Competing Values Framework- The Toyota Way

The Competing Values Framework (CVF) has been named as one of the fifty most important

models in the history of business. It originally emerged from empirical research on the question

of what makes organizations effective (Quinn and Rohrbaugh, 1983). It has since been

extended as a framework that makes sense of high performance in regards to numerous topics

in the social sciences and organizations. The CVF has been studied and tested in organizations

for more than twenty five years by a group of thought leaders from leading business schools

and corporations

The CVF serves primarily as a map, an organizing mechanism, a sense-making device, a source of new ideas, and a learning system. From the CVF comes a theory about how thesevarious aspects of organizations function in simultaneous harmony and tension with one another. The framework helps identify a set of guidelines that can help leaders diagnose and

manage the interrelationships, congruencies, and contradictions among these different aspects

of organizations. In other words, the framework helps leaders work more comprehensively and

more consistently in improving their organizations’ performance and value creation.

The Competing Values Framework
 The CVF evolved out of research to determine the key factors of organizational effectiveness. This research initially yielded a comprehensive list of 39 possible indicators to measure effectiveness. Quinn and Rohrbaugh (1983), through factor analysis, condensed this list into a more parsimonious set of two major dimensions, which defined four major quadrants representing opposite and competing assumptions . The first dimension ranges from flexibility and discretion on one end, to stability and control on the other. The second dimension measures the degree to which the organization emphasizes internal focus and integration or external focus and differentiation . The four major quadrants defined by these two axes were originally labeled the Human Relations Model, the Open System Model, the Internal Process Model, and the Rational Goal Model . These respective quadrants have alternatively been labeled as the group, developmental, hierarchical, and rational culture; collaborate, create, control, and compete ; and also clan, adhocracy, hierarchy, and market cultures .

                                           Figure 1. Quadrants of the Competing Values Framework.

 The"Human Resource Model" or CLAN culture is like an extended family. This type of organization emphasizes teamwork, employee involvement, empowerment, cohesion, participation, corporate
commitment to employees, and self-managed work teams. It is held together by loyalty and tradition. In this context, leaders are thought of as mentors or parent figures. Their main responsibilities are to empower employees, and facilitate their participation, commitment, and loyalty .
 The "Open system model" or ADHOCRACY culture is a dynamic, entrepreneurial, and creative organization. This organization thrives in an uncertain, ambiguous, and turbulent environment. The common values are innovation, flexibility, adaptability, risk taking, experimentation, and taking initiative. Leaders are also expected to be visionary, innovative, and risk oriented.
The "Internal Process model"or HIERARCHY culture is a formalized and structured bureaucracy. This culture values efficiency, reliability, predictability, and standardization. Fast and smooth operations are maintained by strict adherence to the numerous rules, policies, and procedures. The employees throughout the multiple hierarchical levels have almost no discretion. Leaders in this organization are expected to be good organizers and coordinators, and minimize costs.
 The "Rational Goal model" or MARKET culture is fiercely competitive and goal oriented. They focus on productivity, profitability, market share and penetration, and winning. Leaders in this culture are expected to be hard driving, tough, and demanding competitors.  One culture is not necessarily better than the others. The proper culture for each organization depends on the organization’s industry and strategy


An Illustration. In 1937, Kiichiro Toyoda founded the Toyota Motor Company in Japan as a
spin-off from Toyoda Automatic Loom Works to manufacture cars roughly based on the designs of Chrysler and Chevrolet. Toyota emerged from the rubble of war in the late 1950s to become Asia’s premiere manufacturing company and swiftly moved from a regional to a global brand.Gaining a foothold in the United States during the oil embargo of the 1970s, Toyota
systematically extended its product array from compact cars, like the Corolla, to mid-size
sedans. In the late 1980s, Toyota accomplished the previously unimaginable by successfully
introducing, Lexus, a luxury car line to compete with European blue bloods BMW and
Mercedes. In fact, the newly introduced Lexus established previously unimaginable initial5
quality records, and maybe said to havebeen the carthat mostsparked the quality revolution in
theNorthAmerican auto industry. Today, Toyota isJapan’sbiggest carmakerwith over $120
billion in annualsales.
Toyota is one the fewcompaniesthat has demonstrated an ability topursue several directions
simultaneously. The traditional organizational identity at Toyotawas highly focused and
internally directed. Perfecting “leanproduction” and “justin time” manufacturing techniques,
Toyotabecame symbolizedby quality and efficiencywhich made it abenchmark for automobile
manufacturingworldwide. Engineering, extensiveproducttesting andprocessredesign are
competenciesforwhich Toyota hasbecome renowned. More recently, Toyotabecame more
adaptive in orderto respond to external challenges confronting the firm. In the face ofinternal
callsforprotectionism, Toyota diversified its manufacturing and assemblyplantsfrom its core
location in ToyotaCity inAichi,Japan,to newplantsin many regions oftheworld. To survive
theworldwide recession andAsian currency crisis ofthe late 1990s, Toyota introduced
innovative “flexibleplatform” manufacturing to manage globalsupply and demand fortheir
products at optimalpricesregardless of currency fluctuations. Recently, Toyota has also
ventured into non-auto areassuch asfinancialservices, and it nowrunsthe Internetportal,
Gazoo.com.
The value creation story of Toyota representsboth ends ofthe core dimensions and dynamics
continua discussed earlier. Toyota’sinitial approach to value creationwas characterizedby
internally focused, incremental, and control oriented activities. Fine-tuningproduction and
reducing defectswere chief areas of concern. Thereafter, however,the introduction of a luxury
car—which exceededby a substantial margin the quality and design standards of competitorsin
Europe and theUnited States—coupledwith a dramatically successful global manufacturing
and distribution strategy and a rapid automobile designprocess,put Toyota squarely on the
opposite side ofthe dimensions and dynamics continua. The company, in otherwords, created
valueby responding simultaneously to competing tensions and opposites. Itwasfast and slow,
incremental and transformational all atthe same time. It created valuewith flexibility and
anticipation aswell aswith stability and control. It exemplifies a focus onboth internal and
external concerns. Itfocused on the future and thepast,the short-run and the long-run, quick
results and long-lasting results, change and stability,transformation and incrementalism.
In short,by understanding theCVF, and making appropriate choices and efforttoward change
around the positive tensions facing your organization you will begin to create greater value in
your organization.


Reference :http://competingvalues.com/competingvalues.com/wp-content/uploads/2009/07/The-Competing-Values-Framework-An-Introduction.pdf