Unchanging Innovation and Changing Economic Performance in Japan

Abstract

The Toyota Commemorative Museum of Industry and Technology gives its visitors much to ponder. Established at the site in Nagoya where in 1911 Sakichi Toyoda founded his automatic loom factory (the basis of the family fortune, which later funded his son Kiichiro's development of automobile production), the museum was opened on June 11, 1994, the 100th anniversary of Toyoda's birth. It is a popular stop on field trips for Japanese schoolchildren, who are required to study in the 3rd grade the automobile industry. The messages, which Toyota wishes to instill in its young visitors, are the importance of making things and of creativity and research. And confronting all museum visitors upon entry, having central place in the vast and largely empty first room of the exhibits, is Sakichi Toyoda's one-of-a-kind vertical circular loom. As described in the museum's catalog, Even in the closing years of his life, [Sakichi Toyoda] continued to work to perfect the [vertical] circular loom. To symbolize this unfailing spirit of his, we are proud to exhibit the only circular loom he developed that is still in existence. This first Symbolic Exhibit in the Museum, whose distinctive outline serves as the museum's logo, was manufactured in 1924. Though Toyoda first applied for a patent in 1906 on a circular loom design, and eventually held a patent in 18 countries for the concept, and though the circular loom is quieter than flat looms (meaning it is also more energy efficient) and able to produce longer bolts of cloth without seams, the circular loom was never produced in volume. In fact, no sales, let alone profits, were ever made from this innovation. In 1924, Toyoda also perfected the Type G Automatic Loom, a flat nonstop shuttle changing loom-embodying an incremental but significant improvement on previous loom technology-which became Toyota's all-time bestseller in the sector. The Type G Loom, however, is not the museum's symbolic first exhibit or logo; instead, it takes its place chronologically back in the succession of exhibits. Why does one of Japan's, and the world's, leading manufacturing corporations choose to feature an innovative product, which was never brought successfully to market nor became any sort of technological standard, as the emblem of its tradition of industry and technology? Neither corporate public relations efforts, nor Japanese culture, are generally known for their sense of deliberate irony. Nor is either known for rewarding quixotic individual quests of little practical value to the larger purpose. Whether intentional or not, perhaps the message is the one given at face value: that technological innovation is its own reward, and should be appraised on its own noncommercial merits. While the process of innovation is certainly related to a corporation's profitability, there is no easy one-to-one relationship between the best innovation and the best economic results, beyond the fact that innovative people over the long run have the fundamental potential for success.