toyota toyota

vinay kamat

9.06 million cars. That’s Toyota’s production goal for 2006, which will make it the world’s largest car-maker. It would be a big moment for a company that has always relied on lean manufacture to shift its paradigms. In doing so, Toyota has given operational excellence a new meaning: strategy-on-the-fly.

In their paean to Toyota, in The Machine That Changed The World, James Womack, Daniel Jones and Daniel Roos define the strategic dimension of lean production: “[It] combines the best features of both craft production and mass production—the ability to reduce costs per unit and dramatically improve quality while at the same time providing an ever wider range of products and ever more challenging work.”

Now, kaizen, or the force that drives lean manufacture, is a culture of relentless improvement. The beauty of the Toyota Production System (TPS) is to blur the boundaries between improvement and innovation. In an insightful piece in the Harvard Business Review, Learning To Lead At Toyota, Steven Spear describes the induction process of a top manager in its plants in the US and Japan. He details how lean manufacture is not only a bottom-up communication process, but a change agenda as well.

Change, after all, comes from total knowledge of what you are doing. In essence, kaizen is art of leveraging knowledge flows from every nook and corner of the organization to create tomorrow’s products.

Eli Goldratt, author of Goal, underlines the importance of creating two simultaneous paradigm shifts to forge ahead of competition. Microsoft is banking on two: web-based products and gaming. Toyota appears to have created two paradigm shifts through quality (kaizen) and technology (Prius). Yet both are spin-offs of its lean culture.

A blog on soultek.com provides the answer: “Toyota does acknowledge that cars require vast amounts of energy to function, i.e., trillions of dollars of gasoline, refined from environmentally destructive oil. To ignore this would be to ignore kaizen; therefore, Toyota didn’t give up when the first Prius hybrid car was laughed at by automotive ‘experts’.”

The original brief for Project G21, or Prius, came in kaizen language. As Jeffrey Liker points out in The Toyota Way: “The only real guidance was to develop a fuel-efficient, small-sized car. In addition to the small size, a distinguishing feature of the original vision was a large, spacious cabin.”

In a recent column, Financial Times’ Simon London describes the three strategic steps that Toyota took to stay ahead: lean manufacture, design and marketing, and hybrid-power technology. Only a multifocal strategy, focusing on craft, cost, and change, can help an automotive brand to position itself at both ends of the product spectrum: from Qualis to Lexus to Prius.

If there’s anything to learn from Toyota, it’s the art of challenging oneself to do infinitely better. Once Toyota becomes the car king, perhaps kaizen will enter the pages of management as continuous innovation—a tool that has continuously reinvented an industry.

guru murthy

Vinay Kamat

N R Narayana Murthy never appears in the league of management gurus: people who successfully mix vision, concept, and experience to provide route-maps to business. Yet the chairman and chief mentor of Infosys has enough experience, and ability to distill that experience into simple do’s and don’ts, to be part of the guru club.

Like Bill Gates, Lou Gerstner, Jack Welch and Ricardo Semler, Murthy has not only created an institution, he has consistently passed the severest global tests of scale, strategy, and (customer) satisfaction. If Murthy—who ranks among the world’s 10 most admired CEOs in a survey by Economist Inteligence Unit and Burson-Marsteller—were to write a book, he would surely give a new zing to management literature—a discipline that thirsts for plain truths.

Although the story of Infosys is now part of business folklore, the intricate details of process creation, talent management, succession planning, brand-building, inflections points, and genuine Indian leadership, can only be captured in a management book. By writing about his company in Maverick, Brazilian entrepreneur Ricardo Semler opened a new chapter in management, by redefining empowerment.

But what would Murthy write on? Maybe about the heart, not the mind alone. As William Henderson, former CEO, US Postal Service, explains, in Wisdom of the CEO: “Organizations do not thrive on mind alone. They need heart. Their systems may be great, their strategy cunning, their incentives world-class, but without heart an organization can never reach or go beyond its limits.”

Most Murthy-isms are about the heart. They turn management into a set of values that one must practice to inspire oneself. Here’s a short-list of Murthy’s defining moments:

On values: “The Infosys value system can be captured in one line: the softest pillow is a clear conscience.” [In a lecture at Wharton School]

On vision: “I have realized, over the years, that a powerful vision expressed as a simple sentence, capturing the core of our values and aspirations, enthuses generation after generation of employees in the company.” [Lecture at Wharton School]

On self-esteem: “We have to create a grand, noble vision which elevates energy, enthusiasm and self-esteem of everyone in the company while ensuring that everybody sees a benefit in following the vision.” [At a meeting of the World Economic Forum]

On people: Work hard and smart for eight or nine hours…Being in the office for long hours, over long periods of time, makes way for potential errors.” [Figures frequently in discussions on the web]

Jim Collins, a management guru Narayana Murthy often likes to quote, gives an interesting insight into greatness, in Built To Last: “Everyone would like to be the best, but most organizations lack the discipline to figure out with egoless clarity what they can be the best at and the will to do whatever it takes to turn that potential into reality.”

