Persistence, Patience, and Profits

The New York Times Magazine had a wonderful cover story yesterday about Toyota and their path to world dominance. This is a great read for most of corporate America, a modern day tale of the tortoise and the hare.

There are many interesting parts of this wonderful article, from the discussion about the creation of the new Tundra full-sized pickup to the parade of companies that try to learn from Toyota’s methods. But to me the most interesting part is the discussion of the company culture and how their consistent drive for improvement (kaizen) is pervasive.

It seems to me that most of the truly great stories of organizational success are not ones of meteoric rise, they are the result of long slow burns that finally pay off. As in the world of Hollywood, it seems to me that most “overnight successes” really have decades long histories of pain, tribulation, and persistence.

Even in the rocket-ship ride of the .com era, where most rockets tumbled into the sea, or exploded on the pad, and yet a few hung on to achieve greatness, I can’t think of a truly successful example that didn’t have a long, painful gestation. The two most oft cited examples of Amazon and Google in fact had their rough childhoods, and painful adolescences, and neither has yet existed long enough to know whether adulthood will suit them well.

We used to refer to ourselves as the world’s best “tail-light chasers”

In my own experience at Microsoft, the best and most venerable products were ones that were definitively not successes in their first iterations. Be it Windows, Excel, Word, Internet Explorer, or SQL Server, virtually all Microsoft products of any note were born of a desire to patiently chase down the competition and do what they did better. The dogged and relentless pursuit of the competition was a key aspect of the company culture, and resulted in version 3 (or 4, or 6…) eventually overtaking the rival. This happened so much that we used to refer to ourselves as the world’s best “tail-light chasers”.

Which gets me back to Toyota. The company recognizes, like few do, that developing and nurturing a culture is a key part of making an organization hum. I talk a lot about mission statements, and how valuable they (and visions) are to organizational success. Toyota sees that almost instinctively. To wit:

Toyota’s overarching principle, Press told me, is “to enrich society through the building of cars and trucks.” This phrase should be cause for skepticism, especially coming from a company so adept at marketing and public relations. I lost count of how many times Toyota executives, during the course of my reporting, repeated it and how often I had to keep from recoiling at its hollow peculiarity. And yet, the catch phrase — to enrich and serve society — was not intended, at least originally, to function as a P.R. motto. Historically the idea has meant offering car customers reliability and mobility while investing profits in new plants, technologies and employees. It has also captured an obsessive obligation to build better cars, which reflects the Toyota belief in kaizen, or continuous improvement. Finally, the phrase carries with it the responsibility to plan for the long term — financially, technically, imaginatively. “The company thinks in years and decades,” Michael Robinet, a vice president at CSM Worldwide, a consulting firm that focuses on the global auto industry, told me. “They don’t think in months or quarters.”

I love their mission statement (“to enrich society through the building of cars and trucks.”), and will discuss that more soon, but what strikes me most is that last part: “they don’t think in months or quarters”. Neither do most successful organizations. They think in terms of what’s right in the long term, and let the current quarter and stock price fall where it may.

“They don’t think in months or quarters”. Neither do most successful organizations.

When Microsoft was most successful (under Bill Gates and Frank Gaudette’s leadership) it did too, offering essentially no “guidance” to the market. It seems they may have strayed lately from this view, when a comment from Steve Ballmer sends the stock reeling, and that’s a shame.

The point here is that Toyota and most other great companies, didn’t get there overnight but over decades, don’t plan for tomorrow but forever, and don’t try to justify their actions but rather their philosophies. This seems to be an anachronism in this go-go, always rushing, instant gratification world. Bummer.