Toyota Way Principle #1

Posted on April 19, 2012 | in Baseball, Goal Setting, Small Business, Sports, Tickets, Time Savings | by

Yesterday we brought forth a bit of a visual depiction of what lean is and how it can impact a small business or sports organization. Hopefully we demonstrated the level of importance for applying lean and continuous improvement because it impacts the bottom line, improves the service process to customers, and helps you make smarter decisions.

But lean isn’t just something you do, it’s something you become. In addition, the quest to become lean is never-ending simply because there are always new ways to become even more lean, even more streamlined, even more efficient.

Beyond that…lean isn’t easy. There are great benefits to be derived from organizations that take even just the first step towards focused improvement, but it will require dedication and investment of time and money.

And that’s if you’re doing it right.

Fortunately we have some guiding principles to follow that help us do it right. Jeffrey Liker and David Meier, the authors of The Toyota Way, have outlined the 14 guiding principles behind the implementation of continuous improvement at Toyota. There is no lean “roadmap” or cookbook that tells you exactly how to apply lean – it will be different for every situation and organization – but the most successful lean implementations will apply these principles, if not incorporate them into most major business decisions.

This is #1 on the list.

“Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.”

This principles is perhaps the hardest one to apply, as it will generally come with a giant culture/mindset change. It’s also the hardest one to approach. Most companies and organizations don’t have a long-term philosophy because they are simply trying to survive in the current moment. It’s really difficult to do lean if you have no money and you have no customers to serve. Survival in the immediate term has to be the priority. Who cares about six months down the road if you’re not sure you’ll last through the week?

Of course, if that is the situation you’re in, maybe it really is best to step back and create a long-term plan. If your business is really living hand-to-mouth, perhaps a deeper business analysis will do some good.

Most businesses have the goal or intent to last for many years but have not established a long-term philosophy to do so. Basically, they lack a long-term plan.

Why not start one today?

Long-term plans may take years to implement to the fullest extent, but their purpose is to create a foundation for long-term growth and sustainment. And sometimes that means doing so at the sacrifice of short-term wins that did not fit with the plan.

Here is an example of a long-term philosophy that the process owner created and followed, even though doing so really hurt in the immediate future, yet has started to pay off with a solid foundation – the Indiana University men’s basketball team. Coach Tom Crean came into a bad situation – a program with more emphasis on “athlete” than “student”, poor attitudes, recruiting violations, an empty recruiting cupboard – and laid down a long-term philosophy that would hurt in the short run but set the program up for success years down the road. Indiana won six games in his first season, with only two players having returned from the previous regime of Kelvin Sampson. This year, his fourth year, the Hoosiers won 27 games and made it to the Sweet 16 in the NCAA tournament, and they also defeated three top-five teams during the season – including eventual NCAA champion Kentucky.

(There will be more on Tom Crean and the Indiana Hoosiers in a later post. It’s a textbook example of applying a long-term philosophy and sticking with it.)

So what does a long-term philosophy include? For an organization to be viable, it has to provide value to its customer base, members, employees/participants, and suppliers. You can give away free game tickets all day – that provides a LOT of value to the customer, but do you know if it brings value to the team? You can charge more for tickets and provide a little less value to the customer, but maybe that crosses the tipping point where customers won’t pay. A long-term philosophy will incorporate providing value to the customer and the organization.

You also have to define who your true customer is. Baseball teams have two main customers to consider – patrons buying tickets to attend games, and sponsors splashing advertisements on anything within line of sight.

(Okay, that was a touch gratuitous.)

But think about this…what do you have if you take one of those customer bases away? If all of your sponsors went away and you kept your ticket-buying patrons, you would still have games and you would still have fans. If you took your ticket-buying public away? No one attending games to see the sponsors’ ads, and the sponsors go away (since their value is gone) and you then have no revenue and no game.

So your true customer (and the basis for your long-term philosophy as a baseball team) has to be the ticket buyer. You have to focus on the fan. Give the fan value to come to the game, and they’ll come. When the fans come, the sponsors will come too.

Focus on the true customers in your long-term philosophy. That’s a big start.

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