Comments on: Toyota Organizational Structure: Balance Between Centralized and Decentralized Control

By: Hugh Alley

Hugh Alley — Fri, 10 Jun 2011 23:53:54 +0000

I am not surprised that Toyota is dealing with these issues. It is not just the size, although that is part of it. It is also how fast it has grown. I’m not aware of anything in nature that grows 10% a year on a sustained basis. Yet that is what Toyota has had to deal with. It is very hard to get that many new people on board in a new culture, so processes that may have worked informally for many years in a company growing more slowly may be torn asunder by the growth. Anyone who remembers growing pains from their teen years knows how painful it can be when one part of the body grows faster than the connecting tissue! I recall a commentator, and I think it may have been Womack, observing that growing enough people with deep knowledge of the TPS was probably going to be the fundamental constraint of the organization.

By: Pete Abilla

Pete Abilla — Mon, 06 Jun 2011 19:54:34 +0000

In reply to John M.. Thanks for your comment, John. Yes, indeed very complicated and the larger the company, the more challenging the question becomes of how to balance between centralized and decentralized control.

By: John M.

John M. — Mon, 06 Jun 2011 19:31:51 +0000

Pete,

In my (limited) experience, the tradeoffs between centralization and decentralization are tremendously complicated. I’m probably not the first person to point out that all large enterprises are highly dysfunctional, and I think the problems that lie at the heart of the centralization/decentralization question are the reason. You rightly point out that they fundamentally come down to people problems. And people problems are the hardest ones to solve. 🙂

-John