[notes] The Toyota Way

 The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer (2004) by Jeffrey Liker

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Great book. Personal commentary is at the bottom…


 Notes

 Part One: The World-Class Power of the Toyota Way

 Chapter 1: The Toyota Way: Using Operational Excellence as a Strategic Weapon

“The Toyota Production System is Toyota’s unique approach to manufacturing. It is the basis for much of the lean production movement that has dominated manufacturing trends (along with Six Sigma) for the last 10 years or so.”

“The key to their operations was flexibility. This helped Toyota make a critical discovery: when you make lead times short and focus on keeping production lines flexible, you actually get higher quality, better customer responsiveness, better productivity, and better utilization of equipment and space. While Ford’s traditional mass production looks good when you measure the cost per piece on an individual machine, what customers want is a much greater variety of choices than traditional manufacturing can offer cost-effectively.”

“Consider the following counter-intuitive truths about non-value-added waste within the philosophy of TPS: Often the best thing you can do is to idle a machine and stop producing parts. You do this to avoid over production, the fundamental waste in TPS.”

“TPS starts with the customer, by asking, What value are we adding from the customer’s perspective? Because the only thing that adds value in any type of process be it in manufacturing, marketing, or a development process is the physical or information transformation of that product, service, or activity into something the customer wants.”

 Chapter 2: How Toyota Became the World’s Best Manufacturer: The Story of the Toyota Family and the Toyota Production System

“The most visible product of Toyota’s quest for excellence is its manufacturing philosophy, called the Toyota Production System (TPS). TPS is the next major evolution in efficient business processes after the mass production system invented by Henry Ford, and it has been documented, analyzed, and exported to companies across industries throughout the world. Outside of Toyota, TPS is often known as lean or lean production, since these were the terms made popular in two best-selling books, The Machine That Changed the World (Womack, Jones, Roos, 1991) and Lean Thinking (Womack, Jones, 1996).”

“Ford’s mass production system was designed to make huge quantities of a limited number of models. This is why all Model T’s were originally black. In contrast, Toyota needed to churn out low volumes of different models using the same assembly line, because consumer demand in their auto market was too low to support dedicated assembly lines for one vehicle. Ford had tons of cash and a large U.S. and international market. Toyota had no cash and operated in a small country. With few resources and capital, Toyota needed to turn cash around quickly (from receiving the order to getting paid). Ford had a complete supply system, Toyota did not. Toyota didn t have the luxury of taking cover under high volume and economies of scale afforded by Ford’s mass production system. It needed to adapt Ford’s manufacturing process to achieve simultaneously high quality, low cost, short lead times, and flexibility.”

“He [Ohno] also studied Ford’s book, Today and Tomorrow. After all, one of the major components that Ohno believed Toyota needed to master was continuous flow and the best example of that at the time was Ford’s moving assembly line. Henry Ford had broken the tradition of craft production by devising a new mass production paradigm to fill the needs of the early 20th century. A key enabler of mass production’s success was the development of precision machine tools and interchangeable parts (Womack, Jones, Roos, 1991). Using principles from the scientific management movement pioneered by Frederick Taylor, Ford also relied heavily on time studies, very specialized tasks for workers, and a separation between the planning done by engineers and the work performed by workers.”

“In his book Ford also preached the importance of creating continuous material flow throughout the manufacturing process, standardizing processes, and eliminating waste. But while he preached it, his company didn t always practice it. His company turned out millions of black Model T’s and later Model A’s using wasteful batch production methods that built up huge banks of work-in-process inventory throughout the value chain, pushing product onto the next stage of production (Womack, Jones, Roos, 1991). Toyota saw this as an inherent flaw in Ford’s mass production system. Toyota did not have the luxury of creating waste, it lacked warehouse and factory space and money, and it didn t produce large volumes of just one type of vehicle. But it determined it could use Ford’s original idea of continuous material flow (as illustrated by the assembly line) to develop a system of one-piece flow that flexibly changed according to customer demand and was efficient at the same time. Flexibility required marshaling the ingenuity of the workers to continually improve processes.”

