Management of Technology and Innovation in Japan

Reorientation in Product Development for Multiproject
Management: The Toyota Case
Kentaro Nobeoka
Introduction
There are two primary purposes in this case study on Toyota. First, this study examines
a new organizational form for product development, the one featuring the
management of multiple projects and their interdependencies. Various authors
suggest that the competitive environment in many industries has been changing in
recent years as product life cycles have shortened and as customers have demanded
increasing levels of product variety (Stalk and Hout 1990; Wheelwright
and Clark 1992; Sanchez 1995). In the new environment, the strategic usage of
economies of scope has become important as a competitive factor (Markides and
Williamson 1994; Garud and Kumaraswamy 1995). In order to implement the
scope strategy among multiple projects, the management of inter-project interfaces
is necessary, which this study calls the multi-project management. This aspect of
environmental change has demanded a new organizational structure and process.
However, few studies have explored specific organizational arrangements that aim
at the management of concurrent multiple projects.
A second purpose is this: By describing details of organizational transformation
at Toyota, we explore processes and benefits of capability-based reorientation.
Toyota’s change from a single-project-oriented to a multi-project-oriented management
is a major reorientation in many respects. In many cases, firms have to
destroy existing capabilities when they try to implement major reorientation
(Miller and Friesen 1980; Nelson and Winter 1982; Tushman and Romanelli
1985). Toyota, however, was successfully able to adapt to the new strategic direction,
while at the same time enhancing its existing capabilities. This perspective
contrasts with a distinction between continuous and discontinuous change (Hinings
and Greewood 1988; Tushman and Romanelli 1985).
Specifically, this case study focuses on the objectives, inherent processes, and
outcomes brought about by changes in product development organization implemented
at Toyota in 1992 and 1993. The new organization strives for multiproject
management. It consists of three vehicle development centers in which
multiple projects are grouped together, in contrast to either traditional singleproject-oriented
or function-oriented organizations. The reorganization toward
multi-project management was the most comprehensive change in product development
organization implemented within Toyota since it established the Shusa
(heavyweight product manager) organization system around 1965.