Toyota’s Mission Statement and Guiding Principles
We get a flavor of what distinguishes Toyota from excerpts of its mission statement for its North American operations compared with that of Ford . Ford’s mission statement seems reasonable. The company is concerned about being a leader in its products and services and wants to continually improve these to prosper as a business and provide a “reasonable return” to its stockholders—“the owners” of the business.
In contrast, Toyota does not mention stockholders, even though at this time it was listed on the New York Stock Exchange. It does not even mention the quality of its products even though we know that is a passion within Toyota. The purpose of Toyota is not to make a quality product that will sell well and make money for owners. That is a requirement in order to achieve the mission. The true mission, according to this statement, has three parts:
- Contribute to the economic growth of the country in which it is located (external stakeholders).
- Contribute to the stability and well being of team members (internal stakeholders).
- Contribute to the overall growth of Toyota.
The poignant message is that the company must enhance the growth of society or it cannot contribute to its external or internal stakeholders. This is its reason for making excellent products. Toyota challenges its workers to contribute to Toyota and make a place in its history. Toyota genuinely wants its associates to grow and learn, to invest in long-term technologies, and create lasting customer satisfaction with the goal of getting repeat business for life.
Another look at Toyota’s guiding principles comes from the following internal document . It was revised after Toyota’s global expansion, to emphasize the company’s responsibility as a global citizen. The principles here accurately express Toyota’s feeling of responsibility to its business partners for stable, long-term growth, and mutual benefits.
Unfortunately most companies still suffer from short-term myopia. I give presentations about Toyota throughout the world, and I often get questions that make perfect sense for companies whose only goal is today’s profits. Examples include:
- Will Toyota still use JIT if there is a major disaster that shuts down the supply chain?
- Doesn’t Toyota lay off employees when business is bad for a particular product in a plant?
- If Toyota does not lay off employees, what do they do with them?
- Now that Toyota is listed on the New York Stock Exchange, aren’t they more concerned about quarterly earnings?
- How does Toyota cost justify investments in technology for “quick changeover” and “right-sized equipment” to create one-piece flow?
The answer to all these shortsighted questions is simply that Toyota’s business decisions are driven by its philosophies. It will not abandon them at the drop of a hat. The only way it will change its philosophies of manufacturing, investment, and managing people is if there is a fundamental shift in the world that threatens its long-term survival … after very thorough analysis. The philosophies discussed in this chapter did not grow up overnight and Toyota will not drop them overnight. John Shook, reflecting back on what he learned as a manager at Toyota, explains this well:
Toyota intuited many years ago that it must focus on survival and the integration of all corporate functions toward ensuring that survival. TPS, then, is the result of efforts to direct all activities to support the goal of firm survival. This is vastly different from the narrow goal of “making money,” though in most micro-instances of actual work performance, they may appear to be virtually the same thing …. I posit here that Toyota has evolved the most effective form of industrial organization ever devised. At the heart of that organization is a focus on its own survival. It is this focus that enables Toyota to behave as a natural organism, enabling it to evolve as a truly emergent system. (Shook, 2002)