• The Wall Street Journal (subscription required), Monday, December 11, 2006 11:30 AM

Katsuaki Watanabe, Toyota's CEO, is questioning a core tenet of the auto maker's corporate culture--kaizen, the relentless focus on incremental improvement. Instead, Watanabe, 64, wants kakushin, or revolutionary change in how Toyota designs cars and factories.

Watanabe thinks Toyota is losing its competitive edge as it expands around the world. He frets that quality, the foundation of its U.S. success, is slipping. He grouses that Toyota's factories and engineering practices aren't efficient enough. He is pushing Toyota to reduce the number of components it uses in a typical vehicle by half--a radical idea that would usher in a new chapter in car design. He also wants to create new fast and flexible plants to assemble these simplified cars.

Watanabe ultimate aim: Cut at least a trillion yen ($8.68 billion) in vehicle costs in the next three to four years--the equivalent of about $1,000 a vehicle--and keep slashing costs at similar rates thereafter.

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