TOTO
TOTO
  • 3. Challenges of Remodeling  ─  Employees Realized Top Management’s Passion for New Remodeling Business
  • Prologue Remodeling* Transformed by TOTO
  • Our remodeling business launched fully in 1999 as one pillar of the TOTO group today and has greatly contributed to our V-Plan business achievements. We took inspiration from our history to create a business model that started with our 1993 Remodeling Declaration. The ongoing policies and work to improve our corporate structure was modeled from the work of management in times past. We would like to review the flow of the remodeling we have revolutionized up until now while making sure to unite the ideals and goals of our predecessors. *See Chapter 2 for definition of “remodeling”
  • Difference Between Remodeling & New Construction (Residences)
  • 3 Challenges of Remodeling ─ Employees Realized Management’s Passion for New Remodeling Business
  • Japan has approached an aged society with a low birth rate at a speed unseen in human history. Japanese society matured in one fell swoop after the rapid reconstruction following the war. Residential equipment also of course reached an accelerated turning point from their growth model. TOTO reinvented themselves to walk the road of remodeling as a way of confronting this market shift. *The large-scale TDY Tokyo Collaboration Showroom opened in 2012 (pictures form the opening)
  • Chapter 1 Remodeling History
  • External and Structural Alteration Exchange Campaign Shift with Market Trends
  • The External and Structural Alteration Exchange Campaign started in 1981 as a clear effort that lead to our Remodeling Declaration. Activities to standardize the remodeling business were already underway at the time. A fantastic representation of this was the TOTO stores for external and structural alternations. These stores pioneered our Remodel Clubs, providing a tremendous amount of invaluable experience cultivated as an entry point. These activities indicated TOTO’s transformation. Kurokawa, our 8th president appointed in 1972, has described the importance of innovating oneself with the changes of the times. One example of this is a comment made at the beginning of 1976 “The generation of sales made through creation is gone. In the future, we need to fully understand the requirements of users to create quality products at a more inexpensive price through the ingenuity and innovation of everyone.” The TOTO remodeling business was the source of our shifts with market trends.
  • External and Structural Alteration Exchange Campaign sales tool
  • We change with the desires of the times, or in other words, we strived to more fully grasp market trends.
  • Chapter 2 Start of the Remodeling Business
  • Remodeling Declaration Aiming to Create a New Lifestyle in Japan
  • Shigeru Ezoe, the 12th president of TOTO, formulated the Remodeling Declaration in 1993 
with the purpose of creating a new lifestyle for our customers as consumers. Our new business related to external and structural alterations was founded in the belief of our President Ezoe to create a new lifestyle culture in Japan with a clear distinction from the Japanese-style for renovations that simply responded to actual demand by promoting remodeling, which was a word not often heard at that time. Therefore, with inspiration from “re-modeling” that referred to the external and structural alterations which changed American lifestyles, remodeling was proposed as a business that satisfied new needs by positioning the company even closer to its customers in order to listen to their feedback. The Renovation Business Promotion Department (transitioned into the head office promoting the remodeling business the next year) that was newly established at the time actively advanced and expanded the organization of Remodel Clubs set to launch the following year in 1994. We came to intimately understand the intentions of our customers through the TOTO remodeling business by expanding these member stores, and we accelerated this in the following stage of these efforts.
  • Assembly and launch of Remodel Clubs (1994). Remodeling Declaration (1993)
  • Massive expansion of Remodel Clubs from engineering firms to renovation and housing retailers.
  • Chapter 3 The Source of Victory in a Competitive Market
  • Higher Customer Satisfaction is Key to Recovered Success
  • Ezoe raised four priority initiatives in 1993, which is the same year he announced the Remodeling Declaration. Higher customer satisfaction was the first priority raised as a challenge to prioritize above the expansion of sales and greater profit. This emphasis recognized the activities to heighten customer satisfaction in every department throughout the company as the source of victory in a competitive market. President Ezoe saw the key to recovered success as higher customer satisfaction (CS) in an ever more competitive economic environment following the burst of the financial bubble.
  • Redefinition of designations
  • Our Customer Satisfaction Declaration was announced in 1997, which was our 80th anniversary. This declaration redefined the once vague meaning of the word “customer”.
