toyota harvard business review case study

The contradictions that drive Toyota’s success

Strategic Direction

ISSN : 0258-0543

Article publication date: 1 January 2009

• Automotive industry
• Corporate culture
• Organizational structure

Takeuchi, H. (2009), "The contradictions that drive Toyota’s success", Strategic Direction , Vol. 25 No. 1. https://doi.org/10.1108/sd.2009.05625aad.009

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

Article Type: Abstracts From: Strategic Direction, Volume 25, Issue 1

Takeuchi H. Osono E. and Shimizu N. Harvard Business Review, June 2008, Vol. 86 No. 6, Start page: 96, No. of pages: 9

Purpose – to explain the complex and apparently contradictory Toyota company culture. Design/methodology/approach – presents results of a six-year study of Toyota, including 220 interviews and visits to 11 countries. Findings – the Toyota Production System (TPS) lies at the centre of the company’s reputation for automobile quality and innovation. However necessary the TPS has been, though, it has not been the only factor in success. Toyota shows the following apparent contradictions: it moves slowly but takes big leaps; it grows steadily but is paranoid in insisting on change; its operations are efficient but it seems to use employee time in wasteful ways such as meetings; it is frugal but spends freely in key areas; it insists on simple communications but builds complex social networks; it has a strict hierarchy but allows employees to push back. The forces of expansion include setting near-unattainable goals, local customization, and experimentation, while there are three forces of integration which mitigate these: the founders’ values such as kaizen, long-term employment, and open communication. Practical implications – companies cannot simply learn individual points from Toyota: its success reflects its culture, and this takes time to achieve. Originality/value – shows that Toyota’s culture of contradictions puts people at the centre of the company; there is thus always room for improvement.ISSN: 0017-8012Reference: 37AR070

Keywords: Automotive industry, Corporate culture, Organizational structure

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Toyota Harvard Case Solution & Analysis

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Toyota Case Solution

Converting strategy into action:-

Strategies are made to gain competitive advantage, because those companies that do not have their own strategy fail to survive. Toyota has also made the strategies to gain competitive advantage and has gained market share as well as it has increased the profitability of the organization. Toyota believes that they should respect the environment and support the community by decreasing the pollution and co2 emission rate.

Toyota has built pillars into its corporate culture as everyone can understand what they have to do, and this will also help employees to take action at any stage of the organization.

Toyota can also contribute to them by using eco-friendly production plant in manufacturing of the cars, as this will result in reducing the emission rate and wastage. Toyota can use eco-friendly transport of the raw material from the supplier to the company’s premises and finish good from the company premises to the final user.

After making these strategies, these should be implemented and regular updates should be taken about the new plan.

Building the pillars into the corporate culture can be done by organizing workshops and meeting with the staff and creating awareness about the company's new vision. Toyota should contact the supplier to use eco-friendly transport or arrange eco-friendly transport itself. Exiting plant should be uninstalled and eco-friendly plant should be installed, which would manufacture eco-friendly car.

These all steps will help the company to gain the major market share because the world is now shifting towards Eco products and there is excess amount for the Eco friendly products.

Involving the organization & embedding core competencies:-

The core competencies are the skills, characteristics and assets that set Toyota apart from competitors. They are the fuel for innovation and the roots of the competitive advantage.

The old concept of the diversified cooperation is the portfolio of the strategic business unit, in today’s world Toyota must maintain competitiveness by developing the core competencies.

This is a critical task for the management of Toyota for being capable of creating the products, which customers cannot even imagine. It requires radical change in the management and to understand the changing basis for global leadership and in order to gain this Toyota should think out of the box and cross the boundaries rather than focusing on the strategic business unit.

Core competencies can be derived from the collective learning of the employees and ability to work across the organization. With major core competencies, Toyota can compete in the industry because the competitors cannot buy these similar competences from the market easily.  Toyota’s core competencies should be difficult for the competitors to imitate, and it will be difficult if it harmonizes individual technologies and production skills. Toyota’s core competencies lie in achieving excellence through the continuous improvement and waste reduction. Toyota’s global suggestion system results in thousands of improvements every year, from the arrangement of a work team on the production floor to quality of soap in the restroom. Nearly 90% of suggestions are implemented.

Toyota has become a self organizing process where potentially interested people from around the company receive an invitation to view how a problem is solved.

Core competencies can be embedded in Toyota in following ways,

• Regularly arranging the professional development programs for the technical staff
• Training of the core employees on regular basis.
• Arranging induction programs for newly joined the staff.

