Toyota South Africa Motors (Pty) Ltd. - GKC Online

Best
Practice
Bulletin
October 2002 vol.1
FOR INTERNAL USE ONLY
CASE STUDY
Art of
Revitalization
Toyota South Africa
Motors (Pty) Ltd.
2

Best Practice Bulletin vol. 1
Art of Revitalization
With an economically unstable climate and stiff
competition from German challengers, Toyota
South Africa Motors (Pty) Ltd. (TSAM) faces the
challenge of revitalizing its business with the
launch of the Next Generation (N/G) Corolla so
that it may preserve its position as South
Africa’s leading automotive company.
Visionaries at TSAM realized that companies
that enjoy enduring success have a purpose and
core values that remain fixed while their
business strategies and practices adapt to a continually
changing world.
With that in mind, launch project leader,
John Nagel, and members of TSAM’s Corolla
Launch Committee sought to open new channels
of communication between the various business
silos by developing a synergistic methodology
encompassing all processes . . . ultimately
creating a unified “one voice” launch strategy to
transcend the company’s traditional model of
business management.
■No Stranger to Challenge
It was the end of the day and John Nagel watched as
some of the last few cars left the company parking lot
as he considered how he was going to do it. As the
General Manager of Marketing Planning Passenger and
CBU Vehicles with TSAM he was no stranger to
challenge, but this seemed different somehow.
1
*Corolla Launch Committee
It had been only a few hours since Dr. Johan van
Zyl, the President & Chief Operating Officer of TSAM,
had appointed him to manage the debut of the Corolla
and told him that he wanted something special. Dr. van
Zyl had just recently returned from the Sales EQ
(Corolla Quality) meeting in Japan. There, he learned
of oobeya(ooh-bay-yuh) 1 and witnessed examples from
around the globe of successful Corolla launches. He
grew determined that TSAM would, likewise, be worthy
of global praise. Inspired by the idea of oobeya, Dr. van
Zyl decided that the organization could be renewed by
a culture of innovation. Looking beyond this vehicle
launch, it seemed that this guiding principle could
literally revolutionize the way TSAM does business . . .
it could be “the catalyst for a new era.”
South Africa is a middle-income, developing
country with well-developed financial, legal,
communications, energy, and transport sectors, a stock
exchange that ranks among the ten largest in the
world, an abundant supply of resources, and a modern
infrastructure supporting an efficient distribution of
goods to major urban centers throughout the region.
* Left to right: L. Dodkins, C. Westray, C. Taylor, M. Herb, C. Jarrard, T.Ward, J. Nagel, M. Naidoo, G. Crompton, and P. van Deventer.
Not shown here: C. Rheeder, J. Thompson, L. Phieffer, T. Cownley, M.Hughes, H.Higuchi, A. Falk, and C. Kruger.
1. As part of the Toyota Way in Sales and Marketing, this concept connotes “taking down walls to build ‘knowledge teams.’” The method is designed
to generate innovation in an environment that encourages the sharing of ideas across divisions and sections of the company.