“Along with the lessons of Henry Ford, TPS borrowed many of its ideas from the U.S. One very important idea was the concept of the pull system, which was inspired by American supermarkets. In any well-run supermarket, individual items are replenished as each item begins to run low on the shelf. That is, material replenishment is initiated by consumption.”

“Toyota also took to heart the teachings of the American quality pioneer, W. Edwards Deming… Each person or step in a production line or business process was to be treated as a customer and to be supplied with exactly what was needed, at the exact time needed. This was the origin of Deming’s principle, the next process is the customer. The Japanese phrase for this, atokotei wa o-kyakusama, became one of the most significant expressions in JIT, because in a pull system it means the preceding process must always do what the subsequent process says.”

 Chapter 3: The Heart of the Toyota Production System: Eliminating Waste

“When applying TPS, you start with examining the manufacturing process from the customer’s perspective. The first question in TPS is always What does the customer want from this process? (Both the internal customer at the next steps in the production line and the final, external customer.) This defines value. Through the customer’s eyes, you can observe a process and separate the value-added steps from the non-value-added steps. You can apply this to any process manufacturing, information, or service.”

“Toyota has identified seven major types of non-value-adding waste in business or manufacturing processes, which are described below. You can apply these to product development, order taking, and the office, not just a production line. There is an eighth waste, which I have included.”

  1. Overproduction. Producing items for which there are no orders, which generates such wastes as overstaffing and storage and transportation costs because of excess inventory.
  2. Waiting (time on hand). Workers merely serving to watch an automated machine or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of stockouts, lot processing delays, equipment downtime, and capacity bottlenecks.
  3. Unnecessary transport or conveyance. Carrying work in process (WIP) long distances, creating inefficient transport, or moving materials, parts, or finished goods into or out of storage or between processes.
  4. Overprocessing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher-quality products than is necessary.
  5. Excess inventory. Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times.
  6. Unnecessary movement. Any wasted motion employees have to perform during the course of their work, such as looking for, reaching for, or stacking parts, tools, etc. Also, walking is waste.
  7. Defects. Production of defective parts or correction. Repair or rework, scrap, replacement production, and inspection mean wasteful handling, time, and effort.
  8. Unused employee creativity. Losing time, ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees.

“Ohno considered the fundamental waste to be overproduction, since it causes most of the other wastes. Producing more than the customer wants by any operation in the manufacturing process necessarily leads to a build-up of inventory somewhere downstream: the material is just sitting around waiting to be processed in the next operation. Mass or larger-batch manufacturers might ask, What’s the problem with this, as long as people and equipment are producing parts? The problem is that big buffers (inventory between processes) lead to other suboptimal behavior, like reducing your motivation to continuously improve your operations. Why worry about preventive maintenance on equipment when shutdowns do not immediately affect final assembly anyway?”

“The traditional approach to process improvement focuses on identifying local efficiencies Go to the equipment, the value-added processes, and improve uptime, or make it cycle faster, or replace the person with automated equipment. The result might be a significant percent improvement for that individual process, but have little impact on the overall value stream. This is especially true because in most processes there are relatively few value-added steps, so improving those value-added steps will not amount to much.”

“In a lean improvement initiative, most of the progress comes because a large number of non-value-added steps are squeezed out. In the process, the value-added time is also reduced.”

 Chapter 4: The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS

“The more I have studied TPS and the Toyota Way, the more I understand that it is a system designed to provide the tools for people to continually improve their work. The Toyota Way means more dependence on people, not less. It is a culture, even more than a set of efficiency and improvement techniques. You depend upon the workers to reduce inventory, identify hidden problems, and fix them. The workers have a sense of urgency, purpose, and teamwork because if they don t fix it there will be an inventory outage. On a daily basis, engineers, skilled workers, quality specialist, vendors, team leaders, and most importantly operators are all involved in continuous problem solving and improvement, which over time trains everyone to become better problem solvers.”

 Executive Summary of the 14 Toyota Way Principles

 Section I: Long-Term Philosophy

Principle 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

 Section II: The Right Process Will Produce the Right Results

Principle 2. Create continuous process flow to bring problems to the surface.

