The two pillars of the Toyota production system are autonomation and just-in-time.

Autonomation was taken from the ideas and practice of Toyoda Sakichi. The Toyota-type auto-activated loom, which he invented, was fast as well as equipped with a device to automatically stop the machine should any one of the many warp threads break or the weft thread run out.

A major condition for production under the Toyota production system is the total elimination of waste, inconsistency, and excess. Therefore, it is essential that equipment be stopped immediately if there is a possibility of defects.

From Toyoda Sakichi, we learned that applying human intelligence to machines was the only way to make machines work for people. The following is an excerpt from an article by Haraguchi Akira entitled “Conversation with Toyoda Sakichi”:

The textile industry at that time was not as large as today’s. Mostly, older women wove at home by hand. In my village, every family farmed and each house had a hand-weaving machine. Influenced by my environment, I gradually began thinking about this hand-weaving machine. Sometimes, I would spend all day watching the grandmother next door weaving. I came to understand the way the weaving machine worked. The woven cotton fabric was wound into a thicker and thicker roll. The more I watched, the more interested I became.

Toyoda Sakichi was talking about the spring of 1888 when he was 20 years old. Reading this, I was impressed by the way he observed all day, gradually understanding the way the loom operated and becoming more interested as he watched.

With any problem, I always ask why five times. This Toyota procedure is actually adapted from Toyoda Sakichi’s habit of watching. We can talk about work improvement, but unless we know production thoroughly we can accomplish nothing. Stand on the production floor all day and watch — you will eventually discover what has to be done. I cannot emphasize this too much.

Opening our eyes and standing in the manufacturing plant, we really understand what waste is. We also discover ways to turn “moving” into “working,” activities that always concern us.

“Just-in-time” came directly from Toyoda Kiichirō. This second Toyota pillar did not have the same objective as the auto-activated loom that prompted the idea of autonomation. It posed different sorts of difficulties.

Toyoda Sakichi went to America for the first time in 1910 when the automobile industry was just beginning. The popularity of cars was rising and many companies were attempting to produce them. Ford had been selling the Model T for two years when Toyoda Sakichi saw them in the marketplace.

Looking back, it must have been tremendously stimulating, especially to an inventor like Toyoda Sakichi. During his four months in America, he must have grasped what an automobile was and how it could become the feet of the people. On his return to Japan, he often said we were now in the era of automobiles.

In agreement with Toyoda Sakichi’s wishes, Toyoda Kiichirō went into the business of cars. His understanding of the automobile industry and America’s role was astute. He realized the great potential as well as the difficulty an automobile manufacturer would encounter dealing with countless peripheral firms and developing a compatible business system.

I was strongly affected by Toyoda Kiichirō’s words: “just-in-time.” Afterwards, I wondered about how he came up with the idea. Of course, I can never be positive because I couldn’t ask him directly. But it is clear he thought a great deal about how to surpass America’s highly developed automobile production system.

Just-in-time is a unique concept. Considering how difficult it is to understand even now, I cannot help paying respect to Toyoda Kiichirō’s rich imagination.

Both Toyoda men had a strong, unyielding spirit. Toyoda Sakichi’s was exposed, while Toyoda Kiichirō seems to have kept his hidden.

Statements made by Toyoda Sakichi between 1922 and 1924 strongly address the idea that Japanese people should challenge the world with their intelligence:

Presently, white people question what contributions Japanese people have made to modern civilization. The Chinese invented the magnetic compass. But what invention did the Japanese make? Japanese people are merely imitators. This is what they say.

Therefore, Japanese people must address this situation seriously. I am not saying to fight, but we must prove our intelligence and clear ourselves of this shame.… Rather than stirring up hostility by competing internationally, we should progress enough to show our potential.

We had Taka-Diastase² and Dr. Noguchi Hideyo.³ But these achievements were made under the guidance of white people — with their help and the use of their facilities. I say we should achieve greatness through the capabilities of our own people, without assistance from outsiders.