  • Chapter 4 Full Operation in 1999
  • Escape from Reliance on the New Housing Developments
  • We reached a dramatic turning point in our remodeling business with the appointment of Masatoshi Shigefuchi as the 13th president of TOTO in 1998. This was the first year TOTO had appropriated an account deficit since the company went public. Moreover, the number of new housing developments had fallen by 200,000 units over two years. Shigefuchi was unable to wait any longer in shifting to a business model with remodeling at the core to eliminate the impact of the number of new housing developments that he had promoted as Executive Vice President. The presidential policies written in the 1999 President Declaration stated: (1) Bring sensation to customers as a company, and (2) Define a management structure that does not rely on new housing developments. (1) cultivated customer satisfaction by providing the most appropriate products and services to each customer while (2) emphasized the importance of opening avenues to new markets such as remodeling. These policies defended our share in new housing developments and clarified the direction of a new system to quickly expand into the field of remodeling.
  • April 1999 Toyu (in-house magazine)
  • The policies implemented by President Shigefuchi in 1999 were introduced in the in-house magazine in April 1999 with the slogan, “Visit sites to build new relationships”.
  • Chapter 5 Providing a Stage for Remodeling
  • Expanding Breakthrough Showrooms to 100 Locations in Japan
  • Shigefuchi announced the expansion of showrooms to 100 locations throughout Japan right after his appointment as the president in 1998. This fearless initiative released in a time of tough performance is the decision that forged success in the TOTO remodeling business. Showrooms were also a place with a strong fundamental element of simple presentation. The opportunity to largely revamp this policy came with the Thanks 80th Anniversary Showroom Campaign held in 1997. This was the first time we invited the customers to the showroom as a venue for business negotiations with clients. This practice expanded to clients’ and partners’ showrooms.
  • Suburban showroom
  • The effort evolved into a venue used for business negotiations with clients in addition to exhibiting our products.
  • Chapter 6 Evolution of Sales and Showroom Advisors
  • Innovation pursued by TOTO sales
  • Sales and showroom advisors also needed to change. The evaluation criteria of advisors is the customer service questionnaires answered by our customers. The assessment includes factors about how satisfied customers were and whether or not the proposals were easy to understand. The customer-first mentality of the past remains unchanged even today. The factors to evaluate sales have also changed drastically. The quality of efforts demonstrating how much we were able to approach our clients who are in contact with our customers and how effective our remodeling proposal activities were also set as factors in addition to sales. We saw surprise and bewilderment at first, but remodeling became deeply understood and natural the more remodeling penetrated the market. This earned us the support of many partners and clients as the initiative progressed.
  • Proposed activities and evaluation factors changed to prioritize customer satisfaction.
  • Chapter 7 Wheels Driving Remodeling
  • Remodel Clubs Differentiating TOTO from Competitors
  • The expansion of Remodel Clubs was what actually grew the number of showrooms throughout Japan and promoted TOTO remodeling. These two efforts were the wheels that drove our business forward to differentiate ourselves in the remodeling market as well as separate ourselves from our competitors. The Remodel Clubs that started with approximately 600 branches in 1994, which was the year after the Remodeling Declaration, exploded to 5000 branches by 2005. This increase draws almost a perfect parallel with the expansion of showrooms throughout Japan described earlier. More specifically, there was clearly a mutual relationship between these two activities. Remodel Club branches grow in regions if a new showroom was established. Membership stores also increased with the increase in Remodel Club branches that produced higher results by utilizing the showrooms. We proposed remodeling to our customers in each region with Remodel Club branches and showrooms united by facilitating the education of showroom advisers and increasing membership according to this growth. This becomes the basic business model for showrooms and Remodel Clubs.
