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Millions of vehicles recalled due to quality problems, multiple lawsuits, government investigations, and a very public apology from the company’s president have seriously damaged Toyota’s once-unassailable reputation. What do these problems say about the famed Toyota Production System? What will these problems and the wider economic crisis bring for the country’s automotive industry more generally? These authors recently visited Toyota and a number of automotive systems suppliers in Japan. Their observations and assessments of how the industry will fare in the years ahead are the basis for this article, which details the internationalization of the Japanese motor industry, the increasing use of temporary workers at motor plants, compensation systems, and lifetime employment.

Most firms struggle to adapt to discontinuous changes in their environment--witness Lego's very slow adaptation to the world of digital devices and online games. One key reason for this is that they get locked into established networks of relationships and struggle to break out of these relationships and establish new ones. Examines the approaches firms can use to build relationships with new prospective partners that are more suited to the opportunities and threats they face in new competitive environments. Identifies the key barriers that prevent firms from accessing these "networks for discontinuous innovation" and presents specific strategies that firms can adopt to overcome them. The challenge involves three steps: finding the right partners to engage with, forming relationships with them, and then building high-performing networks. By following the guidelines proposed, firms will be more likely to create high-performing networks for discontinuous innovation.