Competencies help Toyota to exploit opportunities by creating value for customers or to reduce threats in the business. Moreover, it has capabilities that other competitors cannot develop easily usually due to historical conditions.

Getting value for your money:-

Toyota should give its customers value for money products, which means the product should be worth more or equal to what the customer is paying. The customer will purchase the product when they get the value of what they are paying.

If you go to the market for a reliable car, you will see lots of different models on your shopping list. Chances are your list of potential car candidates includes 2016 Toyota Corolla and Honda Civic (2016). Both of these economy cars are constant sizzling sellers, and they both hail from car makers known for their reliability, strong resale value and exceptional fuel economy.

Providing an excellent brand value has always been an important part of the culture at Toyota, and with Toyota  Corolla (2016) the company proves again that it deserves to wear the brand value crown. Toyota scored well in all parts of the value equation, from the affordability of the purchase price to the cost of insurance, repairs, and maintenance.

If you would like to get an up-close look at the most valuable brand in the entire world, just head down to Atlanta Toyota for a test drive of the new 2016  Corolla . Toyota has continued to move forward with every new model year, producing cars that are fun to drive, affordable to buy and economical to own. When you test drive 2016  Corolla , you will know why Toyota is once again the world’s most valuable brand.

Toyota Harvard Case Solution & Analysis

In the end, however, it is 2016 Toyota  Corolla  that comes out on top. Toyota offers a number of important benefits for all kinds of drivers, making it the superior choice in different ways............

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Logistics issues have taken on unexpected and possibly unwanted “glamour” among those who study business and economics, thanks to the COVID-19 pandemic and its global aftermath.

It’s a throwback to the days when railroad management was all the rage in the original Harvard Business School curriculum among those interested in studying business in 1908. I should know. I was invited to join the HBS faculty not to teach marketing, service management, or general management, among my later teaching assignments, but to help breathe life into efforts to teach logistics.

In those days, there was fascination with air freight and the trade-off of inventory and transportation costs—as in spending more for air transport in order to spend less on owning inventory, thereby optimizing what we called the “total cost curve.” (I can still draw those curves in my sleep.) A plentiful supply of “safety stock” was the order of the day for those using slower forms of transportation.

"The result, of course, was what came to be known as 'just-in-time' inventory management, as championed by firms such as Toyota."

One of my interests: The value of improved inventory information in a distribution channel on overall inventory levels and costs. One thing that may have helped generate the HBS offer was an experiment I performed using my own crude version of what would become known as the “beer game.”

In my approach, my Ohio State students managed inventory at various levels in a distribution channel. Fluctuating demand at the retail level would generate exaggerated fluctuations—a “whipsaw” effect—in expected demand and inventory planning at the back end, or manufacturing level, in an effort to meet possible future demand. In one simulation, students had little knowledge of inventory levels other than those for the company they were managing. In another, they had full information about inventory quantities at every level in the channel. I found significant value—expressed in lower inventories and fewer out-of-stock situations—in channel-wide inventory knowledge.

Over the years, information technology contributed to more complete knowledge about inventory status as well as more dependable transport. Both made a strategy with less safety stock more viable. The result, of course, was what came to be known as “just-in-time” inventory management, as championed by firms such as Toyota.

The approach worked. The amount of inventory needed to support a given sales level shrank. Logistics as a component of the total cost (transport plus inventory) of doing business came down. Customer service, as measured by stockouts, improved.

"What we had come to take for granted then exploded in our collective faces."

US auto manufacturers, following Toyota’s lead, were at times maintaining just half a day of inventory of some parts supplied domestically—until the pandemic. What we had come to take for granted then exploded in our collective faces.

When the smoke has finally cleared and flows of goods have become more plentiful and dependable, how will industry respond? Surely inventor-to-sales ratios will come back down, but to what extent?

Will we return to the halcyon days of pre-pandemic inventory management? Or will larger safety stocks, with determinants programmed into inventory management formulae, be the order of the day?

Have we seen the peak use of “just in time” inventory management? What do you think?

Share your thoughts in the comments below.

Editor's note: Heskett explores the leader's role in his book, Win From Within: Build Organizational Culture for Competitive Advantage .

Your feedback to last month’s column

Is Stakeholder Management Facing New Headwinds?

Thoughtful comments raise added questions. That was the case in the several responses to last month’s column. The general sense that they left in my mind was that stakeholder management is facing new challenges posed by the rise of what John referred to as the “tribal spectrum” and the polarization that accompanies it.

Perhaps the most significant question raised by respondents was that of balance. To what extent should a leader attempt to balance the interests and values of various stakeholders in making an important decision?

