The Toyota Production System: a milestone and revelation in human affairs, or just a rightward shift of the supply curve?

About a year ago, I happened upon the video above and it reminded me of the revelation that the Toyota production system was to me when I first encountered it in 1983. I was working for Industry Minister John Button and reviewing Australia’s car industry and wondering how to reform the hornet’s nest of protectionist regulation that the industry had been entangled in since local content plans were first introduced in the 1960s. (One of the main instigators was Sir Charles McGrath who – from memory – combined his chairmanship of major car parts manufacturer Repco and the Victorian branch of the Liberal Party to great effect. But I digress.)

In any event, the Japanese had quadrupled labour productivity in a decade or so with this new socio-technical system. Toyota was a major influence on much of the language of management we still hear today – flat structures, empowering workers and so on. But it’s easy to say these things. They demonstrated beyond a shadow of a doubt that they had made them work.

The Toyota production system was for me – a pragmatic step up in human evolution – a step on the ‘high road’ which plays to the better angels of our nature, and shows how this can give us lives that are better in every respect – more respectful, purposeful, intelligent, autonomous and productive than the alternative, previous Fordist or Taylorist model of production. This was Adam Smith’s aspiration for economics. I’m still amazed that economists took so little interest in it. They simply note it’s a rightward shift of the supply curve and move on.

Anyway, if you bother to watch the video (and I sympathise as I don’t like watching videos – you can at least listen to it while you do something else) I hope you’ll find it as compelling as I did. You may not, but I liked its ‘daggy’ quality. There’s no hoopla about this guy and indeed some unease about talking about ‘leadership’ in the vacuous and hyped up way we do now.

I think the ideas implicit in the Toyota production system represent a synthesis of ideals and practicality that is incredibly rare and hugely valuable.

As is my recent practice, I’ve got my robopeeps to do a transcript of the talk which I’ve reproduced over the fold (mistakes and all) in case you want to zip through it to find what might be of interest to you a little faster.


Bill and Ron and industry week and TBM a long time reader of industry of your publications and I’ve known TBM for a long time and you guys do a great job as to a lot of the people that are here. As both Bill and Ron said manufacturing is not going away in this country. 

And we’re going to do our best to make sure that it stays here. This is the cover from the book one of the books that I just did that Bill mentioned hence the kind of funny title of the talk managing to learn. It’s a kind of a play on words. 

Managing so with it as we manage I think one of the things we want to do is be learning all the time ourselves as managers and also helping our people learn as well, but it’s also got the play on the word there that just trying to manage to learn. 

Sometimes in the heat of the heat of battle every day, especially the way times are now it’s hard to stop and take time to reflect and sometimes we can just kind of barely hold on to get things done much less take time to learn as we go about doing things. 

Now, let me make sure everything works here. Let’s see already. I’ll see the monitor is not. Working. The timer’s not on I bet if I push something here to come on. Not sure what there goes there it goes, it’s getting set. Always got to make sure the technology is is okay first of all. 

So this is from my hotel room. I stayed at the Hilton last night, which is nice. And it’s fun to be here how many of you are local? From Nashville area. Let’s see a few hands went up. I’m gonna test this how many of you are not local. Okay that was a test And how many people logo I’m actually from about I was born about an hour west of here and lived there until I was I don’t know eight years old and was lived really all along the Tennessee River until I left in 1980 to go to Japan. 

So when I used to come to Nashville back in the 60s and 70s, I didn’t look anything like it does today. So a quick plug for Nashville for those of you who are going to stay here. So we’re over there in in your left-hand corner and along the block there on the middle of there’s Tootsie’s Orchid Lounge. 

And when I was here in the sixes and seventies, I think that and Ernest tells the record shop where the only things that we’re here other than a couple of very CD bars that most of the upstanding people here in this room would not want to go to. So it’s changed a lot and it’s it’s a great thing to see I left Tennessee in 1980 to go work in Japan. 

Well, first of all when it’s a long story, I won’t get into that. Anyway, what I’m gonna do is talk about Toyota a little bit today. But a couple of things about it the turret is not perfect never was never in titten it never intended to talk about it as if it is and I didn’t just start using this slide after they’re downturn of the last six months. 

I’ve been saying this for years to it is a great model for us to learn from. They had an incredible run of success and I’m sure they’re gonna come back from the current troubles. Not only was there run a success incredible, they work in ways that are very different from any other company that I found that many of us have found thank you for fixing the monitor that that many of us have found. 

I happened into it. I went to Japan first time over 30 years ago I visited Nissan not Toyota actually and Nissan just down the road and I think they’re a host of some of the tours this time also great company 1977 with the first time I went to their Zama plant and decided then in there. 

I wanted to go work in Japan. I wanted to go work for the biggest most Japanese company. I could find and as luck would have it. I landed at Toyota in 1983. I didn’t know they were anything special really at the time they were just another Japanese company they were big they were Japanese now we’re gonna learn about all those wonderful Japanese. 

Man as my techniques people talked about back then because I’d read all these books that Japan was supposed to be great and I was gonna go learn about it and bring it back many many years of learning since then I found out there’s nothing so special about Japanese management per se but turns out there was something about this company the point is is I talk about it as we learn about Toyota’s not really them it’s not about the cars, but as a matter of fact it’s about the way they manage and the way they operate it is a different than other companies and it’s something that we can learn and benefit from. 

So I will talk about them but not trying to say they’re perfect or that we want to copy them exactly or try to be there what we’re trying to do is change our companies bill talked about the the kind of change that that companies are undergoing especially now on these turbulent times and I’m going to consider everyone in this room a leader we have CEOs in this room and we have plant floor leaders in this room, but we’re all leaders at some level of our organizations and as I go around I get this question a lot. 

And it’s sometimes directly sometimes it almost always indirectly which is John I get it. I know what to do. I get this stuff. I read lean thinking was seen to change the world. I talked to Bill Schwartz once I don’t understand this but I can’t get my people to do it that’s my problem. 