In Toyoda Sakichi’s statements we see a tremendous enthusiasm combined with insight. When Toyoda Kiichirō told us to catch up with America in three years, he did not show the same fighting spirit. However, his determination clearly reveals an aggressive nature. These two men are great leaders in Toyota history.

In November 1935, at the Toyota model car exhibition held in the Shibaura section of Tokyo, Toyoda Kiichirō repeated what his predecessor had once told him, “I served our country with the loom. I want you to serve it with the automobile.” This was his dying wish and a story people still love to tell.

On March 26, 1952, a short time before Toyota’s automobile enterprise went into full-scale operation, Toyoda Kiichirō passed away. It was indeed a great loss. I believe just-in-time was Toyoda Kiichirō’s dying wish.

“Toyotaism” was established by Toyoda Kiichirō. He placed the following conditions on the automobile business:

Toyoda Kiichirō wrote an article, published in September 1936, entitled “Toyota to the Present” that provides a good description of Toyotaism. In the following excerpt, he makes some provocative points:

At last, Toyota cars are out on the market. They are not here today because of a simple engineering hobby. The cars were born from the intense research of numerous people, a synthesis of ideas from different fields, and from dedicated efforts and countless failures over a long period of time.

Would it be possible to make cars for the general population of Japan? Three years ago, many people would have said no. The most serious doubters were those experienced in automobile manufacturing.

We started work early on engine design and research. Most preparation was finished in 1933, and on September 1, the tenth anniversary of the great earthquake,⁴ we formally became an automobile production company.

People called the venture reckless. We were warned how difficult it was to operate an automobile business. However, we had known this for several years and had worked hard to prepare ourselves. We firmly believed that Toyoda’s strength and experience in automatic loom manufacturing would make our endeavor possible.

Problems differed from those of weaving machines, however, and we realized the new business would be difficult to create. So, for three years we managed the business under the guise of a hobby.

But the unexpected lapse in automobile manufacturing forced us to take a business attitude — not a hobbyist’s. The business now involves an obligation to the country. Whether we like it or not, we have to make it work as soon as possible.

Since formally deciding to go into car manufacturing, what have we done? … I will describe some of our preparations of the past three years.

The most important area in automobile manufacturing is, without a doubt, the problem of materials. To engage in car production without solving the materials problem is like building a house without a foundation.

In Japan, the steel industry is fairly advanced and can provide materials suited exclusively for automobiles. But turning steelmaking into a business would require a considerable investment as well as considerable research. No materials maker would be patient enough to provide the necessary assistance. And even if there were, they could not continue the necessary research indefinitely.

Materials progress means engine improvement. And progress in engine development means materials must be improved. To obtain the materials essential to engine research in Japan, we must manufacture them ourselves.

Regardless of how well an engine is made, its life will be short, its price high, and its performance poor if proper materials are not used at the right time. If we cannot make the materials, we cannot do the necessary research on the automobile. To do it would cost Japan over ¥2 million ($500,000).

Is it even possible for Japan to make the materials? The fastest way to get an answer was to ask Professor Honda Kōtarō.⁵ So, I went to the city of Sendai and asked him. He said that, at present, Japan did have the capability and that there was no need to hire foreigners. Greatly relieved, I immediately set out to build a steel mill.

Some visitors to our company ask what percentage of our cast products pass the quality test. To sustain the business, 95 percent must pass. I felt that if we were in the sorry position of having to worry about the quality of our cast products, we might as well quit making cars. So, I encouraged our plant workers by saying it would be a shame for Toyota not to make its own cast products.

We failed many times before successfully blowing cylinders into the dies using die presses with a pass ratio of over 90 percent. We eventually succeeded, however, with the old die presses we had used with electric furnaces to cast thin parts for the looms. Even so, 500 to 600 cylinders were rejected.

After making 1,000 pieces of an item, most workers become fairly skilled and defect-free. But the first several 100 pieces will contain some good and some bad. Until skills are established, we have to be prepared to discard anything borderline. This is how materials problems are satisfactorily solved.

Toyoda Kiichirō insisted on the highest quality equipment and worked to use them effectively:

We know machine manufacturing can be done using proper tools. But the problem is to produce them cheaply.

