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Yamaha’s President Speaks About Cost Containment as Paramount Goal

Hiroyuki Yanagi, President and Chief Executive Officer of Yamaha Motor Co., Ltd. issued an important statement a couple of days ago regarding the current economic environment, and Yamaha’s strategy for success in that environment. Although Yamaha achieves the bulk of its sales in emerging markets in Asia, Mr. Yanagi emphasizes the strategy is the same for both emerging and mature markets (such as the U.S.). That strategy centers around cost containment and efficiency, including shorter product development cycles.

We have already seen that Honda is well down that same road in the U.S. as we reported earlier. The message from Yamaha’s President, which is printed in full below, contains one particular statement that caught my eye:

Taking new model development as an example, until now the accepted norm has been: “the cost of a new model = the cost of the current model + the cost of the newly added features that raise its value,” thus justifying the increase in price. Today, that increase will undermine the competitiveness of the new model. The necessary approach is to add value but “produce the new model at a cost lower than the current one.” So, we will be working to reduce the cost of the base model, carefully decide what value should be added or substituted in the new model and reduce the cost of that new value.

What does this mean for us in the U.S.? First, manufacturing continues to focus on cutting costs, a bad omen when it comes to the future of manufacturing jobs here in the States. Specifically regarding motorcycles, I think we can expect all of the Japanese, not just Honda and Yamaha, to focus less on high dollar products, and more on “value priced products”. This means more products like Honda’s new 500cc models discussed in our earlier article. Here is the full text of the President’s message, which you might find worth reading.

Pursuing true Yamaha-ness, breaking out of our old norms

In 2012, we found ourselves in a business environment defined by the economic crisis in Europe, the appreciation of the yen remaining at historically high levels and a slowing of the rapid economic growth that had continued for some time in the emerging nations. The Japanese economy also finally slipped into a state of economic recession. Furthermore, new issues arose from the standpoint of global corporate management, involving developments such as the political problems between Japan and China and labor disputes in the emerging economies.

For 2013, the outlook remains clouded with economic uncertainties as we enter the first year of our new medium-term management plan. It is a plan that was formulated based on debate about business strategies for what products and services will we use to compete in which markets and sectors and with what methods, as well as how we will increase profitability as we work towards the goals of “12 million units produced and 2 trillion yen in sales.” Put shortly, the new plan is to take the standpoint of the customers and “pursue true Yamaha-ness and break out of our old norms,” as we strive for sustainable growth for the future.

“Pursuing true Yamaha-ness”

To this day, Yamaha Motor has endeavored as a company and as a global group to value the uniqueness of our numerous and varied businesses and to offer markets products and services that always exceed the expectations of the customers. Going forward, these ideals will remain a strong core of our corporate management approach. And, to make that core even stronger, we will continue the challenge of pioneering the development of new markets and businesses and creating true Yamaha-ness that makes us shine as a distinct and valuable presence in the markets.

First of all, in the area of “Monozukuri” (engineering, manufacturing and marketing), we will create winning, competitive products for each market that are strategically focused and clearly differentiate us from the competition. These will be products defined by a compelling, integrated mix of original and innovative concepts, outstanding functions and performance and design that expresses “the refined dynamism.” We will take on this challenge defining our goals with technologies expressed through clear-cut words and numbers.

Secondly, in the realm of marketing we will continue to create points of contact in line with the needs and behavior of the customers and bring creativity to those contact points that builds strong bonds with said customers. This will help grow the number of lifetime customers who are truly satisfied with our products and continuously choose to purchase a Yamaha. All of our efforts in formulating product proposals, building the sales networks, organizing sales promotions and introducing new models, etc., will be conducted with a clear brand vision and numerical targets. Furthermore, we will be introducing this new unified Brand Vision this year.

“Breaking out of our old norms”

For an organization, its norms include the knowledge, opinions and judgment that its members should share. These norms reflect commonly shared ideas of a society at a given point in time and are not unchanging universal truths. Today, the huge potential of markets in the emerging economies and the new companies being born there are bringing major changes to the way products are engineered, manufactured and marketed what we call Monozukuri. Meanwhile, the competition between companies to win and keep customers in the developed markets is intensifying. So, we have to ask ourselves if the norms we base our work on still fit this current business environment, and challenge ourselves to break out of the ones that do not.

