Earlier this year Mark over at the Lean Blog did a poll of the "Best Lean Companies." After over 800 votes the results were pretty much as expected, at least for the top half. I don’t agree with a few of them, but then again I’m no expert. Just for kicks I did some research on the stock performance of the top 20 (obviously not including the two or three private companies), ranking them by quarter and year to date with comparisons to the S&P/Dow/Nasdaq, and came up with the following:
|
2007-Q1
|
2007-Q2
|
2007-Q3
|
2007-YTD
|
|||||||
| Deere |
14.3%
|
.. | Intel |
24.1%
|
.. | Deere |
22.9%
|
.. | Deere |
64.8%
|
| Parker-Hannifin |
12.3%
|
Textron |
22.6%
|
Parker-Hannifin |
14.2%
|
Parker-Hannifin |
49.1%
|
|||
| Illinois Tool |
11.7%
|
Caterpillar |
16.8%
|
Textron |
13.0%
|
Textron |
42.8%
|
|||
| Tesco PLC |
9.8%
|
Parker-Hannifin |
13.4%
|
Illinois Tool |
10.1%
|
Intel |
23.8%
|
|||
| Steelcase |
9.5%
|
Deere |
11.1%
|
Danaher |
9.5%
|
Illinois Tool |
18.3%
|
|||
| Caterpillar |
9.3%
|
DOW |
8.5%
|
Boeing |
9.2%
|
Tesco PLC |
16.9%
|
|||
| Nike |
7.3%
|
General Electric |
8.3%
|
Intel |
8.9%
|
Danaher |
12.0%
|
|||
| HON |
3.4%
|
Boeing |
8.2%
|
General Electric |
8.2%
|
Caterpillar |
11.9%
|
|||
| Kimberly-Clark |
0.8%
|
NASDAQ |
7.5%
|
Kimberly-Clark |
5.0%
|
NASDAQ |
7.5%
|
|||
| NASDAQ |
0.3%
|
S&P 500 |
5.8%
|
Tesco PLC |
5.0%
|
DOW |
4.2%
|
|||
| S&P 500 |
0.2%
|
Danaher |
5.7%
|
NASDAQ |
3.8%
|
S&P 500 |
1.6%
|
|||
| Boeing |
0.1%
|
Illinois Tool |
5.0%
|
DOW |
3.6%
|
General Electric |
1.2%
|
|||
| DOW |
-0.9%
|
Honda |
4.1%
|
S&P 500 |
1.6%
|
Boeing |
0.8%
|
|||
| Danaher |
-1.4%
|
Southwest |
1.4%
|
Nike |
0.6%
|
Kimberly-Clark |
0.4%
|
|||
| Southwest |
-4.0%
|
Toyota |
-1.8%
|
Caterpillar |
0.2%
|
Southwest |
-10.4%
|
|||
| Textron |
-4.2%
|
Kimberly-Clark |
-2.3%
|
Southwest |
-0.7%
|
Honda |
-15.4%
|
|||
| Toyota |
-4.6%
|
Tesco PLC |
-5.8%
|
Steelcase |
-2.8%
|
Steelcase |
-16.1%
|
|||
| General Electric |
-5.0%
|
Steelcase |
-7.0%
|
Toyota |
-7.2%
|
HON |
-17.5%
|
|||
| Intel |
-5.5%
|
HON |
-10.7%
|
Honda |
-8.1%
|
Toyota |
-18.5%
|
|||
| Honda |
-11.8%
|
Nike |
-45.1%
|
HON |
-12.2%
|
Nike |
-35.6%
|
|||
There are obviously some interesting observations. The market overall has been a rollercoaster, and even Toyota has had a rough year. Only a handful of companies actually outperformed the major indices. At the same time we don’t want to get sucked into the short-term mindset that bedevils lean improvements or a focus on traditional measures of value. There are a lot of games that are played between the time a sale is realized and when the effect of the sale hits the bottom line… and especially to when that bottom line is translated to a stock price.
But it is still an interesting, albeit admittedly flawed, analysis. There are some companies on the current top 20 that I don’t believe belong there, and some (such as Wabtec) that I believe are missing.
Let’s try this again, looking forward to 2008. What lean-driven companies will be tops in 2008? We’ll lock the top 20 at the end of December, and then Evolving Excellence will report the performance and any notable news. Here’s the poll:
Ken says
Fascinating analysis, Kevin. I hadn’t realized Toyota’s stock performance, which is even worse than GM and Ford’s (both down about 5% YTD). I like the diversity of the current top 15 or so, with auto, grocery, high tech, retail all represented. Would be nice to get a cross section of company sizes as well. You’re right, I don’t believe stock price is really all that meaningful in a lean transformation, but it is “stakeholder value.” I look forward to seeing the analysis every month or so just for kicks if nothing else. -Ken
Stacy says
Parker and Deere have always been my favorites. I’ve met several people from those two companies at a variety of conferences and they seem to understand what lean is really about. I guess it shows.
Mike says
I think Toyota stock habitually underperforms the market for some reason. Toyota leaders don’t care if it does or doesn’t anyway.
I would like to mention that some of these companies (P-H, Deere) have done considerable offshore outsourcing in recent years. There are so many factors to consider. Don’t get caught up in the “one metric” idea (see Mark Graban’s post on the Lean Blog about the single metric problem).
Don McMaster says
That’s some list of companies! I need to research some of them to even know what they do. Abbott has been coming on strong lately. I also like Pentair.
Kevin says
You’re right that some of those companies offshore substantial amounts of their manufacturing. However in some cases it is to actually be closer to an offshore market. I was talking to a GE exec the other day who told me that they are becoming very conscious of true “landed cost” and have recently moved some production back to the U.S. when they leaned a domestic factory to within 15% of the offshore landed cost. The 15% premium was worth the risk offset of the foreign factory.
Toyota does underperform, and their execs don’t care… which is why I put the caveat that this type of analysis is flawed to begin with in a lean world. But the stats junkie in me still likes it!
Kevin
Bruno Silva says
Hello everyone,
Just wanted to warn you that this table has some wrong values since it did not regard the stock splits. For example, Nike had a 2:1 stock split on April, 3rd. This means that, at 26th November, Nike had a 28.76% price increase instead of -35.6%.
Bruno
Niek Elferink says
Dear Kevin Meyer,
I noticed this blog and this post in search of some information I require for my graduation thesis. I’m doing a bit what you did above; matching leanness to financial performance, albeit I’m limiting myself to the Automotive Industry. The idea is to find out if/how “leanness” actually contributes to the bottom line. Leanness can really be seen in the broadest sense of the word here. Some companies may not be lean according to the “Womack-and-Jones” sense of the word, but they may still be focusing on customer value and having suppliers do what they are good at instead of just handing out detailed design specifications.
The point I’m having trouble with is defining which automotive companies (both OEMs and Suppliers) are very lean and which are less lean (or not at all lean). It would be ideal to have a scaled ranking of some sort, but really an ordinal ranking would already be nice. Most will know that Toyota, Porsche and PACCAR are lean companies, but what about for example Audi, which I heard is the only company continuing to grow, despite a worldwide economic crisis?
Basically the question is how one could set up such a “lean ranking”. Could use be made of certain (to be devised) metrics (that require publicly available data)? What are your thoughts about this? Or maybe a poll (like the one that’s no longer available) or something?
I realize you may not have time to reply to this, but I wanted to throw out a line anyway and just see what I could drag back in.
Would really appreciate any comments you may have!
Thanks,
Niek