Meena Raghunathan said, “My concern is more for the stakeholders who have interest but no power or voice! … They are given the least attention and support, though they may need it most.”

On the other hand, Mark K., the CEO of a “publicly traded financial institution,” commented that, “it is my experience that a critical component of the leader’s job is to ensure that proper, meaningful consideration is given to the unique balance of the needs of each of the corporate stakeholders … Balance leads to performance whereas imbalance leads to M&A and becoming a statistic.”

The challenge of balancing interests is that a wide variety of interests may describe any one stakeholder. As John points out: “Sometimes you have to decide which employee values does the business need to foster in order to align to your customer demand.”

Clearly, stakeholder management is not getting any simpler or easier.

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How to Solve Your Company’s Toughest Problems

A conversation with Harvard Business School professor Frances Frei on how to solve any problem in five clear steps.

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You’ve likely heard the phrase, “Move fast and break things.” But Harvard Business School professor Frances Frei says speed and experimentation are not enough on their own. Instead, she argues that you should move fast and fix things. (That’s also the topic and title of the book she coauthored with Anne Morriss .)

In this episode, Frei explains how you can solve any problem in five clear steps. First, she says, start by identifying the real problem holding you back. Then move on to building trust and relationships, followed by a narrative for your solution — before you begin implementing it.

Key episode topics include: leadership, strategy execution, managing people, collaboration and teams, trustworthiness, organizational culture.

HBR On Leadership curates the best case studies and conversations with the world’s top business and management experts, to help you unlock the best in those around you. New episodes every week.

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HANNAH BATES: Welcome to HBR on Leadership , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock the best in those around you.

Maybe you’ve heard the phrase, “move fast and break things.” It refers to a certain approach for rapid innovation that was popularized in Silicon Valley and invoked by many tech firms. But Harvard Business School professor Frances Frei says that speed and experimentation are not enough on their own. Instead, Frei argues that you should “move fast and fix things.” That’s the topic and title of the book she co-authored with Anne Morriss.

In this episode, Harvard Business Review’s editorial audience director Nicole Smith sits down with Frei to discuss how you can solve any problem in five quick steps. You’ll learn how to start by uncovering your true problem. Then, move on to build trust, relationships, and a narrative for your solution before you dive in on the actual work of implementing your fix.

This conversation was originally part of HBR’s “Future of Business” virtual conference in November 2023. Here it is.

