Slow and Steady Wins the Race: After Akio Toyoda publicly stated Toyota lost sight of its priorities prior to the Great Recession focusing too much on growth and profit, instead of on making great cars and satisfying customers, Toyota had a record year in 2013-14 producing more cars and profits then every in the history of the auto industry. Akio Toyoda is now happy to have a year without a growth in profits to reinvest for sustainable growth. I love this quote: If we keep harvesting, there needs to be some additional sowing of seeds.” Akios world: When growth is no growth Profit paradox underpins Toyota strategy for success Automotive News, HANS GREIMEL TOKYO -- Akio Toyoda is the first to admit it. He doesn’t count company growth the same way as other captains of industry -- or Wall Street profit hounds, for that matter. “Growth today has a different meaning for Toyota,” the Toyota Motor Corp. president said this week while announcing record full-year net income and operating profit at the world’s biggest automaker. The difference: Operating profit is expected to flat-line in the current fiscal year, while net income actually drops. But in Akio’s world, that’s still growth. Chalk it up to the paradox of pursuing “sustainable” growth, in which profit is just a byproduct and better cars the goal. Sustainable growth is Toyoda’s latest buzzword. Indeed, Toyota’s record earnings underscore the company’s comeback from a string of tough years marred by the company’s first operating loss in seven decades, a worldwide recall crisis and the 2011 killer earthquake-tsunami in Japan. Toyota is finally poised for takeoff, Toyoda says. “We are now entering a new stage, and are taking the first step toward sustainable growth,” Toyoda said. “Sustainable growth means growing steadily each year under any circumstance.” Yet, that first step is ironically a slowdown in profit growth. Not a problem for Akio, grandson of the company’s founder. He likened it to resting on a staircase landing so that the climber has energy to go even higher. Indeed, Toyota learned its lesson of trying to run to the top of the stairs in one go. That resulted in rampant sales and production that outstripped the ability of Toyota’s human resources to keep up with the change. Toyoda partially blames that overreach for the recalls and the company’s humiliating loss during the financial crisis. While Toyota rests at the landing this year, it will be investing in training, more efficient factories and better r&d. “With this lull in growth of profitability, maybe people wonder whether we want to continuously grow,” Toyoda said. “But if we keep harvesting, there needs to be some additional sowing of seeds.” In a not-so-subtle dig at German rival Volkswagen and its habit of absorbing smaller carmakers to build sales, Toyoda then opined that Toyota’s more organic approach would win the day. “Since our foundation, our growth has been driven by each individual vehicle being manufactured and delivered, rather than through corporate acquisition,” Toyoda said. “My role in this endeavor is to keep Toyota’s overall vision and direction clear,” he said. The slow-and-steady message is winning fans. “They have a mentality now that is shaped by the recall crisis but also the financial crisis. That is, how do we not lose money if things go badly,” says Kurt Sanger, an auto analyst with Deutsche Securities Japan. And despite Toyota’s conservative guidance, Sanger remains bullish on their outlook: “Ultimately we think Toyota will need to revise up as the year progresses.”
Posted on: Fri, 09 May 2014 21:10:16 +0000
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