Today I read an article about Toyota surpassing Ford in vehicle sales to become
the number two in total annual sales, behind GM. (However, Ford still leads
Toyota in car sales, if Toyotas heavy truck division is excluded from the
numbers.)
Fujio Cho, president of Toyota, is generally considered to be an excellent
manager and was ranked as one of the leading managers in the world by Business
Week. What struck me were the last few paragraphs of the article.
Heres the article:
http://story.news.yahoo.com/news?tmpl=s ... 3281261243
"Fujio Cho, president, said last autumn that having passed Ford he would not be
aiming to overtake General Motors, the worlds largest motor manufacturer with
sales of 8.6m last year.
I am not personally interested in the ranking of the sales," he said. I was
surprised to hear that [Toyota was ahead of Ford]. Establishing the target
figure of the sales is not a good way to manage. What I mean by this is that,
for example, if we just stick to our sales target the Toyota employee might
resort to discounting the vehicles and I dont want to do that. "
Chos no-quota approach is unusual and strikes me as a production-distribution,
or beer game, strategy. But it could also be just a pricing strategy. Or both.
What do people think about Fujio Chos reluctance to use sales quotas?
Are there system dynamics models out there that compare sales quota strategies
to alternatives?
By the way, prior to becoming president of Toyota, I believe Fujio Cho was
director of strategy.
Best regards, Michael
______________________________________
Forio Business Simulations
Michael Bean
mbean@forio.com
Production and Sales Quotas
-
"John Gunkler"
- Member
- Posts: 31
- Joined: Fri Mar 29, 2002 3:39 am
Production and Sales Quotas
I believe that Fujio Cho is simply reflecting the Deming philosophy when he
refuses to set sales quotas. Dr. Deming was adamantly opposed to any kind
of "management by objectives" for reasons such as Fujio Cho cited and
others. He taught the Japanese, and they learned very well, that the only
useful kinds of goals have to do with improvement of processes/optimization
of systems. He believed that systems/processes have capabilities to produce
certain amounts and kinds of outcomes and that setting goals for such
systems was foolish and arbitrary -- the systems will produce (within a
range of statistically computable limits) whatever it is designed
(intentionally or unintentionally) to produce. The system does not respond,
well, to exogenous "goals." If the goals are within the capability of the
system, what was the point in establishing them? If the goals are not
within the capability of the system, what was the point in establishing
them? And, in this latter case, there may be all kinds of unintended and
detrimental consequences as people try to force outcomes that the system
isnt built to produce.
From: "John Gunkler" <jgunkler@sprintmail.com>
refuses to set sales quotas. Dr. Deming was adamantly opposed to any kind
of "management by objectives" for reasons such as Fujio Cho cited and
others. He taught the Japanese, and they learned very well, that the only
useful kinds of goals have to do with improvement of processes/optimization
of systems. He believed that systems/processes have capabilities to produce
certain amounts and kinds of outcomes and that setting goals for such
systems was foolish and arbitrary -- the systems will produce (within a
range of statistically computable limits) whatever it is designed
(intentionally or unintentionally) to produce. The system does not respond,
well, to exogenous "goals." If the goals are within the capability of the
system, what was the point in establishing them? If the goals are not
within the capability of the system, what was the point in establishing
them? And, in this latter case, there may be all kinds of unintended and
detrimental consequences as people try to force outcomes that the system
isnt built to produce.
From: "John Gunkler" <jgunkler@sprintmail.com>
-
"Peter Heffron"
- Junior Member
- Posts: 3
- Joined: Fri Mar 29, 2002 3:39 am
Production and Sales Quotas
Friends,
Here are a few thoughts inspired by John Gunklers piece.
"Goals," "systems," "optimization," and so on, are relative terms we humans
have come up with to help explain to ourselves how we think/hope/intend to
make things work. The problem with putting too much stock (no pun intended)
in these terms is that we--each of us--are so imbedded in "the system" that
we cant be objective even if we have (in our own minds) the purest of
motives and really want to be! Put another way, life is (or often seems to
be) full of contradictions; thus perhaps we need to be more humble about our
own "contradictory" ways (do as I say, not as I do).
Saying, "the only useful kinds of goals have to do with improvement of
processes/optimization of systems," is an oversimplification at best, and
immoral at worst. For example that approach has been used to develop nuclear
bombs, mines, gas chambers, and so on to exterminate lots of people...
"The purpose" of improving the process/optimizing the system in some cases
has even, for example, been the elimination of entire ethnic groups, entire
forests, and so on.
This is why there need to be overarching philosophical considerations,
especially ethical considerations, when looking at these issues. Philosophy,
including ethics, will also be debated until the end. And hypocrisy will
still abound (including in each of us), but by remembering to include
ethical considerations (thou shall not steal...do unto others as they would
do unto you...do not take more from the planet than you give back to
it...etc.) in our analysis of systems, including modeling, we will at least
be trying to recognize our own (at times dangerous) limitations as
mischievous components of those same systems.
Peter Heffron ( heffron@hialoha.net )
Here are a few thoughts inspired by John Gunklers piece.
"Goals," "systems," "optimization," and so on, are relative terms we humans
have come up with to help explain to ourselves how we think/hope/intend to
make things work. The problem with putting too much stock (no pun intended)
in these terms is that we--each of us--are so imbedded in "the system" that
we cant be objective even if we have (in our own minds) the purest of
motives and really want to be! Put another way, life is (or often seems to
be) full of contradictions; thus perhaps we need to be more humble about our
own "contradictory" ways (do as I say, not as I do).
Saying, "the only useful kinds of goals have to do with improvement of
processes/optimization of systems," is an oversimplification at best, and
immoral at worst. For example that approach has been used to develop nuclear
bombs, mines, gas chambers, and so on to exterminate lots of people...
