Toyoda shake-up empowers non-Japanese execs
Lentz: Running Toyota in U.S.
TOKYO -- After four tumultuous years of natural disasters, recalls and record losses, President Akio Toyoda is restructuring Toyota Motor Corp. to empower regional CEOs to anticipate problems and respond quickly.
The new structure is less insular and more international. Toyoda essentially has signed off control of half the globe to non-Japanese executives.
Toyoda named non-Japanese CEOs to lead operations in North America, South America, Europe and Africa. Said Chairman Fujio Cho: "We have taken a step forward to be truly global."
In Europe, Didier Leroy gets the title of CEO, solidifying his role as regional boss. He will report to Executive Vice President Satoshi Ozawa, who oversees mature markets such as Europe, the United States and Japan under the company's new business unit overhaul.
Those markets are now combined into a new Toyota 1 business group, while emerging markets are covered by the Toyota 2 business group run by Executive Vice President Yasunori Ihara.
Didier, who remains a senior managing officer, will be one of only two foreigners at that level, just one step below the board. Jim Lentz will be promoted to that rank at the parent company, effective April 1.
Lentz was named to the new post of North America CEO, as well as a managing officer in charge of Toyota Motor North America and Toyota Motor Sales U.S.A.
Kazuo Ohara, Lexus' global executive vice president, will be transferred to California to head Toyota Motor Sales U.S.A., reporting to Lentz. That shuffle upends the historical setup of an American executive heading Toyota Motor Sales under a Japanese boss who resides in North America.
Toyoda is putting his personal stamp on the company founded by his grandfather. After shareholders approve the changes, only three of the automaker's 16 board members will predate his becoming president four years ago. Cho is among those leaving the board, but he will take the title of honorary chairman.
The changes also reflect lessons learned in those four years.
"From what we saw before and during the global financial crisis, Toyota was hamstrung by insularity and slow decision making," says Clive Wiggins, team leader for Asian autos at Macquarie Capital Securities in Tokyo. "This is another step in the road of Toyoda trying to address those issues."
Other components of the massive management overhaul:
Swapping into Ohara's old role will be American Mark Templin, who was Lexus International's global marketing chief. Now he will be the first non-Japanese executive to lead a Toyota division at the company's global headquarters in Toyota City.
His job leading Lexus' global marketing and product planning will remain the same but he will be promoted to managing officer at the parent company, just two steps down from the board, and become executive vice president of global Lexus.
Templin oversees product planning, sales, marketing and business planning, while still reporting to his old boss, Kiyotaka Ise, who retains control of Lexus r&d. Another Japanese executive is in charge of Lexus design.
For the first time, Toyota will have outside directors. One of the three outsiders will be Mark Hogan, a former General Motors vice president. He will be the first non-Japanese on the board since 2007, and only the second one ever.
Operations will be divided into four business units, covering mature markets such as the United States and Japan, emerging markets, components and Lexus.
Toyoda will assume direct control over all things Lexus at the new stand-alone Lexus International unit. While the company's other business units have an executive vice president in charge who reports to Toyoda, the president cut out the middleman for Lexus.
"For daily operations, we plan to implement a more agile and autonomous business unit type of structure that will enable the executive vice presidents in charge to accelerate decision-making," Toyoda said.
The moves represent a stark change from three years ago, when Lentz testified to the U.S. Congress that Toyota's U.S. sales arm had to await permission from Toyota's board in Japan before taking action in response to allegations of unintended acceleration in its vehicles.
Since then Toyota has ramped up local decision-making authority involving safety and recalls, and streamlined the reporting process to Japan.
New talent pool
The latest shake-up reflects Toyoda's limits as a nonengineer CEO in a company that reveres its gearheads. In the shadow of his father, Shoichiro Toyoda, a former engineer-CEO still referenced honorifically as Dr. Toyoda, the 56-year-old son makes frequent mea culpa references to being only a sales guy.
He is delegating more power to experts and tapping talent regardless of nationality. "We want to be rooted deeper in the local regions and have people at the top who have good communication with the local regions and can be good ambassadors of Toyota," Toyoda said.
It remains to be seen how much clout these empowered overseas executives will wield. Chains of command will still stretch back to Toyota City, just as Opel executives ultimately must report to GM bosses in Detroit. And Templin, for instance, is expected to spend much of his time in the United States despite being based in Japan. But they are being given a higher profile.
For the company's North American business, the ascension of foreign-born executives marks a coming of age. Outside Japan, no other Toyota operation has as much depth of talent, manufacturing presence, product development resources or history of immersion in what the company calls the Toyota Way.
As a result, North America has emerged as a feeder program for new global leaders.
Consider the new position of CEO of the company's Latin America and Caribbean operations. Toyoda could have stuck to the textbook and sent a Japanese executive from Toyota City. Instead he named North America manufacturing chief Steve St. Angelo to the post in Sao Paulo, Brazil. "We have a more empowered management structure which has improved the communication between design, engineering, manufacturing and sales. Building that kind of culture helps us provide vehicles tailored for our specific markets," St. Angelo told Automotive News in an e-mail. A case in point is the redesigned Toyota Avalon, led start-to-finish by a U.S. team.
Toyoda has been a strong advocate of internationalization at the automaker. He got his M.B.A. in the United States and cut his teeth at New United Motor Manufacturing Inc., a now-defunct joint venture between GM and Toyota that built cars in Fremont, California. That's where he met Hogan, who had been assigned to NUMMI by GM to learn Toyota's manufacturing ways.
Hogan, now 61, went on to head advanced vehicle development at GM and then became president of supplier Magna International Inc. Toyoda praised Hogan for his automotive acumen, adding, "He will be a non-Japanese who can frankly communicate with me."
In 2007, before becoming president, Toyoda vowed the automaker wouldn't name token foreigners to its board. That was soon after Jim Press stunned the company by defecting to Chrysler just months after being appointed the Japanese company's first non-Japanese board member.
"It's not as if our objective is to bring in non-Japanese to the board," Toyoda said. "Jim Press didn't become a board member because he was non-Japanese. It was because of his performance."
2 traumas led to change
The shock of tumbling to a loss after the global financial crisis and the recall catastrophe of 2009-10 also spurred Toyoda to action. Both problems convinced him that the company needed a more global outlook and a better ear for criticism.
"For the first four years since I became president, we have experienced all sorts of hardships and have worked hard to overcome them," Toyoda said last week. "I finally saw signs of success, and that is why I chose this time to return to the starting point to achieve sustainable growth and be fully global."
Toyoda began laying the groundwork for outside board members and senior-management diversity in 2011, when he dispatched one-time Toyota U.S. boss Yukitoshi Funo, who retires in June, to the United States to study the way companies balance their leadership ranks.
In Cincinnati, Funo was surprised to find that Procter & Gamble Co. led Toyota in terms of globalization, with several foreigners in top management positions. Among the eye-openers: P&G's 11-member board included Ernesto Zedillo, the former president of Mexico.
At the time, Funo predicted that Toyota would seat a foreigner on its own board within three years. "I want to do it quickly," he said. But Toyoda, Funo added, "wants to do it urgently."
Mark Rechtin contributed to this report
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