Message from the President
This year, we are seeing many changes taking place.
If I were to summarize my thoughts about this fiscal year, I would say this year will be a test of whether we can transform our intentions to reality. We have been working to strengthen our management foundation, knowing that there will be more uncertainties which could result in a multitude of changes.
Rather than simply reacting to events as they occur, we must always be ready to overcome any circumstances and face up to the changes ahead without wavering from our main goals.
I would like to express my sincere gratitude for your continued support and understanding for our company.
From an intentional pause to purpose-driven investment
Following the rapid growth in the first decade of the 2000s, Toyota fell into the red for the first time in our history due to the financial crisis in 2008. We also experienced a multitude of challenges following that. What we learned from this is that financial losses, even after a rapid growth, could bring anxiety to stakeholders.
What is important now is not focusing our energy solely on quantitative expansion, but consistently strive to continue making ever-better cars; this is what will bring forth sustainable growth in a way similar to how a tree forms ring after ring as it grows each year.
Acting on what we have learned, we improved our productivity and developed human resources during a time of intentional pause – strengthening our foundation in order to prepare ourselves to face upcoming challenges.
In last year's announcement, I mentioned that we had shifted from an "intentional pause" to an "implementation phase" and that we would start making new purposedriven investments.
In doing so, we have three main goals.
The first is to strengthen competitiveness by putting increased effort into making ever-better cars. For instance, we will move forward more aggressively with TNGA*, which we have been working on for the last few years.
The second is to sow seeds for growth in both existing automobile manufacturing business and in fields beyond that as challenges for the future.
The third is to reinforce our management and financial foundation in order to make the first two goals a reality. Strengthening our management foundation is of particular importance for Toyota not only for today but also for tomorrow's generations.
Human resource development
In April this year Toyota drastically changed its organizational structure.
Today, with over ten million annual vehicle sales, decision-making often requires too much coordination time to make a single decision. On the other hand, we have learned about car manufacturing technology, passion, speed of decision-making, and the use of resources amongst many other things, through the alliances with other automakers. Additionally they offer us opportunities to reflect upon our own practices.
We have introduced smaller independent and productfocused in-house companies. We are also prepared to aggressively promote the development of cutting-edge technology and foster new values. We have implemented this change in order to speed up decision-making and reform working practices so that employees will be able to work irrespective of organizational boundaries. Above and beyond that, I had an additional ambition, which was to create an organization to develop a talented workforce that would shape the future of Toyota.
As an organization grows larger, people tend to have a muddled sense of ownership and to be less motivated to take on new challenges. Through the introduction of the in-house company system, we want to create a "smaller Toyota" out of each organizational unit. I hope it will be an organization that encourages employees to give themselves a new challenge and will be a company through which employees are able to sense their own personal growth.
Next generation leaders
For the management, I believe that when one's role changes from being in charge of a specific unit or function (former setup) to being responsible for an entire inhouse company, that person becomes more resolute. When "decision" is written in Chinese characters, its characters mean "to determine" "an act of breaking." Taking into account the interests of the in-house company as a whole, leaders may have to make difficult decisions sometimes. On these occasions it is important that they care about and think of the people on-site who are affected by these decisions. I am hoping to make the most of this organizational change and to turn it into another opportunity for those of us in the management to nurture leadership qualities.
Innovation and what makes Toyota who we are
Our circumstances are likely to change in the future and there is increasing uncertainty in societal trends. At the same time, automobiles themselves are reaching a critical turning point.
Since its foundation, Toyota has grown through pioneering innovation. In January this year we established Toyota Research Institute, Inc. to accelerate research and development of Artificial Intelligence (AI) technology, a key to future society. It is an integrated part of our "purposedriven investments" for TMC and Toyota Group to keep contributing to an affluent future society.
In parallel, the distinctive characteristics of Toyota, exemplified in the Toyota Production System, that were formed by and have been handed down from our people in earlier days are still being upheld to date. Going forward, we wish to realize sustainable growth through further innovation and the evolution of Toyota's unique characteristics.
Passing on our core belief
The job of Toyota's president is not just to ponder about things that could occur during your tenure of office, but rather to assume the role of a successor who will eventually hand over the company for it to thrive for the next 100 years. For that reason we must carry forward our core belief of creating ever-better cars internally and Enriching Lives of Societies to coming generations.
To achieve that, we must have the purpose and will to work with a vision for the future.
To maintain sustainable growth without drifting away from your goals even in adverse business circumstances, the management should demonstrate that they themselves are ready to take on new and difficult challenges. To put this in my own words, the management should "take a bat in hand and step up to the plate" and let employees see them doing so.
Toyota has entered uncharted territory with global sales exceeding ten million vehicles. From here on, we will walk an unprecedented path which we will need to pave ourselves. This is also a path that we will walk with every one of our stakeholders. While anticipating much more adversity along the way, we will continue to courageously step up to the plate without backing away from fear of failure. We would very much appreciate the continued support and understanding of our stakeholders.
President, Member of the Board of Directors
Toyota Motor Corporation