Innovations in Automotive Firms: An Analysis of Toyotas Innovation through Its Development of Prius

Abstract

In December 1997, among the leading automobile manufacturers, Toyota was the first automaker who succeeded in the mass production of hybrid vehicles, Prius. Toyota perceived environment as a new keyword for the 21st century and forecasted a strong rivalry among automakers in the era of an environmental war. Therefore, Toyota attempted to develop technology which will become a new global standard and which will guarantee the companys survival in the 21st century. Through the Prius project, Toyota achieved two innovations: product and process. Furthermore, Toyotas development lead time had significantly shrunk to 15 months. Toyota achieved these innovations by selecting a practical development direction, hybrid as an interim product, and by managing development process successfully. Effective integration under the talented chief engineer, adequate channels of communication, and a shared-understanding within the firm led Prius development to a success.