Understanding ”the Puuppola miracle” – A managerial view on Toyota´s triumphant return to the world rally scene

People interested and involved in motor sport have been lifting their hats off for the first 4 months of the World Rally Championship (WRC) season, and with a reason. Promising to put up a 150-people organization in a year and a half, to make a competitive and robust racing car from scratch would have alone been a move bold enough from Toyota and its team manager Tommi Mäkinen. Placing the operation to the tiny village of Puuppola about 15 km north of Jyväskylä was an additional spice to the soup.

The results as of May 2017 have been a clear overkill. The team has not only survived on the circuit, but it has already won one race of the competition, it has been on the podium in others, and all of its three drivers have scored WRC points. Mäkinen, an archetypal representative of understating Finns, could (but most likely will not) talk like a Ostrobothnian carpenter describing the results of his work: “I just try to make it good, but it somehow gets to be excellent”. One can easily guess the flow of interview requests and ideas of articles that journalists ask from Mäkinen. The storyline is still short. However, the experiences from this success would provide learning not only from the sports and motorsports angle but also from the broader lens of management and leadership. We try to understand the factors contributing to this success with the aid of management development frameworks and theories.

Hitting the market at the time of technological discontinuity

Harvard professor Clayton M Christensen made already in 1990s an interesting finding: when key technologies in an industry change, the dominant firms in the “new world” will not necessarily be the ones they used to be. The industry originally under Christensen´s study was external computer memories – disk and diskettes: from 5.25-inch floppy disks to 3.5 inches, then to hard disks. Why do the best firms of their breed tend to miss the train of change then? Christensen had altogether five complementary explanations for this. One of those seems to make a clear match with the topical case of Toyota and rallying: the capabilities of an organization define its incapabilities. Very few companies are brave enough to admit that a big part of their legacy in knowledge, practices, facilities and machinery are not assets in the new landscape, but rather a burden that brings with them inertia, force of slowness. The one starting from a clean slate has then an upper hand to react, adapt and proact!

The same plot is in the early writings of the forefather of innovation theorists and researchers, Joseph Schumpeter, who proposed in 1930s that at times every industry is shaken by waves of creative disruption, that rearrange competitive positions and rewrite “the rules of the game”. In the current world of rally this kind of wave was bought about by the new rules on engines and aerodynamics. And to this tipping point Mäkinen´s team hit with the right angle of entry. Mark Jenkins from the Cranfield University in England made the same observation: technological evolution often means competitive revolution! His object of study was close to our case in discussion in this post, as he was observing the success and failure in Formula 1 race driving. Do you remember what happened to Lotus, Brabham, and Tyrrell? Where is McLaren right now?

All in their places – a place for all

Organizations are created to accomplish a clear mission. In the beginning of the trajectory all people involved are in the very core, all are needed to “get the job done”. But over time things do change. Geoffrey A. Moore from Chasm Group observed that when organizations continue to develop and grow, they start establishing context- and support processes that do not offer any true advantage but instead eat the resources as well as the energy and efforts of the management at an accelerating pace.

The emeritus RDI-director of M-real group (predecessor to the stock listed Metsa Board company) described the phenomenon saying that the organizations starts creating “fat of the noblesse”, a luxury that a busy newcomer cannot afford. The 150-people operation (with 10+ nationalities) is not in the small end of SMEs, but it is fair to assume that every hiring has been done out of need. Every position contributes to the common goal, and everyone feels important. In fact, 150 can be the lowest possible headcount needed to do what needs to be done, and at the same time the largest that a manager can still have a hand-on touch with. The challenges for the future may be in keeping this agility advantage when the presence of the team on the circuit becomes “business as usual”. Interestingly, the new bio-product factory by Metsa Group (the biggest industrial investment in Finnish history after nuclear power plants) some 30 km from the Toyota site also is planned to be run with ca. 150 headcount. The starting point is partly the same: experience combined with a fresh start, new knowledge and new machinery.

The continuation of the Toyota Gazoo story will be fascinating to follow with the lenses of management, leadership and organizational development. Hopefully there will also be setback and unforeseen challenges, as then the team and its management will have an opportunity for further development. As the environment and the team´s position in it evolves, the team my need to reinvent itself, at least partially. One route may be moving from deeply entrepreneurial model towards collaborative management, that might already be taking place.

Critics may point out the (theoretically) unlimited resources of Toyota Corporation as a source of success, but aren´t there more examples of failed attempts of major industrial giants trying to conquer back old positions or new areas than successful ones? One has to remember that money can´t make anyone wiser, and scarcity often has worked as a motivator to lean, agile and most importantly – new solutions. Hopefully members of the team in Puuppola, Estonia and Cologne (the team has spread its resources to three sites) do not start a working day by asking “how to use the budget” but rather “how to win”. Following the ideas of Guy Kawasaki, a one-time Chief Evangelist of Apple Inc., this type of a strong internal Mantra (based on the true Meaning, reason of existence of the organization) glues people together and helps them to contribute. Having money in use does not. The third pillar in the GIST-approach (Great Idea for Starting Things) of Kawasaki is the tag line, the phrase mirroring the meaning and the mantra to the public. And what is that in the case of Toyota? Until 2012 it was “moving forward”, a statement that was replaced by a more adventurous one: “Let´s go places”. That is what they are doing!

Yet another Puuppola miracle is already in the making. The 16-year old Kalle Rovanperä, the son of former WRC driver Harri Rovanperä, has marveled the rallying world for years, in the beginning in modern way via YouTube demonstrating the car handling skills of a then 10-12 year primary school pupil, and lately by live action in Latvian and Italian national championship rallies. Big part of rally enthusiasts seem to believe that the brightest talent of his generation will join Toyota and lead it to the final glory. This may happen or not, but what is sure is that a lot of wise decision in terms of talent management, sports conditioning, technical development and team leadership will be needed. Toyota´s first year back in WRC was pretty much labelled with the “nothing to lose” spirit. Already 2018 will be different, and the competition does not hibernate, either.

Juha Saukkonen, JAMK University of Applied Sciences, School of Business, Rajakatu 35, 40200, Jyväskylä, Finland, juha.saukkonen (at) jamk.fi



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