In this episode of The Heidrick & Struggles Leadership Podcast, Heidrick & Struggles’ Lewis Adams speaks to Luis Lozano, the president of Toyota Mexico. Adams and Lozano discuss leadership through the transformation currently taking place within the automotive industry, moving from traditional automotive to broader mobility. Lozano shares what he sees as the biggest opportunities and challenges over the next five years and what leadership skill sets and capabilities will be critical for him as he leads through the transformation and disruption, and what types of leaders he is looking for as well. Lozano also shares how his Mexico strategy plays into the broader global strategic development plan in Toyota, how he plans to achieve his vision of Mexico becoming an innovation center in developing new ideas and expands a bit on some of the ways he and his teams are integrating and prioritizing diversity and inclusion into the business—focusing particularly on challenges unique to Mexico.

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to The Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation. 

Lewis Adams: Hi, I'm Lewis Adams, a partner in Heidrick & Struggles’ Mexico City office, and a member of the industrial and CEO & Board of Directors Practices in Latin America. I work with clients across infrastructure, power, oil and gas, manufacturing, chemicals engineering, and, not least, automotive.

Today I'm excited to be joined by Luis Lozano, president of Toyota, Mexico. Luis is in charge of legal, government, and industrial affairs, corporate communications, and compliance activities for Toyota in Mexico. Luis is also a member of the executive and audit committees. Thank you for joining us today, Luis.

Luis Lozano: It's a pleasure to be here. Thank you so much for the invitation. 

Lewis Adams: Great. Well, to kick off this conversation, Luis, can you share your career journey and why you made the moves that you have, and some key influences in your career decisions? 

Luis Lozano: Sure. Thank you so much. Well, it's been a ride, obviously, to get into the position in which I am.

I started off being a corporate attorney. I studied law in Mexico City, and then I was a member of several law firms, and I was partitioning law in the corporate fields, mergers and acquisitions and contracts, and so on. And one of the things that I, you know, started thinking about is that I did not understand how the decisions of the business were being made.

I was, as all lawyers or many, many lawyers, just focusing on the wording of a specific clause. But I was not realizing why that clause was needed or why was that contract needed. So what was the business purpose of a position that was creating that contract? So I decided—and back then I was working in Baker & McKenzie—I decided to do a MBA, which was not a common thing to do for lawyers back then. I was supposed to get the scholarship from the firm. They were going to pay for my master's degree. When I told the partners meeting that I was going to do an MBA in Europe, they said, “No, this scholarship is only given to those that study a master's in some legal matter, and we want you to go to the United States.”

So, it was a big decision then because from the idea that I was going to not have to pay from my own account, the master’s in Spain, I started, I had to somehow regroup. I had to sell my car, sell my things, and decided to go to Europe. Then I studied the MBA, and I think that's one of the best decisions I've made in my life.

Baker & McKenzie lost me forever, and I didn't go back to them because of that. When I came back into Mexico, once I had my MBA, I was hired by another law firm. That was the law firm of a new automotive company in Mexico back then in 2003, which was Toyota. Basically, they hired me to handle all Toyota matters as an external attorney.

I started working with Toyota. I was in the same building as a matter of fact, and then as the business grew, Toyota asked me if I could join them formally within the company, as you said, in charge of legal department first. And then I started growing and started acquiring new responsibilities within the company.

I created a bigger area. I somehow also was able to foresee all the operations of Toyota in Mexico because there were two companies, a manufacturing company and sales company. I joined the sales company, but I always thought that it was a bad idea to have the two companies separated as if we were a state of the United States rather than a country.

So I pushed for the creation of a holding company, which is a company that I preside, and this holding company—then, you know, we moved all the operations of Toyota below this holding company, and therefore I have this consolidated responsibility of all the operations of the Toyota companies in Mexico, and I think those were kind of big decisions that I had to take during this journey.