I can’t get my people to do it the question that people come to me with and it’s how can you get how can I get my people to do this and so the question to you is how can you get others to do this to do lean? And I’m gonna suggest this really it’s a simple answer there’s only one way there’s only one way to do it. 

And we’ll get to that later but at first just to know what is lean and bill I don’t know that you but I think sometimes even after working with companies for a very long time or even after doing this for many years. I feel like at the at the beginning of the day and at the end we’re really just talking about what is lean anyway, what is it we’re really talking about and as I go around just a quick definitional thing up front, I see kind of two camps of people in terms of what they think lean is and one problem that is with the word lean and in fact, I saw it in one of the major newspapers just this past week, they were talking about one of the major company now that they’ve had. 

This. Crisis now they’re getting lean and of course what the reporter meant by that was this particular company was downsizing and that was about the extent of what they meant by getting lean and there is that narrow definition the tools cost cutting but there’s another broader definition that that I think at least bill and I think when we think of the word lean it’s much it gets into the thinking it’s very systematic is talking about the entire enterprise, it is a business system in itself and if that sense it’s very different that a lot of the other process improvement tools that are out there, it’s not just a collection of tools it’s more than that. 

So I won’t belabor this point it is an economic crisis right now and there is a danger that a lot of people are just gonna go cost cutting or hunker down and try to cut costs and just hold on to this this this this thing ends and I think that’s very much the wrong strategy. 

I think that’s gonna hurt us a lot. So it’s a time maybe to think about some lean history lessons you know this is an economic crisis Toyota in fact the Toyota we know today was born out of a an economic crisis. Toyota’s early days go back to about the year 1950 the Japanese economy was in total shambles. 

Toyota was making that town about a thousand units a month thousand cars and trucks big cars little cars bigger trucks little trucks now a thousand units a month for those of you who don’t know the auto industry that’s about what you make off one assembly line in one day it even at that time for any of the Detroit big three. 

Are for there were four at that time not sure they were making a thousand vehicles a month a day off even one assembly line and there were dozens and dozens of assembly lines so you couldn’t compare the economies of scale that you could try to obtain in addition to only making a thousand a month, they had to make the big ones in the little ones the cars and the trucks so they had to somehow deal with lower volume in high variety and they were at that time just struggling to be able to keep up with Nissan Nissan was actually a little bit bigger a little head where they were the stronger situation and Toyota like to make cars they didn’t know how to sell them so that They’re in horrible debt and the banks refused along the many more money and in the face of that situation when the company basically was going under that’s when the founder of the company keeps your Toyota said to AG Toyota the person who later became the chairman and who really built the Toyota manisment system who then said to Tai Chiono the famous inventor of Taylor production system, we want to catch up with Detroit in three years totally out of the question to preposters completely impossible to catch up with Detroit three years, but this is what he said to do and I’ll suggest that that’s this is the time we also be needing to thinking. 

Thinking out of the box thinking very aggressively, that’s what Toyota did at that time and what Toyota came up with then was a system for success even in a day on market, this is something that’s missed by a lot of us today is as we look to Toyota and other lean companies for lessons. 

Toyota production system is a system for success in a down market. I’ll suggest that even Toyota forgot that in the last 10 years and that’s one of the reasons they’re in trouble now. But one of the things they said to a leader said at that time was it’s easy to make money when everyone’s making money. 

The key is to be able to make money when times are bad. So when the sea is rising off all boats rise it’s when the sea starts going down you have this turbulent water That’s when you can separate the really lean companies from those who are just fashionably lean who are trying it out as the late as the latest fat. 

You see a little icon up there. That stuff from another book that I helped with the translation of this book called The Birth of Lean. It just came out and if I could stop just one minute, I’ll check my twinsky from the Lean Enterprise Institute is here. He’s got some samples there in the back of the room because I think we’re the lean institute is offering a 15% discount on on these three books for the people they’re here at the conference. 

I think you can pick up. A flyer or something at the back of the room if you want. But this just tells the story of to us thinking when they develop their system back in the 19 early 1950s and for people who think it was smooth sailing this is the photograph of the labor strikes that they had in 1950 because they couldn’t since they had no money one of the things they couldn’t do is meet payroll. 

They could pay people they ended up having to lay off about a third or fire about a third of the workforce. But as they did there instead of just firing him downsizing and leaving and calling that lean they did a couple of things. First of all management also left. 

It wasn’t only the labor the union folks that got the fired Management fired themselves as well, even that founder of the company that I mentioned keychuro Toyota fired himself. He invited himself in his senior leadership team. In addition, they sat down with labor finally and said we need to be into this together and create a shared destiny. 

And that was the beginning the real beginning of two of the success and the two of the production system from just Downsizing to share destiny and this is what shared destiny meant they went to the union and said we need you to support us in doing Kaizen We need you to support us in developing and making improvements in eliminating waste and the unit said if that’s what can guarantee our job security us management and us together, that’s what we’ll do. 

So the shared destiny is what led to the sense of shared destiny and commitment to share destiny is what led to the Toyota production system and this is the Toyota production system house. I won’t go into these details. I think you’ve all seen this before if you haven’t. I think you take a look at it. 

But it’s the kind of a simple. Graphic that shows the Toyota production system as an overall system. You see at the top there the goals quality costs and lead time, which was what they started out with. Of course, you have to add safety and morale. The rest on a two pillars there there’s the just-in-time pillar which is the flow pillar so any of you here is studied theories of constraint or some theory of constrained or things like that that’s a way of achieving flow. 

That’s what just in time is that’s the flow pillar. How can you get things to flow from beginning to end? The other side jidoka that means building in quality so those of us who study different quality systems, this is what the way Toyota decides we’re gonna build quality into each process. 

