The system had its origins early in the 20th century, even before the company was born. At the time, Sakichi Toyoda studied the flow of work processes to improve automation in his textile factory. When the company switched to car production in 1934, his son, Kiichiro Toyoda, further refined the processes his father had taught him, and this is where the concept of Just-in-Time – which is key to the Toyota system – was most probably born.

Taiichi Ohno, an engineer at Toyota, is widely credited as being the man who brought the different systems and processes together. Under his guidance, the famous Toyota Production System (TPS) was developed, a system which has allowed Toyota to remain an industry leader to the present day.

The Toyota production system
The goals of the TPS are to design out inconsistency and overburden and to eliminate waste, including overproduction, time spent waiting, and waste involving transportation, processing, stock at hand, movement, and the manufacture of defective products.

While a key outcome of the TPS is low inventory levels, working intelligently and eliminating waste are also important elements. Many US companies have tried to imitate the system without understanding the underlying principles, which has led to failure.

Underlying principles
Toyota calls the underlying principles of their management system the ‘Toyota Way’. According to the company, the Toyota Way includes the following elements:

Teamwork: This is a very important component of the TPS. To achieve this, personal and professional growth is encouraged to maximise the performance of the individual and the group.

Respect: Employees are encouraged to respect and understand each other, build mutual trust, and take responsibility.

Continuous improvement
Genchi Genbutsu: To make the appropriate decisions, you must go to the source of the problem.

Kaizen: Strive for continuous improvement of business operations, drive for evolution and innovation.

Challenge: Underlines the importance of having a long-term vision and of meeting challenges with creativity and courage.

External observers have added the following elements to this to better understand the Toyota system: having a long-term philosophy; using the right process to achieve the right result; adding value through the development of people, including workers and business partners; thoroughly studying the root cause of a problem and reaching a solution through consensus.

The TPS has been, perhaps somewhat inappropriately, compared to someone trying to squeeze water from a dry towel. This comparison does, however, clearly illustrate the stress the system places on waste elimination.  Waste in this sense refers to much more than material waste; it includes manpower, time, and transport – in short anything that does not add to the productive effort.
Successes

Using the TPS has enabled Toyota to achieve remarkable reductions in cost and lead time, while simultaneously improving quality.  This, more than anything else, has enabled the company to become the world’s largest car producer.

While the Japanese earthquake and subsequent tsunami, and the recent floods in Thailand, severely damaged Toyota’s production facilities and disrupted operations, the company was able to bounce back relatively quickly.  It can be argued that the Toyota Production System played a major role in this rapid recovery.

While the tax treatment of assets may not be the defining factor in the purchase of key equipment, it does function as part of the decision-making process.

Because the rules regarding capital asset tax allowances do tend to alter from year-to-year and also vary, depending on the asset and type of company, independent capital allowance firms have sprung up in the UK and elsewhere to advise companies on what they can and cannot claim allowances on. These firms are also able to advise companies regarding the acquisition of new capital assets and whether purchasing or leasing is the best option. One such expert firm is Lovell Consulting, based in Central London.

Because the tax system is so complex and constantly changing, many companies are now looking for expert guidance and this is what initially created the need for independent capital allowance firms. In the US, independent firms that advise companies tend to be CPAs (Certified Public Accountants), MBA graduates or individuals with years of experience in taxation. As companies found that these expert organisations could often save them more in taxes than the cost of the service, their reputations grew and they became more widely used.

In the UK, the situation is very similar, and specialised firms assist companies with research and development tax relief and credits as well as capital allowances and property-related credits. Lovell Consulting – established and built by John Lovell over a period of years – has gained a rigid trust among respect among industry experts.

Cultural change has been addressed in great depth by Cummings & Worley, who have identified several steps that need to be taken when an organisation needs to make an adjustment. In most cases, change will take place over time; it will not happen overnight.  Most successful cultural changes in organisations include the following steps:

1. Formulate a clear strategic vision. This is the first and most critical step of the process.  Without a clear idea of what change is needed, no organisation can move forward. This vision should include what the new values will be and what behaviours will be expected in the workplace.  They should be specific and identifiable so they can be easily translated to employees.

2. Display executive commitment. Once a clear vision has been articulated, everyone at the top of the management chain must demonstrate that they are supporters of the new vision. Executives and top management “get the ball rolling”, and their support and excitement will carry through to the rest of the organisation.