  • Logo upon launch of the Remodel Clubs (left) and the logo as of establishment (right). Various promotion tools of that time
  • Success driven by growing Remodel Clubs that produced higher results by utilizing the showrooms
  • Chapter 8 Challenge of Aiming for New Heights
  • Promoting the TDY Alliance
  • TOTO is furthering remodeling with plumbing equipment at the core. However, we are not only engaged in plumbing equipment products but also doors and windows if there is a ceiling based on the concept of restrooms as an entire space in the area of actual remodeling. We started the TDY Alliance between three companies -TOTO, Daiken Corporation, and YKKAP- in February 2002 to respond to these various needs. This represents the confidence and pride we have in proposing high quality spaced provided through this alliance even with the crisis in the housing market. We realized our goals united as three companies. One of which was an initiative to confront environmental issues and building high-quality homes that can be used in the long term. The Green Remodel advocated by these three companies since 2008 has aimed to realize long product life, reduction in CO2 emissions, and health-friendly design. These three companies were brought together first for this purpose to sufficiently lead the synergy between the expertise of each company and continually provide satisfaction that goes beyond the expectations of our customers and clients according to the philosophy that every person knows their own business best. This is the true essence of the TDY Alliance.
  • Signing ceremony of top management at all three companies (Left to right; TOTO President Shigefuchi (at the time), YKKAP President Yoshida (at the time), and Daiken Corporation President Muguruma)
  • Each of the expert fields from the three companies creates a synergy able to provide satisfaction beyond expectation
  • Chapter 9 Satisfaction Exceeding Customer Expectations
  • The New Remodeling Declaration Pursues New Value
  • We took the opportunity to formulate the New Remodeling Declaration ten years after the Remodeling Declaration was formed in conjunction with the appointment of the 14th president of TOTO, Teruo Kise. The purpose of this revision was to create new markets by ramping up remodeling to the next stage. The objective of TOTO was to provide satisfaction exceeding customer expectations in this New Remodeling Declaration. The stages of life for people change with age. We wanted to be able to propose new lifestyles. For example, the ability to create a richer intergenerational lifestyle for older people with grandchildren by offering a bathtub that allows them to bathe together with their grandchildren. The New Remodeling Declaration spearheaded this shift from a demand of goods to a demand for lifestyle. This type of remodeling continually evolved this business by unveiling new ways to lead the industry.
  • New Remodeling Declaration (2003)
  • We discovered a shift in values through the progressions of the life stages.In other words, this generated a shift from a demand in things to a demand in lifestyle.
  • Chapter 10  The Aim to Revitalize TOTO
  • Company-wide Remodeling Activities
  • TOTO found itself in a deficit for the first time in nine years when settling accounts in FY2008 due to the economic crisis. Kunio Harimoto, who was appointed the 15th President of TOTO during this crisis, advanced our efforts under an unprecedented approach of activities to facilitate remodeling that engaged to every single employee in 2009. These activities represented the proactive efforts to cultivate more opportunities to build awareness about TOTO remodeling. The most surprising aspect of these activities in the company was the remodeling fair at a TOTO plant brought about by the employees working there. Our success came in many different forms, but the heightened motivation on manufacturing sites was clear. We received many compliments from our customers that expressed their trust in TOTO. This was our first experience to reaffirm the pride we have as a company delivering products. The perseverance of remodeling lies in the mentality of innovation and a history of enhancing quality, such as our philosophy to improve customer satisfaction. Company-wide unified remodeling activities succeeded in the growth and prevalence of a mentality toward innovation in not only development and sales, but also throughout the entire company.
  • Remodeling fair at a TOTO plant (2009)
  • Reaffirmed pride as a company delivering trusted products at the remodeling fair at a TOTO plant
  • Chapter 11  Bottom-up Innovation
  • Management’s Passion Realized by Employees
  • As described at the beginning, TOTO remodeling was able to grow into what it is today from the External and Structural Alteration Exchange Campaign that started in 1981. If this was the origin of our remodeling, TOTO forged its remodeling business over 18 years until operations were fully in place in 1999. What was it that overcame the barriers to succeeding in this challenge in 1999 when it could not been done under several generations of managers in the past? The breakthrough was the bottom-up power that moved the entire organization. This was the unified effort of the company when responding with action on-site to the ideals of management. This must have been a miracle granted to us in 1999. The sales ratio between new construction and remodeling had quickly reversed three years later in 2002 with the growth in remodeling making up approximately 70% of the profit in Japan today. The shift to a corporate structure that did not rely on the number of new housing developments, which had been worked toward by our past presidents, had finally been fully realized.
  • Growth of the remodeling business
  • Shift to a corporate structure not reliant on the new housing developments thanks to the remodeling business