FRANCES FREI: So, I would love to talk to you about how to move fast and fix things. And I’ll tell you the reason that Anne and I wrote this book – and it’s really a quest we’ve been on – is that Mark Zuckerberg, in his IPO for Facebook, famously said, “we’re going to move fast and break things.” And the problem with that is that it gave the world a false trade-off. It convinced so many of us that you could either move fast and break things or you could take care of people, one or the other. And we have found that there is a third, much better way. And that is, we can move even faster if we fix things along the way. And so, that’s what I’d love to talk to you about right now. And the way that we think about this is that if you want to move fast and fix things, we have to do it on a foundation of trust. And so, the first thing to do is to experience high trust. And we’re going to talk about how to build trust. But the way we see the world can be described in this grid. And in the presence of trust, we can move really fast. That’s how we move fast and fix things. We call it accelerating excellence. It’s only when we’re in the presence of low trust that we move fast and break things, or what we call being reckless disruption. And as I said, so many organizations are afraid of reckless disruption that they actually end up in this state of responsible stewardship, which is really just going slowly. And so, we wrote the book to get those that are in responsible stewardship to realize that we could go across the way to accelerating excellence. And we didn’t have to go down to reckless disruption. So, the way that we think about this, and it’s the way we wrote the book, is that there’s a five-step plan to do it. We organized the book for days of the week. We think that the metabolic rate of organizations can be improved significantly and that many, many hard problems can be solved in just one week. So, we wrote the book in the structure of a week. Step one is we have to find our real problem, that if we’re… for far too many of us, we’re addressing the symptom and not the cause. At any problem, there’s going to be trust broken at the bottom of it. And we’re going to solve for trust. We’re then going to learn how to get more perspectives to make our plans even better. Learn how to tell a narrative that works. And then, and only then, on Friday, do we get to go as fast as we can. And what typically happens in the move fast and break things is that we move Friday too forward in the week. So, our goal is to put ourselves in a position to move fast. And you have to wait till Friday to do that. So, what do I mean by finding the real problem? Most of us, a problem gets presented as a symptom. So, I’ll give you a recent example that got presented to me and Anne. We got called by a company. And they said, we’re having a gender problem. Will you come in and help us? And we’ve been able to help many organizations solve gender problems. So, we go in there. And we just wanted to make sure that they really did have a gender problem. The symptoms were super clear. There were no women at the top of the organization. Not very many women were coming into the organization. And great women were leaving the organization. So, they had… it looked like a gender problem. But it took, I don’t know, an hour. It took 60 minutes, certainly not even all of Monday, to uncover that their actual problem was not a gender problem. Their actual problem was a communication problem. And if we did all of the things that we know exist in our gender tool kit on how to fix gender, that would have all been wasted effort. But instead, what we found out is that the founders of this organization, and they were two cofounders, and they were very similar to each other, and they’d worked together and known each other for decades. They had a really uncomfortably and aggressively direct communication style. That communication style repelled all women and most men. So yes, the symptoms were gender. But oh, my goodness, the cause was that the two founders were succumbing to a problem many of us succumb to, which is, we were treating others as we like to be treated. They loved to be treated with aggressively direct communication. But nobody else loved it. And when we simply confronted them with that and taught them that instead of treating others as you want to be treated, now it’s a puzzle. Find out how they want to be treated, and treat them that way. Gets fixed. And all of a sudden, women and lots of other men are flowing to the organization. So, Monday… and we take a whole day for this. Let’s make sure we’re solving the real problem. And symptoms are rarely the cause. So, we just want to do some due diligence, some due diligence there. Once we know we’re solving for the real problem, there’s going to be trust broken down somewhere in the… amidst the problem. Well, very fortunately, we now understand trust super well. If I’m going to earn your trust, you will have an involuntary reaction of trusting me if you experience my authenticity, logic, and empathy all at the same time. When these three things are present, you will trust me. But if any one of these three is missing, you will not trust me. And here’s the catch. If trust is broken, and we know it’s only ever broken for one of these three reasons, we need to know which of the three, because the prescriptions to solve a broken authenticity pillar versus logic pillar versus empathy pillar, they’re entirely different from one another. So, you can think about rebuilding trust. It’s just a matching game. Know which one is at stake. And then bring in the curated prescription for that. There is a myth about trust that it takes a lifetime to build and a moment to destroy. And then you can never rebuild it. None of those things are true, that we can actually build trust very quickly when we understand the architecture of it. We can rebuild it quickly and just as strong as it was before. So, this notion that trust is a Faberge egg, it’s catchy and not true. Trust is being rebuilt all the time. But we want to do it with a deep understanding of the stable architecture. So, Tuesday takes all day. We solve for trust. On Wednesday, we call Wednesday making new friends. And what we mean by that is whichever collection of people you bring to the table who are the people that maybe are on your senior team or the people that you bring to the table to solve problems. And here, I’ve represented a table. And there’s eight check marks for eight seats. I encourage you to bring four extra chairs to that table. If you have eight seats, bring four extra chairs. Point to the extra chairs and ask yourself, who’s not here? Who has a stake in our problem who’s not represented at the table? I was recently in a conversation with our senior colleagues at the Harvard Business School. And we were talking about how to do junior faculty development. And we came up with what we thought were great ideas. And then we looked around and we were like, Oh, my goodness, there’s no junior faculty here. How on Earth do we know if these are good ideas? So, we got the empty seats. We invited people in. And sure enough, the junior faculty helped improve our plans dramatically. The equivalent of that always happens. So, on Wednesday, we want to make new friends. So, one is inviting them into the room. But then the second part is, how do you make sure that their voices are heard? And what we need to do is that when someone comes to the room, they’re going to be awfully tempted to say things that they think we want to hear. They’re going to be awfully tempted to conform to what we’re already saying. So, what we need to do is learn how to be inclusive of their unique voices. And the way we do that is by going through this four-step progressive process, which is, first, we have to make sure they feel safe and that they feel… they’re going to feel physically and emotionally safe, I’m sure, but that they feel psychologically safe. And that’s a shout-out to Amy Edmondson and all of her beautiful work there. But we have to make sure that we feel safe. Once we feel safe, then it’s our job to make sure that the new voices feel welcome. You can think of that as table stakes. Then when we’re doing is we’re really trying to move people up the inclusion dial. And here, this is when it really starts to make a big difference. And now what we want to do is make sure that they feel celebrated for their unique contribution. And so, what we’re doing is moving them up the inclusion dial. Now, here’s why that’s kind of hard. Most of us tend to celebrate sameness. And here, I’m asking you to celebrate uniqueness. And what I mean by celebrating sameness is that for the most part, like, when I watch my students in class, if one student says something, and then another student was going to say that, after class, they go and seek out the first person. And they’re like, you’re awesome. You said what I was going to say. They didn’t realize this. They’re celebrating sameness. They’re encouraging sameness. So, what I do is I advise my students to not share that verbal treat, that what we playfully refer to as a Scooby snack. Don’t share that Scooby snack for when somebody says something you were going to say. Share it for when somebody says something you could never have said on your own, and that it comes from their lived experience and learned experience, and how they metabolize successes and failures, and their ambition, if they’re lucky enough to have neurodiversity, their worldview, all of that. It’s a beautiful cocktail. Wait till they say something that comes uniquely from all of that. Celebrate that. When we celebrate uniqueness, that’s when we get the blossoming of the perspectives. And what we want to do to make somebody really feel included is we celebrate them when they are in our presence. But if you really want somebody to feel included, and we bring folks into the room for this, make sure that you champion them when they’re in the absence. So, let’s not just ask the junior faculty to come along. Or if it’s a senior team, and it’s mostly men, and the board of directors is coming in, and we’re like, oh, goodness. Let’s make sure we can show some women too. So, we bring some women along. We celebrate them in our presence. Let’s make sure that we champion them in our absence as well, which is celebrate their uniqueness in our presence and champion them in rooms that they’re not yet allowed into in their absence. So that’s Wednesday. Let’s make new friends. Let’s include their voices. Let’s champion those new voices in their absence. Thursday, we tell a good story. And stories have three parts to it: past, present, and future. It is really important – if you’re going to change something, if you’re going to fix something, it is critical to honor the past. People that were here before us, if they don’t feel like we see the past, we see them, we’re honoring the past, I promise you, they’re going to hold us back. And they’re going to be like The Godfather movie and keep pulling us back. So, we have to honor the past with clear eyes, both the good part of the past and the bad part of the past. Then we have to answer the question, why should we change now? Like, why shouldn’t we change maybe next week, maybe the week after, maybe the month after, maybe next year? So, it’s really important that we give a clear and compelling change mandate that answers the question, why now? Why not in a little while? I find that if you’re a retailer, and you have the metaphor of Walmart just opened up next door, clear, compelling. We have to… that should be our metaphor. How can we be, with as crisp of a language, clear and compelling about why now? And then we’ve honored the past. We have a clear and compelling change mandate. You want people to follow us in the improved future, we have to have a super rigorous and a super optimistic way forward. We have seen so many people be optimistic without rigor. Nobody’s going to follow. And similarly, rigor without optimism, also, nobody’s going to follow. So, it’s our job to keep refining and refining and refining until we can be both rigorous and optimistic. Now, how do we know when our plan is working? Well, here are the four parts of storytelling that we know. Our job is to understand this plan so deeply that we can describe it simply. When we describe it, we want to make sure if I describe it to you, and you describe it to the next person, that the next person understands it as if I described it to them. So, our job is to understand so deeply that we can describe simply that it’s understood in our absence. And the ultimate test is it’s understood when they go home and share it with their family. They have the same understanding we want. We find this to be the four-stage litmus test to make sure we have been effective in our communication. And when people understand it this well, then they can act on it in our absence. And that’s when we’re now in the position to go as fast as we can. And when all of that infrastructure is in place, well, then we can go super fast. And there are all kinds of clever ways that we can do that. So, I look forward to opening this up and having a conversation with you.

