one in which to reinvent Toyota's business approach in order to make new strides in the future. At the time of his message, the yen was undergoing rapid appreciation, and in terms of uncertainty the situation could only be matched by the circumstances Toyota found itself in when it was first founded. President Tatsuro Toyoda's words were a call for all Toyota employees to pull together to overcome the difficulties that lay ahead.
In April 1997, the company partially revised the Guiding Principles at Toyota. Five years had already passed since the guiding principles had been formulated, and they were functioning well as a set of management guidelines and an employee code of conduct. However, in December the previous year the Japan Federation of Economic Organizations (Keidanren, now Japan Business Federation, or Keidanren) had revised its corporate conduct charter. At the time, Chairman Shoichiro Toyoda was chairman of Keidanren, and he had overseen the revision of the corporate conduct charter amid a run of corporate scandals and a move toward emphasizing self-responsibility amid growing deregulation. Given these circumstances, several new phrases were added to the existing Guiding Principles at Toyota, such as "Honor the language and spirit of the law of every nation", "Respect the culture and customs of every nation", and "honoring mutual trust and respect between labor and management". The revised Guiding Principles at Toyota are shown in Table 3-2 below.
Table 3-2 Guiding Principles at Toyota (Revised April 1997)
- 1.Honor the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen around the world
- 2.Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in local communities
- 3.Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through our activities
- 4.Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide
- 5.Foster a corporate culture that enhances individual creativity and teamwork value, while honoring mutual trust and respect between labor and management
- 6.Pursue growth in harmony with the global community through innovative management
- 7.Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships