Toyota Innovation Analysis: Strategies for Future Capabilities

This report provides an innovation roadmap for Toyota Motor Corporation, focusing on future growth and sustainability through innovation. It analyzes the company's current situation, predicts future prospects, and identifies innovation requirements, emphasizing disruptive and incremental innovation models. The report highlights the importance of employee motivation and knowledge sharing, environmental analysis, and organizational knowledge transfer. It also discusses new product identification and key activities for successful development, concluding with strategies for building future capabilities. The Pentathlon theory of innovation is discussed along with the importance of strategy, ideas, selection, implementation and people. Desklib offers a wide range of study tools and resources for students seeking similar solved assignments.

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TOYOTA INNOVATION ANALYSIS
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1TOYOTA INNOVATION ANALYSIS
Executive Summary
This report aims to discuss the innovation procedure that the highly celebrated automobile
company Toyota Motor Corporation can involve. This report has applied an evaluative
approach to a huge range of business information as well as appropriate methodologies to
identify the chief drivers of innovation in the business of Toyota corporation. This report has
analysed the present situation of this company based on which it has predicted the future
prospect that Toyota company can face within 2020 and beyond. This organisation can
innovate the product and maintain a sustainable growth if identify the innovation
requirements. The future innovation capabilities of the company have focussed on the
disruptive and incremental models of innovation. This will help the managers of the company
to effectively motivate the employees and share their knowledge. By means of making the
employees a part in the innovation process, the management of Toyota Motor Corporation
can be soaring high in the domestic as well as global market. Through its environmental
analyse this report has illustrated how this particular organisation and its leaders can plan
successfully then only prepare for both process as well as product innovation. This report has
critically discussed the essence of organisational knowledge, method of knowledge transfer
as well as cross-functional co-operation to analyse or assess innovation ability. In addition to
this, the report has effectively engaged in proper identification of new product and identified
the key activities required for its successful development. This report finally concludes with
the building future capabilities of the firm.

2TOYOTA INNOVATION ANALYSIS
Table of contents
Executive Summary...................................................................................................................1
Introduction:...............................................................................................................................3
The Future of Toyota 2020 and Beyond:...................................................................................3
Innovation Requirements for Toyota:........................................................................................5
Building the Future Innovation Capabilities for the Organisation.............................................6
Conclusion..................................................................................................................................9
References:...............................................................................................................................10
Appendices:..............................................................................................................................12

3TOYOTA INNOVATION ANALYSIS
Introduction:
The aim of this report is to develop an innovation road map to prepare the innovation
process of a highly celebrated automobile company Toyota Motor Corporation. The
operational environment of this particular company has shown a sharp growth in the near
future and beyond as the chief aim of this company is to develop itself through innovation.
The report is placed in the context of recommendations from coursework 1 on areas that
Toyota need to innovate or improve on for the future. In this study the performance
management practices for developing the team has been suggested for improving the level of
productivity of the company. On the other hand, effective organizational culture is required to
get developed for managing the political and economic situation of the company. The key
recommendations are as follows
 Performance management practices
 Development in organizational culture
 Introduction of team management strategies
 Introduction of modern technology
This report has also discussed the methods of process innovation which encompasses the
complete innovation process of the company. This report has analysed the future prospects of
Toyota till 2020 and beyond, its scopes of innovation and ways to build future innovation
capabilities of the organisation.
The Future of the Industry from 2020 and Beyond:
The global sales of the passenger cars have exceeded 78.6 million in 2017. The
United States as well as China are the largest automobile markets in the world as they have
highest production in this industry as well as sales. This is due to the fact that the needs of the
customers are continuously in caressing so also the technological support. Beside the brand
like Ford, other companies such as Toyota, Volkswagen, and Daimler have been gaining
huge profit and become the major automobile makers in 2018. There are two main trends that
will be shaping the innovation trend of the recent automobile industry beyond 2020. The
future cars will be autonomous, connected, shared and electrified in short, these cars will be
will be more flexible and more individual for the users. The cars will be more effective n
future as these will be more focused on the users. The technical savvy young generation will
play key role in this transformation of automotive industry.
For the company like Toyota, it is mandatory to utilise technology at its best. It needs
to understand the demand of the new generation customers hence can launch new driverless
cars. This is the reason why the company needs to invest the best technology, human and
financial resource into this invention. This company has been serving the demands of the
global customers with changing times and places. In this technologically advanced society
where the customers are compactly dependent on the services associated with internet and
prefer to communicate digitally (Al Ariss and Sidani 2016). This trend will be increasing
therefore, the company needs to team up and launch open platform infotainment systems to
connect the popular mobile operating systems. This will enable the app developers to adapt

