focus on all the essential elements. What do you want to look like internally and
externally, in terms of people and the business?
For the business, you need to think about this in the context of a broader cor-
porate strategy. You cannot be a profitable, financially healthy business without
a well-developed strategy. Just the citations to the literature on strategy would
fill this book. One of the chief gurus of strategy is Michael Porter. In a Harvard
Business Reviewarticle (Nov.–Dec., 1996) he posed the straightforward question:
“What is strategy?” He observed:
Under pressure to improve productivity, quality, and speed, managers have
embraced tools such as TQM, benchmarking, and reengineering. Dramatic opera-
tional improvements have resulted, but rarely have these gains translated into
sustainable profitability. And gradually, the tools have taken the place of strategy.
Operational effectiveness, although necessary to superior performance, is not
sufficient, because its techniques are easy to imitate. In contrast, the essence of
strategy is choosing a unique and valuable position rooted in systems of activities
that are much more difficult to match.
He makes many interesting observations in this article. For example, he
notes that you do not really have a strategy unless the strategy states what you
willnotdo. What are profitable business ventures you would pass on because
they do not fit your strategy? If the answer is none, you do not have a strategy,
according to Porter. He also talks about systems of activities that translate the
strategy into action, and an alignment of the systems of activity with the strategy—
something that is very visible in Toyota’s system.
If you have a great strategy that defines how you will be a unique value-
adding contributor, you need to fill in the other three boxes. These speak to
Porter’s “systems of activities.” To achieve this strategic vision for the business,
what does operational excellence look like? That is, what lean systems are required
to satisfy the outside business purpose? What kinds of people are needed to
support this vision inside the company and in your partners? The totality of the
answers to these questions will define the philosophy of your company.
Going off-site and getting top leadership to agree on your way is a great start
and certainly worth doing. You should do some groundwork to look at your cur-
rent state. You should look back in history at your company’s heritage and what
has shaped your culture. But having come out of such an off-site meeting with a
feeling of renewal and a commitment to a grand vision is just the starting point.
Living Your Philosophy
The preface to The Toyota Wayquotes Mr. Cho, who was president of Toyota and
an Ohno disciple:
What is important is having all the elements together as a system. It must be prac-
ticed every day in a very consistent manner—not in spurts.