The Agile Executive

Making Agile Work

The Headlong Pursuit of Growth, and Its Aftermath

with 4 comments

The December 12-18, 2009 issues of The Economist features a couple of fascinating articles on Toyota Motor Corporation. According to The Economist, Toyota’s President  reached the following dire conclusion on the situation Toyota is facing:

Mr Toyoda’s alarm call last month appears partly to have been prompted by reading “How the Mighty Fall”, a book by Jim Collins, an American management writer, which identifies five stages of corporate decline. Mr Toyoda reckons that Toyota may already be at the fourth stage. Companies at this point, says Mr Collins, frequently still have their destinies in their own hands, but often flit from one supposed “silver bullet” strategy to another, thus accelerating towards the fate they are trying to avoid.

In the litany of things that went wrong, an interesting point is made about the Toyota Production System:

… the recalls continued and Toyota started slipping in consumer-quality surveys. A year later Consumer Reports, an influential magazine, dropped three Toyota models from its recommended list. The magazine added that it would “no longer recommend any new or redesigned Toyota-built models without reliability data on a specific design”. People within the company believe these quality problems were caused by the strain put on the fabled Toyota Production System by the headlong pursuit of growth.

Whatever Agile method you practice – Scrum, Lean, Kanban, Crystal, etc. – you need to be cognizant of three touch points with the Toyota experience reported above:

  • Just like the Toyota Production System, your software method is a “vehicle” which is subject to policy decisions from above. It cannot, however, compensate for policy failures.
  • If your company relentlessly pursues growth, the quality/technical debt liability it is likely to incur coud easily outweigh the benefits of growth. Consider the upside potential of growth vis-a-vis the downside of the resultant technical debt. When appropriate, monetize technical debt using the technique described in Technical Debt on Your Balance Sheet.
  • In addition to monetizing the technical debt, evaluate the various kinds of risks indicated in The View From The Executive Suite. A sense of how devastating those might be is given by Toyota’s own experience:

Just as Cadillac used to be synonymous with luxury and BMW with sportiness, Toyota was a byword for quality and reliability… The danger in all of this for Toyota is that its loyal (and mostly satisfied) customers in America have long believed that the firm was different from others and thus hold it to a higher standard. The moment that Toyota is seen as just another big carmaker, a vital part of the mystique that has surrounded the brand will have been rubbed away.

Please remember – unless you work for Toyota Motor Corporation, chances are your company would not be able to take the kind of risk Toyota can.

About these ads

4 Responses

Subscribe to comments with RSS.

  1. Great post Israel. All too often, companies will forsake quality to get something out the door quickly. This is as prevalent in manufacturing as it is in software, though it is easier to push it out the door in software. Rapid growth can only be sustained through a disciplined approach. I’m a huge fan of Jim Collins and his work. In Good to Great, Jim says that great companies have disciplined people with disciplined thought doing disciplined action. It takes strong discipline to continuously focus on quality and improvement when growth opportunities arise. And that needs to come straight from the top.

    Robert Dempsey

    December 15, 2009 at 7:19 am

    • See the December 18, 2009 article Getting Toyota out of Reverse for Business Week’s view on the subject.

      Israel

      israelgat

      December 19, 2009 at 6:48 am

    • Also see H Thomas Johnson’s article The Unnatural Environment.

      Israel

      israelgat

      December 19, 2009 at 12:05 pm

  2. [...] a perceptive CQI  article on the recently reported problems at Toyota,  Johnson offers the following analysis: Toyota avoided this fate until the last decade because it [...]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 38 other followers

%d bloggers like this: