The Toyota Way
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The Toyota Way
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Re: The Toyota Way
#2How do you maintain "Principle 1" while being a publicly traded company?
The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits.
For example look at the field of Customer Retentions. It used to be focused on satisfaction & delight which are both long term success strategies (both to grow and to retain), but in the last twenty years Customer Switching (i.e. making it harder/more costly/more time consuming/more stressful/etc to switch) has become the norm, this is a short term strategy since it improves short term retention metrics at the cost of long term returning customers and poor word of mouth (i.e. nobody returns or joins after they leave, if you made the switching process hellish). It is a great way to keep your quarterly and yearly churn low, but a poor way to run a business.
It used to only be businesses with artificial monopolies that would do this (e.g. Verizon, Comcast, etc). But recently we've seen companies in fairly competitive spaces adopted a similar short term "suicide strategy" like LogMeIn (Remote Support Software), The New York Times (News Publication), SiriusXM (streaming audio), etc. All of which are likely chasing quarterly performance metrics tied to executive compensation.
Re: The Toyota Way
#3That shit works only if you are Japanese.... Have Japanese mentality and work culture... Also your product is a car.. Or something tangable made on a production line....
Agile IS the Toyota way... Or at least tries to be
Re: The Toyota Way
#4They should call this "The Deming Way" since most of it sounds identical to Deming's management philosophy and he taught Toyota back in the 1960s[1]. His system also had 14 points, which probably isn't a coincidence[2].
[1] https://blog.deming.org/2016/10/toyotas-management-history/
Re: The Toyota Way
#5How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the f…
Perhaps it's a culture thing? IIRC, you don't actually legally have to bring more value to shareholders every quarter at the cost of everything else. Maybe Toyota's execs and shareholders have some sort of "gentlemen's agreement" where they just agree to not prioritize the short term at all costs?
Maybe that's naive and they're just saying one thing and doing another.
Re: The Toyota Way
#6How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the f…
There's definitely a big problem with short termism and focus on quarterly performance over long-term value. Luckily there are a variety of solutions to this.
One is to have dual class share structures where minority owners have majority of the voting shares (e.g. Facebook, Google). Another is to create a new type of stock exchange that incentivizes long-term ownership (e.g. LTSE long-term stock exchange).
Re: The Toyota Way
#7How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the f…
Perhaps it's a culture thing? IIRC, you don't actually legally have to bring more value to shareholders every quarter at the cost of everything else. Maybe Toyota's execs and shareholders have some sort of "gentlemen's agreement" where they just agree to not prioritize the short term at all costs? Maybe that's naive and they're just saying one thing and doing another.
All publicly trade companies have a fiduciary responsibility to shareholders. That means different things to different companies and is not a hard and fast rule. Amazon did not prioritize short term profits for a long long time and Bezos famously told investors they were too shortsighted. Many large manufacturing companies adopt the Toyota principles here in the US as well. Principle 1 is up to interpretation about what brings the most long-term value to the company.
No company ever tries to go out of business, ergo they optimize to exist forever or get acquired. Whether the board & management understands how best to achieve that long-term sustainability is another matter and one that shareholders get to vote on.
Re: The Toyota Way
#8How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the f…
> How do you maintain "Principle 1" while being a publicly traded company?
> The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability.
Easy: Don't do that. Either 1.) Don't be a publicly traded company, or 2.) Don't let short-sighted shareholders dictate your management decisions.
Re: The Toyota Way
#9How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the f…
Good ownership structure and corporate governance.
Toyota group is keiretsu where Toyouta Motor Corp. has owners like Toyota Indutries, Denso and some big Japanese banks and insurance companies.
Re: The Toyota Way
#10Earlier quoted context omitted.
Perhaps it's a culture thing? IIRC, you don't actually legally have to bring more value to shareholders every quarter at the cost of everything else. Maybe Toyota's execs and shareholders have some sort of "gentlemen's agreement" where they just agree to not prioritize the short term at all costs? Maybe that's naive and they're just saying one thing and doing another.
All publicly trade companies have a fiduciary responsibility to shareholders. That means different things to different companies and is not a hard and fast rule. Amazon did not prioritize short term profits for a long long time and Bezos famously told investors they were too shortsighted. Many large manufacturing companies adopt the Toyota principles here in the US as well. Principle 1 is up to interpretation about w…
Sure, I just meant the fiduciary responsibility doesn't necessarily always mean "short term profits at all costs."
Why does it seem to always be that way, though? Most every company I see appears very shortsighted with no thought to the long game.