“Make flow evident throughout your organizational culture. It is the key to a true continuous improvement process and to developing people.”

Principle 3. Use pull systems to avoid overproduction.

Principle 4. Level out the workload (heijunka). (Work like the tortoise, not the hare.)

Principle 5. Build a culture of stopping to fix problems, to get quality right the first time.

Principle 6. Standardized tasks are the foundation for continuous improvement and employee empowerment.

“Use stable, repeatable methods everywhere to maintain the predictability, regular timing, and regular output of your processes. It is the foundation for flow and pull.”

Principle 7. Use visual control so no problems are hidden.

Principle 8. Use only reliable, thoroughly tested technology that serves your people and processes.

 Section III: Add Value to the Organization by Developing Your People and Partners

Principle 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Principle 10. Develop exceptional people and teams who follow your company’s philosophy.

Principle 11. Respect your extended network of partners and suppliers by challenging them and helping them
improve.

 Section IV: Continuously Solving Root Problems Drives Organizational Learning

Principle 12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).

Principle 13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi).

Principle 14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

“Learn by standardizing the best practices, rather than reinventing the wheel with each new project and each new manager.”

 Chapter 5: The Toyota Way in Action: The No Compromises Development of Lexus

 Chapter 6: The Toyota Way in Action: New Century, New Fuel, New Design, Process Prius

 Toyota’s New Product Development Process

  1. The cross-functional team and chief engineer work together almost daily in the same room (obeya).
  2. Simultaneous engineering. Manufacturing and production engineers are now involved very early in the design process working with design engineers at the concept development stage, to give input on manufacturing issues.

 Part Two: The Business Principles of the Toyota Way

 Section I: Long-Term Philosophy

 Chapter 7: Principle 1: Base Your Management Decisions on a Long-Term Philosophy, Even at the Expense of Short-Term Financial Goals

 Don’t Let Business Decisions Undermine Trust and Mutual Respect

 Use Self-Reliance and Responsibility to Decide Your Own Fate

 Create a Constancy of Purpose and Place in History

 Chapter 8: Principle 2: Create Continuous Process Flow to Bring Problems to the Surface

 Most Business Processes Are 90% Waste and 10% Value-Added Work

“A good place for any company to begin the journey to lean is to create continuous flow wherever applicable in its core manufacturing and service processes. Flow is at the heart of the lean message that shortening the elapsed time from raw materials to finished goods (or services) will lead to the best quality, lowest cost, and shortest delivery time. Flow also tends to force the implementation of a lot of the other lean tools and philosophies such as preventative maintenance and built-in quality (jidoka). A lean expression is that lowering the water level of inventory exposes problems (like rocks in the water) and you have to deal with the problems or sink. Creating flow, whether of materials or of information, lowers the water level and exposes inefficiencies that demand immediate solutions. Everyone concerned is motivated to fix the problems and inefficiencies because the process will shut down if they don t. Traditional business processes, in contrast, have the capacity to hide vast inefficiencies without anyone noticing.”

“How do you distinguish the value-added work from waste? Consider an office where engineers are all very busy designing products, sitting in front of the computer, looking up technical specifications, and having meetings with co-workers or suppliers. Are they doing value-added work? The answer is you cannot measure an engineer’s value-added productivity by looking at what he or she is doing. You have to follow the progress of the actual product the engineer is working on as it is being transformed into a final product (or service). Engineers transform information into a design, so you look at such things as 1) at what points do the engineers make decisions that directly affect the product? and 2) when do the engineers actually conduct important tests or do an analysis that impacts those decisions? When you start asking these kinds of questions, you re likely to find that typical engineers (or any white-collar professionals) are working like maniacs churning out all sorts of information. The problem is that very little of their work is truly value added, i.e., work that ends up actually shaping the final product.”

 Why Faster Means Better in a Flow

“The same logic applies to a business or engineering process… Take the right people who do the value-added work, line them up, and flow the project through those people with appropriate meetings to work on integration and you will get speed, productivity, and better quality results.”

