To evaluate any governance philosophy, one must first correctly understand the cultural soil that nurtures it in order to truly grasp its essence.
Waste, Not Scale
In fierce competition, controlling costs has always been a topic of interest, giving rise to many management concepts and tools. In practice, Toyota Motor Corporation is renowned worldwide for its high quality, low cost, and fuel efficiency.
However, our understanding of "low cost" may differ significantly from Toyota's philosophy.
Completely different from Ford's emphasis on "economies of scale," Toyota's production method advocates: "a production system based on the thorough elimination of waste, pursuing the rationality of car manufacturing." From this, we can see that the key words of Toyota's production method's core concept are "thorough elimination of waste" and "rational production."
Compared to economies of scale in production, Toyota places more emphasis on reasonable adjustments by producers, suppliers, logistics distributors, and retailers, organizing balanced production, supply, and distribution according to downstream product demand in terms of time, quantity, structure, and other requirements. In Toyota's view, low unit costs only apply within the scope of production, but for the entire supply chain, the subsequent costs may far exceed the savings achieved through economies of scale.
So, how exactly do numerous lean processes operate? The key lies in "thoroughly eliminating waste"!
What exactly is waste?
In fact, the waste referred to by Toyota is much broader and deeper than the common notion of waste. It actually has two meanings: first, all activities that do not create value for customers are considered waste, and those activities that do not add value should be eliminated; second, even activities that create value are wasteful if the resources consumed exceed the "absolute minimum" boundary.
Understanding, Not Misinterpreting
At some point, "low cost" and "good quality at low prices" were what we considered the "tricks" of Japanese companies, but we couldn't figure out how they managed to reduce costs. Now, after closer examination, we see that Toyota uses "thoroughly eliminating waste" rather than simply "reducing costs" as its core concept, leading to a series of Toyota management ideas such as "just-in-time production," "automation with a human touch," "zero inventory," "kanban management," "frugal spirit," and "debt-free operation."
Since low cost is a result rather than a foundation, reducing costs can also be achieved by patching things up. Waste is the true source of cost generation. Therefore, only by adhering tightly to "eliminating waste" and "rational production" can one truly achieve "low cost, high quality" in a healthy and reasonable manner.
In fact, different groups at different times, in different contexts, and in different cultural atmospheres will have completely different understandings of a particular concept and the corresponding behavioral methods and values associated with it. Don't say that Toyota's original term was "eliminate waste"; even if it used "reduce costs," people living in that environment might intuitively understand its meaning boundaries. However, in a different environment—such as the former situation of abundant natural resources, insufficient economy, and malicious competition—"eliminating waste" and "controlling costs" could easily slip into price wars and cutting corners.
This is like the word "leadership," which in an English context expresses "influence," but in a Chinese context, it means "power," a synonym for control. As a result, in both Eastern and Western management practices, everyone talks about leadership and leadership ability, but what they think about internally can be entirely different.
Editor's Note:
From this article, we can easily see that the effectiveness of a management philosophy is first based on the soil that suits it—the culture that gives rise to it. Different cultures lead to vastly different interpretations of the same philosophical expression. This is precisely what our ancestors referred to as "the orange in the south and the枳in the north." Therefore, when we borrow any management philosophy, we must first correctly understand the cultural soil that nurtures it in order to truly and accurately understand its meaning, precisely grasp its essence, and thus appropriately adopt or discard it for our own use, instead of blindly imitating and going astray due to partial understanding.
In recent years, one of the most typical examples is "people-oriented." When we feel close to the imported concept of "people-oriented" because of our long history of "rule by man," we inevitably misunderstand it and justify it accordingly, clinging to outdated notions under the guise of modernization. There is nothing more self-deceptive than being "conservative" in the name of the "times." And when we raise banners to learn from Toyota and GE, the risks of grafting these ideas onto different cultural contexts are especially worth guarding against.