3. Model cultural change at the highest levels. Once again, the change has to begin at the top. Top management and executives must model the behaviour they expect from everyone else. No one will buy into the new methods of activity unless they see them demonstrated daily by their leadership.

4. Modify the organisation to support organisational change. This step is actually worked on throughout steps 1-3. Identifying what needs to be changed in the organisation, what that change entails, and how long it will take is a key step. Changes may be required to policies, procedures, operating rules and even company structure, and the earlier this process can be begun, the smoother it often proceeds.

5. Select and socialise newcomers and terminate deviants. Not everyone will be able to accept or believe in the change; those who do can help “spread the word”, while those who do not will undermine the change if they stay, and so should be terminated.

6. Develop ethical and legal sensitivity. Of course, major organisational change will likely involve legal counsel, but even small changes should not ignore the effect that the change will have on employees. While some pre-existing tensions may be relieved by the changes, new tensions may arise and will need to be addressed.

For an organisation to survive and thrive it must change, as argued by Cummings & Worley. The larger the organisation, the more difficult and time-consuming the change can be, and the more important it is to have everyone moving in the same direction.

In 2006, he became the mayor of Ljubljana, the Slovenian capital, and turned out to be the first mayor of the city since WWII to enjoy two terms in office.

In October of 2011 he founded the Positive Slovenia party, which went on to win the majority of votes during the parliamentary elections of that year.  He subsequently relinquished his position as Mayor of Ljubljana.

A healthy career
Jankovic’s business career began in 1978 when he began working in the investment division of a government postal company called Post of Slovenia. In 1984 he became the acting director of Mercator Investa, a trade and tourism company. He subsequently became the general director of the company.

When Mercator Investa merged with Mercator Inženiring in 1988, he did not get the position as director of the newly formed company, so he decided to leave. From 1988 to 1990 he served as vice director of SOZD Emona. During this time he was also the acting director of Emona-VPS. When Emona failed to appoint him as director in 1990, he left and started his own interior design and civil engineering company called Electa. He remained in charge of Electa until 1997.

Jankovic and Mercator
Jankovic’s career took a remarkable turn in 1995 when he was appointed as a member of the Supervisory Board of Mercator. He represented the Slovenian Compensation Commission, led by then Slovenian Minister of Labour Tone Rop. Newspaper reports at the time indicated that his appointment was a result of lobbying by Peter Rigl, another member of the ruling party.

After Mercator Chairman Kazimir Zivko Pregelj was ousted by the Supervisory Board in 1997 following a debt scandal, Jankovic was appointed as his successor. His appointment was not without controversy: Minister Rop claimed in a 2002 television interview that it was his intervention that made Jankovic’s appointment possible. Both of them later downplayed the interview and insisted that the appointment was solely based on merit.
Whatever the case actually was regarding his appointment, Jankovic was able to transform Mercator into the largest retail company in the country, and one of the largest in the region.

During his tenure, the company was involved in a number of takeovers, the first of which was Klas in 1998.

Mercator opened its first hypermarket in August 1999 in the city of Siska. Jankovic quickly developed a reputation as a hands-on manager. He would, for example, not think it strange to help employees tidy up shopping carts

Mercator’s first international shops, in Sarajevo and Pula, opened in December of 2000, and in 2002 a huge store was opened in Beograd.

Jankovic started his second term at Mercator in 2003, but he was removed from the position in 2005 after two major suppliers acquired a 30 percent interest in the company.  He later accused Prime Minister Janez Janša of being involved in his dismissal.

InfoSys, the global IT consulting firm, had some comments on the subject of the future of globalisation. S. D. Shibulal, the company’s CEO, was optimistic for the future of globally operating companies saying, “globalisation is a phenomenon that has been here for a very long time and I clearly believe that will continue.” His comment was made in response to concerns voiced about the future of globalisation in a world where the US might try to discourage companies from moving domestic jobs to cheaper locations in other parts of the world, in other words outsourcing. This is a contentious issue, especially when high unemployment in home countries can be seen to be a direct result of such actions. However, Shibulal told WEF he believes that the overall impact of globalisation is a positive one, bringing employment and higher living standards to developing countries and allowing a larger pool of talent to drive innovation. As a result of such views, many industries remain strongly pro-globalisation and will continue to oppose protectionist measures.

The WEF week also touched on scientific and climate change related issues. Niel Bowerman, a climate scientist, stated: “I’m a climate scientist … every day, I look at data that suggests that my future is going to be challenging in 50 years time. It suggests that if we don’t tackle these problems – now – our entire generation is going to have a huge issue on its hands.”

