Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Toto Reinvented the Toilet and Built a Global Brand
Transcript
- Lucas: So the most successful product you've never thought about — the Japanese toilet. Specifically, Toto's Washlet. We're talking heated seats, bidet functions, warm air dryers. It's a product that transformed an entire category, and today about 80% of Japanese households have one. But getting there took decades. Luna: I remember visiting Japan for the first time and being genuinely confused by the control panel on the toilet. But also immediately spoiled. How did Toto pull that off? Lucas: That's exactly the question. Toto was founded in 1917, making conventional ceramic toilets. By the 1960s, they were the market leader in Japan, but the bathroom was still a purely functional space. The breakthrough came in 1980 with the Washlet G-series — the first integrated toilet with a bidet and heated seat. Luna: And that wasn't an immediate hit, right? Lucas: Not at all. The Washlet was expensive — it cost about $1,500 in today's dollars. Americans and Europeans thought bidets were medical devices. Even in Japan, people weren't sure they needed warm water aimed at them. So Toto's CEO at the time, Shigenao Nagai, had to rethink the entire go to market strategy. Luna: Nagai — what was his background? Lucas: He joined Toto in 1965 after engineering school, worked his way up through R&D and sales. He became president in 1989, then chairman. He wasn't a flashy CEO — very much the quiet engineer type. But he understood that the Washlet wasn't just a plumbing product. It was a comfort product, a hygiene product, a lifestyle upgrade. Luna: So how did they pivot the marketing? Lucas: They stopped talking about medical benefits entirely. Instead, they emphasized cleanliness and comfort — 'a cleaner, more refreshing experience,' as the ads put it. They set up demonstration booths in department stores, let people try the heated seat. They also targeted women, who were more open to the hygiene angle. And they persuaded hotels to install them, so travelers got hooked. Luna: The hotel strategy is smart — create a captive audience. Lucas: Exactly. By the early 1990s, Toto had about 60% of the Japanese toilet market, and Washlets were in maybe 10% of homes. Nagai then pushed for a second wave: lower prices, more models, and a focus on the homebuilder channel. He knew that if you spec the toilet during construction, you lock in the customer for decades. Luna: Because nobody replaces a toilet for fun. Lucas: Right. So Toto worked directly with construction firms and architects. They offered volume discounts. They also made the Washlet compatible with standard plumbing, so you didn't need a renovation. By 2000, about 40% of Japanese homes had one. Today, it's over 80%. Luna: And international expansion? The Washlet is still rare outside Japan. Lucas: It's growing. Toto entered the US market in the late 1990s, but American bathrooms weren't wired near the toilet — you needed an electrical outlet. So Toto had to work with builders to change that, and also educate consumers. They've had more success in China and parts of Europe. Globally, Toto's revenue is about $5.4 billion, and the Washlet line is their fastest-growing segment. Luna: A couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: It does make a real difference. So back to Toto — what's interesting is that Nagai didn't invent the Washlet. The technology existed. But he understood that the barrier was psychological, not technical. He once said, 'We don't sell toilets. We sell comfort and cleanliness.' Luna: That's a classic product transformation story — changing the meaning of the product in the customer's mind. Lucas: Exactly. And he also invested heavily in R&D — about 3% of revenue annually. That's how they improved water pressure, reduced noise, added energy-saving features. The Washlet today uses about half the electricity of the 1980 model. Luna: And the engineering challenges? I mean, spraying water at a human body — you need precision. Lucas: Absolutely. The water temperature, the pressure, the angle, the position sensing — all had to be tested. Toto built a 'toilet research lab' where employees tested prototypes. They also developed a self-cleaning nozzle that uses electrolyzed water to kill bacteria. That kind of detail matters when you're asking someone to spend over $1,000 on a toilet. Luna: And the competition? Other Japanese companies like Panasonic and Lixil have similar products. Lucas: They do, but Toto remains the category king. In Japan, they have about 60% of the Washlet market. Lixil, which owns the Inax brand, is second with maybe 20%. Panasonic is smaller. Toto's advantage is brand trust and distribution — they've been at it for 40 years. They also manufacture most components in-house, which gives them cost control. Luna: So the lesson for other CEOs: sometimes the biggest opportunity is not inventing something new, but repackaging an existing technology for a broader audience. Lucas: Yes, and being patient. Toto took 20 years to reach 40% household penetration in Japan. Nagai was CEO for 14 years and he never wavered on the Washlet bet. He also diversified — Toto makes bathroom sinks, bathtubs, kitchen fixtures. But the Washlet became the flagship. Luna: And now they're facing a new frontier: smart homes, IoT toilets that track health data. I've seen concepts that analyze urine for biomarkers. Lucas: Toto has filed patents on that. They're also working on voice controls and automatic lids. The question is whether consumers will accept a toilet that knows their medical history. But if anyone can sell it, Toto can. They've already normalized the idea of a high-tech toilet. Luna: It's a fascinating example of a company that dominated a niche by redefining what the product is for. I'll never look at a toilet the same way. Lucas: Neither will I. And that's the power of a clear, patient strategy — one product, one mission, one market at a time.