Specifically, people that influenced me a lot. As a matter of fact, I just bumped yesterday into one of the partners in Baker & McKenzie, Luis Ruiz de Velasco, who was kind of the first person that, you know, if I was kind of a sculptor, he was the guy giving the first hits with a hammer, and I considered him to be the 60% of my formation as a professional. Very grateful for his participation in my professional career. I think that the other person that was very relevant for me was a president of Toyota. He introduced me to the automotive business, and he directed me to what's relevant in the automotive business. What should I be looking for, and why companies such as Toyota should be concerned about being the most respected company everywhere we are. And he gave me the DNA and the cultural values of the company. And I think those two guys are probably the most important influences that I've had in my provisional career. 

Lewis Adams: Yeah, that's fascinating, and thanks for sharing that. Clearly, you made some bold decisions early on in your career, which have paid off and had the vision around the consolidation of the legal entities in Mexico and the fortune of support of some of these key individuals that you've mentioned.

And I guess it ties into the next question, well, as I'd love to explore your leadership through transformation currently taking place within the industry. So where we're moving from traditional automotive to more broader mobility. Can you share what you see as the biggest opportunities and challenges you see the industry undertaking over the next five years, whether it's related to AI, electrification, and then the other points that are impacting the industry?

Luis Lozano: Well, thank you so much for the opportunity of responding this because I think if there's something I'm passionate about is exactly the future, and I am— I guess, I'm a leader that focuses a lot on the future, and I've always had the ease of trying to see things in the long term, number one, and from a bird-eye standpoint of view, that's one of styles that I have as a leader, and therefore being able to do that in the position of president in such a relevant period for the automotive industry is for me a privilege. And with a company as Toyota, it's a double privilege. The automotive industry as we know it is going to be transformed. I always say that if you see the top 10 companies of the automotive business today, and fast-forward in 10 years, you'll see that those companies will change significantly.

There will be at least six companies that will not be there. And that will change their operations. Absolutely. And I'll try to explain regarding that. Business is moving in toward mobility, as you mentioned. What means mobility? What does it mean? And really nobody has a straight answer. What we think mobility may mean for Toyota is we think that people that can move or things that can move—within a room, a street, or within a country or within the world—has freedom. And by being free, you can move, and therefore you could be happy. And happiness is the last objective of Toyota in terms of the process of mobility. Now that's very broad, so trying to, you know, kind of land things as our activities will be moving.

There's a concept that we call CASE, and it stands for some issues that I'll explain. The C in case means connectivity. Right now, cars are hardware. They're not software. So it's like if Apple sells the iPhone without any content on. So there's a huge opportunity for the automotive industry to create content within that hardware that we already make, and therefore we are working on establishing apps that you will be able to download in your car.

And that will be providing additional services or additional privileges from the purchase of your car. So as an example, potentially in the future, you will be able to download an app that can park your car automatically. So your car will leave you in the door of a mall and the parking lot is full. You will touch a bottom and then get out of the car, and the car will go and park itself in the nearest place and will come back to you at a certain point. 

Lewis Adams: So it's like a personal concierge or valet service. 

Luis Lozano: That's just one example. The other example could be it could you can increase your horsepower in your car through an app.

And you say, I'm going to go, you know, on the highway for a road, I want a little bit more speed and therefore I want more throttle. And you'll get the app and the app will be able to liberate some more sort for your car. That's kind of examples that you get from the connectivity portion. Of course, it also connects with streets, connects with other cars, and in that sense, safety is a very relevant item.

Cars will be able to repel themselves before colliding, and it gives a lot of opportunity in terms of what we see for the future. Now, that is C. The A means autonomy, and we have all heard about the autonomous vehicles and the autonomy in vehicles. The approach that Toyota has regarding this is that anything that we do or the machine can do—including robots, cars, or whatever we're talking about—should be to help and assist the human.

So, there's people that see the future and they dream by saying, “I'll be able to get into my car and not drive and read.” But the other types of people, myself included, that like to drive. So therefore you'll be able to decide when you use the autonomy where you don't use it, and the level of autonomy. So that's another exciting thing that's coming in the future. 

The S in CASE stands for sharing, and the reason for that is because the kind of ownership of vehicles and the mobility for the future is in question. There's several cities and several societies today where young people don't want to buy a car. So therefore, we have to understand that our transactions and our interactions with our future customers has to have a wider range of way for them to use the mobility. 