Indeed, management literature requires an egoless simplicity to clear the thicket of jargon that fills its pages and fogs its messages. Like Semler, mentors like Murthy can create a new discipline in management literature: pure simplicity. It’s a language that readers of management sorely miss.

India’s top managers are top-notch, says Goldratt

Do you have a mafia offer? Business guru Eli Goldratt, 59, throws that question at a gathering of CXOs in Mumbai, who have all come to savour his insights. “It’s an offer that your customer can’t refuse,” clarifies Goldratt. Such an offer helps create competitive edge—and value. “But your edge can vanish in no time since competitive advantage is just a window of time,” he warns, with an air of suspense you often encounter in his best-selling business thriller Goal. Even as he pats India for having the best top managers in the world, he points to tomorrow’s challenge: two paradigm shifts instead of one. Goldratt spoke to DNA’s Vinay Kamat about his experiences as a consultant and teacher.

Q: You speak of two simultaneous paradigm shifts to create a competitive edge? How do you do that?

A: One paradigm shift is not enough. A paradigm change in sales must be matched by one in operations. Both have to be in synch, and deliver, to create viable vision.

Q: You have labeled strategy as “long-term bullshit” and have counselled managers to chuck strategy books into the ditch. Is strategy a self-realization that comes from full knowledge of organizational constraints?

A: Yes, that’s true. I find people building plants without (properly) assessing market opportunities. When I see what people are doing, I am reminded of gambling in Las Vegas. They [CEOs] call it strategy and continue to do so.

Q: India’s real infrastructure, as you say, is not ports, roads, and airports. It happens to be top management, and you rate India higher than the US and Europe on talent? Why?

A: That’s true. We have had to hold back managers during our management programmes in Indian companies. Elsewhere, we have to push managers. The time we require to train people here is half the time it takes us in other countries. In India, the level of intelligence is higher on average; the openness is higher; the ability to critique is higher. Indian managers should have a superiority complex instead of an inferiority complex.

Q: In your book, the best leaders are those that provoke, not provide, solutions. Have you come across such leaders?

A: The best example of such leadership is Warren Buffet. He does that beautifully. Of course, the other example is me. What defines such leaders? It’s their ability to figure out the solution but exercise enough self-control not to reveal it. Indeed, it’s their ability to remove the stumbling block rather than provide the solution.

do you see the goal-posts?

Vinay kamat

In the hands of Eli Goldratt, management can turn into a page-turner. As a discipline that involves individuals and their personal lives, management needs to speak to them like a novel. It must grip their imagination, entertain them, provoke them. For, ultimately, management is self-realization.

No one explains this better than business guru Goldratt. His book Goal, which he co-wrote with Jeff Cox, is not just a celebration of his experiences in management; it’s a true action-thriller. It’s about a plant manager, his
demanding boss, his unhappy personal life, the fear of losing his job, the
search for solutions, the chance discoveries, and the final realization. You
have to read Goal to understand how Goldratt handles characterisation, conflict, climax, and catharsis.

For Goldratt, catharsis is simply an awareness of oneself. As he says in the foreward to Goal: “If we can better understand our world and the principles that govern it, I suspect all our lives will be better.”

When he visited Mumbai last week to talk to CXOs about his work and ideas, he provoked his audience by trashing strategy: “Strategy is long-term bullshit…Throw your strategy books in the ditch.” Without an understanding of your constraints, how to leverage them, and the purpose of what you are doing, strategy is meaningless. It is just a mental leap without the wings to hold it up.

Despite being racy and suspensful like a John Grisham thriller, Goal has lots of philosophical takeouts. Here’s one big-picture insight: “Just remember we are always talking about the organization as a whole—not about the manufacturing department, or about one plant, or about one department within the plant. We are not concerned with local optimums.”

And here’s a deliberate remark by one of the characters, which reflects the shortfalls of today’s top managements: “…you cannot understand the meaning of productivity unless you know what the goal is. Until then, you’re just playing a lot of games with numbers and words.”

Perhaps the thriller is the simplest way of not just telling a story, but simplifying the conflict in the organization. In real life, too, simplicity unlocks complexity. You only need to believe in it to break convention. Only then will you be able to see your organisation’s goal-posts. That’s the simple tip in Goldratt’s revolutionary idea: Goal.