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Toyota and Hyundai steer different paths to success.

Toyota and Hyundai steer different paths to success

When it comes to effective management, there is no such thing as one size fits all.

Take the examples of Toyota and Hyundai. Both are successful vehicle manufacturers. Both specialize in mass-market products - although Toyota does have its luxury Lexus range. Both operate on a global scale. But the companies' leadership strategies could hardly be more different.

According to Won Shul Shim and Richard M. Steers (315406)in their article 'Symmetric and asymmetric leadership cultures', from the October 2012 issue of Journal of World Business, Toyota emphasizes the importance of planning and work systems that reduce the effects of turbulence outside the company. Stability, predictability and risk minimization are crucial for the Japanese car-maker.

Hyundai, in contrast, accepts external uncertainty and risk as a part of its normal daily operations. For the South Korean manufacturer, flexibility is the key. It focuses on 'creative problem-solving and reasoned risk-taking'.

The chief executive is the principal strategist at both Toyota and Hyundai. But the South Korean manufacturer's boss is also a 'hands-on' manager who is close to the operations of each site. In contrast, the head of Toyota plays a more distant role.

The authors claim that decision-making at Toyota is 'slow, considered and evolutionary'. Both strategic and local operational decisions are centralized. Consensus is important.

In contrast, decisions are taken more rapidly at Hyundai. While strategic decisions are taken at the center, operational decisions are a local matter. For the South Korean car-maker, action and results are important. These differences help Hyundai to change course more quickly than its larger competitor as new opportunities and technologies emerge.

The authors accept that national cultures are partly responsible for the differences between the two firms. But leadership differences have a greater effect on organizational behavior and performance.

No matter how strategic decisions are made, Chris Bradley, Lowell Bryan, and Sven Smit argue that they should always set aspirations and direction for the firm and its workers. They should also include a way of converting strategy into operating reality.

In their article 'Managing the strategy journey' from issue 3 of the 2012 McKinsey Quarterly, the authors suggest that companies need to spend as much time on building and executing strategies as on operating issues if they are to be successful in the turbulent twenty-first century. Those that do, say the authors, will build institutional skills and generate strategic ideas that evolve over time.

'Rather than fear uncertainty and unfamiliarity,' they conclude, 'these strategic leaders can embrace them, and make the passage of time an ally against competitors that hold back when the future seems murky.'

Stability at the top of the company characterizes both Toyota and Hyundai. Neither company is known for adopting the 'quick fix' of changing its management team when performance wobbles. Such stability does not characterize all companies.

In the September 24th issue of Bloomberg Business Week, Paul M. Barratt relates the extraordinary aftermath of the acquisition of Progress Energy by its competitor, Duke Energy, to form the largest electric utility in the USA.

His article 'The CEO who wouldn't leave' recounts the tale of how the Duke Energy board voted Progress boss William Johnson to become chief executive of the combined company. Under the merger terms, Jim Rogers, Duke Energy's chief executive, was to assume the role of executive chairman - a step toward retirement.

But after William Johnson left to celebrate, the board took another vote and ousted him. It reinstalled Jim Rogers in the top job.

William Johnson served as chief executive of the merged company for approximately two hours, before being awarded $45 million in deferred compensation, severance and other benefits.

The author quotes Jim Rogers as saying that the decision 'reflects a strong board that made a tough decision'. He denies that he engineered the move and points out that his old board held a retirement dinner and gave him an antique chess set as a going-away gift.

Paul M. Barratt reports that Rogers doesn't plan to return it!