NICOLE SMITH: That was excellent. Professor, we got several questions. I want to just dive right into it. Tessa asked, what tools, practices, and skills do you use to uncover the underlying superficial problems? It sounded like you talked a lot about questions and asking questions.

FRANCES FREI: Yeah, it’s right. So, the Toyota production system would famously refer to the five whys. And they had… and that was root cause analysis, which we all know. But essentially, what they found is that it’s about five… why does this exist? Well, why does that exist? Well, why does that exist? Like, if you ask why five times, they found that that’s how you got to the root cause. We find, in practice, the answer is closer to three. It’s rarely one. So, it would be, the symptom and the cause are usually a few layers. And you want to keep asking why. So, that’s the first thing I would say, is that we want to have… make sure that you’re doing root cause analysis. But the second thing on a specific tool, the tool that we like the most, we call the indignities list. And what you do is that… and the way we found out the symptom is we went to women in this company, because that’s what… they said they were having a gender problem. And we asked the women, is there anything that’s going on at work that just… it feels like it’s just nicking your dignity? And it occurs for… is it happening to you, or you observe it happening to other women? So, you go in search of the indignities list. Every time we do this, you’ll get a list of issues. Often, they will sound trivial. When you start to get convergence on those indignities, we then ask you to convert those indignities to the dignity list. And in this case, it was the communication style. And you know what the awesome thing about that was? It was free.