However, growth has not been strong enough to trim
the 30% unemployment rate and the daunting
economic problems remaining from the apartheid era.
Indeed, there are still deep problems associated with
poverty and the lack of economic empowerment
among disadvantaged groups.
In the automobile market, total sales declined 6.6%
in 1997 (vs. the previous year) alone due to radically
increased interest rates and the commensurate decline
of disposable income. The market has been recovering
gradually as it has again grown to a total of 367
thousand units in 2001. TSAM has been the number
one automobile company in South Africa for 22 years
and, even during the downturn in 1997, achieved an
all-time recorded volume of 101,083 units (and
resulting market share of 26.4%—Figure 1) owed to the
outstanding success of the Current Generation (C/G)
Corolla launch.
However, due to the devaluation of the Rand2 (Figure 2) and increased price competitiveness created
by the South African CBU/parts export incentive
[Figure 1] South African Automotive Market Shares (1991–2001)
Still a leader in the South African market, Toyota is steadily losing
market share.
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2. Local currency.
3. The incentive program offset tariffs on imported units/parts for equally valued exports.
case study of Toyota South Africa Motor (Pty) Ltd.
program, MIDP3 , there was a decline in profits that
gradually placed the company in a deficit.
The importance of the N/G Corolla launch is
highlighted by the fact that TSAM’s C/G Corolla,
introduced in 1997, was actually sold elsewhere as
the ’92 Corolla—South Africa missed an entire
generation of the Corolla. This launch would signify
South Africa’s joining the global launch of the
Corolla. In addition, once the N/G Corolla was sold
and produced in South Africa, TSAM would be able
to export it to other countries. TSAM realized that
the launch of the Corolla, if executed properly, could
signal the revitalization of TSAM and a return
to profitability.
■Corolla as a “Catalyst For A New Era”
Traditionally, vehicle launches in South Africa were
held in two separate planning sessions with minimal
integration between them. Team members worked in
different silos and discussions were closer to being routine
than comprehensive business meetings that would
[Figure 2] The Falling Rand
The rapid decline of the South African Rand in 2001
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Best Practice Bulletin vol. 1
Art of Revitalization
generate new thinking. These discussions included:
• A marketing workshop based on a product review
and the strategy presented by each process
• A marketing brief communicating the overall
strategy
• A launch committee covering the operational
implementation
There had not been any changes in TSAM policy
related to vehicle launch procedures in some time
and the possibility of innovation arising from crossdisciplinary
collaboration was stifled by process leaders
reluctant to allow this type of activity to flourish.
It was clear that this environment would be hostile
to planning any new approaches for the Corolla
launch. To address this, John Nagel decided that he
should make management goals a priority for his team
and from the onset, base his personal aims on the
following change management principles:
• Establishing a sense of urgency
• Forming a powerful coalition
• Creating the vision
• Empowering others to act on the vision
• Consolidating improvements that produce even
greater changes
• Planning and creating short term wins
• Institutionalizing the new approach
A Sense of Urgency
After determining these goals, Nagel set out to
establish a sense of urgency right away. As he recalls,
he “was trying to create a burning platform” and make
the team understand that jumping to the next platform
(or changing at this juncture) was critical to the
4. Active Inertia—An organization’s tendency to follow established patterns of behavior.
3
company’s survival. His opening presentation to the
team and the company was designed to make
maintaining the “status quo seem more dangerous
then launching into the unknown.” His presentation
outlined the following reasons why changes had to
be implemented:
• “Success builds active inertia4 and active inertia
builds failure”—as the long-term market leader,
TSAM had not found it necessary to take a hard
look at itself.
• TSAM’s declining profitability
• Declining dealer profitability
• Declining Toyota dealer market share
• Declining Corolla dealer market share
A Powerful Coalition
Next, he developed a powerful coalition by handpicking
and motivating the appropriate individuals from
each silo (Figure 3) and organizing them as a single
working unit. He set about overcoming the “silo
mentality” by putting together this 18-member team of
individuals that had management experience and
marketing ability, would voice their ideas, and were
still “young at heart.”
Once the team was formed, he planned an agenda
to build the core concept for the team’s work. The
phases for this work were:
1. Gather all necessary information
2. Develop a strategic concept
3. Produce tactics to support the strategic concept
The Vision
This team’s vision was to “develop a shared commitment
to excellent performance through renewal.” The

key to realizing this objective lay in the mission, which
was “to make the 558N Corolla the most desirable
vehicle in the market” through service from world-class
people, a product that delivers value and innovation.
Going forward, the plan would involve some critical
steps, including:
1. Realigning the strategy around the most profitable
customers
2. Clearly defining the positioning of the Corolla
sedan and hatch
3. Implementing a strategy that will help sustain
vehicle model life
4. Critically evaluating each and every aspect of the
current launch process
5. Developing a synergistic methodology encompass-
[Figure 3]
John Nagel’s team was made up of individuals from every aspect of the business.
Dr. Van Zyl
Process
Owners:
Division
Heads
Coordinator
John Nagel
Sales
Silo
Supply & Demand
Marketing
Product
Dealers
Parts and Accessories
Service
Customer Relations
Financial Services
TMC
case study of Toyota South Africa Motor (Pty) Ltd.
ing all processes—a “one voice strategy”
Empowering Others
One of Nagel’s major concerns was to motivate and
convince the team that their strategy would be
implemented and, moreover, guide the company in a
new direction. This, it seemed to some team members,
was a daunting task, indeed. Nevertheless, he managed
to inspire them. He concluded that he would have to
motivate people and provide consistent information
sharing in order to transcend the silo mindset of the
organization and find the team’s “one voice.” At a
special off-site meeting in a country hotel an hour and
a half hour from work, the members of this new crossdisciplinary
team were welcomed with a sneak preview
of the Corolla and participated in a blue-sky (or
Sales Training Facilitator
Vehicle Logistics
National Advertising
Concept Generation
Product Project
Coordination
Dealer Launches
Accessories
Technical Training/
Warranty Service
CRM/Female Market
Financial and Insurance
Packages
TMC Rep.
Specialization
Fleet/Car Rental/
Government
Promotions/Launches
Project Control/Timing
Dealer Rep.
Parts/Service Plans
Female Market PD&P
4