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their offerings to the cross-platform users in the tablet, mobiles as well as web (Slater, Mohr
and Sengupta 2014). Thus, the company will be able to utilise the big data’s fast increasing
role in the automotive industry. As the company already has the electric cares operative in
most of the developed countries of the world, it can enter the lucrative market of the
developing nations with the promise of eliminating the dangerous automotive impact on the
environment (Mooi, Wathne and Kayande 2016). Through more utilisation of technology, the
company can also introduce driverless autonomous vehicles with benefits like better traffic
management and reduced accidents on road.
Toyota Motor Corporation is a renowned Japanese automotive manufacturer. It has
been making few very important moves which will have great impact on the future business
of the company. The company has been keeping eye on the future prospects and maintaining
a solid performance at present (Bloomfield 2017). Unlike other renowned automobile
companies, it has been focussing on the future demands of the customers as well as the crisis
of natural resources used as fuels. This is the reason why the company has focused on the
electric based vehicles and introduced the cars using hydrogen fuels to match the demand of
the consumers and supporting the sustainable growth. The company at present has been
expecting 33.1% growth in the earnings over 2020 which will enable the company to earn
higher per share. The revenue is predicted to increase from 27126.47 billion pounds to
29570.00 Billion in 2021 during this period margins are predicted to be quite acceptable at
6.3% (see appendix 2). Toyota has overall stable sales in all over the globe. New models
mainly focusing on the technological innovation as well as fuel efficiency will likely boost
the company's market share and profitability in the global market over next few years mainly
beyond 2020. In achieving this, Toyota Motors will build the first megawatt scale carbonate
fuel cell power generation plant in the North America which will have a hydrogen fuelling
station for supporting its operation in the countries of this continent (Bowen, Baker and
Powell 2015). Moreover, this co many is also concerned with the waste management methods
and has tried to utilise the Tri-Gen facility (Bayraktar and Oly 2014). With this particular
move Toyota has positioned itself to be the ushered company introduced the hydrogen
powered vehicle in the global market for a long time. The company has been heading towards
the right direction, by taking some very important moves to solidify itself as the best car
manufacturer in the world.

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Innovation Requirements for Toyota 2020 and Beyond:
Figure 1. Pentathlon theory of innovation
(Source: Rndtoday.co.uk 2018)
In order to flourish the business worldwide and attain sustainability the management
needs to have full focus on the innovation. In this regard, the Pentathlon theory can be the
most potent one. This particular theory has five critical part and all of these are unavoidable.
In case the management of Toyota prance one of them, it will be a disaster for the company.
These strategy parts are-
 Strategy
 Ideas
 Selection
 Implementation
 People
Strategy of the company is the primary phase based on which the management will be
building the whole superstructure of innovation in Toyota. This strategy steering innovation
will guide as well as influence the ideas to be selected and implemented. In this step the
management will be identifying all the business priorities and ensure all the arrangements at
an early stage (Ihlen and Roper 2014). In case of Toyota these strategies can be acquisition,
applying new skills and new supply chain to strength the future of the company. In making
strategies to flourish, there are numerous problems that will be emerging. After identifying all
the scopes of improvement, the management generate ideas so that these problem areas can
be mitigated and company becomes strong enough to face all the future challenges in the
company both internally as well as externally (Slater, Mohr and Sengupta 2014). In order to
gain support from the stakeholders which includes the employees, shareholders, supply chain
and government of the country where the company is operation. This collected ideas will then
be implemented in the company. By prioritising and selecting the best ideas from all these
stakeholders, the management will make decisions. This process will help the management to
convince all the stakeholders and they are taking party in the decision-making process.