Then at the bottom all this on a foundation of standardized work and Kaizen you have standards but you’re always improving those always improving those things the flip side the two sides. Yncing. You can’t have standardized work that’s gonna stick without Kai’s in and you can’t have Kaizen unless you have standardized work as a foundation two sides of the same coin so what you see then is something that looks like a system you take away one pillar nothing hold up the roof take away the foundation nothing to hold a pillars, so it’s kind of an elegant little thing so just when I joined Toyota 1983 this gave us an easy way to explain to people around the world what it is, we were trying to do and most important in the middle there you see people. 

Both two things about people being in the middle there one is the kind of surrounding comforted by the house okay and another that the dynamic that makes the house work that even creates the house at the same time so I won’t don’t want I won’t go in the details of that except to say through about 20 30 years a lot of hard work through trial and error they put that system in place developed it and when I joined in 1983 in Toyota City, I landed in Toyota City 1983 wanting to work for the biggest most Japanese company. 

I could find I had learned to speak Japanese language to some degree and those of you who are in East Tennessee the mid-1970s might remember. The dead. East Tennessee in the 1970s was not a great place to try to learn the Japanese language. I when I graduated from the University of Tennessee, I never met a Japanese person no connection which panel whatsoever but inside of that’s what I wanted to do. 

I learned the lane was a little bit the degree that you can learn it you’ll take from taking classes landed there at 83 ready to work. When I got to Toyota what they wanted me to do the only reason they hired me I was the only I was the first non-Japanese to work in Toyota City as a regular employee, they only hired me because they needed me they needed someone to help them transfer their system overseas and so many of you. 

I’m sure have heard about the the new me success story California 50 joint venture between Toyota and General Motors, this is a photograph from that a group of people that work there so with this it’s from internal success of the Toyota production system inside Toyota in Toyota City Japan to now starting. 

83 we’re gonna globalize we’re gonna take this system around the world and see how we can do it how we can do in my job was to help them do that so this photograph. I don’t think you can see it but there’s a date on it that says 1980 June 1984, this is the first group of plant floor supervisors to come from Numi to visit Toyota city in Japan to learn about TPS now a lot of these people were considered to be troublemakers about half of the the number of the folks you see in that photo are actually union people and many of them are union members of the old GM plant in Fremont. 

The plant we took over that was considered by GM to be its worst plant in the entire GM global system. Now any of you you know, remember back to the early 1980s would remember that to be to be Jim’s worst plan in the early 80s with saying something. You got to be pretty bad to be the very worse so this was certified worse they did a quarterly quality audit in this plant always came at the very bottom the hundreds of work sites the GM had worldwide this came out of the very bottom always with the bottom three was competing with two others always. 

And this with the plant we were gonna take over he was the worst quality and also considered the worst workforce, this is the workforce that would go out and illegal strikes it would intentionally sabotage quality. Again, if you study lean, you know, the lean begins with quality you have to build quality in it every step that’s where you begin if you can’t do that you can’t do the rest of it and this was not only is a workforce that you thought might not support us in building and quality they would sabotage it this plant. 

As we took it over with the same workforce the exact same people on working on the assembly line all the way stamping through the body shop through welding through paint and assembly through with the exact same people went from the very worst quality in GM system to in one year because this is June 1984, we just hired these people we built our first car in December 1984 in the first quality audit GM every did this plant set a record. 

The very best quality score any GM plant had ever gotten. Now that wasn’t just a 10 or 20 percent improvement here there this was across the board total transformation including a cultural transformation the very same people that we were told we’re troublemakers and works are will make us in the old days now they were the biggest supporters of the system that you could find so for the last 25 years. 

I’ve known that this will work this will work for American industry, this is why I went to Japan to learn this and I assume within a year or two bill and everyone else that this would be all over North America. A little you know and here it is 25 yet years later in a lot of us are still struggling still working to do this and I think a lot of that must have to do with what Ron and industry we’ve talked asked me to talk about today which is leadership so a question that that’s that’s naturally comes up is what is the role leadership in this and why you see here’s a photograph also from 1984 are the first leadership team from anime that visited Toyota city 19, it’s spring of 1984, and if you can see the photograph is I’ll call your attention to the tall fellow in the middle with the mustache, that’s Gary Kondus, we just hired him for full. 

Word he was a plant manager at Ford and we hired him as our senior production manager, he was general manager of the plant and his role then was to bring his leadership team to learn this system himself and to help bring his leadership team along and that’s what the the that’s the team that you see there now explore that little bit further. 

I’m gonna share with you. A quick view of kind of three models of leadership, this is this isn’t meant to be real academic or something but just real quick. I think everybody here this worked very long at all you’ve had at some point your career maybe early on kind of a dictator for a boss someone who said I’ll decide do it my way. 

On the other hand as we worked over the years probably now you may have a boss or you may be a boss since we have bosses here it’s kind of on this other extreme 1080 degrees opposite that says you decide it’s up to you. I don’t care it’s a laissez fairest type of manager says here’s the goals here the objectives, okay, you do it, it’s up to you if it goes well, let me know if it doesn’t go well that’s too bad for you. 

Kind of. Lays a fair sort of thing started in I guess the seven just so and honestly in my view that kind of leader is really more common nowadays, although honestly what we have a lot of time is confusion someone who’s a dictator or one day and one day and then kind of a lays a fair manager on the other what I’m going to suggest is that the lean style of management that I saw of the good managers at Toyota and I want to I don’t want to say that they’re all that, you know, the hundred percent perfect managers but other good ones. 

It’s a different kind of a leadership it meets in the middle yes but it’s not just a blend of those two it actually goes off at a right angle it’s it’s a leadership style that says follow me because people want elite someone to take leadership instead direction, they need that they have to have that but also says we’ll figure this out together follow me and we’ll figure it out together that’s the leadership style I saw and here’s the way I saw it put when I first started getting a kind of getting my head around this back 25 years ago, the head of the plant was Gary Convis says I mentioned the overall ahead of the overall operation. 