The first of these norms involves cost. Before, adding new value to a product and raising its price was viable, but that is no longer the case in most of today’s markets. In the markets of both the emerging nations and the developed nations, value is now a relative trait (defined by market standards) and efforts must be made in Monozukuri to lower the price of products even when adding value. Taking new model development as an example, until now the accepted norm has been: “the cost of a new model = the cost of the current model + the cost of the newly added features that raise its value,” thus justifying the increase in price. Today, that increase will undermine the competitiveness of the new model. The necessary approach is to add value but “produce the new model at a cost lower than the current one.” So, we will be working to reduce the cost of the base model, carefully decide what value should be added or substituted in the new model and reduce the cost of that new value. As for manufacturing, the norm until now was to add new work processes to increase manufacturing capabilities and quality. Now we must find new solutions to achieve the same results without increasing the number of work processes, through measures such as integration or substitution of processes as well as reducing overall cycle time.

The second norm involves lead-time. In new product development, for example, we used to take significant time to develop new products with strict adherence to the standard processes garnered from past experience to be safe and reliable. With the competition in today’s rapidly changing markets, this process is not fast enough, nor is it competitive. From now on, we will be finding more ways to shorten the Monozukuri process like reducing time, eliminating wasted work, substituting processes and conducting parallel development while still continuing to increase precision to ensure high levels of quality.

The third norm we must rethink is our organization and daily work. Organizational structure and work processes are sometimes just based on past habits and inward-directed ways of thinking. Complications resulting from various managerial issues and societal demands caused segmentation, division of responsibilities and redundancy. This is creating waste. We will continue our improvements to eliminate, integrate or combine whatever possible to yield more efficiency, while also connecting these efforts to structural improvement reform. We will continue working to create an organization that is clear, understandable and encourages vitality in the individual and the company.

We will tackle all of these tasks diligently to levels above and beyond everyone’s expectations, so all at Yamaha Motor can speak about our achievements with pride. I am confident that this will connect to the larger aims of “pursuing true Yamaha-ness and breaking out of these old norms” and that every employee will continue to use all of their intelligence to take on the tasks at hand with persistence.

President, Chief Executive Officer and
Representative Director
Yamaha Motor Co., Ltd.
Hiroyuki Yanagi


  1. People are being practical these days. They look for motorcycles that consume less fuel and are more eco-friendly to save up on costs. This is what Yamaha should consider since the market for smaller motorcycle has increased in different countries including the U.S.

  2. RBen says:

    Cost Containment Hmmmm.Like the $2000 MORE expensive WR250F. Than the competing KLX250S/CRF250L.This does not sound like cost containment to me.Yeah its a little faster and a little lighter but 40% higher price.I mean come on Yamaha.

    • John A. Kuzmenko says:

      The Yamaha WR-250R (not F) is built in Japan, and the CRF-250L is built in Thailand.
      I may be wrong, but I bet the price difference between the two is mainly down to cheap Thailand labor building the Honda CRF-250L.

      Don’t worry, though, because I imagine one of the ways these manufacturers will get the costs down and give riders more “value” is to build more of their units in “emerging nations”.

      • Dave says:

        The CRF-350L and WR-250R could not be more different. The Honda is a budget bike in almost every way , the WR is based on a race bike and it’s components (alloy frame/swing, fully adj. suspension, VASTLY superior engine). These are differences that easily close the price gap, if anything, the Honda needs excuses for not being less $$.

        • John A. Kuzmenko says:

          Another thing is that the WR-250R was all-new when it came out for the 2008 model year, not using rehashed parts from other models, and built in Japan along with all of the other $6,000-plus dirt bikes that came out in 2008.

          The KLX-250S has it’s engine design, at least, back quite a ways.
          As for the CRF-250L, how much do the factory workers in Thailand bring home a week (in USA dollars)?
          I don’t know, but am curious.
          Something has to give.

          From my experience:
          The WR-250R is not based on a race bike, it just looks like a WR-250F or YZ-250F, and that’s no accident or coincidence.
          Actually, a WR-250R frame and engine is not similar to any other Yamaha off-road or motocross bike, but it’s hoped you’ll see a resemblance.
          The suspension damping and rear ride height is adjustable, but the internals are cheaper, and, the rear shock, itself, is a cheap damper made by Soqi, not a bona-fide KYB like the YZs and WR-250F.