Best Practice Bulletin vol. 1
Art of Revitalization
brainstorming) session designed to begin the journey
toward the Personal Aims and begin a revolution.
As he puts it, Nagel tried “at every opportunity . . .
to emphasize the importance of the team’s output.” At
the first meeting, he asked Dr. van Zyl to make a presentation
to the team requesting their full support. He
also wanted to emphasize that they should take this
opportunity to grow and that they were “a special
group of people that would be rewarded with career
growth opportunities.” In addition, all major meetings
were held off premises. The final strategy session was
held for two days on a private game farm. “I wanted
to be sure that the members enjoyed being part of the
team,” he says.
Once the team understood that their strategy
would be implemented, the response was very positive.
He remembers that he “had problems with one or two
team members, but basically choosing the correct
people made this task a lot easier.” Any dissent that he
[Figure 4]
Perceptions of the Toyota brand by focus group participants.
5. Toyota Motor Marketing Europe
6. National Marketing and Sales Company (renamed from Distributor)
5
Positive
Negative
Quality
Reliability
Durability
Practical Emotional
Qualities seen as
important to Corolla
drivers
Boring
Conservative
encountered was extinguished as he spoke to
individuals (and, in one case, took one overseas) to
reiterate the importance of this particular launch.
Getting information early and actually seeing the
vehicle seemed to motivate the team a great deal. Both
the sedan and the hatchback received positive reviews
and this helped to build a solid foundation, as the
members were able to actually sense what the vehicle
looks and feels like. Most of the information available
to the team was based on market research so, in Nagel’s
opinion, they had, “a very good understanding of our
customers and our competitors’ customers.” After their
initial meeting, the members embarked on a rigorous
data-gathering mission.
Consolidating Improvements
They immediately took the opportunity to attend
TMME’s5 NMSC6 information sharing session and
traveled to Japan to cover Corolla launch strategies
employed by other countries and the Corolla
[Figure 5]
Results of the product clinic—on a rating scale of one to five,
the Corolla scored very well against the competition and received the
highest scores both Sedan and Hatchback categories.
Sedan Hatchback
Kyalami Test Track
20th November
Corolla
1.6L
Jetta
1.6L
Astra
1.6L
P166
1.6L
Corolla
GT
Golf
GT
Focus
2.0L
Interior comfort (Fr) 3.97 3.62 3.00 3.08 4.08 3.75 3.27
Interior comfort (Rr) 3.95 3.81 3.02 2.91 4.16 3.69 3.49
Visibility 3.75 3.50 3.28 3.25 3.95 3.78 2.96
Acceleration 3.50 3.02 3.18 3.16 4.35 4.41 3.04
Steering Feel 3.62 3.44 3.26 3.30 4.31 4.31 3.15
Brake Feel 3.61 3.25 3.16 3.13 4.12 4.12 3.23
Road Holding (Corner) 3.92 3.31 3.17 3.25 4.50 4.27 2.88
Road Holding (Straight) 3.87 3.54 3.29 3.30 4.54 4.23 3.18
Suspension (Ride) 3.80 3.70 3.12 3.21 4.43 3.99 3.25
Total 3.77 3.47 3.16 3.18 4.30 4.06 3.16