Was a Japanese boy named Mr. Higashi and so Michigan all bosses are mentors in the Toyota system your job is to develop your people always and miss you guys’s job enlisted developed care Gary and in the spring of not you need to forward. Gary said this mystery guy she said this to Gary I want you to lead the organization as if you have no power. 

Lead the organization as if you have no power. Now that as if is very important. Gary had power he was a plant manager he could do a lot of things but he’s being coastal leaders if you have no power now. Gary came to me at that time. Said you know okay John you’re supposed to you know you’re you’re working here on you’re for Toyota and supposed to kind of be helping helping coach through this stuff what does this mean? 

I said, I have no idea no idea what this means. I’ve been there about six months at that time. I was still learning about this but admits something very very important. I found out as I started figuring out in the years ahead. I spent five years in Toyota city working there first the the the newly project and the Kentucky project Canada the different projects around the world where I was helping transfer the Toyota production system overseas. 

And in my five years at Toyota almost never was I told exactly what to do almost never. That’s pretty amazing what’s also amazing is it took me three years to realize that to me three years to kind of realize that you know, something’s interesting is going on here if the three-year point I went to my boss and I said I just noticed something. 

He said why and by then I realized that I was kind of being taught by this socratic method people giving you assignments and questions and making you think so I knew you and you know what happens if you’re ever if you if you’ve ever had asocratic method kind of a mentor, would you ask him a question what happens is you get a question back and so if you have a thought through your question you end up feeling kind of silly, so I thought it through and I went to him and I said I just noticed something he said why and I said well, I’ve been here three years and no one is ever really told me exactly what to do no one has ever given me a solution to a certain problem and told me what to do how to do it. 

Now the first thing he said was. So it took you three years to figure that out. And I said yes and part of because you never really set me down to explain it to me. And here’s another the reason it took me three years to figure it out because at the same time no one was telling me what to do. 

I wasn’t just free to do what I wanted. And that gets to be a very interesting thing. What happened was I was given clear responsibility to propose countermeasures to propose solutions to problems that I owned. In my bosses my mentors, my my seniors, we’re gonna do everything they could not to give me the answer that we’re gonna ask me questions give me assignments so I can go find out the answer for myself. 

And whenever in my boss said to me when I during that conversation something I’ll never forget. Said after the little going back and forth the why didn’t you notice this sooner he said John whenever you tell someone what to do, you take the responsibility for that action away from them. 

And I thought shortly after reflecting on that and I still think now 25 years later that that’s an absolute human truism. It’s got absolutely nothing to do with Japan as far as I know Socrates and everyone’s fan. But it doesn’t mean you just turn people through but the free but whenever you tell someone what to do you absolutely take responsibility you take ownership away you give them a built-in excuse. 

And if we go back to the old dictator style of managers, they do that all the day all the time all day all the time every day, they’re basically we’re telling people what to do taking where the ownership and then later we complain that people don’t take ownership, but they don’t take responsibility but we’re taking away by the way, we manage. 

But the other thing we do is just turn people loose and say, okay, you just figured how to do it on your own and then people don’t get developed. What I was given instead and this was the key to the system the the term asthma system is I’ve come to understand it, you’re given clear responsibility responsibility not being just lost which as it is and most organizations. 

I know you’re proposing countermeasures to problems that you own. And what I’m so of all the things that are they’re famous about the Toyota production system this probably ought to be the most famous because I’m suggesting that they’re way of managing. Solves an age-old dilemma of all large organizations or even medium size or probably even small organizations With the problem you know there’s all these books about organizational theory about leadership and all that. 

And wonderful books and everything but actually organizations the organization problem comes down to one very simple dilemma which is you can’t have one piece one person tilling ten thousand people what to do when or one thousand people or even a hundred people you can’t have one person telling a thousand people what to do when but the flip side of that is also true is a big but there you can’t have a thousand people just doing what they want when they want to. 

From there’s where we get all this organizational theory, we get hierarchies you get line up, you know span of control and it kind of supposed to break down into a big pyramid. What I’m suggesting is the way Toyota works by having people take ownership and propose solutions. It makes that hold the limo melt away. 

Provides extraordinary focus, you get the direction you get the control that you need at the same time maximum flexibility because no one’s telling anyone exactly what to do. It resolves that dilemma the age-old to limb of all large organizations of control versus flexibility of having the right direction versus the adaptability that I think is if there’s a kind of a secret to a success that says, it’s just they had for many years. 

I think that’s it. And I want to emphasize something here. I think a lot of folks that visit Toyota and and see their leadership and management style. They see part of it, but you have to say a little bit longer to see all of it. In three days, you can see that people aren’t telling people quite what to do. 

But often that’s misunderstood is this kind of enlightened modern management where you’re Just to everyone is a you know, has her arm around each other and having meetings and everyone kind of going and doing what they want. It’s not like that. It’s it’s as different from this kind of commonly accepted notion of the enlightened modern manager that just gives objectives and then says I don’t care how you do it just as long as you get the knowledge you get the job done It’s just different from that as it is the old command and control dictator. 

It’s not command and control. And right now it’s it’s everyone, you know, denigrates command and control is it’s a bad thing. Everyone agrees with that. But I really never hear a real alternative to it. Other than some kind of vague notion that everyone will somehow just agree and everyone will will sing Kumbaya and do a good job. 

What we need to do is have leaders at every level sitting direction and developing people so that they have solutions making. Their own work. That I think is a solution and that’s the thing that Toyota. A man is to get done. So, I break it down into these two things maybe I oversimplify it here, but I don’t think so. 

I’ve been playing with this now for for several years. I’m a suggested lean leaders lean managers or any successful manager. Effective manager does two things. One is to get each person these person who works for you. So if you have ten people who work for you, if you have 20 if you have five you want to get each person to take initiative to solve problems and improve his or her work. 

