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On Wednesday May 7, the DU community was joined by CEO of Toyota North America, Jim Lentz for the final lecture in the Voices of Experience Series. A self-described futurist, Lentz is charged with the sibylline task of speculating what the automotive market will look like in five to ten years. In a world of climate change, rapidly increasing technology, urbanization and population growth, the car industry has a host of obstacles to navigate and address.
Lentz graduated with an MBA from Daniels College of Business in 1978, and began working at Ford, though he switched to Toyota several years later where he has worked for over 30 years. When asked about his greatest achievements, he shared with us the story of how he worked to start the brand Scion, a product and process designed to meet the needs of Generation Y. He and his team found that Gen Y’s most valuable resource is time, and envisioned new business practices and products to adapt to this. “The greatest accomplishment usually goes hand in hand with the greatest challenge. I don’t think anything ever comes easy,” said Lentz.
The leadership at Toyota also recognizes the need for sustainable development, and was among the first to invest in fuel-efficient technology. Lentz points to the Prius, a concept that first came to the drawing table in 1992. “At the time gas was less than $1 a gallon, so it didn’t really make good business sense to do what we were doing. But we believed in sustainability, and we knew that if we didn’t find some revolutionary way to reduce the need for oil, in time the industry would become obsolete.”
Around the same time that development of the Prius took off, Toyota began working on fuel-cell powered vehicles, the first of which are expected to hit European and Japanese markets as early as next year. Fuel cells combine hydrogen and oxygen to produce electricity, with only water vapor and heat as by-products. Cars that run on fuel cells can travel several hundred miles before needing to be refueled, a process that takes just a few minutes. The challenge will be building the necessary infrastructure for hydrogen fueling stations, which is already underway.
Another challenge is uncertainty among the public concerning the danger of powering a vehicle with a compact, highly flammable substance. As Lentz responded to an audience member during Q&A at the Newman Center, “visions of the Hindenburg come to mind.” But thorough safety research is underway, and hydrogen tanks are claimed to actually be much safer than gasoline fueling. “From a sustainability standpoint, this is the future” says Lentz.
But for all of its successes, the company has faced its fair share of challenges as well. Lentz reflects on the recall of several million vehicles with potentially ill-fitted floor mats and sticky pedals that had reportedly caused involuntary acceleration in some vehicles. Lentz cited slow response and lack of transparency both within the company and with the public as two contributing mistakes.
The Lehman financial crisis of 2008 was a stumbling block for the entire industry, with sales dropping over 40 percent in some cases. “Do we lay people off? Do we close plants?” Toyota had another idea. Lentz explained that not a single person was let go because of the crisis—instead they went through extensive retraining during the sales lull to ensure that when business returned to normal, Toyota would be producing higher quality vehicles at a lower cost.
“We are very much a relationship company, whether that’s relationships with our associates or whether its relationships with our dealers,” remarks Lentz. He explained to the Pioneer Business Review the intensive review process of possible locations for Toyota North America’s new “all-under-one-roof” headquarters. They decided on Plano, Texas, a suburb of Dallas. Lentz and his team started with over 100 cities and considered dozens of variables, including standard of living for associates.
On the final visit to Plano, Lentz brought his wife, Barbara (whom he met when they were both in college at DU), whose task it was to consider the city from the standpoint of families that would have to relocate there. Good schools, low crime, and short commute times were considered. “I’m never going to be able to satisfy the customers that drive our cars if my people aren’t happy,“ said Lentz.
The company’s core values of respect for people, teamwork and integrity are key components in Japanese culture and have permeated into international branches, something that Lentz thinks sets the company apart.
When asked about cross cultural leadership, Lentz responded that American and Japanese values make the perfect combination. “Americans tend to want to fly by the seat of their pants and make very quick decisions before we may have all the information. Japan is the exact opposite; they want to have 100 percent of the data before we make decisions. Now we get about 90 percent of the information.”
Advice for future grads? Build a good foundation.
“So many students miss building a good foundation by jumping from company to company trying to climb up the ladder… It’s not about a race to the top, it’s about adding value.”
For Lentz it is about value-driven leadership and forward thinking. With the release of fuel cell and other ground-breaking new vehicles just around the corner, the world is about to experience the future Lentz has imagined.
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