[Grandpa's Various Thoughts] The Innovator's Dilemma!?
My heart is Gen Z! My body is a Showa-era person past the age of 60! I am Grandpa, a supporter of Gen Z!?
Last week, I introduced how Tesla's "contrarian management" is working very well.
Of course, I want Toyota to do their best, but while writing the above, I remembered Clayton Christensen's "The Innovator's Dilemma," published in 1997.
The Innovator's Dilemma is a study based on the story of the decline of giant hard disk manufacturers, and it is a theory that points out that the progress of innovation can be a cause of decline for large companies.
In contrast to Tesla, Toyota is a large company that has achieved great success in manufacturing gasoline-powered cars equipped with conventional internal combustion engines. Toyota has provided excellent automobiles to the world, armed with reliability and quality.
Even for Toyota, the world's number one, when thinking in terms of the Innovator's Dilemma, the following dilemmas arise.
1) The Dilemma of Technology Selection
As a large company, Toyota clings to the internal combustion engine technology that has supported its success. On the other hand, Tesla was able to focus on new electric vehicle technology and lead the new market.
2) The Dilemma of Organizational Culture
Large companies have robust organizational structures. However, this becomes a barrier to adopting new ideas and approaches. Start-up growth companies like Tesla have the strength to make more flexible and rapid decisions.
3) The Dilemma of Judging Customer Needs
Even now, the demand for HEVs (Hybrid Electric Vehicles) is high, and in the short term, Toyota can achieve excellent financial results. Even if you tell employees to have a sense of crisis, it is difficult to change the thinking of employees who are earning 3 trillion yen in operating profit, receiving full-amount salary increases, and getting the highest pay in the manufacturing industry. Moreover, the customer need for conventional cars remains large, and it seems irrational to shift management resources to electric vehicles.
However, in the actual future, it is necessary to judge that relying on HEVs equipped with internal combustion engines carries significant future risks in the European market, where environmental awareness is increasing and the ban on gasoline car sales has been legally decided from the perspective of global warming countermeasures. However, even if it is understood in the head, it is difficult to foster a sense of unity within the company for a BEV (Battery Electric Vehicle) shift. That is the Innovator's Dilemma.
If Toyota clings to internal combustion engines and allocates resources focusing on immediate HEV demand, good financial results will likely continue until around 2026-28.
However, if they are late in shifting management resources to BEVs, the Innovator's Dilemma will surely become prominent as 2030 approaches, and a sharp drop in performance is possible.
Therefore, Toyota changed its president (a departure from being a "car guy" <internal combustion engine>) and declared that it will now implement measures to deal with the Innovator's Dilemma at an accelerating pace.
1️⃣ Aggressive investment in BEV development
Toyota will likely increase investment in R&D for electric vehicle technology. Now, without BEVs, there is no future multi-pathway (Toyota's omnidirectional strategy: doing HEVs, doing PHEVs, doing BEVs, and also doing fuel cell vehicles <hydrogen>) . The demand structure for automobiles will change completely toward 2030. A BEV shift is coming. When they can keep up without falling behind, the omnidirectional strategy that compensates for the shortcomings of BEVs will come into play. It becomes important to understand that the multi-pathway is not an end, but a strategy to gain benefits as a result.
2️⃣ Acceleration of partnerships and acquisitions
By partnering with or acquiring emerging battery manufacturers and technology companies as needed, I think Toyota is thinking about incorporating innovative technology quickly. Let's pay attention to Toyota's M&A announcements over the next year.
3️⃣ Strengthening brand value
Toyota needs to strive for disclosures that emphasize corporate resilience, including environmental initiatives and sustainability.
Even if it is a logical argument, it is not understood. It is thought of as a company passive about environmental response. It is not just investors, but consumers around the world that need to be won over.
I, Grandpa, think that an effort is needed to convey logical arguments in words that amateurs can understand. If they do that, not only will they change customer awareness, but they will also be able to increase brand value for stakeholders, including investors.
In order for Toyota to avoid the Innovator's Dilemma, it will be essential to promote transformation and innovation while maintaining flexibility and keeping an eye on future demand forecasts.
That means not only Toyota itself, but true vertical integration innovation involving subcontractors will be necessary. If they avoid that, won't they fall into the Innovator's Dilemma?
This has become a long post again. Thank you for sticking with me.
☆☆☆
(Gratitude)
▼ My article was introduced by Kishakoku-sensei's "Real World Teacher" and "您是老師". Thank you, Kishakoku-sensei.
Japan's post-war reconstruction may have been, in a sense, due to a brilliant adaptation to a disposable mass-production and mass-consumption society, but the revival of the Reiwa era might be driven by a transformation into a model society of resource circulation that does not dispose of things.
Thank you for reading until the end.
If you liked it, please click the 'Like' button 🤍.
If you leave a comment, I'll be jumping for joy.
▼ Here is the sitemap for Grandpa's initial four-part post series.
▼ The second volume of the 'Grandpa Saw It!' series sitemap is now available.
▼ This is the sitemap for Grandpa's current events senryu series. Please take a look at one.
▼ This is the sitemap for the 'Grandpa's Grumbling' grandchild and grandfather series.
▼ Please support Grandpa, the cheerleader for Gen Z.