So if it’s a worker on the line and they have a 60 second job 60 second cycle time in their job, they’re making improvements in that how to take out ways how to improve quality. How to improve their their service for their customer who is the following process If we have everyone doing that number one but number two make sure that the work they’re doing is aligned toward providing value for the customer and prosperity for the company. 

You have to have both of those things. If people just add improving things, but it’s not actually going to be adding value for the customer or prosperity for the company. That’s not going to do us any good. We need to have both of those things done. And it’s so if a manager can do those two things anything that’s left over becomes very very easy and even trivial I’m going to say. 

And here’s kind of a different way of saying the same thing. This is an old slide. That we used when I was there we used simple cartoon for training almost all the training we did we just use these simple cartoons pictures worth a thousand words. And this one is very similar to something you might have seen before in that it shows people climbing up a mountain, you know, a lot of times you see this similar drawing where the the person the front is is holding a flag and you get the top of the mountain and you put the flag on top of the mountain that says success or it says Kaizen or it says improvement or something like that. 

Notice in this case. You see is the leader turned around and pulling a road. So it’s a different kind of pool system if you will the leaders job is to develop the people. This is explicit and this is explicit understanding of what the leader’s job is at Toyota. Get the job done climb the hill climb the right heel the right path and develop your people and do those things at the same time. 

This is the this is the the trick but it all comes back to how you or any individual wants to lead and manage. If you want to be a command and control dictator, that’s fine you do that. I won’t tell you have to follow a lien path. I got out of the convincing game. 

Bill I left the convincing game years ago. So, I won’t try to convince you lean as the right thing to do. If you want to do lean then let’s talk about how to do it. Let’s talk about all the process side the tool side how to get it in place operationally and let’s talk about the management side is as well. 

But you had it has to be something you decide you want to do. So, how do you want to lead and manage in these turbulent times you’re in any times really? This is the central question. In a model I use for that is Mr. Cho, he’s currently the chairman of Toyota he was my boss years ago. 

I was just in Toyota about a month ago, he was out of town. I saw his one of his his top lieutenants. I tried to visit him about once every year to. And I’ve never been the CEO of a large organization and as I talk about leadership I always feel like I maybe should quote somebody who has been who is I saw Mr. 

Chow in a lot of different roles and during that time. I saw him be just an exemplary exemptler zippery, excuse me leader in weather in Japan or Kentucky weather in engineering or in the office or in the plant. And here the three things that he said, he says are the keys to lean leadership. 

First of all, go see. Sounds very simple but I think everyone here I think knows that often we don’t do that We sit around in room We try to solve problems from sitting in a room and talking about it And usually path the room where people haven’t even gone to see it and don’t necessarily know what they’re talking about. 

Now as he said senior man is with must spend time on the front lines, whether those front lines are in the factory or they’re in the dealership or they’re in the engine off engineering office, you have to go spend time on the front lines and as you do that, you need to ask why? 

Does he seek all is he caused to the wide technique? It’s kind of this to five wise but not just asking whatever you see something broken, but going to every situation in your organization saying, Why is this a current why are things happening as they are using the why technique daily. 

And third show respect. Respect the people in your system respect the customer respect all the stakeholders do these three things and you’ll be heading in the right direction. These are ways to accomplish those two things that I mentioned just a moment ago. And so these ourselves so simple let’s explore each one just briefly. 

Go see. So Tai Chi, no no the developer of TPS one of my favorite quotes of his he said data is of course important. But I place greater emphasis on facts. And you can think yourself what he might have meant by the about the difference between data and facts, but clearly what he means is what do we actually know of what’s going on not just numbers that we can’t that can be manipulated until a lot of different stories. 

What do we know what’s going on? You have to go see. And there’s a core Toyota view that almost to an irrational degree that folks at that company the leaders that I really respected at that company. Thought this way that you can understand everything that’s really important about a company by observing from a good spot on the plant floor. 

I don’t have to see your your your company HR statement a philosophy statement to know that if you really think your people are your most important resource. I can go to your factory and see how you treat your people that will tell me a lot more than any statements you have out of the HR department. 

I don’t have to read the financial statement that tells me how you’re spending money on on you capital I can go to the plant and actually see I can see how business is doing I can see that the if all the machines are humming they’re working whether idle I can go and I can see if those machines are actually supporting people to make their work easier or if they’re actually making the work harder at this harmony with the people that are there. 

I can see if this old equipment that’s broken down or old equipment is well maintained or new equipment that’s very actually difficult to use those things will tell me a lot more than anything. I could determine from any any documents. What really Toyota is trying to do is to use dimming’s old PDCA cycle management cycle, but use it with great diligence. 

PDCA is so easy to say. I think we you know, I think we forget how hard it is to actually do. But what we’re trying to do most places I go we people have an idea and we put it in place instead of PDCA it’s it’s a little period of Big D and then that didn’t work let’s have another idea and then go try that what we want to do is simply plan and do a check and the a is not abandoned it’s not planned to check abandon, that’s the that’s the next thing that I see a lot of places. 

Plan do check ask what we learned when we do our check not just check the box and see do we get our numbers right but then reflect on what we learn and make our adjustments in the standardize of that to go forward so it’s when you put those together that means PDCA with a dimming’s circle and what I mean by the dimming circle is the way he would actually train people in the old days bill you might have had this experience as well. 

I did. Since total believes you can understand everything important about a company from good spot on the planet floor, that’s the way they offer used to train people take a piece of chalk and draw a circle and plant floor and stay stand here and observe this operation until you understand it, it’s a great way of actually learning getting observational skills observation skills and in learning how things work but it also takes quite a long time and if we can put those two things together then I think then we can approach what I think is important about totals management style, which is this. 

