Eliminating “Silos” in Toyota – Culturally Feasible?

Because I drive a Toyota (a cute blue Corolla, if you must know), I followed the Toyota safety scandal pretty closely last year. I love my little car, and I was concerned that at some point I would need to trade it in or even change to a different company. Thankfully, my model didn’t have any recalls and it seemed like Toyota fixed their issues – everyone moved on.

But a report that came out last week indicated otherwise. According to a panel Toyota asked to evaluate the company’s actions after the safety crisis, several elements need to be reassessed, including ways decisions are made, its overall culture, and leadership models within the company.

The idea of changing Toyota’s leadership model struck me as quite the challenge. This is, after all, a nearly 80-year-old company that recently overtook GM as the world’s largest automaker. It seems as though they have a pretty successful operation on inside their headquarters. But Toyota’s “top-down management style,” in part, led to the 2010 acceleration scare.

The panel suggests the company eliminate the “silos” between its North American executives, who all head different divisions of the company, by appointing one person in charge of operations. Another suggestion included giving “regional managers more autonomy.” Toyota’s hierarchical leadership model apparently hinders anyone but senior leadership to feel comfortable speaking up – and even that seems like it is against company culture. This seems contradictory to an intra-company philosophy known as the Toyota Production System, which encourages workers to speak up and even stop production on the manufacturing floor when they notice something isn’t right.

However, as Bauer and Erdogan (2009) describe in their case study of Toyota, “it is not uncommon that individuals feel reluctant to pass bad news up the chain within a family company… No Toyota executive in the United States is authorized to issue a recall” (p. 346). Obviously, the panel was correct in its suggestion of giving more authority to North American executives and regional managers.

But while focusing on removing silos will help remove communication barriers between the North American operations, I wonder how much this would work for Toyota. Without having read the entire 60-page report myself, I’m not sure if panel members took Toyota’s culture into account when considering its existing leadership model.

Culture is something that can’t be discounted. Toyota is headquartered in Japan, where characteristics such as masculinity, collectivism, and low uncertainty avoidance are regarded highly. Indeed, Toyota’s board of directors “is composed of 29 Japanese men, all of whom are Toyota insiders” (Bauer & Erdogan, p. 346, 2009). Highly favoring masculinity means also highly favoring competitiveness, achievement, and making money above most other elements, which could have factored into someone not speaking up about a safety issue. A collectivist culture tends to value the group over themselves as individuals, and this extreme loyalty to Toyota may also have led to a reluctance to bring up any issues that would cause unfavorable views of the company. And low uncertainty avoidance, specifically in Japan, can mean that people try extremely hard to keep their jobs. Revealing a problem in the manufacturing of automobiles may be looked down upon by the Toyota culture. Bauer and Erdogan point out that Toyota’s flow of information is one-way – from managers to executives in Japan, where they make the decisions: “Authority is not generally delegated within the company; all U.S. executives are assigned a Japanese boss to mentor them” (p. 346).

And how does that mix with its North American counterparts? Is the culture the same in both countries (probably not), or is that part of the problem? I haven’t researched Toyota in-depth before, so I’m not sure. But I’d be interested in your thoughts. What do you think Toyota could have done differently in the safety crisis? Do you think the company should reassess its leadership model or focus on another element the panel suggested?

Traci Finch

WoldBlu: Organizational Democracy

Although politics is usually among the most mundane reads on the internet, stumbling upon WorldBlu's transparent and democratic approach to leadership has been quite interesting. Companies such as WorldBlu have adopted this approach in order to encourage innovation, collaboration, accountability, and performance in the workplace. In addition, WorldBlu uses the transparency of organizational democracy to assess and display the happiness of their employees. In all, organizational democracy is a sans power distance leadership approach that allows participative decision making to be a catalyst for trust, responsibility, innovation, accountability, and much more. 

The first thing that came to my mind was, just how transparent is WorldBlu? Do they share everything with their employees? The answer to those questions is quite simple; Traci Fenton, CEO and Founder of WorldBlu, has made the entire organization transparent down to the salaries of employees. Even though this came as somewhat of a surprise, it immediately eliminates any cultural differences regarding acceptability of sharing wages and salaries among employees. Also, trust and responsibility become imperative amongst employees when provided with a wealth of knowledge about the company that includes company earnings, budget plans, and open book accounting. What do you think? Is WorldBlu putting themselves at risk with this level of transparency or is it a good strategy for building team moral?

Furthermore, WorldBlu uses organizational democracy as a tool to increase innovation. As a part of WorldBlu, all employees end up feeling as though they are partial owner because everyone is always involved in the decision making process. In addition to innovation, research has shown that participative decision making such as this contributes to organizational commitment and ethical behavior. Think about that for a second. Would you act ethically if someone gave you orders to complete a goal or would you act ethically if you participated in setting the goal? How would you work toward fulfilling the goal? Would you cut corners if someone gave you orders to fulfill the goal? If, in fact, you think that you would act ethically when participating in the goal setting, then you are in good company among the paucity of other research participants who act the same way. WorldBlu feels that the added participation "unleashes positive energy in the workplace" and helps motivate employees without financial incentives. 

