Knowledge management strategic plan 1

Knowledge management strategic plan: A case of Toyota Japan

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Abstract

Knowledge management has become a crucial part of organisational strategic plans after the

realization that it can be a source of competitive advantage. This work evaluates his work

evaluates the current knowledge management practices of Toyota Japan and proposes a new

knowledge management strategic plan for the company. It examines and recommends

improvement to three of the fourteen principles of what is known as the “Toyota way” namely

Toyota production systems (TPS), supplier relations, and organization learning. I believe that

these principles were at fault in the recent backdrop of Toyota accelerated growth following a

recall some of its car models for technical faults. Implementation of these knowledge

management interventions should prevent future occurrence of similar debacles and help Toyota

gain competitive advantage over its rivals in the automotive industry.

Introduction

Knowledge management has become a crucial part of organisational strategic plans after the

realization that it can be a source of competitive advantage (Bhatt 2001). Knowledge

management enable organisations to share perspectives, experiences, ideas, and information that

ensure these resources are available in the right place at the right time for informed decision

making (Schwandt and Marquardt 2000). Thus knowledge management ensure organisation

efficiency by reducing the need to rediscover knowledge. In modern business practices,

knowledge management comprises of procedures, tools, strategies, and activities that ensure

efficient capture and sharing of data for decision making (Dalkir 2005). This work evaluates the

current knowledge management practices of Toyota Japan and proposes a new knowledge

management strategic plan for the company.

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Knowledge management in Toyota Japan

Toyota Motor Corporation is Japanese automotive manufacturer headquartered in Toyota, Aichi,

Japan. It was founded in 1937 by Kiichiro Toyoda. The automotive manufacturer has seen

tremendous growth to become the largest automobile manufacturer in the world with over 340,

000 employees’ worldwide (Toyota 2017). At the heart of this growth is the knowledge

management systems that the company has put in place. Toyota has experienced decades of

quality leadership and innovation. The leadership has promoted knowledge transfer to Toyota’s

employees. It established the Toyota University, a major organization learning initiative that

train its employees and dealers (Toyota 2003). New employees are trained in the workplace

through working with trained managers and other skilled workers in the group. This enhances the

new employee’s understanding of “the Toyota Way” (Liker 2003). Another knowledge

management initiative is sharing knowledge. Toyota uses the “Learn Local, Act Global strategy”

(Ichijo and Kohlbacher 2007). The strategy is characterized by conducive physical environments

with large open space offices that encourage workers to share information and ideas (Dyer and

Nobeoka 1998). Toyota embraces a dynamic learning process and thus does not control every

activity of their employees (Liker 2003).

Toyota has also embraced technology in its knowledge management practices. It uses database

software which records all the company’s operations, best practices and problems. The software

has both databases and library capabilities which enable constant reporting by the company’s

employees (Nguyen 2017). Toyota also promotes good customer relations. It established its first

Customer First Promotion Group in 2012 with the aim of linking its customers with internal

divisions. It enabled the company to tap customer opinions collected by its dealers and customer

assistance across the globe. The company is has put in place measures to tacit knowledge
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management approach to ensure correct diagnoses of production and performance problems.

Tacit knowledge is difficult to describe since it is abstract in nature. It can however be

demonstrated though on the job-training (Jarrar 2002). Tacit knowledge is, in turn, converted to

explicit knowledge where information is used to improve the entire organization. Explicit

knowledge is easier to codify and can be transferred from one person to another. In Toyota,

individual workers and teams are asked to document the tasks they perform each week.

However, it has not been all smooth for the Japanese automaker. Toyota has experienced

troubles recently, forcing it to recall some of its models and stop selling altogether. Eight of the

company’s car model were found to have fault accelerator and had the potential of sticking if

depressed, thereby safety hazards. The debacle not only cost Toyota money in repair costs, but

also prestige and customer trust (Toyota 2010). Toyota’s Total Production System (TPS), which

has been an epitome of knowledge management in the automotive industry, was put into

question. Although Toyota seemed on track in its knowledge management strategy, something

along the line went off the rails. By applying various model of knowledge management, we can

design a knowledge management plan for the company that will prevent future occurrence of

debacles (Dalkir 2005).

