PGD SBL GROUP: PTA218A

PBA4808 GROUP ASSIGNMENT 2

Due date: 30 April 2018

Prepared by PGD SBL GROUP: PTA 218A

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TABLE OF CONTENTS PAGE

1. ABSTRACT 3

2. INTRODUCTION 4

3. LEARNING AND KNOWLEDGE MANAGEMENT AT TOYOTA 5

4. TOYOTA’S KNOWLEDGE MANAGEMENT PROJECT

IMPLEMENTATION
7

4.1 Success factors of Toyota’s knowledge management project 11

5. CONCLUSION 14

6. REFERENCES 15

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1. ABSTRACT
Knowledge management (KM) is defined as the process of acquiring, processing,
codifying, storing, distributing and applying knowledge (Zhang, Wang, Cao,
Wang, & Zhao, 2012). Organizations implement KM to improve efficiency and to
provide effective ways of using their intellectual assets. In the quest to achieve
and maintain a competitive edge, organisations have realised the importance of
implementing knowledge management systems and support learning within and
among staff members. Thus, KM is no longer an option but rather a necessity for
organizations anywhere in the world (Akhavan et al, 2010) if they should compete
successfully (Singh and Kant, 2007, 2008). Practical applications of knowledge
management include processes for data management, strategically leveraging
instructional and information technologies and tools, and governance structures
(Ardichvili & Yoon, 2009).

This paper will address three concepts within the context of knowledge
management at Toyota. It will start by describing organisational learning and
knowledge management, and further explore Toyota’s KM implementation
project. The paper will conclude by explaining the success factors of Toyota’s
KM implementation. The findings of this paper will show that organisations that
have learning embedded in their knowledge and information management
systems are most likely to derive the most value out of the system. Furthermore,
after using Toyota Motor Corporation (TMC) as a case study, the paper will
highlight that information and knowledge management does not only apply to
information-based organisation, but rather to all future thinking and competitive
advantage seeking organisations.

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2. INTRODUCTION
The global automotive industry forms part of the key sectors of the economy for
every major country in the world. The major players in this industry include;
BMW, FIAT, Ford, General Motor, Honda, Mitsubishi, Nissan, Peugeot Citroen,
Toyota, Renault, Volkswagen, Hyundai and Daimler (Datamonitor, 2010).
Toyota was founded by Kiichiro Toyoda in 1937, as a spinoff from his father's
company, Toyota Industries to create automobiles. Toyota Motor Corporation
produces vehicles under five brands, including, the Toyota brand, Hino, Lexus,
Ranz, and Daihatsu. It also holds a 16.66% stake in Subaru Corporation, a 5.9%
stake in Isuzu, as well as joint-ventures with two in China (GAC Toyota and
Sichuan FAW Toyota Motor), one in India (Toyota Kirloskar), one in the Czech
Republic (TPCA), along with several "nonautomotive" companies. Toyota Motor
Corporation is part of the Toyota Group, and is one of the largest conglomerates
in Japan. It, has become one of the most successful companies in the world
today. In 2010, Toyota was ranked number 5 of the world's largest corporations
(Fortune, 2010) and number 11 of the best global brands (Interbrand, 2010). It is
also considered as the most profitable organisation of automobile (Datamonitor,
2010).
The success of the organisation can be attributed to both the effective
implementation of Toyota’s generic strategy and its intensive growth strategies as
well as its core competencies which are:
 Quality - Its ability to produce automobiles of great quality at best
prices, thereby providing value for money to the customers. This core
competence of quality can be attributed to its innovative production
practices.
 Production system (“Toyota Production System” or TPS) – The
system is based on the Lean Manufacturing concept and includes other
innovative practices like Just in Time, Kaizen, and Six Sigma.

Toyota Motor Corporation utilises knowledge management for managing its different
business operations and processes. By utilising knowledge management the
corporation has succeeded in gathering, organizing, sharing and analysing its
knowledge regarding resources, documents, and people skills.
3. ORGANISATIONAL LEARNING AND KNOWLEDGE MANAGEMENT
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According to Garvin (2003) a learning organization is an organization that

purposefully puts in place structures and strategies that facilitates learning for its
members with the purpose of continuously transforming itself to gain a
competitive edge in the market. It is an organization that is skilled in modifying its
behaviour to reflect new knowledge and insights. Internationally, organizations
have realized the importance of promoting learning within themselves because of
the role that learning plays in enhancing adaptability to change. Learning is a
practice that has been around for decades, however, according to Chaffy and
White (2011) the start of the “learning by doing” and “learning by experience”
process was during the Second World War when it was observed that the
building of the second aero-plane took less time and had fewer defects compared
to the first. It was at that point where a realization emerged that if organizations
managed the learning process better, then they can become more efficient.

