Lower the Waterline

In the 1970s and 1980s American automotive manufacturers were producing some of the lowest quality cars in history. It’s not that they were unaware of the low quality it’s just that they didn’t believe there was anyone to challenge them in the market so quality was almost an afterthought.

Enter the Japanese automakers. Relentlessly focused on quality and hungry to break into the huge American auto market they slowly chipped away at the Big-Three (Ford, GM, Chrysler) automakers and brought the American’s market share from over 90% in 1965 to an all-time low of 44.2% in 2018. The Japanese began their rally with a measley 0.1% market share in 1965 which they grew to 32.8% in 2018.

Did the Big-Three forget how to make a quality car? Hardly. The Japanese had just focused on the long game while American automakers paid attention to the short game. Getting sales today is no guarantee you’ll get sales tomorrow.

Quality is almost always a winning proposition for customers, but it wasn’t just quality that the Japanese used to gain such a significant foothold. They paid closer attention to their manufacturing process by using Kanban which is a process of “just in time” manufacturing to avoid wasted materials and wasted effort.

There are volumes of business practices written on Kanban, but I’ll sum up the Japanese method of thinking simply with one sentence. They lowered the waterline on their businesses.

Why Lower the Waterline?

There are always rocks and hazards hiding beneath the waterline of your business. Good cashflow, high profits, lack of competition, plentiful sales, these all add to the waterline. But what if some or all of those went away?

With a high waterline a business can safely sail over almost any hazard without trouble. If that waterline begins to drop, soon the rocks are revealed and the business can run aground and be shipwrecked.

The Japanese purposely lowered the waterlines in their manufacturing to find potential problems. They tightened up their assembly lines to see where the bottlenecks were. And they didn’t ignore them for another day because business was good. They fixed them when they became visible so they wouldn’t be an issue at a later date.

I want you to think about your business now. What rocks would be revealed if you lowered the waterline at your business? Would they be devastating to your businesses survival? How would you fix those issues before they become an issue?

It’s better to lower the waterline yourself and probe for rocks than to let the market or the economy lower the waterline for you when you’re not ready. Now is the time to acknowledge the rocks you are going to face someday so that when they show up you are ready with the fix.