In just 25 years, Toyota has risen from an unknown start-up to the world's top auto manufacturer, surpassing GM and Ford. This meteoric rise is often attributed to Toyota's mastery of lean production, but that is only part of the explanation. An even bigger factor is Toyota's unique and deeply-ingrained corporate culture, which drives the company's competitive edge. As one manager said, Toyota focuses not on sales or profits but on developing people through a proven lifestyle of continuous improvement and betterment. So Toyota's business mantra is less about quarterly earnings than about striving each day to progress as individuals. In short, Toyota's culture encapsulates an approach to business that fuels ongoing marketplace success.
Kiichiro Toyoda founded Toyota Motor Company in 1937 after selling his highly successful automatic loom works company started by his father, Sakichi Toyoda. The sale gave Kiichiro one million yen, equivalent to about $20 million today, which he used to start Toyota. Kiichiro established his father's five key business principles - challenge, kaizen, genchi genbutsu, teamwork and respect - as Toyota's guiding philosophies. In Toyota's early years, it struggled to sell cars, moving only around 1,500 vehicles in its first seven years while finding more success with trucks. Sales grew when Japan forbade vehicle imports, ending competition from US automakers. During WWII, Toyota focused solely on military production. After the war, with US permission, Toyota began producing affordable "people's cars" again, selling over 100,000 Toyopets in 1947. Though it hit hardship with Japan's 1950 recession, forcing layoffs and Toyota's only financial loss, it never lost money again. In the late 1950s, enthusiastic Toyota employees returned from a US trip and set up a small SoCal Toyota dealership. But with US brands dominating 90%+ of sales, only 300 Toyopets and trucks sold in Toyota's first US year. Toyota found success by designing US-specific models like the 1965 Corona. In 1976, it became the first foreign automaker to sell over 100,000 US vehicles in one year. Though still importing, by 1986 Toyota sold 1 million US vehicles, capturing 10% market share. It launched its luxury Lexus brand in 1989, selling 70,000 vehicles in two years. Expanding US production capacity to 2 million vehicles across four factories by 2005, Toyota sold 1.5 million US-built cars. With 2007 sales nearing $200 billion and profits triple the industry average, Toyota targeted becoming the world's largest automaker by building almost 10 million global vehicles that year. Toyota rewrote industry rules, exhibiting unusually consistent earnings growth despite economic fluctuations. Additionally, Toyota achieved excellent shareholder returns, consumer loyalty and employee satisfaction. Thus, Toyota captured the attention of academics and authors worldwide for its sales numbers and broader achievements like its distinct lack of cyclicality in the traditionally up-and-down car business. Former Toyota President Jim Press encapsulated Toyota's aim not to be the biggest automaker but simply the best. He also questioned the wisdom of overemphasizing stock prices, feeling that focus often drives poor decisions. Ultimately, through steady, stable growth rooted in its guiding principles, Toyota reached the industry pinnacle it did not explicitly seek. By creating excellent products and experiences for customers, business partners and employees, Toyota realized by 2007 the sales leadership other automakers actively chased.
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