 Takt Time: The Heart Beat of One-Piece Flow

“A similar thing occurs in any manufacturing or service operation. Make one particular department extra efficient and it can actually bury other departments in excess inventory and paperwork and slow them down, making a mess of things. So there is a need to coordinate activities.”

 Benefits of One-Piece Flow

 Why Creating Flow Is Difficult

“Why not have some inventory to make life a little more comfortable? Because whether it is a pile of material or a virtual pile of information waiting to be processed, inventory hides problems and inefficiencies. Inventory enables the bad habit of not having to confront problems. If you don t confront your problems, you can t improve your processes. One-piece flow and continuous improvement (kaizen) go hand in hand!”

 Chapter 9: Principle 3: Use Pull Systems to Avoid Overproduction

“A true one-piece-flow system would be a zero-inventory system where goods just appear when they are needed by the customer. The closest system Toyota has devised to achieve this is the one-piece flow cell that builds to order only at the precise time the product is needed. But when pure flow is not possible because processes are too far apart or the cycle times to perform the operations vary a great deal, the next best choice is often Toyota’s kanban system.”

 Push Scheduling Has Its Place

“The engineering of new products is a tightly scheduled operation, as I have described in Chapter 6.”

 Chapter 10: Principle 4: Level Out the Workload (Heijunka)

“The Toyota Way document refers to the elimination of Muda, Muri, Mura. The three Ms are:”

“It cannot be overstated. To achieve the lean benefits of continuous flow, you need Principle 4: Level out the workload (Heijunka) . Eliminating muda is only one-third of achieving flow. Eliminating muri and smoothing mura are equally important. Principle 4 focuses on muri and mura by leveling your product volume and mix and, most importantly, leveling out the demand on your people, equipment, and suppliers. Standardized work is far easier, cheaper, and faster to manage. It becomes increasingly easy to see the wastes of missing parts or defects.”

 Section II: The Right Process Will Produce the Right Results

 Chapter 11: Principle 5: Build a Culture of Stopping to Fix Problems, to Get Quality Right the First Time

 The Principle Stopping the Process to Build in Quality (Jidoka)

“Lean manufacturing dramatically increases the importance of building things right the first time. With very low levels of inventory, there is no buffer to fall back on in case there is a quality problem. Problems in operation A will quickly shut down operation B. When equipment shuts down, flags or lights, usually with accompanying music or an alarm, are used to signal that help is needed to solve a quality problem. This signaling system is now referred to as andon. Andon refers to the light signal for help.”

“Poka-yoke refers to mistake-proofing (also error-proofing or fool-proofing). These are creative devices that make it nearly impossible for an operator to make an error.”

 Keep Quality Control Simple and Involve Team Members

“At Toyota they keep things simple and use very few complex statistical tools. The quality specialists and team members have just four key tools:”

 Building in Quality in a Services Environment

“Toyota engineering provides one of the better examples of designing in quality within a professional services environment. For example, the extensive use of checklists and standards that will be discussed in Chapter 12 is one way to ensure quality at the source.”

 Chapter 12: Principle 6: Standardized Tasks Are the Foundation for Continuous Improvement and Employee Empowerment

“Standardizing tasks became a science when mass production replaced the craft form of production. Much of modern manufacturing and standardization is based on the principles of industrial engineering first set forth by Frederick Taylor, the father of scientific management.”

“Managers have a misconception that standardization is all about finding the scientifically one best way to do a task and freezing it. As Imai (1986) explained so well in Kaizen, his famous book on continuous improvement, it is impossible to improve any process until it is standardized.”

 Coercive vs. Enabling Bureaucracies Employee Empowerment

“Most bureaucracies are static, internally focused on efficiency, controlling of employees, unresponsive to changes in the environment, and generally unpleasant to work in (Burns and Stalker, 1994). But in organizational theory, bureaucracies are not necessarily bad. Bureaucracies can be very efficient if the environment is very stable and if technology changes very little. However, most modern organizations try to be flexible and organic, meaning focused on effectiveness, adaptable to change, and empowering of their employees. Organic organizations are more effective when the environment and technology are changing rapidly. So it would appear, since the world around us is changing at the speed of thought, that it’s time to throw out the bureaucratic standards and policies and create self-managing teams to be flexible and competitive. The Toyota Way follows neither approach.”

