From T(r)ee to T(r)ee

While looking through recent (a relative term used for any time period ranging from a few hours to a couple years) news items related to restructuring of organizations to meet new global challenges, I cam across two different organizations – Tata and Toyota. These are names that I had grown up hearing all the time in Pakistan. Tata was a business giant from India that produced (among other things) vehicles. Meanwhile, Toyota specialized in the production of automobiles and last year became the world’s largest manufacturer ahead of General Motors.

I thought it would be interesting to see how the two giants adjusted their organizational structures to help them deal with the increasingly diverse challenges of today’s globalized economy. The title is a take on the two organizations’ logos – different variations of the English alphabet ‘T’ – and a reference to their organizational structures, or organization trees. (I know – it is a bit forced, but I wanted to leave the title slightly ambiguous).

Before I get started with summarizing the plans of these organizations, I would like to point out the (obvious) difference in the industries. Toyota is in the manufacturing business, and TCS is a consulting company. The reason I believe that this comparison is reasonable is because of the extent of global operations of the two organizations, and their sizes. In 2008 Toyota employed 316,121 people, and Tata 140,152 and both had operations spread across the globe.

At the beginning of 2008, Tata was already considering restructuring its organization structure to increase its agility and ability to provide a uniform image across its wide customer base. The new structure meant Tata would ‘package’ all essential services into customer-centered units that would allow for greater level of collaboration with the customers. All of these operating units would be supported by a common group of organizational infrastructure units.

While net profits at Tata dipped in the fourth quarter, the revenues rose and slight dip was justified by the management as a result of what they called the ‘investment’ quarter which will not yield results until the following year (2008-2009).

Toyota on the other hand took a more reactive stance than a proactive one. Efforts to re-organize Toyota are still underway, and this has come as a surprise to many that have praised the “Toyota Way” for decades now. Toyota has always had a reputation of planning ahead and being prepared, however, the size of the Corporation took its toll on profits as the worldwide economic downturn hit the giant. It is interesting to note however that Toyota, even with its slow response due to its cumbersome organization structure withstood the storm winds much better than its US counterparts.

The secrets to Toyota’s ability to survive this crisis may lie in the very approaches that made it famous, like the just-in-time production concept. It should be noted that while this system has been discussed widely and praised by gurus worldwide, an attempt to adopt it was never made in the US. This is not the only example of what I would call the ‘arrogance’ of US organizations, many US companies have been left vulnerable because of their inability to take the threats of globalization seriously. Other examples, in the auto industry include the late adoption of fuel-efficient technologies.

Perhaps those who survive this crisis will be more proactive in their planning, and will take seriously the far-reaching effects of globalization.

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