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Each year Fortune repeats a survey of America's Most Admired Companies. For the first time ever a foreign company made it into the top ten — all the way to number 2. That firm is Toyota. (GE is number one.) You're probably not surprised given all the attention Toyota has been getting in the press, particularly in comparison to GM and Ford. But what surprised me was the story Alex Taylor III told. It is the story of innovation, big bold objectives, and projects.

Great project leadership makes Toyota's new product development so successful

The Birth of the Prius chronicles a 10-year effort instigated by the most senior people at Toyota to reinvent the automobile. The story reveals Toyota's set-backs, missteps, and embarrassments. But we know how this story ends. Hybrid engine technology works. And it's commercially viable. It currently costs about $3000 more than conventional technology, but Toyota is working on closing that gap.

How did they deliver the first Prius in 24 months? And how did they do the next version in another 24 months? It takes a little reading between the lines and some knowledge about what else has been written on the Prius¹. In short, it is great project leadership that makes Toyota's new product development so successful. These are some of the ingredients of that leadership:

• Big bold objectives
• Attention to produce and hold alignment to those objectives
• Carefully selecting the key people for the project
• On-going care and review of the project by the most-senior executives
• Freedom for the team to do the project as they see fit
• No blame environment that encourages learning and innovation

Toyota excels at delivering projects

Toyota hasn't stopped with the Prius. There are hybrid versions of the Camry, Highlander, Lexus GS450, and more are on the way. Ford licenses the technology from Toyota. Each time Toyota brings the technology to another car it does so as a project. A project that wows the market. A Camry that gets 40 miles per gallon and a Lexus that goes from zero to 60 in 5.8 seconds with mileage in the high 20s.

But what has this cost Toyota? No more than any other new car developed…about $1 billion. That includes all the money spent on developing the technology.

Toyota is not just the best automotive company in the world, nor just the best manufacturer. Toyota excels at delivering projects — big, bold projects. That will be far more difficult to emulate.

1. The Toyota Way, by Jeffrey K. Liker, Ch. 6 The Toyota Way in Action: New Century, New Fuel, New Design Process — Prius [ ⇑ back ]