Section I: Long-Term Philosophy
Principle 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
■ Have a philosophical sense of purpose that supersedes any short-term decision making. Work, grow, and align the whole organization toward a common purpose that is bigger than making money. Understand your place in the history of the company and work to bring the company to
the next level. Your philosophical mission is the foundation for all the other principles.
■ Generate value for the customer, society, and the economy—it is your starting point. Evaluate every function in the company in terms of its ability to achieve this.
■ Be responsible. Strive to decide your own fate. Act with self-reliance and trust in your own abilities. Accept responsibility for your conduct and maintain and improve the skills that enable you to produce added value.
I have always been fascinated by companies who have discovered what they stand for, beyond making money. I have been fortunate enough to work for one (ThoughtWorks). I tried creating another with some friends (CambrianHouse). And I look forward to getting up every day and continuing my search for others.
My current fascination is with Toyota. Toyota seems to know whom they serve, why they exist, why they are here.
Here is a quote from Jeffrey Liker’s interview with Jim Press, Executive Vice President and C.O.O. of Toyota Sales North America.
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 or anything 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.
How can that be? How does Toyota stay in business (and become the 2nd largest car maker in the world) if it isn’t focused on making money?
To see another way in which Toyota distinguishes itself, compare Toyota and Ford missions statements:
Ford Motor Company
1. Ford is a worldwide leader in automotive and automotive related products and services as well as in newer industries such as aerospace, communications, and financial services.
2. Our mission is to improve continually our products and services to meet our customer’s needs, allowing us to prosper as a business and to provide a reasonable return to our stockholders, the owners of our business.
Ford’s seems reasonable. It wants to continuously improve products, to prosper as a business, and ultimately provide a return for the owners of the business.
Compare this now with Toyota’s.
Toyota Motor Manufacturing (North America)
1. As an American company, contribute to the economic growth of the community and the United States.
2. As an independent company, contribute to the stability and well-being of team members.
3. As a Toyota group company, contribute to the overall growth of Toyota by adding value to our customers.
No mention of shareholder value. No mention of quality products. Nor the pursuit of excellence (all things Toyota is passionate about).
Toyota doesn’t see it’s purpose as making quality products that sell and make money. That is only in support of the mission. The true mission is:
1. Contribute to economic growth of the country in which it is located (external stakeholders).
2. Contribute to the stability and well being of team members (internal stakeholders).
3. Contribute to the overall growth of Toyota.
In other words, in order to contribute to external or internal stakeholders, it must enhance the growth of society. This is the reason for making excellent products. This seems so backwards to how most companies operate. Toyota wants its employee’s to grow, continuously improve, build high quality products, and learn, to create dedicated repeat customers that will last a life time.
Their reason for being is to keep doing what they do – enhance society.
The Toyota Way is made of 14 principles. We have only scratched the surface here with Principle #1.
In the future I hope to look more closely at each. In the mean time, if you have other examples of companies, that have found meaning beyond making money, I would love to hear about them.