6TOYOTA INNOVATION ANALYSIS
After making decisions from collected information and ideas from all the level of the
organisation, the management of Toyota is responsible to implement those changes in the
company. This will be done through a strong project management process. Through this
method the management will be able to amalgamate various skills with the ideas. The control
system of the company needs to be strengthened so that there is no division from the chief
aim regarding innovation in the company. Through this Toyota will be easily market even in
a highly uncertain environment. However, there are ample risks regarding the organisational
culture of the firm because whenever there will be a change the employees will be the first
respondent. Hence strong management of this tension is needed so that the innovation does
not fail in the market due to internal issues.
Building the Future Innovation Capabilities for the Organisation
The economic condition of an organization is being considered as the important
influencing factor behind the innovative practices (Wang, Plump and Ringel, 2015). After the
globalization, the internal and external environment of the company named Toyota has
changed. With the help of its innovation and modern technology, the company has become
one of the famous automobile industry in the global market. In order to analyse the statistical
data different journals and articles have been used. By following the survey method on the
customers, the popularity of Toyota in the global market has been analysed. The engineering
team of Toyota has given their effort to bring the attractive design in the market. It has been
identified that for developing its unique position in the market the company has focused on
adding values in its products. This can be said that there are various factors that can influence
the innovation process. The team is being considered as the essential component in every
organization. Innovation needs multiple skills and the combination of efficiency. A team
with efficient employees can help to drive the innovation through collaboration. In order to
run an innovation process smoothly the involvement of team members is very important.
Performance management practices of Toyota is also another important key driver for
bringing the innovation. In order to drive the innovation, the company needs to focus on the
introducing the effective monitoring team. After analysing the internal culture of the
company, it has been identified that recently the company is dealing with revenue loss, due to
the improper relationship with the suppliers. As its result, the pressure on the employees has
increased. Due to this reason, the innovative skills of the employees can get effected.
Therefore, in order to deal with such situations, the proper organizational culture is needed
to be developed. The economic climate and political situation of the country impacts on the
innovation practices of the company. From the macro and micro environmental analysis, it
has been analysed that in the case of a developing nation, the external environment can bring
various opportunities for the company. By using its strategic capabilities it will be able to
give tough competition to its competitors. Therefore, this can be said that the innovation key
rivers are in the favourable condition for the company named Toyota.
Role of a leader is very important for introducing the innovation and creativity in an
organization (Wang, Plump and Ringel, 2015). An innovative leader has the vision for the
organization's future. By establishing the trust for the employees, the leader sets long term
goal that helps to bring the development in the organization. It has been analysed that the
trust of the employees on the leader reflects through their work. In this study, the skill of

7TOYOTA INNOVATION ANALYSIS
motivation has been highlighted as the important influential factor for bringing the creativity.
If a leader will be able to develop a strong image to the employees, this will play an effective
role to increase the team confidence. In the case of Toyota, it has been identified that the
corporate and organizational culture of the company has brought positivity in the
organization, which has influenced the creation of the employees. Importance of
organizational encouragement is very effective in increasing the efficiency of the employees.
In the case of the company named Toyota, the Disruptive innovation model can be used. In
this model, the creation of new market value and connectivity has been discussed.
Figure: Disruptive innovation
Source: Heeks, Foster and Nugroho, 2014
In the current scenario, the needs and demands of the customers are constantly changing, Due
to this reason, it has become very difficult for the organizations to develop an effective
innovation plan. Toyota is dealing with the same kind of business challenges. In such
situations, the leaders of Toyota has decided to develop the Disruptive innovation model for
bringing the innovation in the proper manner. The leaders have developed this model as it is
very effective in the case of changing the competitive pattern of the industry. On the other
hand, Incremental innovation will be also adopted by the leaders as it has decided to
introduce the driverless cars to the market. In this model, the old products are being
introduced to the market by adding more features and designs.
Fig: Incremental innovation
Source: (Slater, Mohr and Sengupta, 2014)
This has been analysed that knowledge and cross-functional cooperation is very
important for understanding the innovation capability of the employees. Knowledge
regarding the skills of the employees is very important to analyse their ability to bring the

