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Published on March 21, 2008

By putting a premium on creativity and paradoxical thinking as a corporate resource, Toyota has become the world's best manufacturer and one of the most successful companies, Takeuchi said. He was granted access to the inner workings of Toyota and spent six years researching and interviewing employees, distributors and dealers for his book "Extreme Toyota", which is due to come out in June.

Among Toyota's many contradictions is the fact that while the firm is more profitable than its industry peers, its dividend pay-out ratio is very low.

"They have tremendous cash. So from the profitability point of view, they're not spectacular," Takeuchi, a visiting professor at Harvard, said.

In terms of remuneration, Toyota is second from bottom among the world's major car manufacturers. The family that founded Toyota has only a 2-per-cent stake in the firm but exercises tremendous influence, Takeuchi said. "Toyota has not only embraced contradictions, it has created them. It makes the company difficult to understand."

Toyota's other contradictions include:

n Cultivating frugality while spending huge sums

n Operational efficiency as well as redundancy

n Cultivating stability and a mindset of paranoia

n Bureaucratic hierarchy and freedom to dissent

n Simplified and complex communication

n Moving gradually and also taking big leaps

Takeuchi said there were two opposing views of strategies. At one end is the "outside-in" strategy, which gives importance on "Doing things differently". At the other extreme is the "resource-based" view that emphasises operational excellence or "doing things better". Citing Toyota's accomplishment in both areas, Takeuchi said companies' future success depended on their ability to excel in the opposing strategies.

Speaking at a conference in Bangkok, David Meier, co-author of "Toyota Talent: Developing Your People the Toyota Way", said that like the eastern concept of yin-yang in which opposites can be together, there are many paradoxes in Toyota's ideas - which is difficult to understand, especially for Westerners.

"Sometimes, we [Toyota] have two choices, which can both be okay," Meier said, who worked at Toyota's first US plant when it opened more than 20 years ago.

Pichaya Changsorn

The Nation