The list of great companies of the 20th century must include Toyota and Procter Gamble,

which have both been able to accomplish sustainable growth.

Toyota Motor Company started as an automatic loom manufacturer that pioneered exports
to the West, and subsequently became an automotive business. By 2013, however, the
company had already achieved the best sales and profits in the history of automotive, a
record broken again by themselves in 2014.

P&G was founded in 1837. It developed its first patent in 1841 and in a few short years it
got a reputation for quality products and innovation. Since then, P&G’s focus on
customers and employees has propelled the company’s growth, based on the consistent
creation of successful innovations and new consumer goods: from the first disposable
diaper (Pampers) to the first toothpaste with fluoride (Crest) and the first synthetic laundry
detergent (Tide).

As a result, in its 177 years in business the Procter & Gamble Company has been able to
survive and even consistently enrich its shareholders, through the Great Depression, a
number of wars, and several economic recessions. It enjoyed 58 consecutive years of
dividend increases. P&G has grown from its humble roots as a Cincinnati soap-maker to
one of the largest and most resilient, responsive and profitable consumer products
companies in the world – with more than 300 brands, 23 of which are billion-dollar ones.
In 2014 P&G products made nearly $84 billion in sales across more than 180 countries.

When we compared notes on Toyota and P&G we found these two great companies to
have much more in common than one would initially think.

Both have consistently focused on providing customer value and have been rewarded with
big profits for it. They invest them in building a culture of innovation and in making ever-
better products that win the hearts of more customers. The manufacture of these products
sees the development of the capabilities of associates and partners.

For both companies, achieving sustainable growth by fostering that virtuous circle is the
foremost responsibility of management. To get there, both companies have focused on
developing leaders who operate in an environment that enables employees to make the
most of their efforts to continuously improve themselves, the product, and the process.
This is the way to ensure that all employees have the opportunity to spend their careers in
the companies, with jobs that continuously challenge them to tap into their true potential.

responsibility as a leader at p&g:

a) Facilitate a clear path for each team member to contribute to the company’s vision.

b) Build a safe and nurturing working environment, characterized by trust, that enables
every individual at every level to participate in effective problem solving to both improve
business results and develop their full human potential.

c) Enable effective cross-organizational collaboration and cooperation to take on the

challenge of continually delivering customer value.

In P&G and Toyota, people are deeply respected: inspired by the company’s vision,
motivated by how they can personally touch and improve the lives of customers, and
continuously challenged to go beyond their capabilities, learning new skills that help to
fulfill the common vision and achieve high goals to satisfy customers.

DEVELOPING PEOPLE AT P&G AND TOYOTA

In these two great organizations, people are expected to set high goals, both for making
great products and for their self-development. By “people,” we mean those who directly
work for both companies, as well as the numerous other stakeholders (like suppliers and
business partners), with whom the companies commit to work on common goals, joint
business plans, and – most importantly – joint value creation.

These are not soft-sell, feel-good relationships. They are based on hard-nosed sales, profit,
and cash building action plans for which leaders and teams from both sides are held
accountable. Their joint business plans are effective because they put the customer front
and center — engaging the development of capabilities at all levels with key focus on
front-line operations as a way to accelerate and sustain value creation.

DEVELOPING PEOPLE AT P&G

Procter&Gamble has developed its enviable business record by shaping a unique

organizational culture that brings out the best in people and directs their energy to building
the business.

P&G introduced profit sharing for all employees in 1887. A long-standing belief of the
founders was that “the interests of the company and its employees are inseparable.” This
early pattern of connecting employees to business results has been refined through the
years by continuously aligning purpose, culture, and organizational methods to deliver
superior value to consumers.

Purpose-a long-term view of its contribution to the world’s consumers (leadership in sales,
profit, and value creation) and prosperity for employees, shareholders, and communities.

 CULTURE
P&G has nurtured a culture that is aligned with its purpose. It is highly selective and
works to hire people at all levels whose values fit those of the company. It promotes from
within, offering many opportunities for individuals to progress in their career. The result
of these cultural values is that people find it easy to trust one another: changing roles,
departments, or even locations is much easier because employees know they will be
teaming up with other members of the P&G family.

THE DEVELOPMENT OF SELF-SUFFICIENT TEAMS

There are five key organizing principles at P&G:

– Give people real responsibility from the time they join up.

– Give them the opportunity to broaden their skills over time.

– Work together in teams whenever possible.

– Meet and exceed high standards.

– Develop others to grow continuously on the job.

This graphic illustrates how members of the manufacturing team can expand their skills
and contribution to the business over time.

A second design feature that builds on this first foundation is the self-sufficient team. They
have often been labelled “self-managing” or “self-directing” in the literature. These,
however, are misnomers because no individual or team is ever totally self-managing or
self-directing. We prefer the label “self-sufficient” because it is descriptive of a work team
that understands what the business needs are for the day, divides up the workload,
manages any
daily interface issues with other teams or departments and delivers great results without
external supervision. The team is self-sufficient to do its daily work.

The development of effective self-sufficient teams led to another design feature that
supported high performance. A truly self-sufficient team doesn’t need a daily supervisor,
but there is still a valuable role for managers to fulfill.

The role of the Boundary Manager focuses on issues that usually fall between the cracks
between a team and interfacing departments.

The value of boundary managers is easy to calculate:

1. Does anything ever go wrong between a team and these interfaces?

2. How much money is lost because of these things that go wrong?

3. What needs to be done to correct these things?

4. Who is available to look after these correction

DEVELOPING PEOPLE AT TOYOTA

At both P&G and Toyota, the pursuit of “a better way” starts with an individual obsession
to listen to customer feedback, to be attentive to what is happening on the ground, to
understand the situation, to interpret the information gathered and make quicker decisions
that drive focused innovation at all levels.

And this happens at front-line level, with managers living the principle to be present where
the actual work takes place. At both companies, managers at all levels are expected to go
and see, understand real issues, and lead continuous improvement to better serve
customers.

Below are the key elements that lay at the foundations of the Toyota Way:

 Challenge
At Toyota, respect for people is expressed by a drive to challenge people to achieve targets
for improvement that are beyond their current ability. Otherwise, they would be static (and
disrespected). Every associate at Toyota should be able to clearly state their current
challenges as measurable objectives.

 Respect
This includes respecting your direct associates and all stakeholders and requires sincere
communication and work to build mutual trust. We cannot respect each other unless we
understand each other. Ideally, we should learn to put ourselves in other people’s shoes
and see the world as they do. This is particularly challenging in a global business with
many different cultures.

 Teamwork
Finally, teamwork has been greatly emphasized at P&G, but there are some subtle
differences at Toyota, in part because of their Japanese cultural heritage. Toyota defines
teamwork as respect for individual development and realizing consolidated power as a
team. It is almost impossible within Toyota to talk about teamwork without also
emphasizing the development of each individual’s creative power. When a team is
working to achieve a stretch goal there is always an individual leader accountable for the
project.
CONCLUSION

In conclusion, we are talking about passionate people, committed to a value-driven

purpose and a set of guiding values worthy of – in fact, demanding – a lifetime of their
best efforts. While there are some differences between Toyota and P&G, there is much
more in common in their commitment to the Virtuous Circle: relentlessly developing
people capabilities so that innovation happens at all levels, winning the hearts of their
customers, and maintaining their enviable records of sustainable growth.