“The key difference between Taylorism and the Toyota Way is that the Toyota Way preaches that the worker is the most valuable resource not just a pair of hands taking orders, but an analyst and problem solver. From this perspective, suddenly Toyota’s bureaucratic, top-down system becomes the basis for flexibility and innovation. Adler called this behavior democratic Taylorism.”

 Chapter 13: Principle 7: Use Visual Control So No Problems Are Hidden

 The Principle Clean It Up, Make It Visual

“In Japan there are 5S programs that comprise a series of activities for eliminating wastes that contribute to errors, defects, and injuries in the workplace. Here are the five S’s (seiri, seiton, seiso, seiketsu, and shitsuke, translated into English):”

  1. Sort: Sort through items and keep only what is needed while disposing of what is not.
  2. Straighten(orderliness): A place for everything and everything in its place.
  3. Shine (cleanliness): The cleaning process often acts as a form of inspection that exposes abnormal and pre-failure conditions that could hurt quality or cause machine failure.
  4. Standardize (create rules): Develop systems and procedures to maintain and monitor the first three S’s.
  5. Sustain (self-discipline): Maintaining a stabilized workplace is an ongoing process of continuous improvement.

 Visual Control Systems Are About Improving Value Added Flow

“Visual control goes beyond capturing deviations from a target or goal on charts and graphs and posting them publicly. Visual controls at Toyota are integrated into the process of the value-added work. The visual aspect means being able to look at the process, a piece of equipment, inventory, or information or at a worker performing a job and immediately see the standard being used to perform the task and if there is a deviation from the standard.”

“Examples include kanban, the one-piece-flow cell, andon, and standardized work. If there is no kanban card asking to be filled on a bin, then the bin should not be there. The filled bin without a kanban card is a visual signal of overproduction. A well-designed cell will immediately reveal extra pieces of WIP through clearly marked places for the standard WIP. The andon cord signals a deviation from standard operating conditions. Standard task procedures are posted, so it is clear what the best-known method is for achieving flow at each operator’s station. Observed deviations from the standard procedure indicate a problem.”

 Chapter 14: Principle 8: Use Only Reliable, Thoroughly Tested Technology That Serves Your People and Processes

 People Do the Work, Computers Move the Information

 Section III: Add Value to the Organization by Developing Your People and Partners

 Chapter 15: Principle 9: Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others

“In fact, it seems the typical U.S. company regularly alternates between the extremes of stunningly successful and borderline bankrupt.”
[!!! read the Innovator’s Dilemma]

 The Principle Growing Your Leaders Rather than Purchasing Them

 First Lesson of Management Putting Customers First

“At Toyota, formal authority is typically one level up from the responsibility. This forces the person responsible, who has no formal authority, to defend his or her ideas, work through other people, and convince the person with formal authority that the ideas are correct. The only defense for taking action is to present the real facts of the situation to the formal authority. This process forces managers either to uncover the facts and develop a compelling case for their position or to go out on a limb and prove they are right through demonstrated success.”

(Figure 15-3: Toyota leadership model) “The least effective manager in this model is top-down and has only general management expertise the bureaucratic manager. This characterizes a large portion of U.S. managers. How effective can you be if you are trying to run the organization through command and control without any intimate understanding of what is going on? Your only choice is to make a lot of rules and policies and measure performance relative to those rules and policies. This leads to metrics-driven management that takes the focus away from satisfying customers or building a learning organization.”

“By contrast, the Toyota leaders, by having a combination of in-depth understanding of the work and the ability to develop, mentor, and lead people, are respected for their technical knowledge as well as followed for their leadership abilities. Toyota leaders seldom give orders. In fact, the leaders often lead and mentor through questioning. The leader will ask questions about the situation and the person’s strategy for action, but they will not give answers to these questions even though they have the knowledge.”