Learning within organizations does not happen automatically, it requires the

establishment of a strong and directed learning culture that is supported by an
enabling system. Based on a paper by Chinowski and Carrillo (2007), learning
can be classified into two distinct categories. The first category refers to “when
and why” learning takes place and the impact of the process of learning. This
type of learning is normally driven by necessity and knowledge is gained in a
piecewise manner. The second category involves a dynamic process of
continuous learning where knowledge is proactively searched for before
necessity arises. At Toyota, both categories of learning are recognized, promoted
and supported by management having recognised that both categories cater for
different needs of the firm. Organizational learning within Toyota is intertwined
with knowledge management in such a manner that learning contributes to the
firm’s memory so that it not only influences current staff members, but also future
members because of the accumulation and storing of past experiences, norms,
successes and failures. Also, the process of targeted unlearning is promoted
since some practices and routines within the firm need to be unlearned so that
new learnings and practices can take place.

According to Sanchez (2005) there are five learning cycles, and in a learning
organization, managers will understand the dynamics that drive all five learning
cycles and will adopt knowledge management practices that assure that the
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function is effective and sustains the overall “learning loop” of continuous

organizational learning. The five cycles of the learning organization include:
 Individuals in the organization create new knowledge;
 Individuals and groups become interactive with, share, test and accept or
reject new knowledge developed by individuals;
 Groups interact with other groups to determine whether new knowledge
developed by a given group becomes accepted within the overall
organization;
 New knowledge accepted at organizational level is embedded in new
processes, systems, and the culture of an organization;
 New knowledge embedded in new processes, systems, and organizational
culture leads to new patterns of action by groups and individuals;

To develop a framework for organizational learning, the organisation needs to

consider the individual learning cycle and then integrate this into organizational
learning as illustrated in figure 1 below:
A simple model for organisational learning

Figure 1: A simple model for organisational learning (Source: Adapted from

Daft and Weick)
Data represents events that a person wishes to bring to the attention of others in
an organization. It may include quantitative and qualitative descriptions of events.
Information is created when data is converted to meaning which is evaluated by
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an individual using his or her personal interpretive framework. Knowledge is a

set of beliefs that individuals hold about cause-and effect relationships in the
world and within an organization. Organizational Knowledge beliefs are shared
among individuals in an organization to enable them to act on those beliefs and
work on processing useful information to the organization. Learning results in a
change in knowledge which leads to a change in content to an individual’s beliefs
about a causal relationship within the world and the organization. Organizational
learning occurs when there is change in the content or degree of belief shared
by individuals who jointly act on those beliefs within the organization.

3.1 Toyota’s knowledge management

There are three basic and essential organizational processes that must function
well in order for knowledge management to be effective:
 Maintaining learning loops in all organizational processes,
 Systematically disseminating new and existing knowledge throughout the
organization,
 Applying knowledge wherever it can be used in the organization,

Toyota Motor Corporation is the largest automaker by volume in the world.

Toyota manufactures and sells vehicles and spare parts globally. Currently
Toyota has 53 manufacturing companies in 28 countries. The company sells its
vehicles in more than 170 countries. The company has 364,445 employees.
Toyota prides itself with being recognized as an industry leader in manufacturing
and production.

Toyota follows a highly disciplined organizational knowledge management

practice. It is a continuation from personal KM approach from transferring
employees around its factories to transfer knowledge about their production
system. Their processes are documented in detail in the tasks that the team of
workers and each worker are asked to perform. The document includes content,
timing, sequence and output of each task. Issues that arise in the assembly line
are analysed and dealt with at the weekly Quality Circle Meeting where
suggestions on improvement of the process are discussed. These suggestions

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are then evaluated by their engineers and then formally incorporated into a
revised description document.

Transferring knowledge within a global organization is how Toyota uses the

personal knowledge approach. When a new factory is opened Toyota selects two
to three hundred new employees and invests in months of training and working
on assembly lines of Toyota’s existing factories. After completing several months
of studying the production system and working alongside experienced assembly
line workers, they are then sent back to the new factory site where they become
the core production team formed. Once these employees are repatriated they are
often accompanied by experienced line workers hundred or so long-term, highly
experienced Toyota production workers, who work alongside all the new
employees in the new factory to assure that knowledge of how Toyota’s
production process works is fully transferred to all employees in the new factory.
This is in comparison to “on the job training” where the experienced employees
try to pass on their knowledge, skills and experiences of the Toyota processes to
the new employees.

