Let’s look at how Toyota Glued its management to its employees, and its brand and products and strategy and positions and future to the world’s automobile buyers.
The Japanese automaker began in America about 50 years ago with a Land Cruiser and a Corona. It’s easy to look at the success of this automotive giant and assume it was always so, but Toyota started out as a small loom shop to manufacture fabrics. How times have changed, and Toyota changed them.
Here’s a sales fact that brings Glue into perspective: In 2006, J.D. Powers measured the “retail return rate” of American automobile sellers – that is, the number of days a car sits on a dealer’s lot before it is turned over to a customer. Toyota (including its Lexus and Scion brands) averaged 27 days. BMW averaged 31; Honda averaged 32; Ford averaged 82; GM was at 83 and Daimler-Chrysler (before they sold the company) automobiles averaged 107 days on a dealer’s lot.
That is the definition of sticky. Toyota is Glued to the customer. Are Chrysler, Ford and GM more Glued to their own dealers?
Toyota doesn’t think in terms of months or quarters. It thinks long term. Ten years ago, using basically the same information about buyer trends, Toyota decided to create hybrid technology and Ford decided to make big SUVs. Short term, the SUVs did well. Long term, Ford is in trouble while Toyota is settling into the number-one-automaker-in-the-world position.
How did Toyota use Glue to do this? It dedicated itself to its customers’ desires for a vehicle that worked and was built to not come apart. If that sounds stupidly simple, watch Hyundai, because it has taken that thinking to a rubber-meets-the-road mentality as well. That takes extreme alignment across continents and oceans and cultural and language barriers. Glue has no language, it knows no ocean and it recognizes no country. It just sticks one thing to another. That’s how Koreans and Southerners can work together in that giant Hyundai factory in Montgomery, Alabama – the most sophisticated auto plant in the world. Toyota helped start that Asia-America manufacturing highway.
Toyota Glued itself to the American worker, and has no union issues or legacy of health care costs to pass along to customers. It spends $20 million a day on R&D, trying to understand exactly what American customers want and how to give them a better automobile and a better automobile experience. It sees no difference between the two. It aligned its internal and external and Glued them together early on. Toyota still does it every day.
Here’s how dedicated Toyota is to this sticky proposition. Yuji Yokoya, chief engineer for the redesign of the Sienna minivan, made it his personal job to drive a Toyota minivan in every state in this country, every province in Canada and as much of Mexico as he could get to. He drove over 53,000 miles to understand how people used the minivan and how it handled in every imaginable condition. Then he built it – and it stuck because he Glued it to the customer first.
Same with the new Tundra. Chief engineer Yuichiro Obu and project manager Mark Schrage took a different tack, but one no less sticky. They knew Texas buyers wanted two-wheel-drive trucks and farmers in Montana wanted 4-wheel drive, because they went there and worked with them in their trucks. The knew guys wore gloves so the knobs in the cabs had to be bigger and easier to get ahold of. They discovered that contractors use their trucks as their office, so they built in file hangers in the doors and laptop accommodations.
Toyota sought out professional truck users, the trend-setters in the truck market, and catered to them. It aligned and Glued the Tundra to the early adopters, taste-setters for this type of vehicle.
This is not an unusual practice. But Toyota took it even further. Toyota built that truck plant right in the middle of Texas, where trucks are God on four wheels, and upped the ante by flying the Texas state flag out front.
Toyota sends guerilla teams in their Tundras to construction sites with beverages and donuts and truck beds-full of smart, subtle branding. Guys on the site test-drive the Tundra. Many have never driven anything but a Silverado or an F-150. Toyota is Gluing down the road.
Toyota is Gluing itself to fishing tournaments and NASCAR and country music with Brooks and Dunn sponsorships. This is All-American Truckville brought right to your inner psyche.
Toyota has done this undercover branding to its target before. The Scion went after edgier youth with totally untraditional designs and marketing and something else – limited production, to make them scarce. Glue takes many shapes.
GM knew similar things about truck customers, but it didn’t connect the dots with Glue. The devil is in the details – and so is the Glue.
Sure, Toyota made mistakes (there were some recalls for faulty parts), but it quickly addressed them in a painless way for customers and moved on. JetBlue may be studying Toyota’s fix strategy as I type. It could certainly do worse. So could many other companies.
Instead of covering up problems like too many companies, Toyota looks for ways to point them out so they can be addressed. It’s a point of pride. There will be problems. Toyota gets them in the open and fixes them. Productivity is Glued to efficiency and the result is quality – and sales and profits and diehard customer loyalty.
Toyota can refit a plant to manufacture a new vehicle in about 16 days. Less downtime adds about $100 million to sales numbers. It creates efficiencies not so it can pocket the profit but so it can make a nicer dash or more comfortable seats or a more refined interior or a tighter fit and finish or build in more durability – Gluing more customers to its brand.
Toyota’s quality is so legendary GM may not even be able to catch up to it, much less beat it. Toyota’s Glue is just that sticky.
So is its flexibility. Many manufacturers have a few packaged models outfitted with certain options. The Toyota Tundra comes in 31 different arrangements.
Innovations are standard equipment and quality is off the charts. Toyota puts as much importance on the process of designing and making automobiles as it does the automobiles themselves. Assembly line Glue sticks tightly to people in the showroom.
Toyota has been extremely fortunate to have a string of great leaders. And nothing is stickier than leadership. Toyota’s leadership Glued the brand to an entire generation of American customers and they never went back to GM, Ford and Chrysler. If hindsight is 20-20, what is foresight?
Toyota has already built its vehicles to accommodate the larger battery capacity for a plug-in hybrid. It is ready, installing Glue now for the future.
Some other manufacturers have their own powerful Glue, namely Honda. Toyota is not incapable of mistakes (it didn’t get the truck market right for years and missed the youth market completely until Scion). However, its steady pace is built on Gluing at every contact point. And it reconnects unashamedly and quickly after a misaligned effort and Glues it back in tight.