Machining cast products is not much different from manufacturing textile machines. Textile machines must be mass produced to a considerable extent. The same is true of automobiles. With textile machines, there are many varieties. In the case of the automobile, types may be fewer but greater accuracy and more specialized machines are necessary, such as fine boring and honing machines.

We can get ideas in other countries by studying the new manufacturing equipment being developed by other automotive machine makers. In this area, it is obvious that advanced equipment will enable us to make inexpensive products as good as those produced elsewhere.

Although I feel plant facilities can be as simple as barracks, I try to buy equipment that can perform perfectly — regardless of cost. We really have no alternative but to buy machines costing ¥50,000 ($12,500) to ¥60,000 ($15,000) each. If we are not prepared to spend money for good machines, we should not be in automobile manufacturing.

At the time, I tried to save money by using barracks as plants and reducing research spending. Regardless of how much I was laughed at, I would have run out of money had I continued buying things that were not needed. Eliminating a lot of small wastes enabled us to afford good equipment.

Machinery must be chosen carefully. To avoid ending up with wrong machines and wasting ¥30,000 ($7,500) to ¥50,000 ($12,500), we went to America to examine them first.

Once this expensive equipment is acquired, we have to learn to use it correctly. So, we study tool use because regardless of how good a machine is, we cannot produce large quantities accurately without proper tools. We need tools intended for mass production — and their design and production can easily take three to four years. This is what we have been doing since Toyota first bought the equipment three years ago.

After buying millions of yen worth of machinery, hundreds of people worked hard for three years without putting a single car on the market. Stockholders began to worry and wonder when cars would start rolling out. Those in charge also felt that somehow we should produce one or two cars just to show we were really doing something.

However, a car made this way would not be of the highest quality. This point is difficult for managers and capital investors to understand. If we hadn’t had managers with enough courage to make a bold commitment to car manufacturing, we would not have found investors to trust the engineers and leave everything to them.

It would be easy if money was guaranteed once cars were produced. But money is always lost the first few years which is why this business is so difficult to establish. Anyone who plans such a endeavor and doesn’t look ahead is foolish.

In the first few years, many managers thought this way. They considered me overly confident with no thought of the future.

It is easier to operate a tried and true business that uses known methods and will clearly make money. Starting a difficult business that no one else will touch is a challenge. But if it fails, the fault is entirely yours — and you can commit harakiri with a clear conscience.

I will go as far as I can with the automobile. If I do anything, it will be to make cars the public can afford. I know it will be difficult, but this is where I started.

Toyoda Kiichirō’s mission, while laying the foundation of the automobile business, was to develop a Japanese production technique. This required intelligence.

One reason it was difficult to develop an automobile industry in our country was that the car body could not be mass produced as in America. And it is difficult to establish the industry making car bodies by hand. This problem was always the most agonizing.

Someone suggested that we hire a foreigner. But that amounted to importing America’s mass-production system and that didn’t fit our situation. At the time, we lacked almost everything pertaining to this industry and were actually making parts by hand.

Japanese people are by nature craft-oriented and make many things by hand. Mass production, however, requires using die presses. But we were not going to make tens of millions of cars as in America, and we could not invest as much money to make dies. Somehow, we had to combine the die presses and hand-finishing in a way that avoided copying the American method exactly.

I had to thoroughly examine the industry to see how far it had advanced. So I toured the plants in the Tokyo area with the guidance of Kawamata Kazuo. On a tour of Sugiyama Steel where they were making fenders with die presses, I received some unexpected help.

There could have been other plants doing similar work but I asked Mr. Sugiyama ifhe would be interested in making the mold for the car body. He said yes. Because it was the first time and we had no equipment that could do it, we studied various methods and did the finishing by hand.

Other countries, of course, have machines for making molds. Some manufacturers specialize in making models for different companies and, unlike Japan, can afford to install thousands of such machines. Because hand-finishing would be faster and less costly, however, we decided to handcraft it this time and produce a rough mold in about a year and a half. This area needs future research.