So, they could be renting for short-term lease could be a possibility. You could get into a parking lot with your phone and ask if there's an available car for you in that parking lot, and it will confirm to you that that's the case. You will then push a button and say, “I'd like to rent a car for the next couple of hours,” and then there's going to be a QR coming into your phone. You show the QR to a detector in the car. The car will open, and you can start a car, use it, and then drop it in the airport or drop it in another parking lot. That's the things that we will be seeing for the future. So from purchasing to that, there's a very ample range of possibilities for the ownership.

And then we have the E that stands for electrification. And electrification is probably the most-discussed situation and circumstance within our industry right now, and the way we see it in terms of Toyota, we believe that we should focus on where are we electrifying. And the fact that we are electrifying is because we want to reduce the CO2 emissions. We want to get into carbon neutrality by 2050 as a company. So therefore, the technologies that we are providing to our customers, which are hybrid electric vehicles, plug-in hybrid electric vehicles, battery electric vehicles, and fuel cell vehicles, which are hydrogen vehicles for the future, have that purpose of reducing the CO2 rather than—for us a discussion of electric or not electric is, in reality, a bad or a false dilemma.

In reality, what we need is whatever it takes to reduce CO2 for the future and the way to do it in the fastest way, in the most efficient way, and in the best manner possible for every other society. Now, this concept, Lewis, is very relevant, and I was referring to you in terms of the list of participants in the industry that you see today and the ones that you'll see in the future.

And that's why I tell you that it'll change because each one of those concepts will be very complex to deliver globally. Not every company will be able to do that. There are companies that have already expressed that they will only sell battery electric vehicles for the future. Well, that means that you will not be able to be a global company because not all, you know, Africa will take a while for electrification. A country like Mexico will take a while for electrifying. So therefore those decisions impact and will impact this outcome of global companies. What Toyota's view of multi-technological approach, depending on country and customer preference, I think will guarantee that we will be in that list that I tell you in 10 years.

Lewis Adams: Sure. And you know, the complexity you mentioned is just so enormous that it must create a lot of, you know, leadership challenges as well for the organization. So what do you see the leadership skill sets and capabilities that will be critical as you lead through all of this transformation and navigating some of these disrupting factors in the industry?

Luis Lozano: Well, one of the factors that I think is a risk for companies, such as Toyota, which are so established is that we obviously have a traditional business. And that traditional business is very relevant because that traditional business, it's what's going to finance the progress toward the future for a mobility company.

But that requires a structure that right now may not understand that they're working toward the future. And that's one of the struggles that we find. So we need to think of ambidextrous companies. Where part of the company, we’re still working for the present and for the profit of the present. And at the same time, you need another structure thinking about the future and spending the money that the traditional part of the business is creating.

And that generates a lot of conflict within the organizations. So first thing that I think is that we need to move on to have a more dynamic organization. And in that sense, I think we have to develop. The middle part of the structure, organizational structure of our companies. I love military kind of philosophy and strategy.

Wars are won by sergeants, not by generals, because the sergeants are in the field and taking those decisions. So we need to enforce the sergeants—the sergeant situation and the sergeant imposition—that's going to be crucial for this kind of transformation. And in that sense, we need to give them more information. We have to give them more transparency, and we have to give them more power to take those decisions. We have to get rid of bureaucracy in terms of company, which is by being a big company, that's a huge risk. 

However, we need to become more agile, more flexible, and move with more ability because disruption comes very fast as some historic companies have learned in a bad way. And I do think that we need to be disruptors within the company to disrupt the rest. And finally, I think from the leadership standpoint of view, Toyota has to be more aggressive rather than defensive. And that's one of the things that I push for with my position toward my bosses and something I always tell them: We need to be more aggressive. We need to lead the change. Rather than wait until something makes us change. And that's the view that we need for being successful in terms of the transformation. 

Lewis Adams: Absolutely. And we've seen it in other sectors, particularly in traditional sectors that are impacted by big social change or environmental change, say the oil and gas industry, and automotive in a similar way, needs to be more proactive in terms of how it positions itself. And I guess you're seeing that with Toyota. 

Changing the tack a little bit. As I mentioned in the introduction, your president role is responsible for a wide variety of functions. Public affairs, including legal and compliance, government and regulatory affairs, communications, corporate social responsibility, customs, and trade compliance.

