3 December 2018

Toyota restructuring recognises the industry’s human element

The news that Toyota has undertaken a reorganisation of its executive board is most interesting in the light of developments at Nissan and Renault following the Carlos Ghosn debacle - if indeed there turns out to have been wrongdoing.

Akio Toyoda, the Japanese OEM’s CEO said in a statement on Friday November 30 that the changes are “designed, by reducing the number of structural layers, to allow rebirth into a Toyota that is able to reach conclusions more swiftly, make prompt decisions, and take immediate action faster than ever.” Now, while this alludes to the shift that many carmakers face, that of moving from being pure automakers to ‘new mobility providers’, there seems to be an element of buttressing the company against personalities getting too big, in changing several senior managing officers’ title to that of operating officer, and dropping the title of executive in many cases. Toyoda also said that the moves are aimed at rewarding junior managers with faster promotion and that talent and ability not education or seniority by age will be most influential in gaining advancement.

In reducing the number of structural layers, the carmaker could well be trying to avoid the creation of ‘super-bosses’ such as Carlos Ghosn.

The changes will eliminate a tier of executive posts at the managing officer level, effectively removing some of the previous degrees of hierarchy. Bringing leaders from around the world up to the title of Operating Officer avoids regional fiefdoms being created and also imparts a sense of an evenly rewarded meritocracy.

Thus Johan van Zyl, CEO of Toyota Europe, Steve St. Angelo, CEO for Latin America, and James Lentz, in the same role for North America, will all take the new title.

Toyoda talked at length about bringing the company into the 21st Century, transforming its structure in line with the transformation of the automobile but there are definitely elements of intelligent and careful hierarchy engineering to prevent the creation of an ‘untouchable’ CEO in any area - a CEO that could be prey to fiscal temptation and other cavalier actions, similar to those that Carlos Ghosn has been accused of.

The global industry has often viewed Toyota and other Japanese major carmakers as too traditional in their management structure but I feel that Akio Toyoda’s decisions show a remarkably fresh approach; while preparing the company for the road ahead, that is fraught with uncertainty for all car makers, they also recognise that artificial intelligence and other technological advances are still at the mercy of human frailty.

Simon Duval Smith

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