“Toyota’s also uses Quality Circles as a personal knowledge approach to

creating new knowledge. At the end of each work week, groups of Toyota
production workers spend one to two hours analysing the performance of their
stage in the production system to identify actual or potential problems in quality,
productivity, safety, etc. Through their discussions, each group proposes
“countermeasures” to correct identified problems and discusses the results of
countermeasures taken during the previous week to address problems identified
in earlier Quality Circle discussions. Through such interactions, Toyota
employees share their ideas for improvement, devise steps to test new ideas,
and assess the results of their tests. This knowledge management practice,
which is repeated weekly as an integral part of the Toyota production system,
progressively identifies, eliminates, and even prevents sources of process errors.
Improvements developed and implemented by Quality Circles over many years
have transformed Toyota’s production system into one of the highest quality
production processes in the world “(Spear and Bowen 1999).

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4. TOYOTA’S KNOWLEDGE MANAGEMENT PROJECT IMPLEMENTATION

According to an article by Robert Simmons (2013) a winning knowledge
management program increases staff productivity, product and service quality,
and deliverable consistency by capitalizing on intellectual and knowledge-based
assets. For a knowledge management program to be successful, technology
should not be the only aspect that is considered. An organization should also
consider:
 People - represent how the ability of individuals can be increased within the
organization to influence others with their knowledge,
 Processes - involve how an organisation establishes best practices and
governance for the efficient and accurate identification, management, and
dissemination of knowledge,
 Technology - addresses how an organisation chooses, configures, and
utilizes tools and automation to enable knowledge management,
 Structure - directs how organizational structures can be transformed to
facilitate and encourage cross-discipline awareness and expertise,
 Culture - it embodies how an organisation can establish and cultivate a
knowledge-sharing, knowledge-driven culture,
Figure 2 below indicates a typical KM implementation plan utilised by
organisations:

Figure 2: KM Implementation Model (Source: www.community-of-knowledge)

Toyota Motor Corporation utilises knowledge management for managing its

different business operations and processes. This has enabled the corporation to
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be able to gather, organise, share and analyse its knowledge regarding

resources, documents and people skills. With this increase in its operations
base, the corporation confronted troubles related to management of its
resources. For resolving this trouble, the company made use of knowledge
management as it become aware of its significance and need (Ichijo &
Kohlbacher 2006).

In view of the significant growth in operations, the corporation utilised several

approaches such as Lean production, and Total quality management. Toyota’s
success in global markets has been based on the company gaining competitive
advantage through the implementation of innovative and ground – breaking ideas
on its production floors. Toyota has changed from simply transferring knowledge
to tapping tacit local knowledge by its local staff in foreign markets. Additionally,
Toyota has experienced a global lead in automotive industry with its new strategy
‘learn local, act global’ as well as by applying a knowledge-based approach to
marketing. Toyota has adopted tacit knowledge approach for transferring
information within its organization (Lehaney, 2004). Toyota applied this approach,
when it opened a new factory and wanted to transfer the knowledge of production
system to new employees (Powers, 2006). Processing of tacit knowledge
changes understanding and provides different contexts that affect the meaning of
knowledge collected through tacit approach. Under this approach information and
knowledge is shared to the employees of the organization to enhance learning.
Additional under this approach information is shared orally as well as employees
learn by their observation. Sometimes experts were also interviewed under this
approach.

The three major characteristics of adopting knowledge-based marketing

approach which includes creation of strategic knowledge in the organization,
lessons learned for global knowledge management and various implications were
provided by the approach. Toyota’s IMV (Innovative international multi-purpose
vehicles) project was one of the innovative strategic decisions taken by the
company. This led to knowledge creation, product development and huge
production to Toyota. The emergence of new strategy was also valuable for the
company which stated the following: ‘learn local, act global’. It has reflected
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outstanding sales performance of Toyota along with increased profits (Eardley

and Uden, 2011). The knowledge-based marketing has connected the customer
knowledge to the capacity of Toyota to address their needs. It has deliberated on
various internal experiences, skills and attitudes of employees. With the help of
this management knowledge approach, Toyota has made the necessary
customer values and information transparent. This approach has enabled easy
access of information within the organization and has opened the ways towards
success and profitability. Toyota has also experienced the benefits of long term
profitability and growth for the company along with increased competitiveness.
Implementation of the knowledge-based approach has helped Toyota at the time
of globalization in managing its core competencies. Toyota additionally brought
the concept of front line management and global knowledge creation with the
help of its ‘learn local, act global’ strategy. It has overcome various challenges by
applying tacit knowledge approach to marketing (Green, Stankosky and
Vandergriff, 2010). This made it easy for Toyota to identify and reuse the
knowledge resources within the global operations. Toyota has a strong market
orientation which has resulted in its product success. It has also experienced
profitability, high market share and sustainable competitive as a direct result of
implementation of the knowledge-based marketing approach, as the approach
focuses on exploitation which means sharing and exploration meaning creation.