It seems that having a voice in the workplace also contributes to improved job satisfaction and happiness in the workplace. WorldBlu facilitates a simple ball game to assess the happiness of their employees as they leave after a day of work. For example, when exiting for the day, employees grab a tennis ball out a large bucket and then place the ball in a happy ("H") bucket or an unhappy ("U") bucket to indicate their feelings about the day. This is not only an ingenious and simple way to assess employee affect, but it is also an excellent way to draw correlations with employee affect, performance, and productivity. Moreover, independent variables possibly affecting the happiness of employees can be correlated with employee affect. For instance, are employees leaving happy because the company was more profitable today or are they leaving happy because it was an easy day? Either way, this type of transparency allows for employees to be proactive about finding solutions to the problems. If someone is unhappy and starts slacking at work, then other employees are at liberty call them out and enforce accountability. 

This style of leadership is somewhat new to the business field and it definitely contains the ability to make the workplace uncomfortable during its inception. People aren't used to the transparency, accountability, and innovative style that organizational democracy has to offer. Instead, people grow accustomed to their own self-serving biases that discard accountability and potentially excuse mistakes. Conversely, organizational leadership rids the business of hierarchies, sheds light on mistakes and subsequently uses that mistake as a way to innovate and grow in the future. In fact, "the business world talks about innovation around technology, but rarely talks about innovation with regard to how we do our business. Democratic companies will continue to have a competitive advantage in the future, and we will eventually get to a place where employees demand it." So, what do you think? Is this the type of company you would want to work for? 

Matthew Fowles

Analysis based on:

http://blogs.forbes.com/glennllopis/2011/05/16/corporations-must-bring-democracy-into-the-workplace-a-conversation-with-worldblu-hcl-technologies-and-groupon/

and 

http://blogs.forbes.com/csr/2011/05/25/worldblu-spreading-workplace-democracy-through-happiness/

How Bob Iger Unchained Disney

If there was an opposite cliché for “two peas in a pod” Bob Iger and Michael Eisner would be it.  They could not be more different in their leadership techniques if they tried.  Bob Iger is the current CEO and President of the Walt Disney Company and took over in 2005 from Michael Eisner.  You could say that both individuals are responsible for the turn-around success that Disney acquired in the 2006 season (shortly after the change of command).  The company’s net income increased 33% and revenues improved by 7%, only to continue in an upward pattern the following year.  But how could two different leadership styles be responsible for the turnaround?

During Eisner’s reign at Disney he was described as micromanaging, imperious and bullying.  The article goes on to say, “Eisner left behind a place where division chiefs were afraid to make decisions.” How do these qualities make for a successful work environment?  From what we have talked about in class, there are different qualities in an individual that work for success but also hinder that success as well.  One could argue that Eisner was conscientious in the work place.  He was organized, systematic, and achievement oriented.  Although this could be the case, those traits seemed to have clouded others and took a negative effect on the employee morale. 

The control aspect of Eisner’s personality seemed to hinder the atmosphere as well.  He would be involved in every phase of the creative process.  Although this is true, his attention to detail helped start the turn-around of the Walt Disney Company, even though the work may have been done with less enthusiasm then is seen at the company today.  Eisner’s attitude about work and how it should be done was strong willed and strategic and one could say of the need for power stance.  He was doing what he thought would be best at the time.  He took chances and controlled the ideas of the company.  This autocratic atmosphere left something to be desired by its employees, who were most likely having a negative affect feeling towards Eisner.  However, all of this is also is what helped Iger to “hit the ground running” according to him. 

Then there is Bob Iger.  A big picture thinker who passes the power around.  Iger believes in the work of a team-oriented environment, everyone working together in hopes of reaching and surpassing certain goals.  You could say that Iger has a very proactive personality.  He changed what he perceived to be wrong, changed the status quo so that everyone felt like what they were doing was important for the company, and used multiple initiatives to solve different problems, such as the division chiefs being unconfident in their decisions.  Iger designed his own office to feel more inviting by installing a door to a heavily trafficked hallway.  He also moved studio chiefs up to his floor to encourage more interaction.  Another change he made was to hold meetings that were more supportive of conversation and less autocratic.  Iger increased motivation ten-fold with his can-do attitude. 

