The Leadership Style of Hiroshi Okuda: Case Study Analysis

Discussion of Different Leadership Styles

Hiroshi Okuda is not afraid to speak his mind or impose radical change in an

organization. And because of these traits he is memorable at Toyota Motor

Corporation where he is the chairman of the board. Prior to becoming chairman,

Okuda served as Toyota’s president – the first non-family member in over 30 years to

head the company. He also is unusual among other Japanese executives because, in

Japan, executives are supposed to be unseen. Okuda justifies his outspoken and

aggressive style as being necessary to change a company that had become lethargic

(i.e. tired) and overly bureaucratic.

Okuda moved ahead at Toyota by taking jobs that other employees did not want. For

example, in the early 1980s the company was trying to build a manufacturing facility in

Taiwan, but the Taiwanese government’s demands for high local content, technology

transfer and guaranteed exports convinced many at Toyota that the project should be

scrapped. Okuda thought differently. He successfully lobbied for the facility in the

company, and it is now very profitable for Toyota. As Okuda noted, ‘Everyone wanted

to give up. But I restarted the project and led it to success.’ His drive and ability to

overcome obstacles were central to his rise in the company’s hierarchy.

When Okuda ascended to the presidency of Toyota in early 1995 the company

was losing market share in Japan to both Mitsubishi and Honda. Okuda

attributed this problem to several factors. Toyota had been losing touch with

Japanese customers for years. For example, when engineers redesigned the

Corolla in 1991 they made it too big and too expensive for Japanese tastes.

Then four years later, in an attempt to lower costs significantly, they stripped

out so many features in the car that the Corolla looked too cheap. Competitors,

on the other hand, had also done a much better job of identifying the boom in

recreational vehicles – especially the sport-utility market. Toyota’s burdensome

bureaucracy also bothered Okuda. A decision that took only five minutes to 8

filter through at Suzuki Motor Corporation would take upwards of three weeks

at Toyota.

In his first 18 months on the job Okuda implemented some drastic changes. In a

country where lifetime employment is consistent with the culture, he replaced

nearly one-third of Toyota’s highest-ranking executives. He revamped Toyota’s

long-standing promotion system based on seniority, adding performance as a

factor. Some outstanding performers moved up several managerial levels in

Analysis of Hiroshi Okuda's Leadership Style

one go – something unheard of in the history of the company.

Okuda also worked with the company’s vehicle designers to increase the speed

at which the vehicle went from concept to market. What once took 27 months

was shortened to 18 months. And now the company is making a custom car

within five days of receiving an order.

Finally, Okuda is using the visibility of his job to address larger social issues

facing all Japanese businesses. For instance, he accused Japan’s Finance

Ministry of trying to destroy the car industry by driving up the yen’s value. And

he has been an audible voice in the country, condemning the lax lending

practices that forced Japanese banks to write off billions of dollars in bad loans

and led, in part, to that country’s economic crisis in the late 1990s and early

2000.

Unfortunately, some of Okuda’s actions may have backfired. It has been

suggested that the reason he was removed as president of the company in June

1999 was that he had overstepped the boundary at times with his blunt

demands for change; and his refusal to bail out other members of the Toyota

keiretsu may have offended the founding Toyota family. However, even though

he was no longer president, his strategic leadership helped him to be appointed

to the chairman’s job.SOURCE: Robbins, Bergmann, Stagg and Coulter 2006, p600, Pearson

Questions:

Answer all four (4) of the following questions.

1. Explain the different leadership styles (not theories) defined in the academic

literature and discuss what style of leadership is the most appropriate in different

environmental situations and with different categorisations of employees.

2. Based on your answer to Question 1 (above) how would you describe Hiroshi

Okuda’s leadership style/s? Cite specific examples in the case study that support

your choice.

3. Explain the terms ‘transactional’ and ‘transformational’ leadership. What form did

Hiroshi Okuda exhibit? Cite specific examples in the case study that support your

choice.

4. When a company is in crisis, do you believe that a radical change in leadership is

required to turn the company around? Why? Why not?9

Your answers to the Case Study should be presented as four (4) distinct answers that are

presented with a covering introduction to the whole case study (no more than 150 words). You

should divide your assignment into a brief introduction, discussion (of each of the four

questions-up to 450 words-no more-on each question) and brief conclusion section to the case

study (no more than 100 words). Reference list is not included in word count.

The objective of the exercise is to enable you to develop and present an argument which is

convincing and well supported and is within word constraints.

The answers should be written in paragraph form using appropriate headings and sub-headings

based on your reading of the case study and additional research. Please ensure that it is

thoroughly and correctly referenced using the Harvard referencing system. It is expected that

students would use a minimum of 6 different reference sources in the body of this

assignment. Of the 6 reference sources, at least one should be an article from a scholarly

journal. Where less than 6 references are used within the body of the assignment it would be

difficult to achieve a grade higher than P2. Assignments that are not correctly referenced will

incur heavy penalties. See course site for Harvard referencing guide. Please note that there will

be some useful references on the course site to assist you

Please conform to the following:

ï‚· use Font 12

ï‚· Times New Roman font only

ï‚· 1.5 line spacing

ï‚· reference list on a separate page after conclusion

ï‚· use Harvard Style of referencing ONLY

ï‚· do not use foot-notes

ï‚· print word count at the end of your assignment (before the ‘References’ section).

Occasionally assignments go missing during submission and return. It is expected that students

will submit to Turnitin as well as a hard copy to your tutor or to assignment box.

Assessment of your assignments will take into account:

ï‚· relevance of your answer to the question or task set

ï‚· clarity of expression

ï‚· supporting documentation for arguments

ï‚· proper acknowledgment of documentation and use of a bibliographic convention

ï‚· logical planning and sequence

ï‚· use of inclusive language

ï‚· overall presentation, including correct grammar, spelling and punctuation

ï‚· comprehensive coverage reflecting engagement with set readings, text(s) and other

relevant materials