Management of Technology and Innovation in Japan

Reorientation in Product Development for Multi-project Management 231
Effective multi-project organization cannot be established without capabilities
in strong project management that is to coordinate functional boundaries. Heavyweight
product management organization at Toyota played a role as an organizational
platform (Ciborra 1996) that enabled the changes into multi-project organization.
The new competitive environment required an additional coordination
mechanism that specifically targets inter-project coordination. Because of Toyota’s
capabilities regarding cross-functional integration that had been enhanced
and nurtured for a long time, the firm was able to respond to the new requirements
without penalizing cross-functional integration. These capabilities were firmly
embedded within Toyota as patterns of routines and informal communication lines
as well as culture.
With respect to organizational evolution, Toyota’s movement can be contrasted
with the one at Chrysler, which is also described in Figure 6. A primary issue for
Chrysler in the 1980s was a lack of cross-functional coordination and integrity.
Because Chrysler wanted to strengthen cross-functional integrity, in 1989 it
changed the organization from one with lightweight product manager to a project
team organization by discarding barriers between engineering functions. Scott
(1994) has argued that the new Chrysler organization worked effectively to optimize
the development of individual products such as the LH and the Neon. Using
these organizational processes, Chrysler is currently developing capabilities in
cross-functional coordination. Without these capabilities, it may be difficult to
employ new additional coordination requirements such as inter-project coordination.
In order to implement flexible strategic reorientation, firms need to accumulate
capabilities in advance that may be combined to target new strategic directions
(Ciborra 1996). Major reorientations without any capability base tend to
result in organizational failure (Hannan and Freeman 1984; Tushman and Romanell,
1985; Singh et. al. 1986).
This in-depth case study has also offered evidence that in order to benefit from
the center organization, a structural change of simply grouping some projects together
is not sufficient in itself. Other automobile firms in the world also employ
some type of product grouping. However, grouping alone does not necessarily
lead to effective multi-project management, and organizations at other firms do
not seem to work as effectively as at Toyota 5 . Toyota made several important
changes along with the introduction of the multi-project center organization. For
example, first, it reduced the number of engineering functions in Centers 1, 2 and
3, and added the component and system development center (Center 4). In this
way, each center is simplified enough to simultaneously manage multiple projects
within the center. The management scope of center heads and planning division
managers is small enough to oversee all activities within the center. Second, a
powerful planning division with more than 150 people in each center also seems
5 This statement is based on interviews at Nissan, Mitsubishi, and Mazda. At these firms,
one example of the differences from Toyota is that some key functions such as planning,
chassis/engine engineering, and cost management are not divided into centers. In
this sense, it seems that these firms have been changing organizations in the same direction
as Toyota, but has reached only incomplete multi-project organization.