 Chapter 16: Principle 10: Develop Exceptional People and Teams Who Follow Your Company’s Philosophy

 The Principle: Developing Excellent Individual Work While Promoting Effective Team Work

“Talk to somebody at Toyota about the Toyota Production System and you can hardly avoid getting a lecture on the importance of teamwork. All systems are there to support the team doing value-added work. But teams do not do value-added work. Individuals do. The teams coordinate the work, motivate, and learn from each other. Teams suggest innovative ideas, even control through peer pressure. Nevertheless, for the most part, it is more efficient for individuals to do the actual detailed work necessary to produce a product. Teams can coordinate in meetings, but in most cases, not a whole lot of the detailed work gets done if individuals spend all their time in meetings.”

 Developing Teams at Toyota: Not a One-Minute Proposition

“One surprise I had when I was visiting the Hebron operation was the frequent reference to situational leadership that they had learned from Ken Blanchard, famed author of The One-Minute Manager.”

 At Toyota, Everything You Learned in School About Motivation Theory Is Right

 Internal Motivation Theories
 External Motivation Theories

 Chapter 17: Principle 11: Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve

 Section IV: Continuously Solving Root Problems Drives Organizational Learning

 Chapter 18: Principle 12: Go and See for Yourself to Thoroughly Understand the Situation (Genchi Genbutsu)

“Observe the production floor without preconceptions and with a blank mind. Repeat why five times to every matter.” ~Taiichi Ohno (as quoted in The Toyota Way document)

 The Principle: Deeply Understanding and Reporting What You See

“Literally translated, Genchi means the actual location and genbutsu means the actual materials or products. But genchi genbutsu is interpreted within Toyota to mean going to the place to see the actual situation for understanding. Gemba is a term that has become more popular. It refers to the actual place and means about the same thing as genchi genbutsu. The first step of any problem-solving process, development of a new product, or evaluation of an associate’s performance is grasping the actual situation, which requires going to gemba. Toyota promotes and expects creative thinking, and innovation is a must, but it should be grounded in thoroughly understanding all aspects of the actual situation.”

“There are many stories about the famous Ohno circle. I was fortunate to speak in person with Teruyuki Minoura, who at the time was president of Toyota Motor Manufacturing, North America. He had learned TPS directly from the master and part of his early education at Toyota was standing in a circle:”

 Hourensou Rapid Genchi Genbutsu for Executives

“As president of Toyota, Cho had to learn to rely more on trust than he did in the days of running a few manufacturing plants. He doesn t have the time to go and see everything for himself. Instead, he surrounds himself with people he trusts and, by default, goes and sees secondhand through them.”

“But he also uses a method called hourensou to keep in touch with what is going on. It seems almost antithetical to genchi genbutsu, but if practiced right it can be an efficient way for an executive to accomplish the same thing. Hourensou is a Japanese word made up of three parts: hou (hou koku to report), ren (renroku to give updates periodically), and sou (sou dan to consult or advise). To serve some of the genchi genbutsu functions, senior management uses hourensou, which is common within top Japanese companies.”

 Chapter 19: Principle 13: Make Decisions Slowly by Consensus,Thoroughly Considering All Options; Implement Rapidly (Nemawashi)

 The Principle: Thorough Consideration in Decision Making

“For Toyota, how you arrive at the decision is just as important as the quality of the decision. Taking the time and effort to do it right is mandatory. In fact, management will forgive a decision that does not work out as expected, if the process used was the right one.”