When attracting talent into these different functions, what types of leaders are you looking for? And given all of the transformations you also discussed, are there specific skills and competencies you are finding to be critical when seeking senior leaders for today and tomorrow? 

Luis Lozano: First, I would like to say that I think that we need a very diverse view from the people that we're hiring, meaning we need people that have different backgrounds, different sex, have different preferences, because I think that the diversity is enriching for a transformation because as you have more points of view on a specific topic, I think you'll be better off to take the wisest decision.

That's number one. Number two, I like strong leaders. By no means I know everything, and by no means I am accurate with every single decision I make. And therefore, I like people that fight me back and that have their own opinion and that are strong with that. And sometimes I will concede; sometimes I won't. But I think it's enriching to have strong leaders within the company that protect the company. They work for the company, they don't work for me, and that's one of the other things that I do when I present myself as a leader within the company. 

Everyone here works for Toyota, and that's the end of the things. And therefore, as we go either in a traditional business or in the future business, we need to look for the best interest of the company. And if that goes against a decision or my decision, I would embrace it because that's why we hire these strong profiles for the future. I do think that for the future, globalization will be a more relevant thing and therefore experiencing the other countries may come very handy.

And you know, from your experience here in Mexico, that's not the case. You may be an exception of an international member of a local firm. That's not what happens commonly. It's Mexico's a very kind of close environment and I do think that we need to open up a little bit more in terms of our strategy.

And I do also think that the leadership has to also understand where you're standing. Sometimes companies determine the way you are going to be organized. Are you going to be North America? Are you going to be Latin American? Are you going to be—you know, what kind of a transactional point of view? And those plans that come from corporate offices and the established may not reflect the reality of a country.

So, therefore, I do think that people have to have the liberty of working locally and freely in accordance with the environment they're at. In Mexico, in Toyota world, there's a word that's called “Gemba” in Japanese, and that means the place where things can happen, and people cannot take decisions—and that includes me—if I am not at Gemba.

Gemba has always the best point of view of a situation as circumstance or a decision so that we have to trust Gemba to make the best recommendation. So, again, I think that involves my kind of view of what we need and what we will need for the future transformation of mobility.

Lewis Adams: Absolutely. And I think that approach will be positive for Toyota, Mexico in terms of you encouraging people to have a point of view and to push back and challenge and get international experience. And hopefully, with building that kind of leadership culture, we can attract the international talent that we have in Mexico that's going to broaden, bring them back to help build the future.

Luis Lozano: And let me tell you something in addition. I think that we Mexicans, and in general Latin Americans, we sell ourselves very badly in global companies. But one of the best strengths that we have, and that I always tell my Japanese colleagues, is that we never take advantage in this period of transformation on something that we are very strong at in Mexico at least, which is adaptability because we are in a changing environment constantly.

Government may say one thing, and do another. There are several factors that make us change, and we are used to changing, so we adapt very quickly to change and we trigger change very easily without a problem. And that's not the case with other cultures in which the stability of their situation can allow them to plan for the long term and also allow them to execute. But when something changes, they go crazy because they are not in control of a situation. And on that side, I think we're very good at just switching lanes and no problem. 

Lewis Adams: Yeah, that's a great perspective. Great way to look at it. In terms of the complexities and challenges Mexico faces in general can be converted into a competitive advantage as the world becomes more complex and volatile.

That's great. And I guess following on from that, and some of the points you raised, clearly being part of a global organization that's going through transformation, can you share how your Mexico strategy plays into the broader global strategic development plan in Toyota? 

Luis Lozano: One of the things that this transformation toward mobility is going to show every single global company is that you cannot transform globally at the same speed because the situations of Mexico will be very different from those in the UK, will be very different from those in France, will be very different from those in Japan, and will be very different from those happening in Africa. So as you transform and you go through this kind of a big process of transformation that is happening and you have to do it, you need to modulate the speeds depending on country conditions.

So, for example, we are part of the North American region. Electrification in the US and Canada will happen faster than for Mexico because they have the infrastructure. They have more money in terms of government, they have cleaner energy, they have several situations and circumstances. They have purchasing power different from Mexico.