Lean problem solving what you see here if you’re I’m sorry again if you can’t see this in the back of the room very well and I know we’ll make these slides available so so I’m not sure exactly how but industry week will make these slides available to you later but what you see is the quality room or engineering room or the improvement specialist room and people using various sophisticated maybe quality analysis tools figuring out what’s going on in their company, where’s right out the door at the gimbal, there’s a problem right here right now. 

And if there’s one Japanese word you might learn it’s it’s gimbal which means the real place where the real work is taking place that’s what we want to do is focus everything on where real value creating work is occurring and if we can get out of the room where we’re using our sophisticated tools and go help the workers having a problem right now. 

Then it becomes a lot easier it becomes a lot more effective and we can make true improvements and really change also the culture I think in our company because what what Mr chose said mr Joe was actually the person who led the development of that house that I showed a minute ago I mentioned before that through probably let’s say about 20 or 30 years about 30 years of trial and error a Toyota put together the Toyota production system it was after they did that they sitting back and looked at it and said, you know, we’ve created something here maybe we should call it something and be and learn and figure out how to articulate it how to explain it and that’s when in the early 70s that they started really calling it the Toyota production system and developed this house. 

Mr. chose the person who actually led the team that did that and what he told me was that the whole purpose of that house having those two pillars there and so leave take one pillar away the whole thing falls down was to be able to go into any work situation and be able to determine right now if things are normal or their abnormal. 

Are things normal as I expected them to be or are they different in fact can do that then I’m gonna be able to then solve problems and head things in the right direction and all this then built on respect for people which is again just it’s one of those words it becomes platitudes nowadays. 

But there are a lot of different ways of approaching a lean system putting it together you wait. I’ll show the house there that’s a conceptual thing and people use value stream mapping something. I help to help to kind of introduce about 10 years ago. But maybe the most effective way you can also build your entire operating system from the worker out from the operator out you go look at the person you look at the work and you remove wasteful steps from his or her work this is true, whether it’s a worker on the line or whether it’s an engineer and you want to remove the waist and isolate the waste get it away and as you after you’ve isolated from the work the direct work, you can start to eliminate it. 

But you want to eliminate it from the work that the frontline workers doing until nothing is left but value creating steps we never want to waste any operator any worker any employees time or effort that’s the most disrespectful thing that you can do in in this in the lean view of the world so back to this leading as if you have no power. 

What we want to do is I said earlier is to get the work done while developing people at the same time we want to climb the hill the right heel. Get to the right peak and develop the people so they can be developing other people so we don’t have to always be pulling up the rope at the same time. 

Well it’s explore those two things since I said those are the two things you need to do right to get the job done requires this solving real business problems and making improvement in the way the work is performed at each level of the company that’s front lines all the way up to the CEO. 

And each activity of the company and that’s the front that’s that’s the plant that’s engineering that sales that support operations of finance and HR in real time not analyzing data at the end of the month, but in real time and at the root cause what’s actually causing this and honestly most places I go this is very simple almost another definition of Wayne and this is something that’s a very rare usually all four of these bullets are something that’s not in place we’re not doing it every level we’re doing it some of the levels we’re not doing it every activity, it’s mostly just manufacturing and operations maybe an engineering. 

She’s not real time is we’re analyzing things after the fact and it’s rarely at the root cause we’re throwing a still throwing a lot of band-aids at things is what I find to develop people there requires providing with them with the skills to do that providing them with the skills to solve real business problems and make improvements in the way they perform their work. 

Takes me to a quote that I like a Cheryl Jones is one of the early group leaders to join Toyota Georgetown in in in Kentucky, she’s now vice president. I understand manufacturing there and she’s one of her early learnings was this the continuous improvement comes from making mistakes and learning from them these are words again easy to say I think profoundly understanding them and put him into play them into place is what makes the difference. 

In a way to think about that is to ask yourself perhaps and your company in your organization or under your leadership or overall. How does your organization think about problems? Problems problems, they’re everywhere. And yet sometimes we can’t access evenly ground how do you how does your organization think about having them go about finding them deal with dealing with them are they bad things that people want to hide and honestly that’s a lot of what I see one of my favorite quotes from another one of my favorite teachers that at Toyota and it’s a fairly famous well-known thing a lot of to it the leaders will say which is no problem is problem. 

I first heard it at Numi when there was a senior Toyota manager who had ten high potential very smart and very good geom engineers reporting to him and no matter what he would ask them about in terms of what was going. On their answer would be everything is fine, we have no problems and he honestly couldn’t understand why they were saying that when all he saw was an absolute mess he saw things he saw equipment coming in late and he saw it sometimes being damaged out of spec when it came in nothing would problems when he would ask him about this say no problem finally one day he blew up said no problem his problem. 

The manager’s job our job is to see problems and to create systems so that others can see problems as well. So the GMO managers with their kind of scratch their heads a little bit I’m not trying to pick on GM here today GM folks are my friends. I worked with them for for many years, but there’s a very difficult challenge in turning that battleship around and these people have done the those folks who were working there have done the best they could over the years but make getting this cultural change about the attitudes towards problems is more than the most important things and ever scratching their hands, they couldn’t understand what he was saying and finally said, you know, no see problems no need manager. 

That got their attention kind of the wrong reasons they thought he was threatening to fire them which he wasn’t what he meant was there’s no purpose to have managers here if we’re not seeing problems in helping others see them that’s what it’s all about, they’re always problems out there that’s what that little diagram again means we can be in the room analyzing problems without there are problems there we need to go see them so that’s why if you go back to this Toyota production system house at the top you see the the words are changed instead of Toyota production system, it says thinking production system. 

And another well-known sensei at Toyota said TPS is the right acronym but it’s just stand for thinking production system we want people thinking every time they do the job if it’s a 60-minute cycle under 60 second cycle on an assembly line or even shorter or even longer people thinking every time they do their job and getting people to think and taking initiative therefore is obviously the key how can we get people to think and take initiative? 