The next point is that top-grade sheet metal greatly facilitates making the molds for the die presses. We asked Professor Mishima Tokushichi to study sheet metal. During a foreign tour, he learned some advanced techniques that will enable us to greatly improve our products. We are experienced in coating and lining and will require no assistance in those areas.

Lastly, in assembly, we need equipment, setups, and skill in the assembly area. Japanese people are adept with their hands and training will be no problem. In the near future, I am certain we can make better cars for less than foreign manufacturers.

With the May 1936 enactment of the automobile manufacturing business law, domestic car manufacturers came under government protection and assistance. Under this law, business in the automobile industry required a government permit and the domestic automobile industry’s growth was to be protected by suppressing the foreign car assembly businesses. This was a powerful government protectionist policy.⁶

However, Toyoda Kiichirō recognized that the market always demands reasonably priced products. Although he believed the legislation would prevent wild competition, he feared that, if relied on too heavily, it would eventually force customers to abandon the domestic industry. As a personal warning, his writings reveal his concern for self-responsibility on private business.

Using our present knowledge, we can at least make the shape of an automobile. Future progress will depend on academic research. Today’s problem, however, is that, regardless of how good a car we make, it will mean nothing unless we make it economically.

This problem eventually relates to price. What quantity must we produce in Japan to enable us to sell domestic cars at reasonable prices? No one can know this figure with certainty.

Cars have to be sold at prices that are reasonable today. But what is reasonable? We know our cars will not sell unless they are cheaper than foreign models. We might manage to sell 50 to 100 cars a month by appealing to patriotism. But selling 200 or 500 would be difficult. In the end, prices must be competitive. A consumer automatically derives pleasure from buying something at a lower price.

We know from experience in purchasing equipment that prices are sometimes driven down more than necessary. Cars sold to government agencies may bring the desired price, but in other cases prices must be lowered. Appealing to patriotism here would be useless. If prices are not kept low, we will be unable to sell hundreds of cars a month.

Good marketing and skillful advertising might allow us to deceive the buyers for a while — but not for long. As people learn the value of domestic cars, they will buy only if the price is commensurate. They won’t buy just for the sake of the country.

It is a new product and we must invest the money to produce it well and keep prices low. To make and sell cars domestically, manufacturers must carefully consider whether or not they can make ends meet with such prices.

Fortunately, the automobile manufacturing business legislation has been enforced to a certain extent. However, if it increases the price of both foreign and domestic cars, we will have only ourselves to blame. The law should enable domestic car production to improve so that consumers can pay less. On this point, we have a great responsibility, but, at the same time, we cannot offer low prices at the beginning.

Can we actually produce economical cars domestically? Low prices are fine — but if they mean poor materials, poor quality, and eventually unusable products, nothing is achieved. How do we break through this dilemma? The automobile manufacturing business law would be useful in reducing the pressure of competition, especially the dumping practices of the well-established foreign companies. But, in fair competition, we must rely on our own capability.

Toyoda Sakichi and Toyoda Kiichirō had an international business perspective and excelled at perceiving the world as a whole. They had the foresight to go always to the heart of the matter. Both spent their lives mainly in the production fields, looking at things realistically, calmly, and objectively.

A person standing in a production area can end up cleaning the corner of an enormous box with a toothbrush. Toyoda Sakichi and Toyoda Kiichirō were different and always studied the entire picture. They had the overview of chessplayers and were constantly designing strategies. They knew how to checkmate.

In Haraguchi Akira’s interview, we discover that Toyoda Sakichi was an inventor of great genius:

He would not read catalogues or books. He would not borrow from newspapers or magazines. He never asked for information or borrowed from others to help in an invention. He never studied mathematics or physics. His thinking and inventing were accomplished completely by himself. No mathematics teacher or mechanical expert could find fault with his inventions. His logic fit all scientific principles.

Because his inventions sprang directly from actual practice, they did not always follow scientific principles. In application, however, his inventions produced better results. He put his ideas into actions, not words.

He didn’t use consultants or assistants. He was independent and alone. He did not have a special research lab or any reference materials at his side. The living room in his home was his laboratory and office. He had no visitors and he wouldn’t call on anyone. From morning till night, he would sit in the room, looking up at the ceiling and down at the surface of the mattress, pondering things quietly. In this way, he generated over one hundred patents.