Development Group7 . They decided that in order to
develop a strategic concept it was important to
consider three things:
• Understanding Toyota’s place in the market
• Knowing the competition
• Reaching the customer
They conducted a product clinic and customer
focus groups. From market studies and their primary
research, TSAM came to understand the position of the
Toyota brand, the competitive environment, and their
customers. The focus group participants were drawn
from pools of owners of the C/G Corolla and the
current competitive set including the VW Jetta4, Opel
Astra, VW Polo Playa, and the VW Golf4.
Understanding Toyota’s Place in the Market
The results of the primary research performed by TSAM
rendered interesting, but not entirely surprising results.
As expected, the Toyota brand scored well on Quality,
Durability & Reliability (QDR), but continues to
struggle with regard to styling and emotional appeal
(Figure 4).
[Figure 6]
Results of the product clinic—several positive aspects of the 558N drew
the attention of the respondents.
Sedan Hatchback
Smooth/modern styling Styling/rear design
Interior space/legroom Spacious/legroom
Boot space Power/acceleration
Comfortable seats Responsive
Rear seat/hip point Roadholding
Balanced power Cornering
Acceleration Dashboard design
Brakes Interior design
Road holding Steering wheel
Interior design Center console
Visibility Sporty look & specs
7. Also known as Corolla Engineering Group (ZE)
case study of Toyota South Africa Motor (Pty) Ltd.
Obviously, the challenge here would be to establish
an emotional appeal to match the QDR already
associated with Toyota. The newly designed Corolla
might just be the car to help Toyota take a big step in
that direction. To determine the extent to which this
vehicle may be able to improve the brand, it had to be
compared to the rest of the competitive set from both
objective and subjective points of view.
Knowing the Competition
During the product clinic at the Kyalami test track,
the Corolla scored very well against the competition
(Figure 5). In fact, it scored comparatively well in
those “sporty” categories in which Toyota is reputedly
weak, such as acceleration, steering, road holding,
and suspension.
The Corolla apparently has other obvious
advantages over the competition(Figure 6) as well. In
addition to enhanced styling, the vehicle has
considerable interior space, greater visibility, and
exceptionally comfortable seats.
In so many ways, the new Corolla exceeded
expectations from a product standpoint, yet it is one
thing to build a superior product and quite another to
market it effectively and, moreover, to provoke
“feelings of passion” in your intended audience. Until
Volkswagen’s (VW) introduction of their new Golf,
they had quite the opposite problem.
VW has been very successful at maintaining a
stylish, sporty and youth-oriented image, but has
suffered from a poor perception of QDR and safety
amongst consumers until their recent product launch.
The Golf4, equipped with four air bags as standard
6

Best Practice Bulletin vol. 1
Art of Revitalization
equipment, had a halo effect on the entire brand,
effectively raising its brand image single-handedly
(Figure 7). Previously, as the second-place brand in
South Africa with QDR setbacks, VW already represented
a nuisance; now, it is a threat.
Reaching the Customer
Realizing Toyota’s image weaknesses and the opportunity
that the Corolla offers (in light of the danger that
a brand-enhanced VW represents), TSAM was
determined to take a bolder approach. In order to
enhance customer loyalty and acquire the competitor’s
customers they conducted a market analysis and
implemented integrated marketing. This allowed them
to establish a sales launch policy to target core and
strategic customers, and create a core message. The
core message that they established was: “Corolla:
Catalyst for a New Era.”
From the beginning the team was asked to focus
on an innovative launch for the Corolla. When
Dr. van Zyl recognized how well the planning process
[Figure 7] Perceptions of the VW brand by focus group participants
The arrow signifies the brand’s movement from a negative QDR image to
a relatively positive one.
7
Positive
Negative
Improved QDR
and
Safety Features
➡
Old
VW
Young
Sporty
Ecxiting
Status
➡
Latest Design
Improved Engines
Improves user profile
Practical Emotional
Qualities seen as
important to VW drivers
was proceeding, he decided that TSAM’s entire
revitalization should depend upon this launch strategy.
In due course, this launch had, indeed, become the
catalyst for a new era essentially signaling the rebirth
of TSAM.
Planning and Creating Short-Term Wins
In order to further enhance innovative strategy
creation the group was sub-divided into six teams. The
teams were purposefully defined in order to disentangle
themselves from the corporate structure and break
from performing their duties in the same manner as
they had in the past.
Positioning At the core of the strategy is “the golden
thread” of each brand, namely the positioning statement
and what the brand stands for.
Perceptions This team was responsible for all oneway
communication, both above and below the line.
Their objective was to reposition the Corolla and
Toyota brand.
Experience This team was responsible for all two-way
communication, both internally and externally,
including all training. Their objective was to exceed
customer expectations for life.
Cost This team was responsible for all financial issues
relating to owning a vehicle. The aim was to look at
the entire vehicle ownership cycle from purchase to
re-purchase. Their objective was to ensure that the
Corolla has the lowest running costs in its class.
Retention This team was responsible for getting
current Toyota drivers into the new product. Their
objective was to convert existing Toyota drivers into
Corolla drivers, and maintain their loyalty.
Acquisition This team was responsible for getting
current non-owners into the new product. Their

