Skip to content

Kiichiro And Eiji Toyoda: Blazing The Toyota Way

The two cousins changed how the world builds autos

As part of its anniversary celebration, BusinessWeek is presenting a series of weekly profiles for the greatest innovators of the past 75 years. Some made their mark in science or technology; others in management, finance, marketing, or government. In late September, 2004, BusinessWeek will publish a special commemorative issue on Innovation.

Kiichiro and Eiji Toyoda
One was the zealous mentor, the scion of a prominent clan with a vision that stretched far beyond the family business. The other was the younger cousin, a protégé who knew how to make that frustrated vision come alive. Both thought they had the makings of a great company. But on that day in 1938 when Kiichiro Toyoda, the founder of Toyota Motor Corp. (TM ), instructed his understudy, Eiji, to build a factory on land cleared from a red-pine forest in central Japan, neither realized they were about to make history. That plant, located in what is now called Toyota City, pioneered concepts such as just-in-time inventory control, kaizen continuous improvement, and kanban parts labeling -- all disciplines common today in factories from Detroit to Stuttgart, and essential to the Toyota Way.

Born in 1894 and trained in engineering at prestigious Tokyo University, Kiichiro lost out on the job of running the family's mechanical loom business to his well-connected brother-in-law. A restless tinkerer, in 1929 he took an eye-opening tour of car factories in the U.S. and Britain. By the time Kiichiro returned home, his goal in life was to build world-class cars. With a grubstake from his father, he went to work.

Early on, he spent his days reverse-engineering Chevrolet engines. By the late 1930s, Kiichiro had launched his own company -- the name was changed to Toyota, which is written with eight brush strokes, an auspicious number in Japan -- and found a soulmate in Eiji, who had followed in his footsteps at Tokyo University. By 1935 the pair had developed a prototype called the A1, a Chrysler DeSoto Airflow knock-off. To hold down inventory, Kiichiro shortened the supply chain so parts were delivered just in time for assembly. But passenger-car production didn't get off the ground until 1947 and success came too late for Kiichiro: He was forced out after a strike in 1950 and died two years later.

That was hardly the end of the story: Eiji became a managing director and was sent to the U.S. to study Ford Motor Co.'s (F ) River Rouge plant. He came back impressed by Ford's scale but scornful of the inefficiencies. So he and a veteran loom machinist, Taiichi Ohno, fine-tuned Toyota's own operations. Eiji and Ohno came up with the kanban system of labeling, an early precurser to bar codes, to keep the flow of parts smooth. They also perfected the art of kaizen, constantly adjusting the manufacturing process to achieve savings and quality improvements.

Eiji's first export effort to the U.S. fizzled when the Toyota Crown proved too slow for American highways. Eiji pressed on, exporting the compact Corolla in 1968, a year after becoming president. Detroit laughed. But the Corollas proved popular with baby boomers looking for cheap, reliable vehicles. Hooked on solid quality and high resale values, the boomers stayed loyal, trading up to the Camry and Lexus -- another brainchild of Eiji, who stepped down from Toyota's board in 1994 at the age of 81. By then, Detroit execs were making pilgrimages -- to Toyota City.

By Chester Dawson

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE