In a traditional auto company, it is difficult to pin down where the real responsibility for a new vehicle development program lies. Many departments and many executives have partial responsibility. If you want to find who has responsibility for a new vehicle development program at Toyota, find the chief engineer (CE), because the buck stops there. In many ways, the CE epitomizes the Toyota approach to leadership (as seen in The Toyota Way in Action: The “No Compromises” Development of Lexus and The Toyota Way in Action: New Century, New Fuel, New Design Process—Prius).
Traditionally, the importance of a person at a company directly relates to how many departments or direct reports he or she has. This is the hierarchy of top-down management. Judging by this standard, the Toyota’s CE is a very unimportant person. Although thousands of Toyota associates work on a new vehicle program, the CE has perhaps only a half-dozen people formally reporting to him. This is because Toyota uses a matrix organization structure in engineering.
Vehicle centers I, II, and III each focus on a family of products—rear-wheel drive cars, front-wheel drive cars, and utility vehicles/vans. The functional groups within each center, like body engineering and chassis engineering, are technical specialty (functional) groups with their own general managers. The general managers control the engineers by assigning them projects, generating their performance evaluations, and the like. The CE controls the vehicle program and is responsible for the results, but not the people who work on the project. The CE has to depend on all of the functional groups to supply the people and get the work done. While it is an American adage that managers must have authority commensurate with their responsibility, the CE system works contrary to this belief and the role would be uncomfortable for most U.S. managers.
John Shook, former Toyota manager and a lifelong student of TPS, described this system to me as “responsibility without authority” and a common practice within Toyota. At Toyota, formal authority is typically one level up from the responsibility. This forces the person responsible, who has no formal authority, to defend his or her ideas, work through other people, and convince the person with formal authority that the ideas are correct. The only defense for taking action is to present the real facts of the situation to the formal authority. This process forces managers either to uncover the facts and develop a compelling case for their position or to go out on a limb and prove they are right through demonstrated success. For example, in the case of the development of the first Lexus, Ichiro Suzuki pushed the Lexus beyond the original conception of senior executives as a vehicle only for the American market and pushed its performance characteristics beyond what the senior executives in charge of the functional groups thought was possible.
Why does the CE system work at Toyota? Clark and Fujimoto (1991), who wrote an influential book on Toyota’s product development system, referred to the CE as a “heavyweight project manager.” This is in contrast to U.S. companies, where project managers are often “lightweights” with little real authority. But the CE does not have formal authority in the American sense by design. The checks and balances of the system force the CE to sell his or her ideas. On the other hand, the CE is a powerful and influential person who is empowered through multiple sources, including:
- Being blessed by top executives at Toyota. The CE has the ear of these executives and they are committed to getting the CE the resources to succeed.
- Controlling the vehicle program. The functional groups where the engineers reside are all in support roles to the development process, which is controlled by the chief engineer and which is the birthplace of all the exciting new design programs.
- Leading the program. CEs are selected for this honorific position because of a history of excellence in leadership. Moreover, they get to do it again only if they are successful on the last program.
- Having proved that you are an exceptional engineer. You also rise to this position because you have demonstrated exceptional technical engineering capability. CEs have much broader training and exposure across several engineering specialties than most other engineers at Toyota.
- Being a critical link between engineering and customer satisfaction. Toyota has managed to build a culture of individuals focused on customer satisfaction and they recognize the CE as a critical link in that commitment.
I think that the phrase “heavyweight project manager” does not do justice to the important role the chief engineer plays. Suzuki was known as the Michael Jordan of chief engineers. This reputation came from repeated technical achievements that demonstrated remarkable technical skills and engineering intuition. At Toyota, the CE is someone who is in the trenches of engineering and knows how to “play the game.” He or she exemplifies what an excellent engineer is through actions and leadership.