NICOLE SMITH: Wow.

FRANCES FREI: You can’t beat free.

NICOLE SMITH: Monique asks, can you speak more about how to amplify others’ ideas and perspectives, especially when they’re from underrepresented stakeholders?

FRANCES FREI: Oh, I love that question. Thank you very much. And so, I’m going to go to… here is my favorite visual on the amplification part, which is the team I’ve drawn in the middle, it’s a three-person team. And each circle represents a person on the team. And I’m showing that there’s three circles in the middle, that those folks are very similar to one another. And then on either side, we have a team where there’s difference among us. And this is where the underrepresented might come in. If we’re not careful, when we have underrepresented voices, we’re only going to be seeking from them the parts that overlap with us. So, this is when we’ve invited them to the table, but we’re not inclusive of their voices. What we want to do is make sure that everybody feels comfortable bringing all of their richness to the table, not just the part that overlaps. And so, what we find we need to do is be very solicitous about… and same with questions. From your perspective, how does this sound to you? What else are we missing? What I’m trying to do is get you off the scent of saying what you think I want to say or even asking you to say what I want to say because it makes me feel better. But I want to be inclusive of all of the gorgeous uniqueness. And this, of course, ties to diversity, equity, and inclusion, which I know has gotten a rocky go of things in the press. But what I’ll tell you is, if I got to rewrite diversity, equity, and inclusion, I would have written it as inclusion, equity, and diversity, because I have seen teams bring… I have seen organizations bring in diverse and underrepresented talent and not get the benefit from it.

NICOLE SMITH: Yeah.

FRANCES FREI: So, diversity may or may not beget inclusion. But I have never, ever seen an organization that was inclusive that didn’t beget gorgeous diversity.

NICOLE SMITH: Right.

FRANCES FREI: So, be inclusive first.

NICOLE SMITH: I appreciate you saying that, not just sitting at the table, but actually including and giving lift to people’s voices. I also want to talk about this friends thing you keep talking about, making new friends. First of all, how do I identify who’s a friend?

FRANCES FREI: Yeah. So, in this case, I want the friend to be someone who is as different from you as possible. So, the new friends. Like, who’s worthy of friendship? Not someone who you’re already attracted to, not somebody who you’re already hanging out with. So, here’s the thing about humans. We really like people who are really like us. It doesn’t make us bad people. But it just makes us human. And so, what I want you to do is seek difference. Find people from different perspectives. And that will be demographic difference, different lived experience, different learned experience. And so, if we’re senior faculty, let’s invite in junior faculty. If we’re all women, let’s invite in a man. If we’re all engineers, let’s make sure we’re bringing in the perspective of marketing. So, what I would say is my guiding principle is seek difference. Those are your potential new friends.

NICOLE SMITH: OK, so Steve wants to hone in on Friday, right? And Steve asks, can you paint a quick sketch of what’s going fast after this being slower – a slower, more thoughtful process?

FRANCES FREI: I sure can. Thank you, Steve. And so, here’s how I would think about Friday. We need ruthless prioritization. And what I mean by that is that for the most part, organizations have… that we work equally on everything. We think everything is equally important. But what we know is that organizations that win, they have ruthless prioritization. And they know, this is what I’m designed to be great at. And this is what I’m designed to be bad at. Not bad for sport, bad in the service of great. And if an organization can’t discern between these two, they’re going to end up with exhausted mediocrity. And so, what we have to do for our employees and the rest of the organization is, here’s what we’re going to optimize on. That’s half the story. And here’s what we’re not. So, I’ll give you an example of this. And the example is from Steve Jobs. And if those of you that are a bit techie, and you remember 20 years ago, when Steve Jobs walked out on that Worldwide Developer Conference stage with a manila envelope, and it had a MacBook Air in it. And he slid out that MacBook Air. And the crowd and the world went crazy, because it was the lightest-weight laptop in the world. Well, he very, very openly said, we are best in class at weight because we are worst in class at physical features. We could have been best in class at physical features. But then we would have been worst in class at weight. Or we could have chosen to be average at both. But then we would have had to rename our company. And then he made fun of another company that I won’t say here. So, we will end up… if we aren’t deliberate, we’re going to end up with exhausted mediocrity, constantly getting better at the things we’re bad at, which, without realizing it, means we’re getting worse at the things we’re good at. So, the most important thing we can do on Friday is to articulate, this is what we want to be disproportionately good at. And thus, this is what we want to be disproportionately bad at. And there’s a whole other series of things. But that’s the most important one.

