Principio 1

Section I: Long-Term
Philosophy
Chapter 7: Principle 1: Base
Your Management Decisions
on a Long-Term Philosophy,
Even at the Expense of
Short-Term Financial Goals
Overview
The most important factors for success are patience, a focus on long-term rather than short-term results, reinvestment in people, product, and plant, and an unforgiving commitment to quality.
Robert B. McCurry, formerExecutive V.P., Toyota Motor Sales
In the last few decades, the world has been moving in the direction of capitalism as the dominant socio-economic system. The prevailing belief is that if individuals and companies pursue their self-interests, supply and demand will magically lead to innovation, economic growth, and overall economic well-being for humanity. While it is comforting to think we canall simply do what is best for our short-term economic interests and all will be well in the world, there is a dark side to the pursuit of self-interest as the engine for economic growth. We see it with Enron and other scandals and the aftermath of extreme distrust of large corporations and the morality of corporate executives. We see it when there is an economic downturn and millions of peopleare thrown out of their jobs to fend for themselves.
A Mission Greater than Earning a Paycheck
Can a modern corporation thrive in a capitalistic world and be profitable while doing the right thing, even if it means that short-term profits are not always the first goal? I believe that Toyota s biggest contribution to the corporate world is that of providing a real-life example that this ispossible.
Throughout my visits to Toyota in Japan and the United States, in engineering, purchasing, and manufacturing, one theme stands out. Every person I have talked with has a sense of purpose greater than earning a paycheck. They feel a greater sense of mission for the company and can distinguish right from wrong with regard to that mission. They have learned the Toyota Way from their Japanesesensei (mentors) and the message is consistent: Do the right thing for the company, its employees, the customer, and society as a whole. Toyota s strong sense of mission and commitment to its customers, employees, and society is the foundation for all the other principles and the missing ingredient in most companies trying to emulate Toyota.
When I interviewed Toyota executives and managers for thisbook, I asked them why Toyota existed as a business. The responses were remarkably consistent. For example, Jim Press, Executive Vice President and C.O.O. of Toyota Motor Sales in North America and one of two American Managing Directors of Toyota, explained:
The purpose of the money we make is not for us as a company to gain, and it s not for us as
associates to see our stock portfolio grow oranything like that. The purpose is so we can reinvest in the future, so we can continue to do this. That s the purpose of our investment. And to help society and to help the community, and to contribute back to the community that we re fortunate enough to do business in. I ve got a trillion examples of that.
This is not to say that Toyota does not care about cutting costs. Shortly after World WarII, Toyota nearly went bankrupt, which led to the resignation of the company founder Kiichiro Toyoda. Toyota pledged to become debt-free. Cost reduction has been a passion since Taiichi Ohno began eliminating wasted motions on the shop floor. Often this led to removing a worker from a line or cell, to be placed in another job so one less worker had to be hired in the future. Toyota now has arigorous Total Budget Control System in which monthly data is used to monitor the budgets of all the divisions down to the tiniest expenditure. I asked many of the Toyota managers I interviewed if cost reduction is a priority and they just laughed. Their answers amounted to You haven t seen anything until you ve experienced the cost-consciousness of Toyota down to pennies. Yet cost reduction is not...