          Designating it a WR to start with was no accident, as well, to suggest it is a street-legal WR-250F (and when the current model WR-250F was introduced in 2007, it was very much a 2006 YZ-250F with lights and EPA certification for off-road use).
          The only thing the WR-250F and WR-250R share is the WR designation.

          I owned a 2008 WR-250R, a 2008 WR-250X, a 2009 WR-250F, and to this day ride a 2002 WR-250F.
          I like/liked them all, although the WR-250R could really do with a KYB shock with decent valving.

  3. PN says:

    I don’t think this is such a bad thing. Manufacturers have to make desirable products at affordable prices. Bike prices over $14K leave me cold. How many people try the sport for a year and then sell their bikes? I buy used now and haven’t spent over $4K. Experienced riders might think a 300 or a 500 isn’t anything special, but it can be a ton of fun and enjoyment.

    • John A. Kuzmenko says:

      For myself, the thing I don’t like about cheap bikes are the cheap features, like Stone Age forks and shocks and wheels and tires and brake calipers.
      A new buyer won’t have a clue, but riders who have been around the block will see these as cheap cop-outs.

    • Scott says:

      I must admit taking advantage of Yamaha in the recession of ’09 (only another year on the extended warranty so we’ll see if i can prove out that statement). A dealer had purchase an ’07 Stratoliner at auction and I paid less than $10k for a $16k+ machine.

      But I agree with PN, if I had space and time I’d be buying a lot of used bikes.

    • Norm G. says:

      re: “Experienced riders might think a 300 or a 500 isn’t anything special”

      not if it’s got 4 expansion chambers stickin’ out the back and letters YZR/NSR on the side. 🙂

  4. JR says:

    OK.. so the motorcycle manufactures are wondering.. what do we build now that will sell and get the market moving again? Well they already know what they can build. This being reliable, simple, affordable, light weight, easy to maintain, air/oil cooled, good handling, good stopping, good sounding, good mileage, and easy to finance, fun motorcycles. Hey.. here’s an idea to copy since production stopped in 2009. Light weight (under 400 lbs. dry) V-twin engine (1,000 cc) air/oil cooled, fuel in the frame, engine oil in the swing arm, muffler under the engine, hydraulic lifters (no valve adjustments) clean reliable belt drive with it’s own tension idler (no adjustments needed) centralized components for great handling along with the low weight for great gas mileage. Hmmm.. sounds like the former Buell XB to me. See how easy that was.

  5. Crusty Kris says:

    Cheap bikes at cheap prices – that’s how I read it!

  6. richard says:

    Been riding for years……avid motorcyclists will allways pay for exotica. Small displacement bikes are for commuters…like the Honda Fit…none buys one of those because its cool !! We are talking about a completely different class of rider..they want to save $$ be carpool lane friendly..not to mention getting rained on….they will never buy an MV or a Duc. Lets be real..thers alot of you saying bikes are too expensive…isnt a Ferrari like $200,000….an MV F4 will destroy it at $20,000..lets compare apples to apples before we make assumptions on cost….go buy a smart car ! might be more your speed or a Honda Jazz…bout the same category.

    • MGNorge says:

      But motorcycles in the US are generally seen and used as secondary vehicles, they’re toys. Just as people snowmobile in the winter or go boating in the summer. Each can be used as a primary vehicle (depending on where you live) but there’s usually a car or two at home to do primary duty. That means as prices go up fewer find the extra cash, that can be used for other necessities or extras, to spend on a motorcycle. During a long downturn such as what we’re still trying to dig our way out of it’s amplified even more. Saying that an F4 will destroy a Ferrari is far from the issue most are facing.

  7. Jeremy in TX says:

    I don’t think the performance flagships are going anywhere. Instead, I think they’ll get better as margin from some of the cheaper budget models are leveraged to mitigate some of the price increases that would normally accompany improvements in the high-performance models.

  8. James says:

    I think the new trend towards smaller, less expensive motorcycles is a good thing. I just wish they (the Japanese motorcycle industry) would build something more like the Honda GB500 than the Ninja 300: a single cylinder motorcycle with simple classic lines and no fairing. I have always used motorcycles as transportation first and fun second. As the economy continues its downward slide (peak oil, peak debt, peak everything) fewer and fewer people will be buying motorcycles as toys. As much as I love my first generation FZ1 (perfect reliability for over 60,000 miles and averages 44mpg), it is way too big and cumbersome for urban riding and lane splitting. Yamaha should bring back the SRX6 with liquid cooling, fuel injection, and Ducati Monster styling. That’s something I would seriously consider buying in the future. Assuming I could afford it, of course.

