Americian Car Makers
Maybe its a result of my recent trip to Japan and watching the Toyota Production System in action but I find the recent behaviour of the US car makers incredulous. In my view you have a situation here of two very clear choices. On one hand you have three very large companies going cap in hand (For the US visitors in Aussie language this means asking for help) asking the American taxpayers to save their companies from bankruptcy and on on the other you have a number of Japanese companies (Toyota and Honda come quickly to mind) cutting their profit forecasts.
Is it just me or is the fact that on one hand there is squandering of Billions of dollars (and lets not forget these executives are being paid an absolute fortune to oversee such destruction of value) and on the other, there is one very key word being used…………..”Profit”. Toyota is not immune to the current economic events but they are still making a profit.
The difference in “thinking” could not be more distinctive.? The US companies are what I classify as being a very reasonable companies (and in my line of work I see so much of this). That is they have many “Reasons” why company behaviour or conditions are the way they are. That is they have more reasons why things can’t happen thereby being reasonable, rather than (as Jim Collins called in his book, “Good to Great”) facing the brutal Facts, getting off one’s backside and doing something about it.
In my view the brutal facts are that they have believed their own Bulls**t for far too long.? While not having read the documents they provided to congress and only relying on press reports, the offering they made to congress provided no evidence of anything different happening. Ohhh? did I hear them say the environmentally friendly vehicles would be their saviour?? (They did arrive in them after all - as a result of their traditional thinking i.e. taking the corporate jet, getting them in further trouble).? All I can see is a bucket load of money going to keep them alive for a few more months and no cultural change happening at all. Its the arrogance in their thinking that arriving in a corporate jet was suitable behaviour that goes to the core of the issue.
The solution lies in a different way of thinking, something I don’t feel they are capable of, otherwise being this close to oblivion would have made them start on that path - surely????.
One of the simple but profound themes that came clear for me during my trip to Japan was the difference in the philosophy between the US and Japanese formula for profit.
The traditional formula used both in the US and here in Australia is; (Cost + Profit) = Price
The Japanese formula is; (Price - Cost) = Profit
A very subtle difference however the effect of its application is profound. Its application isn’t an easy matter either - because it requires a cultural change, a change in the way the WHOLE organisation thinks. The US car makers have attempted to mimic the tools used by Toyota - but they missed the fundamental tool, the way they think.? Use of tools in isolation from the “System” will never work - ask any builder, if an apprentice tradesman uses the best tool; does this mean he will build the best house???? Of course not.
So to summarise my ramblings; the US car makers are doomed to fail unless there is a significant change at the top. Because we all know the fish stinks from the head down; likewise the company’s leadership need to demonstrate exactly that - some actual leadership and stop listening to the underlings pis*ing in their pocket.
As a shareholder or owner of a business, which position? would you rather your company be in; Toyota’s where you cutting the “actual profit” your making or the US car makers where your fighting for someone to come rescue you from oblivion? I am no rocket scientist - but that equation seems easy to me.