Knowledge management models

Researchers have proposed several knowledge management models that can be used in

designing the appropriate knowledge management plan for Toyota Japan. These models have

their own strengths and weaknesses. These models are discussed below.

Von Krogn and Roos Knowledge management model

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The model proposes that knowledge management is both an individual and interaction-oriented

strategy. It adopts a connectionist strategy assuming that everything known is known by

somebody (Dalkir 2005). The model promotes group sharing of information. However, it is

inflexible since it views knowledge as abstract.

Nonaka and Takeuchi Knowledge Spiral Model

It assumes that slogans, metaphors, and symbols spurs organization innovation (Nonaka and

Takeuchi 1995). Like Krogh and Roos model, it also assumes connectedness and part of larger

entity. It assumes that knowledge creation begins from the individual before becoming group

knowledge (Dalkir 2005). The model is appropriate for knowledge conversion from tacit to

explicit knowledge. However, it is vague and generic about survival.

Choo and Weik Model

This model has been widely acclaimed for its sense-making capabilities. Sense-making is

important in effective decision-making. Its strengths include being a viable solution for turning

chaos to order. However despite being a holistic model, it still harbor abstract interactions.

Wiig Model

This model is concerned with organization of information. The model is based on four

dimensions; completeness, congruency, connectedness, and perspective or purpose (Dalkir

2005). Wiig model emphasize the role of individual knowledge worker. However, this model

needs further development especially in the perspective and purpose dimension.

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This will apply perspectives from these models in development of knowledge management

strategic plan for Toyota. These models highlights three perspectives that are key to knowledge

management: the knowledge worker; organization development; and knowledge exchange.

Key objectives of the plan and how it will integrate with Toyota goals

Toyota Motor Corporation has knowledge management is grounded in its goal of continuous

improvement (Kaizen) and employee involvement (Liker 2003). According to Liker (2003),

Toyota implement 14 principles of management that ensure its excellence in the automobile

sector. These principles are enshrined in the “Toyota way” of strategic knowledge creation.

Toyota way is creation of knowledge and unlocking of tacit customer knowledge across the

globe by local staff and local partners (Ichijo and Kohlbacher 2007). Toyota uses its “learn local,

act global” in its international business development and knowledge management. Thus the

current knowledge management strategy should align with Toyota way. The objectives of this

strategic knowledge management plan are three-fold: (1) to improve knowledge sharing between

Toyota and its suppliers; (2) enhance organization learning; and (3) improve Toyota production

systems (TPS).

Institutionalized knowledge sharing with supplies

Toyota’s 11th principle spells its relationship with suppliers. According to this principle, Toyota

should challenge and help improve their suppliers (Liker 2003). The desired result is to be at the

same level of talent with Toyota employees and other associates (Dyer and Nobeoka 1998).

Toyota has, therefore, put in place routines that enhances its relationships with suppliers.

However, these routines do not encourage inter-firm knowledge sharing. The goals of this

objective is to improve existing knowledge sharing between Toyota and its suppliers. Firstly,
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Toyota has supplier association (kyohokai) which was established in 1943 to promote mutual

friendship and exchange technical information between the company and its network (Liker

2003). These networks are scattered across various regions and have not been successful in

sharing information because of geographic proximity issues. Toyota uses these networks

transmits important information about production plans, policies, and market trends. Suppliers,

on the other hand, use the network to transmit information about parts and components they

make. Thus, this association is critical to knowledge sharing in the production process. Supplier

association should be used to develop ties between members across multilateral knowledge

transfers.

