Business to the Buddha

Tag: Toyota

  • The Machine that Changed the World







    I read this book recently “The Machine that Changed the World“. It is indeed a good book every businessman should read it. “The business is run on trust” or “the business will be run on trust”. When we hear this statement it seems odd, however it is true Trust is the factor. I wrote often about ‘interdependent co-arising‘ (Blog 1, Blog 2 and Blog 3). When I read this book I realized that it is practiced in Japan for many years. Toyota has substantial equity share in its suppliers and the suppliers of suppliers. This is a complete mesh of cross-locking equity structure. They trust each other decide a profit margins rather than hiding the cost structures. According to the book “…This system has replaced the vicious circle of MISTRUST into VIRTUOUS circle of COOPERATION…”.

    The cross linking equity structure goes to a deeper level and different competitors also own each others share. This shareholding pattern is to help each other raise funds. Reference to this is – “The Machine that Changed the World” page 194 perhaps it is edition 1.

    What I found interesting (page 151 of the book I think first edition) – when the volume of demand changes and assembler gives notice to the supplier and in case the volume (demand forecast) fluctuates “…The assembler will work with the supplier to look for other business…”. This is not only interesting but also a surprising and welcoming effort to build trust. One more thing I found very impressive and useful – “…we (suppliers) work without safety net, so we cannot afford to off the high wire…” and thus suppliers maintain the quality not only for their own sake but also for the assemblers.

    The other interesting fact is not just production but also product development is done in cooperation. We hear “crowd-sourcing” as a means for innovation however, a crude system has been used by Toyota for years now. New product development at Toyota involves the suppliers and major work of NPD is done by the suppliers.

    One more interesting factor I realized while reading the book. When we say “one customer at a time” and “managing customer relation in Marketing”, this concept was far more ingrained in the Lean system of sales even in 60s. So beyond Operations the Lean system has been a pioneer in Marketing and Sales too.

    Still after praising the book I am of the opinion that there would be some method which will change the game even further. The question to ask is when and how (which I contemplated earlier)?

  • There is no substitute…







    My brother taught me playing Cricket; he introduced me to my Football and Basketball club. I played and represented club and division. I achieved some good accolades in athletics. He was the one who abusively told me when I was in class 5th that let us see if you can pass mathematics of class 10th either. And to his surprise I improved so much that I could solve MSc Physics problems when I was in 12th. He was All India Ranked 16th in GATE and had many PhD offers. He plays flute, he is an artist acts in theaters too. Well, why am I writing all this? The reason is – My brother taught me “there is no substitute to hard work”. He is right he has proved it always. And I recalled the lesson when I saw the following on facebook.

    One of my friends, Rahul Krishnan, recently said – every professor of operations management seem to be fascinated with Japan or Toyota. To this I said, perhaps 10 to 20 years down the line Japan would be replaced by China.

    I started thinking – what is the reason? The reason seems to be – there is no substitute to hard work. Japan did this post World War II, China did in late 70’s to present. In 80’s manufacturing started following Japanese systems, and I think in next few years we will start looking at what does China do differently that it is so economic, so efficient and so competitive?Our professor of Macroeconomics Prof Mankad shared with us how economy changed and Japan became an economic power to reckon with, now it is China. The currency of Japan was undervalued, they became manufacturing super power and export experts. See China, the same is happening now once again – history is repeating itself. Perhaps it will repeat again when we move from TPS to CPS (Chinese Production System) in future. In fact many Japanese companies outsource their work to China. So it is time to learn what China is doing differently.

    No doubt Japan is a nation of hardworking people and so is China. And I come back to the lesson – there is no substitute to hard work.