Fearful of Complacency? Try Paranoia!

“If there's one thing a company can learn from Toyota Motor Corp., it's the power of paranoia. Consider that Toyota just two months ago overtook General Motors Corp. as the world's biggest carmaker. As Detroit bled, Toyota pulled down a record $15 billion in profits last year. Still, its executives in Japan and North America are worried that they'll be spoiled by success. ‘The scariest symptom of 'big-company disease' is that complacency will breed,’ Toyota President Katsuaki Watanabe told BusinessWeek in an interview.

So Toyota is giving itself a dose of strong medicine, meant as both an elixir for current ills and as preventive maintenance. The company's U.S. management has just launched its most far-reaching initiative in 50 years of doing business here. Called EM2, for "Everything Matters Exponentially," it's a total re-examination of product planning, customer service, sales and marketing, and even the car dealers the company doesn't directly own. Simultaneously, Toyota is retraining all of its U.S. factory workers. Company executives also expect sales growth to slow. The concept of continuous improvement, or kaizen, remains part of Toyota's DNA. But ‘the challenge is [how to] sustain that paranoia,’ says Ranjay Gulati, a professor at Northwestern's Kellogg School of Management.

(“Staying Paranoid At Toyota; Fearful of ‘big-company disease,’ the No. 1 carmaker keeps scrambling to retool itself.” David Welch. Business Week: July 02, 2007, Iss. 4041; pg. 80)

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