One of the 14 Toyota Way principles is to think long term. In fact, it’s the first on the list. What does it mean exactly to base decisions on the long term, in the context of lean management? Reading carefully, we can see that nearly half of the principles address long-term concerns. Herein may be both the secret to why some firms succeed with lean management, while others struggle. For the latter group, why does it seem so hard to make decisions that are in the good of the long term?
The 14 Toyota Way Principles
When reviewing the 14 principles, we go quickly from big picture vision and philosophy in principle 1, to concrete practices in principles 2 through 8. Then principles 9 through 14 return to the long term in their discussion of developing people, leaders, network of partners, and the capability to learn as an organization.
As described by Jeffrey Liker in The Toyota Way, the 14 principles are:
- Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
- Create a continuous process flow to bring problems to the surface.
- Use “pull” systems to avoid overproduction.
- Level out the workload (work like the tortoise, not the hare).
- Build a culture of stopping to fix problems, to get quality right the first time.
- Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.
- Use visual controls so no problems are hidden.
- Use only reliable, thoroughly tested technology that serves your people and process.
- Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
- Develop exceptional people and teams who follow your company’s philosophy.
- Respect your extended network of partners and suppliers by challenging them and helping them improve.
- Go and see for yourself to thoroughly understand the situation.
- Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.
- Become a learning organization through relentless reflection and continuous improvement.
We can say that the first principle is a keystone. If we leave it out, the other thirteen fail. Even when we achieve them individually they do not hold together as a system or coherent set of management practices. There are too many profitable shortcuts we can take when we excuse ourselves from taking care of the future.
Respecting the Nature of Humans as Short-term Thinkers
Toyota communicates the core of their Way as being continuous improvement and respect for people. In this context, respect for humanity means understanding why long-term thinking is hard for humans. Although reasons vary by individual and organization, here are some common ones.
Near-sightedness or narrow-mindedness. Thinking of the long-term requires that we open our mind to possibilities. This requires a willingness to study what has and hasn’t worked in the past. We may simply be ignorant of the benefits of making long-term decisions. We may lack the basic financial literacy in matters such as compound interest, living within our means, and saving early.
Going with the crowd. It’s human nature to go with the herd. What are my neighbors and friends doing? If it’s okay for them, it’s probably okay for me. When we hang with a crowd of short-term thinkers we are more likely to make short-term decisions. In personal terms, we can seek better role models. In corporate terms, we can partner with firms that share our long-term philosophy and practices.
Instant gratification. The upfront cost of putting money aside may seem too high when there are many things we want to buy right now. The benefit of having more money to spend in the future may be too abstract. Modern information technology, social media, on-demand supply chains, an abundance of refined sugars in our diet, flood of streaming entertainment – all of these things reward us now, possibly at a higher cost later. These may seem like forces beyond our control, but we can start by being aware of how they affect the horizon of our thinking and decision-making.
Inaction due to fear of uncertainty. We may think that it’s impossible to know the future, so it’s better to do what seems best today. When we are unsure about the best course of action, we tend to stick with the status quo, rather than explore better options. It’s the notion of, “If it ain’t broke, don’t fix it.” Over time, all things break, so we need to invest in maintenance and even scheduled upgrades.
The Cost of Thinking Long Term
The ugly secret hidden in plain sight is that making decisions based on what benefits us long term goes against our short-term interests. We feel pain when immediate needs are not met. Even when we know in our mind that it’s better not to have the third cookie, the short-term urges of our body can overpower our long-term decision-making.
Often people shorten the wording on this list to make it easier to read or fit on a card. Principle #1 is often reduced to “long-term philosophy” or “make decisions based on the long term.” These sound like reasonable expectations. However, it cuts off the most consequential element of Toyota Way Principle #1: even at the expense of short-term financial goals.
This raises the question of why we even set short-term financial goals if they motivate behavior contrary to our long-term interests. What are the concrete short-term expenses of long-term thinking? I’ve yet to see an organization address this in more than a philosophical way. That is to say, how does a lean organization do the math in order to consistently make long-term decisions, even at the expense of short-term financial goals?
How to Think Long Term
How do lean practices help people overcome these human tendencies for short-term thinking? As we can see, this may be less about adding a certain way of thinking and more a matter of recognizing and removing the obstacles to long-term thinking. This is often the case with lean and other efforts at individual or organizational improvement. Stopping the bad is easier than starting the good while keeping the bad.
However, lean management is full of concepts and practices that remind us of the importance of Toyota Way principle #1. We map a process or value stream, and proceed to imagine a future state that’s six months out, in the direction of an ideal process. We look to the overall direction or challenge, give ourselves a near-term target condition, and take small next steps in practicing kata. We talk about pursuing perfection and striving to meet ever-changing needs of customers.
We need a “long-term thinking practice pattern.” Perhaps organized on a series of five to eighteen questions on a two-sided card. Am I making a short-term decision or long-term decision? What long-term payoff do I expect from this short-term sacrifice? Will my future self scold me or thank me for this decision?