    • Dave Kent says:

      I too have used motorcycles as my primary (usually only) transportation for the past 40 years. I had my flirtations with sportbikes, but my main attraction has always been midsized standards or dualsports. Riders like us have historically been the minority. But as you say, with the economic downturn more folks, especially new riders, will consider bikes as daily transport. Practicality, comfort, and ease of ownership will rule the day. All of us should celebrate that. It shouldn’t matter WHY a rider rides, only that the percentage of the public that DOES ride continues to increase. The more folks that ride, the more we’ll all be accepted and respected on the road. And thanks, James, for reminding me how stupid I was for selling my spotless SRX6 18 months after buying it new. I was young, stupid, and convinced it was “underpowered”. Not a week goes by that I don’t regret that bonehead move!

      • Norm G. says:

        re: “But as you say, with the economic downturn more folks, especially new riders, will consider bikes as daily transport. Practicality, comfort, and ease of ownership will rule the day.”

        which ironically brings us full circle back to the “bigger and better mousetrap” built by henry ford. practicality…? comfort…? ease of ownership…? why you just described the automobile here in the 21st century.

    • Norm G. says:

      re: “As the economy continues its downward slide (peak oil, peak debt, peak everything) fewer and fewer people will be buying motorcycles as toys.”

      no, it’s worse than that. as the economy continues its downward slide (peak oil, peak debt, peak everything) fewer and fewer people (who never had the means to buy them in the first place) will be buying motorcycles… period.

  9. AFW says:

    Yamaha is racing to the bottom, Honda seems to be going into that mode also.
    The future of motorbikes is cheap, low tech and possibly less reliable, can’t
    wait! Ducati and BMW are having record sales, expensive bikes indeed, no
    shortage of buyers. European economy is tanking and the U.S is flat or trending
    lower despite what the Gov’t and media declare, looks like a long slog for the
    general population in western economies. Man, I wish it was 2000 again, those
    days aren’t coming back again, the 2008 debacle changed things forever.

  10. Norm G. says:

    re: “Specifically regarding motorcycles, I think we can expect all of the Japanese, not just Honda and Yamaha, to focus less on high dollar products.”

    but again the euros demonstrate they are having none of this. BMW thumbs their bavarian noses and announce 2012 as a record year. “double digit growth in december”…!!! Deutscheland their largest market (naturally), but good ol’ USA was their #2.

    “They said UP MARKET is the place you outta be…!!! So they loaded up the truck and they moved to Beverly…” (sung in the key of the classic TV show theme)

  11. Don Fraser says:

    My first bike, ’71 Honda SL350 cost $800 vs. second car, ’71 Chevy Vega cost $2200, slightly less than 1/3. My umpteenth bike, ’08 Kaw EX250 cost $3700 vs. my ’07 Mazda 3 at $18,0000, slightly less than 1/5. The EX250 is Kawasaki’s best seller by far because it has value. My ’71 Bultaco Pursang cost $1100, or about half the Vega. A new 450 MX bike is about $9000 or about 1/2 the Mazda. My annual earning are about 15 times what they were then. So it is hard to argue that the companies have not kept the costs of our entertainment down.
    HA/DA is still selling a lot of product and it is all high end, European companies are doing pretty well, also at the higher end. The Japanese companies sales have fallen off a cliff and no one knows what to do. Honda has some really good stuff coming and it will be interesting to watch.

    • Dave says:

      Many are feeling the crunch of a higher cost of living without the benefit of their wages having multiplied over the years. A mortgage costs a greater percentage of salary for most people who purchased in the past 10 years. Even though a bike can still be had for a fraction the cost of a car, it’s harder for most to justify, especially when purchasing new, where car loans can be had at or near 0%. I haven’t seen many motorcycle financing offers that good.

  12. Gary says:

    “we will be introducing this new unified Brand Vision this year.” Sounds like the “Star” line of motorcycles will again come under the Yamaha brand.