So electric cars are still more expensive than regular combustion vehicles. So, by being in the same region, we are going to be separated from that kind of master plan that was made in Japan, putting Mexico within the North American region, and Mexico may look more like the Latin American region in this case, or more like Southeast Asia region.

So the way I see it, and the way I've been working in the last couple of years, is I've created my own network of contacts with those markets that I think will be more like Mexico. I don't rely as much for this complex in my regional headquarters, which is kind of a traditional part of a business. I don't rely with them and some may not like it, and I have my share of revalue problems.

But what I try to do is I try to create this kind of synergies because I do think that as a company moves, they will need to reallocate some vehicles. Let me put an example for that. There are markets that will go completely battery electric vehicle—as I told you, we have a multi-technological approach. But Mexico and Latin America and Southeast Asia will be a huge opportunity for Toyota to maintain the hybrid electric vehicle market alive. And all the investments that we've made during the years will be able to amortize in these markets. So, I think we are in a position to be a very interesting lever for Toyota, as Toyota may look to the way they will be organized toward the future. So that's one of the things that I push a lot and that's why I also told you before that local leadership and sergeants have to be more empowered to take those decisions because a global company will not be able to take global decisions on changing environments, I think. 

Lewis Adams: And to achieve your vision that you have about Mexico becoming that kind of innovation center in developing new ideas, are there any specific challenges you see relating to that? 

Luis Lozano: Those challenges are the ones that I also told you when you talk about the traditional organization. You obviously have the bureaucracy, you have the traditional business, and the traditional business may not understand what you're thinking in terms of this opening up or this looking for other options because things have been done one way previously. So you have to break those traditions, if I may, or traditional way of achieving processes within the company. And that obviously creates conflict and creates conflict between people. So as I told you, I do embrace having tough discussions with leadership regarding this, and I am, in that sense, maybe a little bit rebellious within the company.

Some people like it, some people don't like it. It's kind of the way we do, but I think it adds value to the company to also the point that I made before I work for Toyota, Mexico. In this case, I work for Toyota and I believe that stronger Mexico and more agile Mexico and more independent Mexico within our organization will provide better answers to Toyota's global transformation toward the future.

Lewis Adams: It's clear that from an early stage, including when you decided to do your MBA in Europe, you've taken brave decisions and continue to do so. One point, maybe we can just flip back to, because I know you mentioned it in one of your previous answers as we know that a specific area of focus for Toyota is diversity, equity, and inclusion.

In reading the Toyota North American Mission statement, the President and CEO Tetsuo Ogawa says that “Toyota works to integrate diversity and inclusion in all aspects of our business. If Toyota wants to build the industry's best cars and trucks for the way our customers live, we need to reflect the diversity of our team members, suppliers, dealer partners, customers, and the communities we serve.”

Can you share some of the ways—I think you've touched on some already—but expand a little bit on some of the ways you and your teams are integrating and prioritizing diversity and inclusion into the business. Are there any challenges you face in Mexico specifically that would be different maybe in other parts of the world?

Luis Lozano: Well, I think first of all, we have to recognize, again, a global company for which situations may vary country by country. The diversity issues in the US may not be the same as a diversity issue we find in Mexico or may be different than those the Australians may have. So therefore, again, locality [matters] in terms of how you address and facilitate the path into diversity. It will change according to the culture of each one of the countries that you are working in.

So that would be kind of my first thing, because there's a struggle always. You have a global diverse policy, and that may not be applied the same to every single country in the world. And that's one of the recognitions that we need to push back. And let me tell you that reporting to North America, we tend to have a lot of pressure from the US to do things the way they do it.

But for example, racism is an issue that has been historically different in Mexico than in the United States and has had different results and therefore they have created different concepts of importance to take decisions within the company to kind of be, or, you know, get any kind of discrimination out of your system, but also embrace being a more diverse company.