But how does all of this make for a successful organization?  Removing the cloud hanging over the company helped to raise employee spirits and employee engagement with the company.  Having the opportunity to take the lead on different projects helped to instill trustworthiness and openness within the company.  The employees were allowed to use their own creative influences and intellectual ideas without feeling like everything they were doing was wrong.  Every idea was considered with an open mind and the ability to be discussed.  Having the feeling of failure surrounding them when Eisner was around made for a very closed environment, closed to feeling like they needed to try and closed to cooperating with Eisner.  Iger was able to change that with one flick of his magic wand and now the Disney Company is working more efficiently and effectively then ever before. 

Although Eisner was controlling and closed minded, Iger does not speak ill of him.  Iger believes that he could not be doing what he is doing today without the basis of what Eisner set up.  As the saying goes, it takes a village to raise a child, and even though there were rocky times in this village, the base on which its foundation is resting is strong and only becoming stronger with each different CEO that the company goes through and each individual personality they bring to the table.



Angela Minichiello

http://www.businessweek.com/magazine/content/07_06/b4020085.htm

How the Mulally change saved Ford

In September 2006 the Auto industry was riding high.  SUV sales were through the roof as gas prices remained in the $1.50/gallon range.  The bigger the better was the thought as Escalade's and Explorer's were rolling off the assembly lines as fast as Ford or GM could produce them.  Ford needed to make a decision on who they would bring in to succeed former CEO William Ford Jr.

Enter Alan Mulally.  He had never worked in the auto industry before, in fact he drove a foreign car.  He had never had to make a sale or put change his own oil.  Mulally had worked for Boeing since 1969 and was a shrewd business man.  The Ford family needed a change of atmostphere and Mulally was the man they targeted.  For $700,000 and a $7.5 million sign on bonus Ford made possibly the best decision the company has ever made and brought on Mulally as their new CEO.

What made Mulally special though?  Mulally was considered by many to be a control freak.  He wanted things done his way, when he asked, and he wanted it done correctly.  He was your high intensity manager who arrived at work by 5am and left between 7 and 8 pm.  He was also considered a risk taker.  Mulally was a fan of preparing for the future through investments in the now, he had done so by overhauling Boeing's retirement schedule to allow for increased health care benefits.  But Mulally trusts those around him before making decisions.  He increased his inner circle to include an HR representative and an IT administrator so that he could be further connected to the ins and outs of Ford.  He instructed directors who attended meetings that they were to hold meetings with their management prior to meeting with him so that all information was up to date.  Mulally wants the most up to date information from all sources before he makes his decisions.  He instituted a color coding method for memo's, green meaning good, yellow meaning cautious, and red meaning urgent so that he could address the difficult issues immediately and nothing got swept under the rug.

Mulally used his authoritative style of management to institute changes that have made Ford the top American car producer once again.  After months of meetings with upper management he came to the conclusion that Ford was not prepared for the future.  He made the risky decision to mortgage the future and take out a $20+ billion loan to modernize Ford's fleet.  They went with smaller, more fuel efficient vehicles that had the sleek look of European Cars.  As a result, Ford was prepared for the 'great recession' and have seen sales rise in the past 2.5 years.  They were the only American automaker who did not accept a taxpayer bailout.  Mulally saved an American legend, his authoritative style played a large part in that.

I can not help but wonder several things.  Do leaders who bring in those they trust perform better than those who are thrown into a situation with people they do not know?  Would a leader who did not have an authoritative style have been able to make such a risky decision by gambling the entire company on one decision?  And is Mulally a fluke or will other companies start to follow the lead and bring on more of the natural leaders who do things their way?

Analysis based on a cnn money article found here...http://money.cnn.com/2009/05/11/news/companies/mulally_ford.fortune/index.htm

Chase Behrendt

Welcome!

Hi, fellow MQM 421 classmates! Welcome to our group's blog, which will focus on leadership styles and how certain styles affect behavior in an organization.

First, we wanted to give you a quick look at the members in our group:

• Chase Behrendt - Chase is in the MBA program and has an undergraduate degree from ISU in finance and accounting. He currently works as the head administrator for a four-physician orthopedic practice in Bloomington/Normal - and has spent the last seven years in healthcare.
• Traci Finch - Traci is pursuing her graduate degree in communications. She majored in journalism (and social work!) at University of Iowa and now works in State Farm's IT department, performing speechwriting duties and other written/online communications.
• Matthew Fowles - Matt is an MBA student entering his final year with an undergraduate degree in psychology. He is a former college and minor league baseball player at ISU and with the Arizona Diamondbacks organization.
• Angela Minichiello - Angela is a graduate student in Recreation Management on track to graduate in December. Her undergraduate degree in communications with a focus on public relations is from Drake University.

Our blog, as you can probably gather, will offer information and opinions on the many different leadership styles researchers have identified (such as transformational, authoritarian, laissez-faire, etc.) and how these styles manifest into affecting organizational behavior. (If you want a quick refresh on different leadership styles, changingminds.org has a good page here.) For example, we will be looking for real-world examples of leaders who exemplify one or more of these styles; then we will connect that to how their style affects their organization.