It is hard to say that global warming has ever been far away from the public consciousness, with climate change scares dating back decades; originally it was thought a new period of global cooling was imminent. However, given the severity of the recent recession, many of those involved in research into global warming may have concerns that thoughts of introducing further climate saving measures may take a back seat when compared to encouraging economic recovery. Niel Bowerman’s comments are intended to remind people that scientific evidence currently points strongly towards irreversible climate change if the effort to reduce greenhouse gas emissions is not sustained. This is particularly relevant at the moment because globalisation and development of heavy industries in previously non-industrialised nations, creates the potential for seemingly ever increasing harmful emissions.

Hester moved from Credit Suisse to Abbey National in 2002, where he was promoted from Finance Director to Chief Operating Officer. He remained at Abbey National for just over two years, leaving in late 2004 to become Chief Executive of British Land, a real estate investment trust or REIT. Famously, he is quoted as saying, in late 2007, that he did not foresee a market decline on the horizon, just a period of lower growth. Of course, within a few months, the real estate bubble had burst and REITs like British Land were left with overpriced assets on their books.

Hester emerged relatively unscathed from his time with British Land and moved on to Northern Rock in early 2008. His appointment there, by the Chancellor of the Exchequer, demonstrated continuing faith in his financial abilities; however he only remained until September of that year, when he resigned to become a member of the board of Royal Bank of Scotland.

Today, Stephen Hester remains at RBS, currently as Chief Executive, where he earns an annual salary of some £1.2m. In addition to his basic salary, he is also eligible for bonuses and pension payments from the bank. His bonus for 2012 was approximately £1m, however he decided not to accept the bonus after outcry from the public and politicians in view of the poor performance of RBS and the overall economic downturn. Since taxpayers had to bail the bank out and currently own well over half of it, accepting the type of bonus payments that have become so prevalent in the banking industry does not make for good press. The Labour Party organised a Commons vote on the payout, further increasing pressure on Hester.

The Chief Executive is currently focusing on returning the bank to profitability and returning the £45bn taxpayer investment. Today, the economy is still struggling to overcome the recession, unemployment is high and RBS itself has sacked over 20,000 people, so it is perhaps not surprising that many taxpayers and politicians saw the bonus as adding fuel to an already disastrous PR fire. However, Hester certainly has his supporters, some calling the job “immensely stressful” and stating that the proposed bonus had been fully deserved.

Some are even saying that the job is no longer properly incentivised and they would not be surprised to see him leave for greener pastures. Whether that will happen remains to be seen, but Hester’s experience is definitely in demand during these turbulent times in the financial industry.

For years, frontline workers have been “talked up but trod down,” in other words, while these are the people with the most impact on a company’s customers and are a company’s public image, they are often the lowest-paid and most poorly trained of all its employees. Companies try to make these positions idiot-proof, taking away all decision-making and lowering performance expectations until it is clear to the employees concerned that their jobs have no real value. Of course, a direct result of that process is frequently poor customer service, upset customers, high employee turnover and falling profits.

To turn this around, Schlessinger and Heskett proposed turning the old top-down model on its head and designing the business around those with direct customer contact. This involves putting service first by instilling customer-service values in employees from day one, providing initial and on-going training and using modern technology to provide a range of support options to front-line employees. Further, the service-driven model links compensation to performance at all levels of the organisation and requires upper management and executives to focus some of their attention on the employees with direct impact on brand recognition and opinion.

Metrics, such as the cost of employee turnover, return on investment of training options and the incremental profits derived from loyal customers, have all demonstrated that this model can and does work to create higher corporate profits. The authors argue that applying production-line values and planning to service-oriented companies is an outmoded concept that can carry a company only so far. Eventually customers become disengaged or angry, as their needs are not met. Competitors will begin to appear, offering similar products and excellent service, and customers will leave. They will go to a service-driven company because they are able to speak to an educated employee, who understands not only the product or service, but how it can benefit the customer and it is that same employee who will have the ability to close the sale.

This approach also harnesses the power of today’s technology to support front-end employees. Since most new starters are familiar with and comfortable using the latest technology, this is a natural fit that can create a symbiotic relationship in which younger employees can make a company aware of ways to leverage new technology for the good of the company.

Schlessinger and Heskett argue that in today’s faster-paced business environment, a focus on the customer and on providing all employees with the training and skills necessary to satisfy their needs will go a long way toward improving their company’s profitability.