"The purpose" of improving the process/optimizing the system in some cases
has even, for example, been the elimination of entire ethnic groups, entire
forests, and so on.
This is why there need to be overarching philosophical considerations,
especially ethical considerations, when looking at these issues. Philosophy,
including ethics, will also be debated until the end. And hypocrisy will
still abound (including in each of us), but by remembering to include
ethical considerations (thou shall not steal...do unto others as they would
do unto you...do not take more from the planet than you give back to
it...etc.) in our analysis of systems, including modeling, we will at least
be trying to recognize our own (at times dangerous) limitations as
mischievous components of those same systems.
Peter Heffron ( heffron@hialoha.net )
-
=?iso-8859-1?Q?Jean-Jacques_Laub
- Junior Member
- Posts: 16
- Joined: Fri Mar 29, 2002 3:39 am
Production and Sales Quotas
Hi John
I do not agree with your opinions about processes and goals.
First point.
The reason of Toyotas strategy is not automatically the result of the
philosophical question: to what extent fixing goals can change the results
of a process?
If Toyotas president did not mind his shares market it was probably
because the capacity of his factories was correctly used. He then did not
see the usefulness of selling more which would generate a decrease of
prices. On the contrary if his factories were underused he would certainly
be more concerned with selling more. Then the Toyotas problem is a simple
economical optimization problem that can be solved with SD, O.R., a
spreadsheet or with a pencil and a sheet of paper.
Second point:
Gurus theories are always partially grounded on reality. In this case the
reality is that most goals are not reached. Then the solution is to suppress
goals and to work on processes.
This is of course a very tempting theory. No more goals to set, everything
comes automatically.
The difficulty to reach the goals can have another reason. The goals are
badly set and the means to accomplish them are not well adjusted.
I do not mean that process is not important but its influence can vary
considerably.
Many people set goals, focusing on results instead on focusing on the causes
that determine the results and then experience difficulties reaching their
goals. In fact one must when setting goals take into consideration the
process. If the process is well build then the goals will be easier to
settle.
Example:
If a new salesman is hired and you settle with him sales objectives on a
month by month basis, he may have genuine difficulties, depending on the
kind of product, to see the link between his efforts and his sales results.
It can affect his motivation.
If you set objectives on which he has more control, for instance the
quantity of contacts, the quality of reports, etc. that will, if carefully
chosen, influence his future results, you will know that if the objectives
are not reached it is because the salesman did not work correctly.
There is too a saying that says that there is no good wind for a journey
without destination.
Third point: It is an important advantage of SD to be independent from any
simplifying theory. That means that depending on the situation, the outcome
of a SD model may be eventually contradictory with any Gurus theory.
J.J. Laublé Allocar, rent a car companies.
From: =?iso-8859-1?Q?Jean-Jacques_Laubl=E9?= <JEAN-JACQUES.LAUBLE@WANADOO.FR>
I do not agree with your opinions about processes and goals.
First point.
The reason of Toyotas strategy is not automatically the result of the
philosophical question: to what extent fixing goals can change the results
of a process?
If Toyotas president did not mind his shares market it was probably
because the capacity of his factories was correctly used. He then did not
see the usefulness of selling more which would generate a decrease of
prices. On the contrary if his factories were underused he would certainly
be more concerned with selling more. Then the Toyotas problem is a simple
economical optimization problem that can be solved with SD, O.R., a
spreadsheet or with a pencil and a sheet of paper.
Second point:
Gurus theories are always partially grounded on reality. In this case the
reality is that most goals are not reached. Then the solution is to suppress
goals and to work on processes.
This is of course a very tempting theory. No more goals to set, everything
comes automatically.
The difficulty to reach the goals can have another reason. The goals are
badly set and the means to accomplish them are not well adjusted.
I do not mean that process is not important but its influence can vary
considerably.
Many people set goals, focusing on results instead on focusing on the causes
that determine the results and then experience difficulties reaching their
goals. In fact one must when setting goals take into consideration the
process. If the process is well build then the goals will be easier to
settle.
Example:
If a new salesman is hired and you settle with him sales objectives on a
month by month basis, he may have genuine difficulties, depending on the
kind of product, to see the link between his efforts and his sales results.
It can affect his motivation.
If you set objectives on which he has more control, for instance the
quantity of contacts, the quality of reports, etc. that will, if carefully
chosen, influence his future results, you will know that if the objectives
are not reached it is because the salesman did not work correctly.
There is too a saying that says that there is no good wind for a journey
without destination.
Third point: It is an important advantage of SD to be independent from any
simplifying theory. That means that depending on the situation, the outcome
of a SD model may be eventually contradictory with any Gurus theory.
J.J. Laublé Allocar, rent a car companies.
From: =?iso-8859-1?Q?Jean-Jacques_Laubl=E9?= <JEAN-JACQUES.LAUBLE@WANADOO.FR>
-
"Paul M. Konnersman"
- Junior Member
- Posts: 6
- Joined: Fri Mar 29, 2002 3:39 am
Production and Sales Quotas
John,
Very nice sketch of Demings views and a credible speculation on the
basis for Fujio Chos statement.
I continue to be astonished that there are so few people who seem to
understand what Deming said and perhaps even fewer who understand how
wise he was. But then, one could say the same about Jay Forrester.
Paul Konnersman
From: "Paul M. Konnersman" <konnersman@comcast.net>
Very nice sketch of Demings views and a credible speculation on the
basis for Fujio Chos statement.
I continue to be astonished that there are so few people who seem to
understand what Deming said and perhaps even fewer who understand how
wise he was. But then, one could say the same about Jay Forrester.
Paul Konnersman
From: "Paul M. Konnersman" <konnersman@comcast.net>