Earlier this week Toyota president Akio Toyoda gave a speech which was almost like an answert to my previous post about How should business leaders learn from GM's latest turning point?
In HBS Newsletter last week Nancy F. Koehn, Professor of Business Administration at Harvard Business School, highlighted three fundamental management issues on which GM has failed for decades:
First, pay close attention to what is happening to consumers' lives in the context of the larger environment—not only their stated preferences, but their hopes, dreams, wallets, lifestyles, and values.
Second, keep an equally close eye on the competition.
And third, understand how a company's structure and culture relate to its strategy.
In his speech this week Mr Toyoda addressed all of these fundamental issues and outlined how Toyota is going to move forward. His speech covers many things from company philosophy to recovering from past challenges, from current challenges to realigning the organization and re-segmenting the market to overcome the challenges.
There is one paragraph I want to highlight from the speech, but you should read the whole speech.
Rather than asking, “How many cars will we sell?” or, “How much money will we make by selling these cars?” we need to ask ourselves, “What kind of cars will make people happy?” as well as, “What pricing will attract them in each region?” Then we must make those cars.
Matt May said it well in his blog: If every company leader thought and acted in the transparent manner you will hear in Akio-san's message, I dare say the world would be in a far better position today.
In this weeks Harvard Business School Working Knowledge Newsletter several faculty members write about GM: What Went Wrong and What's Next. Nancy F. Koehn, Professor of Business Administration, highlights same fundamental leadership and management issues I have been blogging about earlier.
General Motors was formed in 1908, the same year Henry Ford brought out the first Model T. Ford Motor Company became the undisputed leader of this young market and by the early 1920s, it was producing 60 percent of all the motor vehicles manufactured in the United States and half of those made worldwide. All of these automobiles were Model Ts, offered in one color: black.
Beginning in the mid 1920s, GM staged an astounding victory against Ford Motor Company. Alfred Sloan, Pierre Du Pont, and other GM executives placed a series of important bets on what American consumers wanted (different makes, models and prices; cars that were status symbols and identity holders as well as transportation sources) and they did so with careful, consistent attention to what the competition was—and was not—doing. As company leaders rolled out this daring strategy, they also created an organizational structure and culture developed to support a multi-product, vertically integrated enterprise. By the mid 1930s, GM's market share had risen to 42 percent while Ford's had fallen to 21 percent.
In this context, it is interesting to consider the root causes of General Motor's decline, which has been under way for 30 years. Although there are many factors that contributed to the company's long, slow bleed, the three fundamental issues are management's consistent failure to do the very things that made the business so successful initially.
First, pay close attention to what is happening to consumers' lives in the context of the larger environment—not only their stated preferences, but their hopes, dreams, wallets, lifestyles, and values.
Second, keep an equally close eye on the competition. (Look close at the picture above and you will see a hybrid Prius among the pick up's and SUV's.)
And third, understand how a company's structure and culture relate to its strategy. Use all this understanding to place innovative bets. This is what the early leaders of GM did. And this is what several generations of executives—beginning in the 1970s with the first oil shocks and the entrance of Japanese imports—have consistently failed to do.
It has been a failure of leadership as astounding and momentous (and ironic) as the company's early achievement, Professor Koehn concludes.
The organization clings to whatever made it a success. The very culture that created the success makes it difficult for members of the organization to perceive changes in the environment that require new responses. Culture becomes a constraint on strategy.
This is what happened to GM. At the moment GM is changing their strategy and structure dramatically. Their survival will depend on wether they are able to change also their culture - and that requires a lot of leadership and quite some time. But there is hope – the same thing happened to Ford (in the 1920s) yet today they are the only US car manufacturer not needing government bailout.
He is on spot writing how business as usual is unrealistic in our current economic climate. Leaders must accept the fact that success is likely to become a moving target and their organizations must become faster, leaner and better equipped to compete and change quickly.
He determines three basic strategic concepts that directly impact achieving superior results. The concepts are Clarity, Focus and Execution. These are the keys to achieving superior results on both professional and personal fronts. These three keys also reflect a new way of thinking you need to embrace, to better frame your strategy building process. Here is a quick description of each of these strategic concepts.
Clarity: You must be clear about your vision and what you really want!
Focus: You must focus on high-leverage activities that will move your results needle!
Execution: You must execute by elevating your ability to persuade and influence others!
Clarity, Focus and Execution must become the foundational framework for all that you do.
This is the new action template he is suggesting for your mind. Get Clear! Get Focused! Execute! When you are committed to this approach, the next step is to wrap them in a powerful concept that can transform your life and work. The concept he refers to is this: Always exceed expectations!
Good leadership is required to put all these pieces together. For a vision to be executed, it must be understood and supported by the business as a whole. There must be unity and there must be clarity. All of this comes together with one primary goal: To get results! In the most basic terms, that is what leadership is about: Creating organizational environments capable of getting superior results. To get results there must be a high level of organizational energy.
Tom lists seven things for a leader to do NOW to change results 1. Recognize that “Business As Usual” is not an option. 2. Create strategies based on what can actually be seen. 3. Reevaluate the Value and Purpose of your Vision. 4. Identify and disrupt organizational comfort zones. 5. Conduct Quarterly More-Of-Less-Of Reviews. 6. Commit to exceeding expectations and providing value. 7. Abandon activities that won’t move the strategic results needle.
In other words stop doing what is comfortable but not necessary, and start doing what is necessary even if it feels uncomfortable in the beginning.
Manager’s Toolbox is my collection of management and leadership best practices. Writing about them forces me to process them and as a result I will better remember them and have them available when I need them.
My aim is to summarize and internalize the knowledge I need during my management career.
Earlier this week Toyota president Akio Toyoda gave a speech which was almost like an answert to my previous post about How should business leaders learn from GM's latest turning point?
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