Chinese dynasties lasted centuries. Investments in companies by Silicon Valley California venture capitalists may last only months.
Which is best? A controlled growth approach or grab it all while the going is good?
The tortoise or the hare. Which one won the race?
Japanese firms like Toyota and Honda have historically been controlled growth firms. They want their amount of management competencies to parallel their size and evolving complexity. I am old enough to remember when Honda only sold lawn mowers with exceptional engines. Then they produced a low end 90cc motorcycle. Then a car. It was their plan.
The famous Toyota Production System (TPS) and its “one piece flow” just-in-time manufacturing approach was based on continuous learning and discovery. It is a management philosophy. It embraced the now famed plan-do-check-act (PDCA) iterative cycle espoused by the quality management guru W. Edwards Deming. Toyota’s objective was steady growth to build its managerial talent somewhat independent of global economic cycles. When global economies boomed, Toyota raised prices to dampen accelerating production volume. When global economies declined toward recession levels, they lowered prices to maintain existing or modestly growing production volume levels. Maximizing short-term profits was back seat to long term success.
Tortoise or hare?
Was the recent Toyota auto safety problems and resulting recalls caused by a departure of stability toward opportunistic growth motivated in part to replace General Motors as the world’s leading auto manufacturer? I do not think so. My guess is Toyota’s snafu will be viewed years from now as a minor temporary blip to their long term approach to stable growth.
But the world seems to be in an increasing speed-up mode with more volatility and accelerating change. Is it possible this is a false read, and big fluctuating swings and unexpected events just appear that way because of CNN-like 24 hour news coverage collected from all corners of the earth? Are there really more earthquakes and floods? Or do global media simply report what was not in prior decades quickly communicated as news?
Or is my observation of faster change correct? Is increased volatility the real deal? Examples of volatility include changes in consumer preferences, foreign currency exchange rates, and commodity prices, just to name a few. Trends can develop quickly such as oil dependence, emergence of country economies (e.g., India and Brazil), and instantaneous Internet-based global communications. Unanticipated shocks can come from occurrences like the Asian tsunami, H1N1 flu, the global economy crisis, Euro currency shocks, and now the crisis in Egypt. Has the Internet, global communications, and relaxation of international country trade barriers introduced big sin wave vibrations and turbulence compared to past decades’ rock-a-bye baby smooth rises and falls?
For the sake of argument, let us assume that economic volatility is escalating to become the new normal. How does this affect managerial styles and approaches? An obvious change might be that five year detailed line-item strategic plans are out the window. A long term vision and mission direction setting is acceptable, but not the detailed financial projections that go with them.
Organizational agility and speed to change is replacing the fixed straight line cruise control momentum that may have worked for Toyota but may simply not be an appropriate management style when the highway ahead is full of twists and turns.
So where is the tie-in with enterprise performance management, business intelligence and business analytics (especially predictive analytics)? I always connect my writings to these.
Where is the tie-in? Re-read a prior key sentence: “Agility and speed to change replaces momentum.” Without strategy maps and their derived key performance indicators (KPIs), then employee alignment is too loosely connected with the executive team’s strategy – misalignment. Without insights to customer micro-segment preferences and their associated profitability to offer products and services to them, then long term sustaining profits are jeopardized. Without demand forecasting, then an organization will be endlessly reactive, not pro-active.
I can offer more examples of performance management methodologies that are essential to be competent in such that without them there are adverse consequences. The message here is that maybe long-term controlled growth is not the wisest approach.
Tortoise or hare? Maybe the rabbit is the one to place your bet on.