 A Great Deal of Learning up Front Makes for Easier Decision Making

 Chapter 20: Principle 14: Become a Learning Organization Through Relentless Reflection (Hansei) and Continuous Improvement (Kaizen)

“We view errors as opportunities for learning. Rather than blaming individuals, the organization takes corrective actions and distributes knowledge about each experience broadly. Learning is a continuous company-wide process as superiors motivate and train subordinates; as predecessors do the same for successors; and as team members at all levels share knowledge with one another.” ~The Toyota Way document (2001)

“The beginning of the 21st century has continued the turbulence, uncertainty, and intense competition of the end of the 20th century. Long gone are the days when a company could set up shop, make a product well, and then milk that product for years, hanging on to its original competitive advantage. Adaptation, innovation, and flexibility have knocked this old business approach off its pedestal and have become the necessary ingredients for survival as well as the hallmarks of a successful business. To sustain such organizational behavior requires one essential attribute: the ability to learn. In fact, the highest compliment we can pay to a business in today’s business environment is that it is a true learning organization.”

“Peter Senge popularized this concept in his book, The Fifth Discipline, over a decade ago, defining a learning organization as a place (Senge, 1990): ”…where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together.“”

“Senge focuses on new patterns of thinking and learning to learn. In other words, a learning organization does not only adopt and develop new business or technical skills; it puts in place a second level of learning how to learn new skills, knowledge, and capabilities. To become a true learning organization, the very learning capacity of the organization should be developing and growing over time, as it helps its members adapt to a continually changing competitive environment.”

 The Principle: Identify Root Causes and Develop Countermeasures

“Ultimately, the core of kaizen and learning is an attitude and way of thinking by all leaders and associates an attitude of self-reflection and even self-criticism, a burning desire to improve. Westerners view criticism and admitting to a mistake as something negative and a sign of weakness. Westerners are often eager to blame others when something goes wrong. The attitude of the buck stops here is the exception, not the rule. It is just the opposite within Toyota. The greatest sign of strength is when an individual can openly address things that did not go right, take responsibility, and propose countermeasures to prevent these things from happening again.”

 Getting to the Root Cause by Asking Why? Five Times

“Taiichi Ohno emphasized that true problem solving requires identifying root cause rather than source; the root cause lies hidden beyond the source.”

“Keep asking why until the root cause(s) are determined. Take countermeasures at the deepest level of cause that is feasible and at the level that will prevent reoccurrence of the problem.”

 Practical Problem Solving in Seven Steps

[Figure 20-3 Toyota’s practical problem-solving process]

 Process vs. Results Orientation: The Role of Metrics

“Believing they can get any behavior they can measure, companies wishing to emulate Toyota’s system often ask me about its metrics. To their inevitable disappointment, they learn that Toyota is not particularly strong at developing sophisticated and common metrics across the company.”

There are at least three types of measures at Toyota:

  1. Global performance measures how is the company doing? At this level, Toyota uses financial, quality, and safety measures very similar to those used by other companies.
  2. Operational performance measures how is the plant or department doing? The people doing the work at the work group level or the project manager’s level painstakingly track progress on key metrics and compare them with aggressive targets. The metrics tend to be specific to a process.
  3. Stretch improvement metrics how is the business unit or work group doing? Toyota sets stretch goals for the corporation, which are translated into stretch goals for every business unit and ultimately every work group. Tracking progress toward these goals is central to Toyota’s learning process. Again, Toyota does the tracking at the work group and project level. The measures are very particular to what the teams are trying to accomplish.

“The most important learning measurements track progress toward stretch improvement goals, which is the process called hoshin kanri.”

 Part Three: Applying the Toyota Way in Your Organization

 Chapter 21: Using the Toyota Way to Transform Technical and Service Organizations

 The Problem of Identifying Flow in Service Organizations

“In service organizations, the work is often organized around projects that vary widely in size, complexity, number of people involved, and lead time. But if you start with the customer, define value, and then map the process that adds value to the customer, identifying workflow can be more manageable.”

“Often this is information inventory, rather than physical inventory, so it is more difficult to determine the amount. The key importance of physical inventory is how it causes a delay in the process, not the amount of physical inventory itself. And so it is for information inventory when information is produced before it is used and builds up waiting, the main issue is time delays, just as with physical inventory.”

“A proven method used in lean manufacturing is value stream mapping, which was adapted by Mike Rother and John Shook (1999) from Toyota’s material and information flow diagrams. The value stream map captures processes, material flows, and information flows of a given product family and helps to identify waste in the system.”

