TOYOTA WAY assignment

Question-According to Liker one reason why Toyota exists as a business is because

they base their management decisions on a long- term philosophy, even at the
expense of short term goals. Describe this by giving three examples from the book.

Answer: Toyota first principle “Base your management decisions on a long-term

philosophy, even at the expense of short-term financial goals.”

.A long-term philosophy acts as a guiding light for any organization and culture and,
with strict adherence and a deep respect of the philosophy, can drive the company
focus indefinitely. If based on deep, meaningful values, the company’s long-term
philosophy cannot be easily undone and will serve as the compass for all major
company decisions, projects and goals. This principle is perhaps the hardest one to
apply, as it will generally come with a giant culture/mind-set change. It’s also the
hardest one to approach. Most companies and organizations don’t have a long-term
philosophy because they are simply trying to survive in the current moment. It’s
really difficult to do lean if you have no money and you have no customers to serve.
Most businesses have the goal or intent to last for many years but have not
established a long-term philosophy to do so. Basically, they lack a long-term plan.
The organizations must have a philosophical sense of purpose that supersedes any
short-term decision making. They must work, grow and align the whole organization
toward a common purpose that is bigger than making money.

Examples from the book explaining the principle of long term philosophy:

 Toyota’s both the Lexus and the Prius projects were long-term investments in
the future of the company. At the time the Prius project was initiated, nobody
knew whether hybrid vehicles would go anywhere. But Toyota decided to be
the first and bet that hybrids would be an investment in the future. The best
people with active support from the very top of the company were assigned to
the Prius and they all felt like they were working on a project that was critical
to the future of the company. Similarly the Lexus project of Toyota that
successfully penetrated the luxury market which was earlier dominated by
European prestige. Investing in the future, not short-term profits, was the
focus of these projects.
 Another example associated with long term philosophy of Toyota is when
Toyota gave TABC (a truck bed plant in US) responsibility for manufacturing
68,000 four-cylinder engines per year for the Tacoma truck to a plant in
California with its high cost of doing business. Toyota wasn t measuring this
investment in terms of quarterly budgets; it was measuring it in the on-going
respect the customer and its employees have for their company and products.
And, of course, through TPS Toyota knew the sophisticated and committed
workforce of TABC could build in quality and continue to eliminate waste.
Toyota believes this is what drives profits in the long run.
 Another example is almost life-long employment in Toyota. Toyota would no
sooner fire its employees because of a temporary downturn in sales than most
of us would put our sons and daughters out on the street because our stock
investments went bad. Toyota executives understand their place in the history
of the company. They are working within a long-term philosophical mission to
bring the company to the next level. The company is like an organism
nurturing itself, constantly protecting and growing its offspring, so that it can
continue to grow and stay strong.