objective was to gain new and regain lost private
buyers and fleet accounts.
Once TSAM management agreed upon the Strategic
Concept, it was handed over to the appropriate process
silo and its details developed under the guidance of
that silo’s representative team member. The brief on
the tactical strategy covered its objectives (i.e., clarified
the role of the idea to achieve the objectives), purpose,
methods, and any other details. (i.e., who, what,
where, when, why, how, how much, how to evaluate).
Institutionalizing the New Approach
Nagel decided that it was imperative to gather
consistent information from the frontlines.
Unfortunately, when attempting to organize the retail
end of the business his biggest challenges lay ahead in
the form of “ability”and “motivation.” As he put it,
“there was a general sense of apathy in the dealer
network.” Toyota had been the market leader in South
Africa for 22 years and selling a Toyota product was
typically very easy as “the product almost sold itself.”
Over the years the market became much more
competitive as new offerings were being placed. This
was further enhanced by the fact that competitors were
gaining export credits that gave them a pricing
advantage. For example, in South Africa the Corolla
must compete directly against the BMW 318i on price.
This places a great deal of pressure on the Toyota
dealers’ sales staffs. “The aim of the training was to
enable the sales staff to take on this challenge,” Nagel
says. Somehow, he had to develop support tools for
salespeople coupled with a formal education process,
familiarity with the PDCA cycle, 8 and awareness for
8. Plan, Do, Check and Act
case study of Toyota South Africa Motor (Pty) Ltd.
global best practice.
It was thought that a sales caravan process may be
the ideal method. The idea behind this process would
be to take the training to the staff so that their busy
schedules are not adversely affected. It incorporates a
group of five trainers that move from area to area,
teaching one-day classes of 40 salespeople about the
products. The focus is on practical product and skills
training and seven vehicles are presented so that salespeople
may receive the opportunity to test drive them.
In addition, the Toyota Way and kaizen (continuous
improvement) have been introduced to the sales
staff to be followed by “a proper sales kaizen culture”
that will be developed next year. Currently, a high level
of competition exists between the different dealers and
so the sharing of best practice is hampered. To help
ameliorate the situation, sales tips are shared on a
weekly basis and kaizen is practiced in the Sales
Managers Forum where best practice is discussed.
Furthermore, minimum standards have been
implemented for each element of the sales process.
At this point, Nagel placed several ideas in motion.
To generate greater motivation and self-confidence, he
implemented a personal leadership program that
encouraged individual thinking through training and
enforced a dress code that engendered greater pride
and professionalism.
Five workshops were held between TSAM
Marketing, dealers and suppliers to finalize the dress
code. The observed criteria were practicality, cost
effectiveness, image building (in line with the Toyota
brand), and enhancing the customer experience. Dress
8