The theory states that there are specific factors in the work environment that result in job satisfaction. Apart from these there are different sets of factors that cause dissatisfaction.

Herzberg’s theory therefore differs from similar theories in the respect that he theorised that job dissatisfaction and job satisfaction were caused by two independent sets of factors. Removing the factors that cause job dissatisfaction will, according to his theory, therefore not result in job satisfaction, since this is determined by a separate set of factors.

Fundamentals of the Two Factor Theory
According to Abraham Maslow, individuals have five essential needs, starting with basic physical at the bottom, going through security needs, social needs and self-esteem needs, until we get to self fulfilment needs at the top. His theory has been highly influential in the workplace and is still used today by managers around the world.

Where Herzberg agrees with Maslow is that he says fulfilling individuals’ basic needs for pleasant working conditions, a safe environment and a minimum salary, are not sufficient to satisfy them. They are, instead, motivated by the fulfilment of higher-level psychological needs, such as recognition, a sense of achievement, advancement and responsibility and the nature of the work they have to do.

Herzberg, however, added a second dimension to Maslow’s theory by suggesting that there are separate sets of factors that will cause workers to be dissatisfied in the workplace, even if all their other needs are met in terms of the Maslow hierarchy of needs. Some of the factors he listed are supervision problems, company policy, relationship with peers and seniors, working conditions, salary and security.

Satisfaction and dissatisfaction do not form a continuum therefore, with one decreasing as the other one increases. To improve productivity and attitudes in the workplace, managers must recognise and attend to both sets of factors and not make the false assumption that increasing satisfaction will automatically lead to a decrease in dissatisfaction.

Tesco is one company that uses elements of Herzberg’s theory to motivate its employees. The company pays attention to factors causing dissatisfaction as well as those causing satisfaction.

As an example, employees are motivated and empowered by timely and appropriate communication, by involving personnel in decision-making and by delegating wherever possible. Forums are held every year in which staff can provide input on pay rises. Tesco personnel even get an opportunity to give their input when restaurant menus are designed, helping to prevent feelings of alienation and dissatisfaction.

In a 2009 study at the University of Malaysia and the University Tunku Abdul Rahman, also in Malaysia, it was found that the major factors determining job satisfaction for staff members were salary, policy and administration. The main factors that caused job dissatisfaction were lack of personal growth and personal achievement.

Kelso Place Asset Management is a UK-based equity fund management company that has been in business since 2000. It specialises in locating and purchasing UK-based businesses that are experiencing financial, strategic or operational challenges, but which have outstanding long-term potential. It then provides the necessary support for to enable them to overcome these problems and ultimately prosper. Co-founder Sion Kearsey remains at the helm of Kelso Place and his experience as a managing director at Goldman Sachs brings a wide range of investment and management expertise to bear on such acquisitions.

Kelso Place’s stake in Nicole Farhi was purchased from OpenGate Capital, which acquired the fashion house in March 2010 for a reported £5m. Hogan Lovells, acting as an advisor to the Kelso Place team, along with City private equity partner, Amit Nayyar, facilitated the transfer of the Farhi company. Mark Hughes, a partner with law firm Browne Jacobsen, led the OpenGate team.

When Kelso Place makes an investment in a company, either wholly as a shareholder, the investment team has already identified both short-term issues as well as longer-term opportunities. Kelso Place then works to incentivise that company’s employees and management team, re-align its performance with by implementing new strategies and increasing profit-making potential. Their prior experience with other brands in the luxury fashion sector makes this a logical next-step and brings a considerable degree of executive experience to bear on the Nicole Farhi brand name.

Both Nicole Farhi, who founded the label and Niki Scordi, will remain in their roles as creative director and chief executive, respectively. The brand is looking to focus on expansion into the Asian fashion market and Kelso Place sees this as an excellent opportunity for investment returns. With the Farhi brand being well established in the UK and other European countries, Asia is seen as a prime opportunity for increasing its global presence, in addition to bringing the Farhi brand back to profitability.

The brand has lost money over the past few years, as it attempted to broaden its distribution base, arguably a little too widely and too rapidly. Kelso Place appears set to focus the brand on high-end products with the best marketability, including penetration into the Asian markets and moving from a wholesale presence in the United States to a standalone store in New York. Control over both wholesale and retail sales in this gateway market is one aspect of the overall profitability and expansion plan.

With a 30-year history in the fashion industry, the Nicole Farhi brand, with the assistance of Kelso Place Asset Management, will focus on expanding the reach of its core products and improving profitability.