Why GM and Ford Can’t Embrace the Toyota Way

Who says they can’t? Dr. James Womack that’s who, in his article this week, titled Why Toyota Won. You can read it here if you have an online subscription to the WSJ or if you don’t, it’s reproduced here. I enjoyed the article. The kaizen mindset I’ve been trained in forced me to think, “Very good Dr. Womack, but how can you do better next time?”
The good doctor has been taking some hits in the Lean manufacturing blogs for being a lightweight in the positions he took on the issues of the failings at GM and Delphi. In the article this week Dr. Womack steps up, saying Motor City needs a new business model, rather than a new car model. The key points are, in his words:
• GM and Ford can’t design vehicles that Americans want to pay “Toyota money” for
• GM and Ford are clueless as to how to work with their suppliers
• GM and Ford have miasmic management cultures
• GM and Ford cling to their wide range of brands
• GM and Ford still treat customers as strangers engaged in one-time transactions
Positive commentary on Dr. Womack’s article has been all over the Lean manufacturing blogs this week. Bill Waddell adds his insight by drawing comparisons between the Ford and Firestone of Mr. Ford’s and Mr. Firestone’s days, and the sad corporate break up over poor quality vehicles and tires that happened a few years ago. Bill draws a case in point of how the corporate cultures of the big U.S. automobile firms today have created dysfunctional the supply chains. Bill laments:
The days when men of integrity cut mutually beneficial deals, investing family fortunes and family reputations on the strength of the other man’s word are tragically, long behind us. Supplier management is becoming a legal function.
The days of integrity and honor may be behind Ford and Firestone, but luckily not for all companies in all countries. Building mutually beneficial relationships with customers, suppliers, the community and employees is part of the well-documented secret to Toyota’s success. So why is it so hard to copy?
Deep questions of business and human nature like this can’t always be answered by people who got GM and Ford into trouble in the first place (i.e. MBAs, engineers, financial analysts, PhDs, etc). A wider search is called for when the answer affects the lives and well-being of so many. Let’s look to the clergy. The Reverend Dr. Leander Harding draws parallels between the WSJ article and the situation that parishes find themselves in today. Here are a few excepts from the Reverend’s blog (with a few minor spelling corrections made, but not noted):
[…] good systems have the capacity to draw forth excellence from the ordinary and bad systems have the capacity of demoralizing and defeating those who are otherwise extraordinarily competent. The systems in which many of our clergy find themselves are zero sum, no-win games. The problem is particularly acute in small parishes where the cost of doing business outstrips any reasonable expectations of gain and tends to drive the joy out of the ministry for priest and people alike.
Toyota has done a better job of brining out the best in average people through their focus on kaizen, while the atmosphere at the competition did the opposite. The same happens in ministry, apparently.
The system many clergy find themselves in is to be given the mandate to turn around a financially fragile parish in the face of daunting demographics and really crushing competition.
These soul-searching words from the Reverend could have come from troubled minds of Mr. Wagoner or Mr. Ford.
In spite of more than a generation of congregational studies and sincere efforts to reorganize diocesan structures around making congregations more effective, in most places we haven’t been able to come up with “a development system that tries out many approaches to every problem, then gets the winning concept to the customer very quickly with low engineering cost, low manufacturing cost, and near perfect quality.”
Combined with values that respect people, fact-based management is superior to faith-based management. The human beings that make up the religions, governments and even large corporations of the world aren’t always ready to see this.
As a way forward to constantly improving the system of congregational ministry I suggest taking another clue form Deming. One of his principles was “Eliminate fear.” It would be a salutary thing to become very specific about identifying the sources of fear in the system and then trying methodically and systematically to eliminate them, identifying quickly the best practices. For example there is tremendous fear around financial issues for most parish clergy and vestries.
Such honesty is refreshing. Fear can drive the wrong behavior. In corporate USA sometimes it seems the executives’ only fear is about their golden parachutes opening properly, and that as they float down in their parachute they might lose the name of the executive recruiter who will land them in their next job.
What do Toyota executives fear? Complacency is often mentioned, and I’ve heard Hyundai whispered. The Japanese Toyota executives probably fear loss of face. They would lose face as business leaders if Toyota ceases to exist profitably turning out products for the next generation or if they fail to leave a planet on which the next generations can drive Toyota products. Being Japanese executives, their mobility is also limited should they lose their job. When is the last time you heard of a Japanese executive being hired to head a non-Japanese multi-national coporation? At Toyota this fear, tempered with respect for people, drives kaizen.
What is needed is not quick fixes or the famous “entirely new paradigm for ministry,” but doable, improvements that open the door to other improvements and open the door to improving the system constantly and forever.
Kaizen in the ministry..? Reverend, we’re waiting for your call.
Back to the WSJ, Dr. Womack closes his article by saying:
There is no mystery about the lean business model. All of the elements are operating in this country every day at Toyota and at many other American companies in a range of industries. What is mysterious is why GM and Ford can’t embrace it […]
Why indeed? I’ll take a crack at it. Leading with the term “business model” reveals that Dr. Womack is still seeing the issue in Wall Street’s terms. That’s ultimately short-term profit driven thinking. If I learned anything from my time working with the Japanese, it’s long-term thinking. It is closely tied to the idea of corporate social responsibility, since the longer your business planning horizon is the more you are likely to include customers, employees, suppliers, the planet earth, community, etc. in the picture. Business models are a subset of all of that, and by nature narrower in scope of concern.
Toyota is highly profitable. They pay attention to Wall Street and Wall Street to Toyota. But Toyota is genuinely worried that they may not be around in 50 years because the car market will be saturated, polluting cars will have been banned, the planet will have overheated, or other things those of us concerned with profit this quarter might find ridiculous. Toyota will spend money and time planning for these long-term contingencies before they will cut corners to please Wall Street analysts for next quarter’s earnings.
You could call it a business model, but it’s corporate citizenship. It’s knowing you’re a king and wanting to rule the land of Toyota in a just and honorable way. Wall Street measures and reward quarterly earnings growth. I can’t think of a better way to kill long-term thinking in the minds of our business leaders (I probably could if I tried but I’m making a point here).
The success of Toyota is about more than profit. It’s also about people. There’s a human dimension at Toyota, based on long-term thinking and turning fear into a drive to do kaizen. If you don’t have this in you, how do you get it? Perhaps it is cultural, generational or simply a matter of human nature vs. the right kind of nurturing. I’m not an expert in the business of peoples’ souls. You will have to ask your priest, imam, pastor, guru, rabbi, swami, psychoanalyst, spiritual leader or business coach.
It’s not faith, it’s fact: when you find harmony in your business process between people and profit, you win.