Find a subject to think about, stare at an object until a hole is almost bored through it, and find out its essential nature. Stand and watch a neighborhood grandmother’s hand loom for a whole day. This was how Toyoda Sakichi was inspired and tracked down the facts.

He went abroad to make first-hand observations. We cannot help but be impressed by his progressive nature. He would expand an idea to its fullest capacity and, the next moment, compress it to its smallest form. In terms of chess, he had both an overall view of the chessboard as well as checkmating capability.

In 1911, Toyoda Sakichi toured Europe and the United States. Prior to that, under adverse and complicated circumstances, he quit the Toyoda Spinning and Weaving Company. But in America, when he saw the Northrop and Ideal System automatic looms, deemed the period’s outstanding achievements, he recognized the superiority of his own inventions. Thus, after traveling abroad, he re-established himself and again demonstrated his unyielding spirit.

At that time in America, he also saw cars. He decided at once to go into automobile manufacturing after the automatic loom. In his mind, his looms and the automobile were strongly connected.

Toyoda Sakichi’s auto-activated loom and the ring-type loom, had things in common with automobiles. Both functioned automatically using machine power. Also, in terms of idea and application, the ring-type loom overcoming the limitation of thread length in textile making was similar to the unlimited nature of an automobile running freely on a road without tracks.

Toyoda Sakichi’s imagination, although boundless, was always realistic. Returning from America, he is said to have announced, “From now on, it’s the automobile.” Thus, in his mind, besides looms, a chessplayer’s view of the Japanese automobile industry was forming.

The path from Toyoda Sakichi to Toyoda Kiichirō and then to the present Toyota Motor Company is the path of a developing and maturing modern Japanese industry. The line connecting them is the pursuit of a technology of Japanese origin.

In 1901, Toyoda Sakichi first thought about inventing an auto-activated loom. Twenty-five developmental years later, it was accomplished entirely by Japanese people. This was Toyoda Sakichi’s wish and it was fulfilled.

Going through his records, we find a fierce, challenging attitude toward Europeans, a sense of rivalry. He himself stated that it was an intelligent rivalry, a perception that was ahead of his time.

Toyoda Sakichi’s mission in life, business, and the world was to cultivate and train the natural intellect of the Japanese people, sell original Japanese products produced by this intellect, and increase the national wealth of Japan.

Toyoda Sakichi sold his own cultivated intellect in the form of his patents. Today we might call the development and production of Toyoda Sakichi’s auto-activated loom a highdensity, “how-to” industry.

Platt Brothers of England purchased the patent for the loom in 1930. It is a well-known story that the ¥ 1 million ($500,000) that resulted from this deal was spent on automobile research.

I am overwhelmed by Toyoda Sakichi’s tenacity in employing the Japanese intellect he regarded so highly. He believed Japanese business as well as the country would continue to lag behind the European-American world unless the creativity and original technology of Japanese people was discovered. Raising this national consciousness became his personal goal.

Japan’s role in today’s world of buying and selling commodities is very large. Actually, the role is sometimes too large and causes friction. Overcoming this problem will require politically facilitated agreements regarding quantities. When I think in purely economic terms, I conclude that we must export commodities with high added value that are marketable domestically as well. This means commodities demanding a lot of brain power, as Toyoda Sakichi used to say. Eventually, we may have to export intellect itself.

Toyoda Sakichi pursued and developed an original Japanese technology. I know no better example than Toyoda Sakichi, who did not confine himself to an ivory tower, but discovered things to study in real life, inventing and commercializing the auto-activated loom that attained the world’s highest level of mechanical design and performance. Although many great ideas emerge from the academic world, few inventions are born in industry or become the organizing principle of the industry itself. In Japan, especially, such examples are rare.