NICOLE SMITH: Mm-hmm. Speaking of Steve Jobs, we have a question where they ask, do you think that the culture in Silicon Valley is changing from break things to fix things, particularly as it pertains to not only their own companies, but broader societal problems?

FRANCES FREI: Yeah, so I – not in all of Silicon Valley. So, I think we can famously see, it’s not clear to me that Twitter is moving fast and fixing things. But what I will say is that, look at Uber today. And I had the pleasure of going and working with Uber back in 2017, when they were going to move fast and break things. They are moving fast and fixing things now, and going at a catapulting speed. Or ServiceNow didn’t ever even go through move fast and break things. It’s just moving fast and fixing things. Stripe is doing the same thing. Airbnb is now moving fast and fixing things. So, what I would say is that Silicon Valley can now choose to move fast and fix things, whereas, in the past, I think they only thought they had the choice of going slow or moving fast and breaking things. Today, we have the choice. And more and more companies are making that choice.

NICOLE SMITH: Mm-hmm. And so, Bill asked, which one of these steps do you find the most commonly in need of… that companies need the most help with? So, you laid out Monday through Friday. Is there something that sticks out often?

FRANCES FREI: Well, I’ll tell you that if companies are really pressed for time, they skip Thursday. And that’s to their peril, because if we skip Thursday, that means we have to be present. And we’re a bottleneck for everything. That means people need us to translate why this is important. So, I would say that Thursday is the one that’s most often skipped. And I encourage you not to. And then I would say that Tuesday is the one that’s most often misunderstood because of all of the myths I mentioned that we have about trust. And we just think, oh, if trust is broken, we have to work around it, as opposed to going right through it and rebuilding trust.

NICOLE SMITH: So, Thursday, that’s the storytelling, honoring the past, describing it simply, right? So why do we struggle to describe things simply?

FRANCES FREI: Oh, I don’t know what your inbox looks like on your email. But you tell me how many long emails you have.

NICOLE SMITH: I refuse to deal with my inbox. I’ll deal with it later.

FRANCES FREI: So, Mark Twain was right. I apologize for sending you a long letter. I didn’t have the time to send you a short letter. It’s the metaphor for all of this, that when we understand something in a complicated way, we want to benefit people from the entirety of our knowledge. And we just throw up all of it on people, as opposed to realizing the beautiful curation and skill that’s required to go from understanding it deeply to understanding it elegantly in its simplicity. So, I think it takes time. It’s also… it takes skill. Like, this is… there are professional communicators for a reason. They’re really good at it. But if you’re on your second draft of something, you have no chance of describing it simply. So, I would say, unless you’re on your 10th draft, you’re probably describing it in too complicated of a way.

NICOLE SMITH: Yeah. So, can I ask you a little bit more of a personal question, Professor?

FRANCES FREI: Yeah, anything.

NICOLE SMITH: So, Abby asks, how do you apply the essential steps to moving fast and fixing things in your own consulting role? So, Uber and all the places that you go.

FRANCES FREI: Yeah. Yeah, so I’ll tell you, when we’ve been successful, it’s when organizations come to us, and they say, here’s our problem. Will you help us? When we’ve been unsuccessful is when we go to the organizations, and we’re like, we think you’re having a problem. So, pull works. Push doesn’t. So, the only thing we can’t provide is the desire to change. And so, I would say personally, make sure there’s an opening. And then you can be super helpful in fixing a problem. And I also would say that all of this applies to yourself. I mean, that ruthless prioritization – so many of us are trying to be good at as many things as possible – at work, at home, daughter, sister, cousin, parent, friend – as opposed to, I’m going to kill it at work, kill it at home. And I am not going to be good… not now. I’m not going to be as good at all of these other things. So, you can either choose exhausted mediocrity, or you can have the nobility of excellence. These things are choices. So, I think all of this applies to ourselves.

NICOLE SMITH: So, let’s go back to Tuesday, where you drew that triangle with logic, and empathy, and authenticity. So, Hung asks, between logic and empathy, which one would you say an individual should develop first? And Hung really describes just having a left foot and right foot and not knowing which one to go forward.