    Whether we like it or not, I think many people are not buying bikes because of high prices. When motorcycles are more or just as expensive as cars, something has to give.

    • ApriliaRST says:

      >>When motorcycles are more or just as expensive as cars, something has to give. <<

      Just like in the early days of the 20th Century when $600 cars put dozens of motorcycle manufacturers out of business.

  13. NORKA says:

    One of the major factors in holding down sales is the price of a modern cycle. Their excessive cost is a direct result of the current manufacturing model. For example Honda can build a very complicated car such as a Fit (4 doors, A/C, power everything, etc) and sell it for $16,000. On the other hand their cycle division charges significantly more than that for a Goldwing which compared to the Fit is a very simple machine.
    The Fit is built in mass production highly automated factories. Motorcycles are built in low volume, non automated factories. If Honda built motorcycles like they build cars they could sell thousands of 1000 cc sports bikes at $8,000 not $12 to $15 thousand.

    • Norm G. says:

      re: “Motorcycles are built in low volume, non automated factories.”

      you sure about that…? were talking about Honda the people who built Asimo here…? nearly everybody’s assembly line is pretty much as “automated” as they’re going to get, or at least as automated as need be.

      re: “If Honda built motorcycles like they build cars they could sell thousands of 1000 cc sports bikes”.

      well THAT or they’d have thousands of 1000cc sportbikes takin’ up space in warehouses and dealer showrooms….? anybody remember, the fire sale on overstock CBR1000’s when the banking industry imploded a few years back…?

    • bikerrandy says:

      The higher costs we see as US buyers is a result of the lowering value of the US Dollar. You can thank our politicians in Washington DC for this. It’s called inflation caused by too many US dollars being printed.

  14. kid_swabe says:

    The bike at the backdrop looks like a Yamaha Mio, being sold in ASEAN markets where Yamaha has a big chunk of the market…

  15. ApriliaRST says:

    Like the other bikes in it’s class, the new FJR is nearly sixteen thousand dollars. At that price, (mainly) only an already dedicated rider is going to lay down the cash and ride the bike home. That’s great for him/her, but where are the bikes that get new riders on two wheels? IMO, Yamaha is making an attempt to serve the product needs of both new and experienced riders. Serious cost containment and lower priced products are badly needed.

    Yes, this yet another example of the pressure on manufacturing jobs, but at present generation Y is living life on their smart phones and boomers and generations in between have not gotten any younger. I’ll be happy if the corners that are cut don’t result in essentially disposable motorcycles.

    • Dave Kent says:

      Agreed. The motorcycling climate is changing, and manufacturers can benefit if they stay attuned to the change. The shift should be away from performance, complexity and expense. Simpler, less expensive, more efficient and easier to own bikes will attract the younger crowd who don’t have the spending power of the boomer generation. Those bikes don’t have to be boring, either. But the average Ricky Racer wannabe needs to admit that he spent way too much for a bike he’ll never be able to ride remotely close to its limits. And the average cruiser guy needs to admit that he’s not a Hells Angel and stop wasting money trying to look and sound like one. The younger folks coming up won’t have the luxury of excess capital to be squandered on such nonsense. They’ll be looking for real, practical value. If the manufacturers respond to that need, the customer base will grow exponentially and ensure business for years to come. But SOMEBODY needs to be first. Maybe it’s Yamaha.

  16. Eric says:

    I don’t like the sounds of this at all. The language is not unlike a CEO preparing the investor community for a bad earnings report: ‘Times are tough, expect less from us.’

    I’m all for good value but that means a balance between cost and performance. Sounds like Yamaha is moving to the bean counting side of that equation and is willing to sacrifice performance. Sad.

    • MGNorge says:

      It is sad but should be short-term as/when the economy gains strength. Look at Honda, beaten up this side and down the other for not “improving” their cars and bikes enough for the moto journalists but maintained some pretty good sales numbers in some of their car lines. That’s now showing signs of a rebirth with lower cost models coming out but motorcycles will take longer and will wait until people feel secure enough in their jobs and have money in their pockets. This may just be a delayed reaction with Yamaha? They may have tried to sustain but the downturn has lasted longer than expected and they must hunker down. You’d think this would spill over into their race teams and all the resources they consume?

      • Dave says:

        If higher performance and premium features/quality were paying the bills this speech would have read completely differently. The revenue is in lower cost/higher volume that developing countries have been consuming. Our (US) upper end new bike market is dying off.