8TOYOTA INNOVATION ANALYSIS
innovation (De Massis et al. 2015). Knowledge is being considered as the important power
that helps to deal with the competitive environment. Through the knowledge transferring
process, the internal relationships among the employees get developed. This plays an
important role in motivating the employees towards achieving their goals and objectives. By
introducing different knowledge sharing software the information regarding the business
industry, the skills of the employees gets improved. Therefore, by introducing the effective
training and development practices, the company named Toyota will be able to increase the
efficiency of the employees.
As the company has decided to develop the driverless cars in the market, therefore, in
order to develop the product in the automobile industry the company needs to focus on its
marketing practices. Research and development are being considered as the important process
in the new product development. After researching the market, the organization get the
chance to gather the information regarding the needs and demands of the customers. Through
this process, the position of the competitors can also be identified. By involving the efficient
car engineers the unique product will be launched. By adding the modern facilities as well as
the attractive design, the company has decided to develop its unique product in the
competitive market. In order to aware people regarding the product features, the company
will develop an effective marketing plan. Through different social media as well as printing
advertisement, people will be informed about the new product. The design, features and price
of the product are needed to be analysed by the designing team of Toyota so that they can
identify the actual demand of the customers and attach the needed changes I their products to
reach more people. Through different campaigns, it can introduce the product in the product
in the market. Another way, this can be said that the safety and security of the customers are
very important in the case of developing the new product in the market (Heeks, Foster and
Nugroho, 2014). Therefore, this can be said that there are three variables relating with growth
of the company which they can never avoid. These three variables are cost, time and quality
of their product. Depending on the manufacturing cost, the company sets the selling price of
the product. In this process, the target market is being selected. After selecting the target
market, depending on their demands, the advertising policies are being introduced. The
external business environment of Toyota is also equally important for developing its
products. Depending on the political and economic situation, the business organization
develop its business policies.
Auditing is being considered as the on-site verification operation that helps to
examine the quality and system of a particular organization in which the audit is being done.
In order to achieve the audit purpose, several audits can be introduced in an organization. For
introducing an effective audit practice, on the basis of product, system and process, the audit
program is being done. Depending on the requirement and needs of the organization, the
business audits are being done. It helps to analyse the reporting, accounting as well as
functional procedure in an organization. In the case of product development or innovation,
these three variables are important. In the case of both the internal and external audit, the
performance of the employees, the quality of the product, customer relationship, financial
record and employee wages regarding issues are being analysed. Another way, this can be
said that in the case of product innovation, the company can apply these three audit
techniques. For analysing the standard of the product as well as if it is able to develop its

9TOYOTA INNOVATION ANALYSIS
business in the market or no is being analysed. On the other hand technology and budgeting
for the new product development practices are being observed by the audit members.
Manufacturing cost, taxation policies and customer rules are being observed by the company
(Wang, Plump and Ringel, 2015). Therefore, this can be said that before the product
innovation practices, the company named Toyota will recruit an auditing team that will focus
on analysing if all the auditing elements such as timing, costing and quality of the product are
being maintained in an effective manner or not.
Conclusion
Therefore, it can be concluded that the company has become a highly preferred brand
of car in the automobile industry. Toyota despite of being a Japanese multinational
automotive manufacturer has captured a huge market all over the globe and has a great future
to flourish. With great penetration though high-quality product and service, this particular
company has captured a huge prospect in terms of innovation both in product as well as
process. The data has revealed that the company can gain in both the domestic as well as
foreign markets through innovation. The personal strength and weaknesses in all the brands
in the automobile industries are more or less common but Toyota has more opportunities than
the other companies operating in the global markets. The innovation of the products of this
company is marked by different innovative ideas which include driverless cars which will use
biowaste fuels to prevent fast decreasing level of natural fuels. It has innovative models
which can effectively use technology at its best. In order to gain the best result, the
management needs to have direct involvement with the innovation for which they need to
have proper planning and knowledge sharing method within the organisation. Though
examining the quality and system of the organisation the planners will be able to achieve the
desired results. By focussing on the disruptive and incremental models of innovation, the
company can introduce innovation at the organisational level and the employees also can
participate in this innovation. Performance management practices of Toyota can incorporate
the efforts of the employees in one hand and maintain an open organisational culture in the
workplace so that a sustainable growth can be achieved.

10TOYOTA INNOVATION ANALYSIS
References:
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Baker, C.R., 2015. Organizational change at Ford Motor Company in the face of international
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pp.150-167.

11TOYOTA INNOVATION ANALYSIS
Mooi, E.A., Wathne, K.H. and Kayande, U., 2016. Openness and innovation performance
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Appendices:
Appendix 1.
Appendix 2.
Appendix 3.

13TOYOTA INNOVATION ANALYSIS