And again that makes sense, you know at the high level but what you do with that well, you can ask yourself in your organization, do you have a process or a structure or framework to help you and to help everyone identify problems? In often again as we go around people don’t and to solve problems once we’ve actually identified them and then thoroughly to lead and develop people so there’s not just you solving problems seeing and solving problems so everyone out there is seeing and solving problems. 

So in a in a highly performing toy operation or lean operation including many of yours instead of a team of industrial engineers every worker out there is industrial engineer. So engineers so the workers become engineers the engineers become managers and developers, they’re developing people and doing project management the managers then become psychologists make basically and trying to move people forward which brings us to. 

Back to the notion of change and what the leaders role is. I promised you. I would discuss this a bit people tell me all the time. John I can’t get people to do this. And how can you get out of this to do this? I suggest that there’s only one way so honestly, it’s a very irritating question when you think about it, it’s a very arrogant question. 

How can you get others to do this is only one way which is that that means that you have to do this and for a lot of folks I know that’s kind of frustrating to hear because you think well I’m an area manager in the plant find you know, I I only have limited amount of area of influence a responsibility with authority but you know what I go to the plant manager after talking to the other manager says, you know, the air manager says he could do this, you know, if he if he had, you know, the authority over the plants or what about you plant managers says, well yeah, I have the whole plant but you know what? 

I don’t have I don’t have anything to say about setting the financial targets for this company for this plant. You know, the equipment the equipment acquisition that’s acid done by someone else purchasing brings me these parts that don’t work this pliers never deliver on time, so if I was a VP then I could actually get it done. 

So I could talk to the VP. And a VP says basically the exactly the same thing said yeah in all operations but I don’t actually I don’t own purchasing someone else actually goes out and and and identifies and values the suppliers on engineering keeps giving these processes that don’t work and these products that nobody can build so then it says if I was a COO then I could get this done and then finally now after some years later now that I left Tennessee a long time ago, and I have gray hair less of it and I spend time now and and CEO’s offices. 

There’s no more frustrating frustrated person in the company than a CEO who can’t get the things done that he wants to get done. Because he’s over here being a dictator one day do it this way taking away responsibility for people and the other day just saying okay, we’ll do management by objectives. 

I’ll give you a target if you hit that target good for you you don’t get it then bad for you what you have to do it every level is simply due and start to manage in the way that we’ve been talking about that’s what I think how can you get others to do this there’s only one way the challenge is not getting other people to do this at all. 

Challenges getting you to do this or me I’m not trying to say that just because I’ve been around this for so long that I perfectly embody this this way of thinking you’re working all the time we need ways to help ourselves that’s what these tools and processes are actually all about we need things to make it easier we have natural human tendencies and in the heat of fire during the day, of course, we’re gonna have sometimes act and not the most optimal way and that’s what these lean tools and processes are really all about is to make it easier for us, so do you have a process in your company to help you do these things when you go to the gimbal actually how do you do it, what do you look for how do you know what to look for? 

Lena’s very processed focus we all know that and by process people we often copy the tools, you know, the combine or the and on which process is most important is the process of creating process through root cause thinking through understanding why things are working as they are why the problems are there Lean is not jumping to conclusions is not jumping to solutions ever those famous tools again combine or and on even more than the mechanical benefit that they break. 

Their frameworks for learning and improvement that’s what they really are they’re designed to make it easy to see problems they’re designed to make it easy to make improvements in their design to make it easy to learn. I remember the first time I had one of my when I took my Toyota teachers, I’d been there for a while by this time and he said John you don’t get combine at all said, you know what he means that combine is a tool for Kaizen that’s what it’s for it’s it’s a means for us to make things better it’s a tool for Kaizen it’s not just an inventory control tool to make our way to get inventory down it’s a way to start improving the way things work took me a long time to get my. 

Dead around that but. That’s exactly what it is and that’s what all these tools are so the reason we like to put these in place on the plant floor like a production analysis board where we can see plan versus actual standardized work is to make it easy for us as managers as leaders so we can see if things are normal or not normal so then we can ask why in an effective way that’s actually developing the people that we work for. 

I don’t know if there’s a natural human tendency, maybe there seems to be. That the way we want to process all problems is we see a problem we get something impressions when there’s something that we jump to a solution if there’s something I see everywhere. I go, it’s a cultural thing it’s a sink it’s a thinking thing. 

And we just jump over and leap over the facts well now that without even will evaluate bothering to look at them whereas what we need to do is actually go through the facts to understand them to stop basing our thinking on impressions and assumptions to look at the actual cause and effect to develop a hypothesis and this is the pretty hard thing to do it’s hard for me to do in the absence of having tools in places well, so that’s why we have a lot of these tools including the a3 process that Bill mentioned and I know that I think Jamie is here doing a workshop on it as well, that’s what that is from. 

For Jamie Flynn’s ball, that’s what these tools are really for. So here’s a quick look at the whole kind of list of how these things work together in this pyramid. It’s top you see improving engagement how we improve how we make improvements how to engage the workforce well we can do various things empowerment training we tried that QC circles we tried those they didn’t work very well did they suggestion programs a lot of companies still have them and 98.99% of the time they’re totally ineffective and we have enough guys in events that also all these can work all these can work but only if they rest on a people management and development process that access supports them rewards recognition employee development treating employees actually a citizens of the organization. 

But even that needs to have another bedrock underneath it, which is the process design of the work itself. What’s important about all those lean tools is the fact that they’re designed in a way to engage the workforce they’re designed in a way to give responsibility to the people doing the work standardized work in Kaizen I’m gonna have an engineer actually develop a draft of what the standardized work it is then I’m gonna give it to the floor. 

I’m gonna give it to the work team and say this is yours now redesign, it redesign it and keep redesigning it over and over so that you take ownership of it JIT and and and Judoka. The combine actually comes to the worker when I worked on the assembly line in in Toyota I’d actually take the you know the combine off whenever I open a new box send it through I would say that same comp line come back through in about three days now we know how many times I would get a delivery later that comment was supposed to come back that allowed me to see normal from abnormal. 