Another strategy for knowledge transfer is the use of operation management consulting divisions

(OMCD) of the company to deal with problem that strain operations between the company and

its suppliers (Dyer and Nobeoka 1998). OMCD assist in all production, inventory, and quality

management activities. It helps the company to save on inventory costs while suppliers also

benefit from not holding too much inventory. To OMCD, Toyota can add voluntary learning

teams (Jishuken), which is group of supplier who volunteer to assist each other in production and

quality improvement. Plant managers and line managers participate in Jishuken (Dyer and

Nobeoka 1998). Closely associated with Jishuken is problem solving teams. Problem solving

teams are formed to solve emergent problems within the company’s supply network. They

establish cause of the quality problem and suggest ways to fix the problem, which gives the

company a competitive advantage (Dyer and Ouchi 1993).

Toyota should embrace more inter-firm employee transfers since it is a widespread practice in

Japan (Lincoln et al. 1992). Employee transfers (shukko) helps large assembles to control their

suppliers and enable the firm to shed unwanted employees (Dyer and Nobeoka 1998). Toyota
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has been using shukko to transfer their employees and give the experience they need to rise to be

directors.

Toyota production systems (TPS)

Toyota’s 6th principle spells the need for the organization to follow standardized processes as the

basis for continuous improvement (Liker 2003). As a result, Toyota established the TPS to

promote the idea of maintaining continuous production to adopt to changes in demand of its

products. TPS links the organization’s production activities to real demand through the

implementation of Kanban, Kaizen, and Just-in time. TPS has been used to organize the

manufacturing and logistic process. It can be used to promote the interaction of customers and

suppliers with the organization.

Through TPS, the company can embrace the rapid diffusions of lean production techniques such

as Kanban and inventory management (Lieberman 1994). Kanban is an agile method that enable

the organization to complete its operations in more efficient ways through communication and

information sharing (Palen 2014). It emphasizes continual improvement and optimization in

project scheduling iteration, and cadence (Trapani 2015).

Lean management implementation has been faulted for being superficial, often concentrating on

tools such as just-in-time and 5S instead of concentrating on a system that would permeate an

organization (Liker 2003). Toyota can successful implement lean management by involving

senior management in its day-to-day operations and encouraging a process of continuous

improvement. Toyota Technical Center (TTC) found that the company always in problem if

senior management fails to follow principles that create a culture that promotes the Toyota way

(Scholtes 1998).
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Lean manufacturing has been defined as a five-step process involving defining customer value,

designing the value stream, making value flow, attracting the customer, and striving for

excellence (Womack and Jones 1996). Toyota should tune its production system so that it is

uninterrupted one-piece flow value-adding process that cascades from the customer demand by

providing only what the next process takes in a short interval, and a culture where everyone in

yearning to continually improve. Toyota production system has been flexible in responding to

customer demands. It has a shorter lead time and promotes high quality. As a result, it

encourages better customer responsiveness, productivity, and utilization of equipment and space

(Liker 2003). Toyota established the TPS to eliminate waste in material or time in the production

process (Ohno 1988). The same objective has been driving companies’ need for fast and flexible

production processes that gives the best quality of product to the customer at affordable cost.

Organization learning

Organization learning is related to knowledge management. According to Schwandt and

Marquardt (2000) organization learning is a system of actors, actions, symbols, and process that

helps an organization transform information into knowledge, which increases the organization

ability to adapt in the long term. Organisation learning is concerned with adopting and

developing new technical and business skills, knowledge, and capabilities. According to Senge

(1990), for a firm to be called a learning organization, it must be fully growing its learning

capacity over time, as it helps its members to adapt to continually changing competitive

landscape.

Toyota’s 14th principle spells its desire to become a learning organization through reflection and

continuous improvement. Organization learning is at the pinnacle of Toyota Way pyramid as

becoming a learning organization translates to organizational effectiveness (Toyota 2017).

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Toyota is a learning organization because it adopts standardization and at the same time

promotes innovation (Liker 2003). At the epicenter of organization learning is people. Unlike

other organizations that weeds out underperformers, Toyota focuses on upgrading its employees’

capabilities. Toyota implements an on-the-job training programs which encourage employees to

be free to make judgments (Takeuchi, Osono, and Shimizu 2008). Employees are equipped with

problem solving skills. Employees are given mentors who encourage experimentation by sharing

their experiences in the apprenticeship system. Senior managers create environments with large

open space offices that encourage workers to share information and ideas (Dyer and Nobeoka

1998). Toyota embraces a dynamic learning process and does not control every activity of their

employees (Liker 2003).