  17. LarryC says:

    Translation: Expect the bean-counters to have even *more* influence than they have had in the past. Yen pinchers sitting around a conference table deciding what “features” your next bike needs…and what it can do without. And how that can be accomplished the most cheaply. Likely not a rider in the lot.

    I work for a company that tends to spew this kind of bureaucratic bull from time to time in order to convince customers they are getting good value.

    “Yamaha-ness,” eh? I’m afraid Yamaha-ness is what has prevented me from ever being interested in, or purchasing, a Yamaha product in the past. I suspect that isn’t about to change any time soon.

    • Neil says:

      I have been saying for years to get the weight off cruisers to save money. Look at all the crazy electronics on the Ducati Diavel. I would buy one without all that crap. In the seventies we just had good plain motorcycles. Make the same with modern motor, modern brakes and modern suspension. We do not need a million horsepower nor can we afford it. Get more people on motorcycles by making more affordable motorcycles that are inexpensive in their simplicity. Then have some expensive ones as well for the people who have the big bucks. There are many ways to cut costs and not all of them are bad.

    • Dave says:

      Make no mistake, the bean counters do not have influence, they have control. It is everyone else that hopes to have influence.

      • Norm G. says:

        re: “Make no mistake, the bean counters do not have influence, they have control. It is everyone else that hopes to have influence.”

        holy shnikees…!!! this has to be the most outstanding comment i have ever heard. it sounds like something i would say…!!! (sonofabi#@%*) LOL

    • todd says:

      Hardly. Imagine a bean counter being taken to task why sales plummeted after removing features in the name of lower cost. I’m positive their job will not be as easy as that. The design teams will need to add features and performance all while being required to reduce the cost of that feature.

      It sounds to me that Mr. Yanagi’s goal is to improve the product and reduce their manufacturing costs. That’s quite a goal and, typically, the Japanese have been able to pull that sort of thing off in the past.

      I too look forward to the new RD350.


  18. John A. Kuzmenko says:

    That “product” shown on the screen in the above pic looks awful fun.

  19. Les says:

    The only constant is change. Maybe Yamaha will go out of business and Polaris will buy the name and make retro Virago 750 and RD350 in 50 years.

    Competition is good. Stagnant Yamaha and Honda need a kick in the back side. If they die then nature will produce a stronger replacement, or not as life has room for.

    One more snide remark – instead of vehicles Yamaha should just sell flavored water with a hip name for 4 bucks a drink. That’s the greatest scam on earth. So much so that Monster Energy Drink (MADE WITH REAL LIGHTNING!) is paying yamaha GP 4 mil euro to put a sticker the bikes next season. (source :

    Wait, it’s snowing here and this lack or riding leaves too much time for thinking. One last point. We are at the dawn of a virtual existence and the econ will continue to collapse for quite a while yet as manufacturing, shipping, warehousing, store-fronting and all the related jobs continue to be replaced with virtual product which requires none of the above. Think about how much money you spent last year on things that are just easily reproduced data. Your phone, your net connection, various subscriptions there of (netflix) your ipad aps, your android…

  20. Tommy See says:

    Sales and profits are slipping due to the world economic down turn. No brainer !
    Why would Yamaha come out with the monster size 1200 Tenere just to grab some sales from BMW GS? ! Come on ! Honda has been slipping but with their new developments in the 500 and 700`s they will continue to be the #1 – 2 wheel company. Suzuki is in trouble. Harley keeps on chugging others are trying! The chase is for fuel economy. Consumers are wanting safe easy on the pocket book long distance fun riding machines. Bring back the 60-70`s era sizes and slow down and enjoy the ride! Best of Luck to all manufacturers of our passion.

  21. Tom R says:

    Translation: Build mostly cheap stuff for places like India, etc.

    Don’t look for much cutting-edge stuff from Yamaha for the next decade or so.

  22. Tom says:

    Guy looks like a penny (or is than yen) pincher.

    • Eric says:

      You look as you feel and this guy does not look happy or excited. Dour stuffed-shirt corporate suit with no passion for the product. I hope I’m wrong…

  23. Mark Bremer says:

    Sounds like a lot of middle and upper level managers that don’t really contribute anything toward the products should be scared for their jobs.

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