Best Practice Bulletin vol. 1
Art of Revitalization
code training was on two levels: how to dress properly,
and the official corporate wear. The corporate wear has
been very well received with about a 70 percent
adoption rate so far. In the future, the dress code is
planned to become part of the franchise standard as
competitors all have a basic dress code. 9
Sales abilities were heightened by delivering
formal sales training in the form of the Toyota Way in
Sales and Marketing “Art of Selling” which was tailored
specifically to the South African Sales Activity process.
In addition, Nagel’s efforts were focused on reinforcing
product knowledge and presentation skills. An
intensive follow-up program of mystery shopping,
dealer check sheets, and KPI10 for Check & Action
(portions of the PDCA Cycle) were put into operation.
Finally, a national skills olympiad would generate a
competitive atmosphere to encourage salespeople to
improve their skills.
■Implementation Challenges
Using oobeya principles, Nagel was able to promote
communication between team members to identify
and eliminate challenges. While trying to integrate
TSAM’s marketing functions across its silos, Nagel was
presented with a suite of difficulties including a lack of
human resources, and poor communication with, and
among, production people, marketing and TMC’s
support staff. In addition, it was a challenge to
establish implementation procedures.
To achieve progress toward a successful Corolla
launch Nagel had to answer challenges brought to light
by training team members. It became important to
9. BMW, Mercedes, and VW all have strict formal dress codes.
10. Key Performance Indicator
9
understand new operating methods that could
motivate both trainers and the staff to adopt these
innovations. In addition, he had to acquire TMC’s
support for his efforts to create new sales tools and
gather information and deal with the almost
insurmountable obstacles involved in truly integrating
production and marketing efforts.
“The most critical issue was available time as team
members were not always supported by their process
leaders (managers),” claims Nagel. Although a core
team of four people worked full-time on the project,
the other team members were forced to perform their
normal job while simultaneously doing their part in
the strategy creation process.
To succeed, he was determined to test each and
every module for accuracy, establish standards for
consistent information sharing with the production
site, gain full support from top management, set up
monthly progress meetings with TMC, and, perhaps
most importantly, create and motivate an implementation
squad whose full responsibility was to get the job
done . . . and done well.
■Moving Forward
At the conclusion of their work the team prepared a
presentation to hand the launch strategy over to
TMC for review and implementation. As the team
prepared this presentation, they were eager to discover
how it would be received by TMC. TMC directed
them to work in conjunction with its staff to leverage
its progress to date and structure it in a way that
would reflect the Corolla’s importance as TSAM’s best-

selling vehicle.
TMC recognized that, although there were some
missteps along the way, TSAM made a genuine effort to
reform its launch processes for the Corolla and vehicles
to follow. Nagel says that, “in retrospect, I would have
changed the teams somewhat. I would have divided
the experience team into internal and external
experience. Internal experience would focus on the
staff, including dealer staff and associate training.
External experience would focus on the customer
experience including promotional activities. I would
have combined the retention and acquisition teams.”
Essentially, there were some fundamental benefits
realized from developing a cross-functional team
that could more easily view the business from
several perspectives.
Indeed, as TSAM approached the launch of the
Corolla, John Nagel could easily claim that they had
accomplished something that is otherwise very difficult
to do in most organizations—by faithfully implementing
oobeya principles, he was able to build a team that
could see beyond the limits of their silos and realize
the effects of a range of decisions on the business as a
whole. Selecting individuals who were open to
different ways of seeing the business was also a key
consideration. In short, team members were able to
gain a better grasp of the big picture through shared
knowledge and motivation. Although it seems that
TSAM is quickly approaching an overwhelmingly
successful launch, the question yet remains whether
these reforms will actually generate a profound
business turnaround. Unfortunately, such questions
may only be answered in the future, but look for them
to be answered in the very near future.
case study of Toyota South Africa Motor (Pty) Ltd.
Beyond the obvious improvements that were put
into action at TSAM, we should observe that from a
higher-level perspective, the team members there were
following the Toyota Way by generating a strategy that
considers the customer first, uses kaizen, and respects
the opinions of others. That is why we can see this as a
Best Practice . . . as a perfect example of the Toyota
Way in Sales and Marketing.■
10

“Best practice” simply means learning from the
success of others. Many distributors and dealers have
implemented exceptional innovations to respond to
the changing needs of customers. This Best Practice
Bulletin is published for all Toyota members to share
these good practices and learn from each other.
The Best Practice Bulletin is about your most
innovative ways of doing business. If you have any
practices that you would like to share with Toyota
around the world, please contact us at:
Best Practice Bulletin
Overseas Marketing Division
Toyota Motor Corporation
Address
4-18, Koraku 1-Chome
Bunkyo-Ku, Tokyo, 112-8701, Japan
Fax
+81-3-3817-9037
E-mail
mr_bestpractice@mta.mx.toyota.co.jp
■ Published by Global Knowledge Center, a division of
Toyota Motor Sales, U.S.A., Inc.
■ Copyright 2002 by Toyota Motor Corporation
■ Contents may be reprinted by authorized distributors
for internal use only.
■ All rights reserved.
■ Printed in Japan with soy ink on recycled paper.