4.1 Success Factors of Toyota’s knowledge management project

Based on the factors and evidence presented above, the KM implementation at
Toyota was a success as it considered some important factors in the project plan.
To ensure that a KM implementation plan has a tacit and explicit approach. Toyota
also followed the four steps required in implementing a KM project in the
organisation which are:

- Collection
- Retention
- Distribution
- Application

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Critical reasons for knowledge management success in general can be attributed to

the following: -
 A stated rationale for knowledge initiatives
 KM efforts connected to both mission and operations of the institution
 Setting the objectives at the right level
 Understanding the basic components of KM
 Working with combinations of strategies
 Defined roles and responsibilities
 Progress based on experimentation
 Planning for sustainability of knowledge mobilization processes
 Enhance reward and recognition system to include learning and
knowledge sharing competencies.
 Aligning KM approaches to suit organisational culture.
 Developing a well-designed KM Implementation Plan (people, process and
technology).
 Developing KM metrics (especially outcome measures)
 Educating staff about what types of knowledge are valuable and how they
can be utilised.
 Integrating knowledge sharing into everyone’s job description

As additionally stated by Mohd (July, 2009) reasons for the success implementation
of knowledge management are:

- Senior management support

- Clearly communicated KM purpose/goals
- Linkages to economic performance
- Multiple channels for knowledge transfer
- A knowledge friendly culture
- A solid, technical and organisational infrastructure
- A standard flexile knowledge structure
Other abstract and technical factors that must be considered are:

- Ability to identify, capture and transfer critical, tacit knowledge

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- Knowledge representation, storage, search, retrieval, visualization and quality

control
Through the following initiatives Toyota established and embedded knowledge
management practices and approaches when implementing KM in the
organisation:

Tacit knowledge transfer to employees

- Establishment of the Toyota University,

- Organisational learning,
- Training of dealers and employees,
- New employees are trained by working with highly trained managers and
skilled worker groups, enabling a better understanding of the “Toyota way”,
- A knowledge friendly culture by getting and making use of customer opinions
collected by dealers and customer assistance centres, which was established
in 2012,
Explicit knowledge transfer
Adoption and Implementation of the Toyota Production System (TPS)
 Maintaining a continuous flow of products to adapt flexibility to changes
in demand,
 Linking all production activities to real demand through the
implementation of Kanban and Just-in-time,
 Organising manufacturing and logistics processes, including interaction
with suppliers and customers,
The Learn Local, Act Global Strategy
 Learning the local needs, cultures and requirements and adopting to
those while ensuring global coordination,
 Connecting tacit local knowledge from various global sites to finally
share and apply it on a global scale,
 Ensuring effectiveness when entering new emerging markets,

To ensure continuous improvement within the organisation, Toyota must continue to

assess the level and influence of KM which include culture, leadership,

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organizational intent, knowledge processes, organizational structure and technology

infrastructure as stated by Albers (March 2009).

The spider diagram in figure 3 below is used to evaluate the health of each of the
organizational factors. The farther out on the spider the more the factor supports
KM.

Figure 3: Organisational factors that influence Knowledge Management (Source:

www.tlainc.com)

5. CONCLUSION

As stated by Mohd (July, 2014), “the importance of knowledge is increasing day

by day in the society and because of this, a shift is occurring in individuals
thinking regarding business innovations”. Therefore, by making use of
knowledge management as a management tool, organisations can effectively
improve all its existing flaws of KM regarding its business operations. When
implementing KM, project plans should focus on the user in terms of how KM can
improve a worker’s daily work. Furthermore, at the strategic level the project
management plan must be regularly updated and utilised as a framework for the
monitoring of the knowledge management program.
The most substantial aspect that needs to be improved is sharing knowledge and
it can be done only if knowledge management is used as a management tool.
The most substantial KM intervention that can be used by Toyota Motor
Corporation is the use of KM as a management tool (Jost 2010).

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