The Okuda expansion: management beyond the founding family (1995)

A turn to management that does not lean on the founding family’s gravity

The heart of this appointment lay not so much in the change of president as in the fact that the Toyoda family itself entrusted the making of a “post-family culture” to a man from outside it. Shoichiro Toyoda, the third generation of the direct line, had tried to change the corporate culture, but so long as domestic market share held in the forty-percent range he was blocked by voices saying there was “no need to stretch so hard.” When share fell below forty percent and the chance hospitalization of Tatsuro Toyoda coincided with it, the founding family chose the career man Hiroshi Okuda without hesitation. It was a choice that broke the pattern of a steward “returning power to the sovereign” and stepped into management that does not depend on the Toyoda family’s gravity.

Okuda’s snap decisions and campaigns of sheer volume did not immediately restore the forty-percent share he had set as a target, and the problem of an inefficient sales network remained. Even so, a management that judged the risk of not spending to be the greater one — pouring funds into expansion and setting out to break down the inward-looking culture — turned to rising profits, helped by a weak yen, and readied the next pillars of global expansion and hybrids. This decision, in which the founding family chose a “strong Toyota” even at the cost of diluting its own control, points to one template by which a family firm can keep growing beyond its scale.