This C-Suite Recognizes That Failure is Part of Innovation

At Toyota Financial, a close-knit, collaborative group of C-level execs allows for missteps in the company's innovation strategy.

By Tim Scannell
Wed, October 30, 2013

CIO — When George Borst made the jump in 1997 from general manager of Toyota's Lexus division to head of the company's finance group, he was faced with a big decision.

The finance group's four core systems were in woeful shape, needing upgrades to improve performance and keep up with the rapid growth of finance operations. Borst came to the job long on strategy but admittedly a bit short on the intricacies of IT and finance, having come from sales, marketing and product-planning groups.

"I wish I'd paid a lot more attention in college to my economics and finance courses," he jokes. "But I was sent over there for a reason: to help increase sales and get closer to the dealers."

Borst decided to upgrade all four systems at the same time, including the core receivables system, thinking that a staggered plan would take longer and trigger an endless cycle of updates and redundant fixes.

As it turned out, that decision was a mistake.

"George's error was in signing on to the upgrade of multiple legacy systems concurrently without increasing the manpower and business prowess to be successful," says Ron Guerrier, CIO at Toyota Financial Services (TFS). The core receivables system was hardest hit, Guerrier says, noting that the effort had to be restarted three times.

The IT department's reputation also took a hit. "Even though it was my fault," Borst says, "people were blaming IT for not having the capability to do it."

His mistake was trying to solve a problem without first gathering all the details and considering every variable, all while essentially flying solo. It's a mistake that neither he nor the company would repeat today. Not because Borst has a deeper understanding of all the complexities of IT, but because he later pulled together a trusted team of executives willing to share responsibility and accountability, in good times and bad.

The team includes the CEO, CIO, the vice presidents of sales and product marketing, and even the finance group's VP and general counsel -- many of whom came up through the ranks together over the past decade or more, cementing their collaborative relationships. It is a C-suite dream team, although its members might eschew that phrase because egos and lofty titles get in the way of collaboration and trust. The number one rule for this group: Leave that baggage at the door.

The TFS team's recipe for innovation and collaboration includes a list of basic ingredients: trust, courage, confidence, a sprinkling of diversity and a healthy dollop of mutual ownership of both successes and failures. Like many recipes, however, there is some wiggle room. "I'm huge on unity, but that doesn't mean everybody agrees," notes Mike Groff, who was until recently the senior VP of sales, marketing and product development at TFS. He was tapped to replace Borst as the organization's president and CEO when Borst retired on Sept. 30.

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