How Toyota Became No.1

Applications from Toyota to Internet Marketing Online

Toyota has grown profits quarter over quarter for 50 consecutive years.

Today, the company grosses over $200 BILLION in sales, and recently leap-frogged both Ford and GM in one fell swoop to become the largest and most profitable car company in the world.

The Big Three have been laughing at Toyota since the early seventies, calling it an annoying fly that just needs to be swatted. And, at the same time, they arrogantly refused to do what was necessary to build better cars.

Meanwhile, the modest little sewing machine company from rural Japan eventually shamed them, surpassed them, and pushed them to the brink of extinction.

While the Big Three chased trends and pursued the whims of various management personalities over the years, Toyota stayed true to a set of unchanging, guiding principles that allowed it to deliver superior value to the consumer. That’s it.

The Company would probably be successful in ANY industry, since its secret is not so much how it builds things, but how it approaches the process and mind-set of building things.” That’s an intriguing thought, isn’t it?

So what are those guiding principles and mind-sets …
and what parallels can we draw from them
to build better online businesses?

Genjitsu and Genchi Genbutsu — Yes, them’s Japanese words. Genjitsu means “facts, or reality.” The Toyota culture believes facts are the basis of sound decision making. And Genchi Genbutsu means “go and see the problem first hand.” In other words, improve quality by exposing the truth.

While Big Three executives look at problems through a long chain of command, Toyota executives are routinely out on the shop floor, with their teammates, witnessing the source of the problem first hand.

In online business, too many people take guru advice as gospel and close their eyes to the obvious. They implement some idea or process in their sales funnel, and then never bother to check it against other alternatives to see if it is really the best thing for them to do.

For example, social media marketing gurus are telling you how transparent and intimate social media marketing is and what a wonderful traffic generator it is for this reason. You look at their Twitter page and you see they have 50,000 followers and you’re duly impressed.

But they’re also following 50,000 people. And they’re telling you that’s how you get people to follow you. Follow them, and they’ll follow you back.

Do you think this person actually looks at their Twitter account or has any meaningful interaction with the people they’re following? Imagine trying to follow a 100,000 Tweet stream. What value does this strategy add to anyone’s life? None.

Kaizen —a system of continuous improvement to which every Toyota employee from janitors sweeping floors to top management is expected to keep top-of-mind while they work.

According to Taiichi Ohno, former Toyota executive vice-president, “Something is wrong if workers do not look around each day, find things that are tedious and boring, and then rewrite the procedures. Even last month’s manual should be out of date.”

What Toyota has managed to cultivate is a culture obsessed with the relentless pursuit of perfect quality and zero waste — never-ending striving toward an unattainable goal — where ALL work is a scientifically controlled experiment carried out by the people who do the work.

This is, of course, analogous to testing in online marketing. An online business is very much like a production line, with inputs, processes, and outputs.

Each aspect should be approached as an ongoing experiment, where the lessons learned are as treasured as the profits earned. Toyota’s continuous improvement process is based on PDCA (Plan, Do, Check, Act).

A process is planned and put into production. Then it is continually checked for opportunities to reduce waste and improve quality. Those opportunities are then acted upon to actualize the improvement. Rinse and repeat.

Few marketers approach their business processes in this way. Like the Big Three, they stop at PLAN and DO. But without CHECK and ACT, you never raise your starting point and your processes never improve.

Horenso — A Toyota invented acronym derived from the Japanese words hokoku (giving a thorough update to someone), renraku (staying in touch on a subject), and soudan (consultation about an issue).

All Toyota employees are rigorously trained in the art and science of clear and concise documentation.

Work must be interchangeable. If someone is working on a process or problem, it is expected that this person keep detailed records. That way, if they should go missing in action or be reassigned, another skilled worker is be able to pick up where they left off and carry on without missing a beat.

This is a huge one for many small online business owners — even solo-preneurs. A small company can function without ever truly documenting its processes and procedures. But you can’t grow effectively or ever reach your true potential until you do.

Lessons learned will be lost and mistakes repeated … you won’t be able to delegate effectively … and you will never extricate yourself from the day-to-day operation of the business.

There is something about documenting your processes that clarifies your thinking. Horensu is as much about individual efficiency and effectiveness as it is about team-work.
What’s good for the future is good for today …

Another major Toyota business principle is to remain focused on the long term.

Executives are encouraged not to look at the stock price, or become overly fixated on the financial numbers, but rather to pay close attention to the things that actually contribute to the numbers — such as creating enhanced customer value.

The Big Three, on the other hand, are trend followers, fixated on quick profits and the latest management fad.

Similarly, many online marketers forfeit the long-term value of their brands and lists in the hopes of instant riches.

Source: How Toyota Became No.1 by David Magee

1 comment for “How Toyota Became No.1

  1. August 31, 2009 at 3:02 am

    What do you think will be the benefits to San Antonio, Texas, now that Toyota moved their truck manufacturing there? Are you thinking that there will be significant changes to the general economy of San Antonio?

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