Taka-Diastase developed by Dr. Takamine Jōkichi was obviously a Japanese creation, as Toyoda Sakichi pointed out, but the work was done in a foreign laboratory. Although this does not lower its value, it does distinguish it from Toyoda Sakichi’s invention in how and where it was achieved. There were as yet few Japanese scientific achievements, and the soil to grow such achievements was not very fertile. For this reason, Toyoda Sakichi’s achievements were unique.

Touching upon Toyoda Kiichirō’s keen insight, in his article “Toyota to the Present” cited earlier, he said the quality of the sheet metal in the die presses greatly affects the making of the mold. It is much easier to make molds using top-grade sheeting. Dr. Mishima Tokushichi was asked to study this issue.

MK steel, invented by Dr. Mishima, was one of the few Japanese discoveries along with the ferrite or NKS magnet invented by Dr. Honda Kōtarō. Toyoda Kiichirō’s expectations were extremely high. Unfortunately, the German Bosch Company and General Electric of the United States made greater efforts to apply these inventions. Nonetheless, Toyoda Kiichirō watched them more carefully than other Japanese businessmen.

At every opportunity, Toyoda Kiichirō emphasized the importance of cooperation between academia and industry in establishing businesses like automobile manufacturing. He felt that, in everything, a strong foundation was essential.

Before his involvement with automobiles, Toyoda Kiichirō worked with weaving machines. Many of our elders helped Toyoda Sakichi with his great invention, putting it to work in the business. They worked behind the scenes, unknown to the outside world. In the early days, Toyoda Kiichirō worked busily at Toyoda Sakichi’s feet developing and commercializing the automatic looms, selling them to foreign businesses, and negotiating contracts, and so forth.

Although interested in automobiles from the start, it was perhaps during his tour of Europe and America in 1930, when he went to England to negotiate with Platt Brothers, that he was most strongly influenced. New York especially must have shocked him with its flood of cars.

When Toyoda Kiichirō returned home, the bedridden Toyoda Sakichi asked him to report in detail on the automobile situation in the United States and Europe. Then, Toyoda Sakichi instructed him to spend the ¥1 million from Platt Brothers on automobile research, an amazing act of courage and foresight. Toyoda Kiichirō must have been filled with tremendous excitement and a sense of responsibility when he received the instructions.

I look at the changes in the period from Toyoda Sakichi to Toyoda Kiichirō as a time of evolution. In the same sense, I look at the changes from Toyoda Kiichirō to the present time as a similar and continuing evolution. In this evolution, there are mountains and valleys. There are successes and failures. There are favorable and adverse situations. There is movement and stagnation. The flow of a stream is sometimes rapid and sometimes slow and sometimes the stream seems to be drying up.

In Toyota’s evolution, something in the stream has been continual, solid, and based on Japanese creativity. Toyoda Kiichirō realized better than anyone else that things cannot be achieved in a day. He was eager to learn the basics of automobile manufacturing as quickly as possible from General Motors and Ford. He acquired materials from the American producers to compare with those of Japan and then looked for a Japanese method of production.

In 1933, Toyoda Kiichirō announced the goal to develop domestically produced cars for the general public:

“We shall learn production techniques from the American method of mass production. But we will not copy it as is. We shall use our own research and creativity to develop a production method that suits our own country’s situation.”

I believe this was the origin of Toyoda Kiichirō’s idea of just-in-time.

True innovation — I mean real technological innovation — also brings some kind of social reform. Like Ford’s Model A, Toyoda Sakichi’s auto-activated loom also brought an industrial revolution.

The world of the automobile that Toyoda Kiichirō entered was, in a broad sense, a composite industry. To narrow the gap between the Japanese and American automobile industries and create a domestic production system, he had to explore ways to learn the basic technology, master the different production technologies, organize the production system, and find a uniquely Japanese production technology.

Thus, Toyoda Kiichirō must have clearly envisioned just-in-time as the first step in the evolution of a Japanese production system. It is, in fact, the starting point of the Toyota production system, constituting its skeletal structure. We can see, therefore, how the search for Japanese originality flows into the creative development of the Toyota system.

From Toyoda Sakichi to Toyoda Kiichirō to the present, Toyota as a company has managed to evolve in the midst of enormous internal and external changes, a process that might be called a dialectic evolution.