FRANCES FREI: Yeah. So, here’s what I would say, Hung, is, ask yourself… I bet you’re trusted most of the time, which means people are experiencing your authenticity, logic, and empathy most of the time. But ask yourself, the last time, or the most recent times you had a skeptic, you had someone who was doubting you, who they were wobbling on your trust, ask yourself, what is it that they doubted about you? And if it’s that they doubted your logic, double click there. If they doubted your empathy, double click there. And that is, each of us has what we call a wobble. Each one of us has a pattern where the distribution of these is higher for one or the other. That’s the sequence I would go in. There’s not some generic sequence that is better. All three of these pillars are equally important. But I bet, for each one of us, one tends to be more shaky than the other. And that’s what I would go after. Now, I will just tell you the distribution in the world. The vast majority of us have empathy wobbles, then logic wobbles, then authenticity wobbles. But that doesn’t help any of us specifically. It just tells us we have lots of company.

NICOLE SMITH: OK. So, we got a lot more questions and a little time. I want to get as many as I can in, but…

FRANCES FREI: OK, I’ll go super quick. Yeah.

NICOLE SMITH: No, take your time. But I just want to let you know, you’re pretty popular in this conversation. Rock star, as Allison said. Tara asks, how can company leadership make sure that their messaging is actually heard and understood? I feel like you touched on this a bit with simplicity.

FRANCES FREI: Yeah. Yeah, and I think that the way to do it is, talk to people about your message that didn’t hear it directly from you. And see how well they understood. That tells you whether or not it’s reaching. So, don’t ask the people that were in the room. Ask the people that were spoken to by other people in the room. That will tell you how well it’s there. And if it took you a long time to describe it, I promise you, it’s not going to be heard.

NICOLE SMITH: Mm. Oh, wow. Yeah, thinking about it, probably need to shorten my own stories a little bit here. So, Karen asks you, how do you handle employees who are not willing to accept others’ points of view and be open minded? I mean, you described this uniqueness and diversity. But there are people who are holdouts that don’t see the advantage of that.

FRANCES FREI: So, I often find those folks are an education away, because if I can let you know that if I get to benefit from everyone’s point of view, and you only get to benefit from some people’s point of view, I will competitively thump you. So, let’s say you don’t have the moral imperative wanting to do it. Well, the performance imperative… we have found that organizations that are inclusive get a 200% to 500% boost on employee engagement and team performance with no new people, no new technology, simply the act of being inclusive. So, the person who doesn’t want to be inclusive, I’m going to ask them, can they afford… can their career afford performing so suboptimally?

NICOLE SMITH: Mm. And so, we have a question. The person didn’t leave their name, so I don’t have a name. But how much time do you spend on each stage? Some folks like to spend more time on stages than others. Does the team not move forward until everyone’s satisfied with the current step? What do you do when you hit a roadblock on each stage, and not everyone is in agreement?

FRANCES FREI: Yeah. Well, I don’t like consensus, so I’ll just… I’ll say there. And so, what I try to do is work on momentum, which is that I want to make sure that everybody’s voices have been heard. But then you have to leave the decision to someone else. So, we want to do is make sure everybody’s voices are heard, and they had a chance to do it. But we don’t hold out until the very last person. We move forward. And then we can retrace and see if the momentum can bring people forward. So, not consensus. I would consider it not consensus, and we have to make sure that everybody gets to air out what their problems are.

NICOLE SMITH: OK. Well, Christopher asks our last question. How does transparency fit into this model, specifically this trust, authenticity, logic model? Does it have a place?

FRANCES FREI: Yeah. It sure does. And I find that the most important part for transparency is on the logic side. So, if you’re going to say… if you’re going to inspect whether or not I have good rigor, and I have a good plan, I could say, oh, just have faith. I did all of this hard work. Or I could give you a glimpse inside so that you can see the inner workings. Now, I often call it a window of transparency, because there’s actually a cost of full transparency that I’m not always willing to take. But a window of transparency, I think we always need. So, to me, the transparency part is, let’s be transparent about our logic so people can see it for themselves, and they don’t have to do it in too much of a faith-based way.

NICOLE SMITH: Professor, that was all dynamic. And thank you for the illustrations. You made it simple with the illustrations.

FRANCES FREI: Yeah, all right. Awesome. Thanks so much.

NICOLE SMITH: Thank you for your time.

FRANCES FREI: OK.

HANNAH BATES: That was Harvard Business School professor Frances Frei in conversation with HBR’s editorial audience director Nicole Smith at the “Future of Business” virtual conference in November 2023.

We’ll be back next Wednesday with another hand-picked conversation about leadership from Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review.

When you’re ready for more podcasts, articles, case studies, books, and videos with the world’s top business and management experts, you’ll find it all at HBR.org.

This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Music by Coma Media. Special thanks to Dave Di Iulio, Terry Cole, and Maureen Hoch, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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