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Published on March 21, 2008

In its history of over 40 years, Toyota has never had a Thai heading its local subsidiary. But leading Japanese professor Hirotaka Takeuchi predicts the world's second-largest auto-maker could have a Thai national becoming a board member in the next 10 years.

Takeuchi, dean of Hitotsubashi University's Graduate School of International Corporate Strategy and visiting professor at Harvard University, said the Innovative International Multi-purpose Vehicle (IMV) project, in which Thailand has played a leading role, had changed the whole management process and become critical to the future success of Toyota Motor.

"IMV was a project which most people in Toyota said would be 'impossible' despite the company's culture, which promotes innovation and doing the impossible," Takeuchi said. "Because in the past, everything was driven by Japan, the headquarters had to try new ideas out first and if it worked, the production process was taken to other countries.

"The problem with this system is that in Japan, Toyota would use local suppliers to provide all the parts. This system would work very well in Japan, but in Thailand the local operation would have to use the same parts that Japan uses, meaning they would have to import. This is very expensive and it takes a long time for parts to come in," he said.

But the IMV project bypasses Japan altogether.

"Forget the 'Made in Japan' label," he said.

"Many people said if you lose 'Made in Japan', Thais won't buy it. 'Made in Japan' is a strong endorsement of quality and engineering," Takeuchi said.

The new concept has become "Made for Thailand, and Made by Toyota".

The company has to convince Thai consumers that the products are as good as the ones made by Japan, Takeuchi said.

IMV manufacturing has been run interdependently by four hubs - Thailand, Indonesia, Argentina and South Africa.

From the manufacturing point of view, this requires excellent coordination but there are many benefits to adopting the system.

"Indonesia's IMVs are very different because road conditions and weather are different. The way people drive and use their vehicles is different," Takeuchi said.

"They have one platform combined for pickups [the Vigo], minivans [Innova] and SUVs [Fortuner]. Put together on a single platform, that's great innovation," he said.

"The benefits come from both centralised platforms and customisable features. The slogan is 'localise to be globalised'," he said.

With the headquarters being completely out of it, some Toyota bigwigs in Japan were worried.

"But there was a strong leadership in Thailand who said 'We can do it'," Takeuchi said.

Moreover, Takeuchi said IMV is innovative not only because of the production aspect, but also from the organisational angle.

This is a breakthrough, where power has shifted to the local office from the headquarters.

For example, the South Africa hub leads the process for the African continent while Indonesia is expanding to India, and Argentina is now the hub for South and Central Americas.

"This is like a tipping point. It's a cascading process," he said.

Running the system like this is a big gamble for Toyota, but they are willing to do it and the results so far are excellent. Takeuchi said he expected IMVs to succeed Corolla as the best-selling brand of Toyota within the next five years.

"Corolla is now stable. IMVs are selling to 140 countries." he said.

One big benefit of IMV is that it brings in management layers, Takeuchi said.

Takeuchi is due to release a book "Extreme Toyota" that he co-authored with Emi Osono and Norihiko Shimizu in June.

Ten years from now executives from Thailand, Indonesia, Argentina and South Africa could become board members of Toyota, which is currently rather homogenous.

Does Takeuchi mean a Thai national could sit on Toyota's parent board?

"Sure," the professor said.

Pichaya Changsorn

The Nation

 At a glance

n Previously, all new ideas were first implemented in Japan and then the process was replicated in other countries.

n In the IMV project, the headquarters is bypassed and production is run interdependently by hubs in Thailand, Indonesia, Argentina and South Africa.

n Thus production can be customised to meet regional requirements.

n It also marks a power shift in the organisation, with greater local autonomy.