“Service processes are often complex and involve hundreds or thousands of activities. If you try to map everything all at once, it leads to a mess. However, by developing a big-picture, macro value stream map of the current system, you bring everyone together to agree on all the waste in the processes.”

 It’s All About Supporting the Core Value Stream

 Chapter 22: Build Your Own Lean Learning Enterprise, Borrowing from the Toyota Way

“One man did his part, and the other his, and neither even had to check to make sure both parts were getting done. Like the dance of atoms Alvin had imagined in his mind. He never realized it before, but people could be like those atoms, too. Most of the time people were all disorganized, nobody knowing who anybody else was, nobody holding still long enough to trust or be trusted, just like Alvin imagined atoms might have been before God taught them who they were and gave them work to do…. It was a miracle seeing how smooth they knew each other s next move before the move was even begun. Alvin almost laughed out loud in the joy of seeing such a thing, knowing it was possible, dreaming of what it might mean thousands of people knowing each other that well, moving to fit each other just right, working together. Who could stand in the way of such people?” ~Orson Scott Card in Prentice Alvin: The Tales of Alvin Maker, Book Three

“The toughest and most basic challenge for companies that want to learn from Toyota is how to create an aligned organization of individuals who each have the DNA of the organization and are continually learning together to add value to the customer.”

“Below the surface is the Toyota Way culture. In fact, Toyota takes a textbook approach to developing culture. Edgar Schein, one of the leaders in analyzing and understanding culture, defines culture this way: "The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”“


 Commentary

I see modern management as being defined by a series of manufacturing revolutions. This book is the quintessential description of one of those revolutions, Lean. Lean was pioneered by Toyota, and IMHO is now the dominant management philosophy. That makes this an important book to read, and I would say it lives up to its expectations. But I also like to complain, so some of the following commentary will be negative.

My first general complaint is that this book often sounds preachy. Yes, I understand Toyota is a revolutionary company, but (1) you don’t always have to say it, and (2) they can’t be perfect all the time. For example, Liker frequently writes things like: "Companies are hopelessly behind Toyota in their understanding of TPS and lean.” This is true, but rarely needs to be stated. The fact that I’m reading the book is evidence enough that my understanding of TPS and lean is hopelessly behind Toyota!

My second general complaint is that I need anti-examples. This relates to (2), nothing is perfect. What are the downsides of TPS and lean? In what scenarios does it not make sense to apply TPS and lean? There must be answers to those questions, but this book doesn’t do a good job exploring them. For example, in the chapter of supplier relations, Liker writes:

“There were also some concerns about Matsushita’s quality control discipline and if the level of quality required for this new, complex battery was too high for what Matsushita was used to. Fujii was reassured when he found a young Matsushita engineer one day looking pale. He learned he had been working until four in the morning to finish some battery tests. Yet he had come back in the next day to make sure of just one thing (Itazaki, 1999, p. 282). At that point Fujii realized that there was a Matsushita style that could work together with Toyota’s style. Ultimately, the two corporate cultures did complement each other and produced a world-class hybrid vehicle battery.”

Liker spins this as positive, but it seems like a negative to me. If being a supplier for Toyota means working until four in the morning for multiple days in a row, then I’d say something is dangerously wrong with Toyota’s supplier relations.

This reveals my biggest complaint of TPS: it seems like it over-relies on human-resources, in particular time. Liker included an interview (about genchi genbutsu) with Don Jackson, a Toyota VP, where Jackson said: “Typically my average day is 10 to 12 hours. I usually start out on the production floor around 8:00[am].” This seems hypocritical to me. The Toyota Way preaches the elimination of Muri (overburdening), but consistently working 10 hour days sounds overburdening to me. In some sense, time can be thought of as a manager’s inventory. Using more time than necessary is a form of overproduction, which is an indication of waste in the process. This waste should be eliminated. Employees shouldn’t be working 10 to 12 hours a day. That doesn’t represent passion, it represents waste in the process.

Ending on a high note, I’m super happy that Liker quotes Orson Scott Card in the final chapter. That was a beautiful passage.

 
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