But it'll be different in Mexico and the US, that's kind of my point. So one of the things that we did is we have created our own diversity committee that we are trying to control what we believe that has to have the priorities in terms of diversity and inclusion situation regarding Mexico, and separating from the US kind of idea of what diversity and inclusion may be. At the end, you need to be diverse. The end is the same. The way to achieve it and to attack each one of the topics will be different, changing from place to place. So in that sense, we've created this new D&I committee, and this D&I committee is already working within the Mexican framework of Toyota to determine which priorities will be more relevant for Mexico in the future, and what are the issues that we need to work in terms of a medium term, the urgent things, and the kind of global things that we need to work on as we move within Mexico for a more diverse company—and to guarantee obviously the rights and the obligations for anyone to work equally within the company.

What society is what it is; things that will be accepted in Mexico may not be accepted in the US and vice versa. So that's kind of a challenge that we need to work with. 

Lewis Adams: Yeah, it's adapting corporate processes to local circumstances, and obviously the diversity committee is a great initiative. Is there anything else that you're doing to attract and retain diverse talent? Anything you'd like to share? 

Luis Lozano: To be honest, especially, no. Aside from the fact that we have a very strong approach toward diversity and for example, Mexico, you know, female inclusion in leadership of the automotive business is one of the priorities that we have because it's still kind of a very manly industry, and I think that we need to break that.

As a matter of fact, a big part of my reports are very, very strong intelligent women. And I like to have them because they have always this strength that you and I as men don't have, which is seeing more intuitive approach or foresee for problems. So that's kind of where we are underlining our situation right now is a priority. It's in kind of creating a strong leadership of women within the industry because Toyota wants to be the leader on that matter in the Mexican industry. 

Lewis Adams: Great. Thank you. And I guess as we bring this podcast to a close, just have one final question. What leadership skill set and capabilities do you think will be most critical to help Toyota, Mexico meet its strategic goals in the coming year?

Luis Lozano: Well, I think we need to be very practical and tactical. When you're in a changing environment, tactics are very important. As a global strategy, we already know that we want to become a mobility company that provides happiness to everyone. But to achieve that in a changing environment, as I described during the podcast, I think that flexibility is one of the most relevant issues and one of the most relevant values that leadership will require.

You need to be flexible, adaptable. You need to move fast. You need to be very agile, and you may need to be very agile to move horizontally and vertically also. So if you make a mistake, you have to correct it quickly. And if you have to unwalk what you walked, then you do that quickly. That kind of agility will create a circumstance in which you as a company may move quickly within the change context of a situation.

So I believe that—there’s kind of brief story when the Carthaginians invaded Rome, and Rome was very big and very fixed. And the Carthaginians dropped by with elephants; they moved very quickly. They won the war. They invaded Rome. They maintained their invasion in Rome for a while. No general could win to the Carthaginians, even though they had a bigger army.

At the end, what they did is they hired this young general, whose name was Scipio Africanus. And this guy thought about, instead of defending Rome within Italy, attack the Carthaginians in Spain. It changed the whole game. So therefore, by getting there with a smaller army, moving very tactically and very fast—also getting new partnerships with tribes that were within Spanish territory that knew very well the terrain and giving them and empower them with these new allies—they could be able to create a very flexible situation in which they won.

They attacked and they won and conquered Spain for the Romans, and then they moved and attacked the Carthaginians in Carthage, and that forced the people that were in Italy to move to defend their land. So this flexibility and disruption should be embraced because it could have very relevant results for companies like us. So that's what I would say. 

Lewis Adams: Fantastic and great anecdote at the end there. Luis is always a pleasure spending time with you. Thank you again for speaking with us today and sharing your thoughts. 

Luis Lozano: Likewise. I recognize always your professionalism and your leadership within your industry in Mexico, and we've had a great time working with you within the industry and look forward to keep working with Heidrick & Struggles.

Lewis Adams: Thanks again. 

Luis Lozano: Thank you. 

Thanks for listening to The Heidrick & Struggles Leadership Podcast. To make sure you don’t miss more future-shaping ideas and conversations, please subscribe to our channel on the podcast app. And if you’re listening via LinkedIn, Twitter, or YouTube, why not share this with your connections? Until next time. 

About the interviewer

Lewis Adams (ladams@heidrick.com) is a partner in Heidrick & Struggles’ Mexico City office and a member of the Industrial and CEO & Board of Directors practices in Latin America.