Toyota has been transferring individual and team innovation into the entire organization learning

(Liker 2003). It encourages employees to come up with innovative ways to do things. However,

such new ways must be standardized and practices across the entire organization until improved

ways are discovered. Organization leadership promotes learning by continuously encouraging

creativity and empowering people keep the innovative spirit alive.

Toyota should now focus on talent management, which is concerned with hiring the best and

retaining them in the organization in the face of hypercompetitive business environment. It

should promote lateral communication, improve work environment, and develop people skills to

be better problem solvers. It should develop exceptional people and knowledge teams that follow

the company philosophy in accordance with its principle 10. Effective teams comprise of well-

trained people who have been developed as individuals to work as teams (Dalkir 2005).

Monitoring and evaluation

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There are many metrics that can be used to evaluate and monitor knowledge management. These

measures have various classifications such as general management, leadership style, internal

processes, human resource, and strategic vision (Anvari et al. 2011; Chang and Wang 2009).

This knowledge management strategic plan can be monitored and evaluated in relation to

effectiveness of the strategies used by the knowledge management team proposed.

Knowledge sharing with supplies can be measured be evaluating whether it is institutionalized.

Suppliers are constantly asked to provide feedback which helps the monitoring of whether

knowledge transfer was effective. According to Lieberman and Wada (1997), suppliers who

constantly provide feedback to the company stay motivated while helping the company raise its

performance. Quality audits for supplier plants can ensure suppliers are compliant with quality

systems and process and thus help maintain Toyota’s quality standards. Surveys can be

conducted to evaluate their satisfaction with the new knowledge sharing framework. Toyota can

also benchmark its supplier relations with other world class automakers and multinationals to

identify areas of improvement.

Toyota production systems (TPS) should be evaluated on the basis of how they promote

standardization of processes and products. They should be flexible to accommodate changing

customer demands, promote just-in-time, minimize waste, encourage minimum inventories, and

be less prone to errors (Liker 2003). Surveys can be done to evaluate the extent of senior

management involvement in the day-to-day operations and how they encouraging a process of

continuous improvement. Besides, the six sigma can be applied to evaluate the effect of process

involvement on different functional areas of the organization such as finance, employees,

marketing, production, and supply chain.

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Organisation learning can measured in relation to the company’s continuous improvement. The

effectiveness of the organisation can connote organization learning. Toyota can establish key

performance indicators (KPI) of individual employees and teams. It can survey the extent of

information sharing, dissent, employee job satisfaction surveys, retention, skills, and innovation.

Unlike other companies, Toyota evaluates their managers on the basis of learning results instead

of performance. It evaluates how managers reached their goals: how they resolve issues, how

they foster organization skills, how they develop and motivate their employees (Takeuchi,

Osono, and Shimizu 2008). For instance, the company uses personal magnetism (jinbo), which

evaluates the level of trust between the manager and the employee.

Conclusion

This work proposes a new knowledge management strategic plan for the Toyota Japan. It finds

that Toyota knowledge management practices are enshrined in its 14 principles of what is known

as the “Toyota way.” The strategic knowledge management plan recommends strategies to (1)

improve Toyota production systems (TPS) (6th principle); (2) improve knowledge sharing

between Toyota and its suppliers (11th principle); and (3) enhance organization learning (14th

principle). The goals of improving Toyota production systems is to make it a lean organization.

Improving knowledge sharing with suppliers should make its suppliers to be at the same level of

talent with Toyota employees and other associates. Finally, enhancing organization learning

promotes continuous improvement and innovation in the organization. These interventions

should, in turn, help Toyota gain competitive advantage over its rivals in the automotive

industry.
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