Toyota and GM: Getting Bigger at the Expense of Getting Better?

 The February 24th edition of Economist Magazine ran an article entitled “The Machine that ran too hot:  The woes of Toyota, the world’s biggest car company, are a warning to rivals.”  In the article,   James Womack, one of the authors of “The Machine that Changed the World”, a book about Toyota’s innovations in manufacturing, dates the origin of its present woes to 2002, when it set itself the goal of raising its global market share from 11% to 15%. Mr. Womack says that the 15% target was “totally irrelevant to any customer” and was “just driven by ego”.  In other words,, Toyota got itself in trouble when quality became subordinate to another goal:  Selling more cars than GM.

GM apparently is not heeding the warning.  WSJ reported on March 3rd “Feeling Heat From Ford, GM Reshuffles Managers“.  Ford’s February monthly U.S. sales surpassed GM’s for the first time in 50 years.  Hours after the sales results were released, GM announced its second executive shuffle in three months. It appears as though GM is falling into the same trap as Toyota did when it shifted it’s priority from safety and customer satisfaction to surpassing its rival in sales. As Toyota and others (Merck, Motorola, HP) have shown, doing so can lead to their downfall.

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Don’t focus on getting bigger at the expense of getting better. 

  • Increasing scale should not be seen as the end goal, but rather as an outcome of pursuing your core purpose.
  • Great leaders pursue growth in performance, distinctive difference, creativity and people, knowing sales growth will follow. 
  • Focusing on a noble core purpose and growth in this way will engage the hearts and minds of your people in a way that financial BHAGs never will. 

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