I knew how many boxes I was supposed to have in front of me. I could use that that information then to start making improvements a three process bad stream mapping hosting concrete all these do the same thing they build PDCA into the work and their way of getting responsibility and authority at the right level. 

A quick look at one of the most famous lean tools as I wrap up here. There you see on assembly line. You have a car moving along you have you workstation that’s those workstation three and it shows some markers there at the ten second point all the way up to the second second point, which is the end of the cycle and you see a rope overhead in the end on now when I worked on the assembly line, I had to pull that rope off many times. 

And what happens is whenever you pull the rope, you know, exactly what’s gonna happen. And you know when to pull the rope whenever you have a problem there’s a promise made by the company that says we want you to be successful every time you do your job. And for you to be successful every time you need you do your job, you need to know exactly what success is and what your job is and you need to be able to know from therefore what a problem is how to identify one and you need to know exactly what to do once you’ve identified a problem and you need to know what will happen once you’ve identified it so I was talking to identify a problems and whenever I would find one I’ll reach overhead. 

I didn’t have to look for that rope. I would just pull it was right there. And the promise from the company is management a leader will come a leader will come to support you in your work help you make a decision what to do next within your job cycle within your job cycle, someone is going to actually come and help you do that that’s quite a promise now when I worked on the line and in and building Corollas getting in and out of a Corolla 500 times a day. 

I pulled the road many times. I knew exactly what would happen. In our GM friends going back to the movie now saw that as well and as we were getting the new me plant up and stuffed up and running in 1984, our GM friends asked us kind of like a little bit smirking because you know, they had pride as well and they saw this TPS and they they loved it already but they you know said well, you may not have such good luck doing this in the United States with unit workforce and we hadn’t even were forced so they said so Toyota are you gonna put this stop the line system in place in Fremont California? 

Kind of laughing kind of thinking surely we wouldn’t be you know, so it’s so crazy and we said yes absolutely we are and they said well you’re crazy said they’ll stop the line all they already stop the line without the the the rope system without the end on system, so they’ll stop the line all day long and we said yeah we’re gonna but that’s what we’re gonna put in place they said you’re gonna give these workers the right stuff the line and we said no, wait a minute, you’ve got a little bit wrong. 

We’re gonna give them the obligation to pull the rope and notify when they found a problem anytime they see one anytime they see a problem they are obligation is to pull that rope and notify that’s their job is to do that our job then on the other side is to support them so that so that they can be successful every time they do their job all the way to the end of their cycle. 

That’s what we put in place and that’s what brought about the culture change and the quality change at that knew me plant and that’s what I think is the secret to all the lean tools and and that’s the secret to the lean tools that as you put them in place. 

I think can help you can have the same sort of success. 

That I just take a moment to address this economic crisis, here’s the only thing I’ll say about that is this this is the time that markets realign. 

I think there’s a tendency of companies that I see now to want to cost cut and just hunker down and try to wait it out. Say we just want to survive this until the end but this is the time that markets realign so this is the time to be as aggressive as you can possibly be an aggressive in my book means a couple things one on the strategic market side, but the other in the plants the lean basics in my view and bill I’ll be interested in your view on this but the last few years a lot of the lean basics even by good lean companies have been forgotten the most basic lean principle is over production you never over produce and 15 years ago when we were doing, you know, visiting companies doing lean it was all about over production, how can you stop over? 

Producing to make just the right amount but no one talks about that anymore as if as we’ve had you know, this boom period of easy money with with with the loan issues the China phenomenon and before that calm over production has been forgotten and Toyota production system is built on actually an agreement between customers and suppliers. 

So that you’re not just working at the whim of what our customer may want it any moment you have an agreement and if you can actually be able to not sure ship your customer based on agreement, but also not over produced you’re gonna have the shortest possible lead time and that’s been forgotten so I think if there’s anything we need to do operationally it’s get back to the basics of lean production on the one hand or the other side be as aggressive was as we can in the market there is a, An individual here a Roger honey from honey reels and he’s the fourth generation owner of the company the beginning 1933 1933 was the last time that we saw a similar economic crisis to this 1950 when Toyota rose up was was when they had a huge crisis there the next big crisis they had with the oil shocks in the 70s during each of those times of crisis is when they were able to actually increase their market position, so that’s what’s going to be happening now we can either kind of wait it out and be at the mercy of whatever of however the different the The different players in our competitive environment may fall or we can try to kind of take our destiny in our own hands and be as aggressive as you can so I think there’s those two things strategically be aggressive and in operations get back to the basics, which I think a bit forgotten in recent years though, thank you Ron. 

Any other question, yes. Hello good morning can you pick up a little bit about Japanese society and how they have implemented lean at the service and the government level if at all oh so it’s speaking of Japanese society and whether or not there’s lean being applied in in different areas in Japan, well the first thing I say I’ll go back to my first experience there which I was looking for Japanese management. 

I thought there was something Japanese about this and I only landed at Toyota not because I was so smart and I knew the Toyota was somehow different it was totally it was completely luck it turns out lean is not. No more common in Japan than it is anywhere else if you visit the average company over there they’re no leaner than the average company here and often less so and then if you’re the Japanese government, they’re probably fewer less lean governments anywhere, there’s been some movement of that in Japan. 

I was actually last month when I visited Toyota I visited the Toyota hospital, you know, health care is one of the areas of lean nowadays in North America and and around the world that’s really booming healthcare is found hospitals have found that lean works there kind of to my surprise but as it turns out it worked it it applies just directly and complete. 

It’s a wonderful thing It’s good news that hospitals are embracing lean Quality is getting better costs are coming down the work environment is better for the people who work there and around the world that’s taking place but not really in Japan except a couple of hospitals. Toyota Hospital being one of those. 

The Japanese Post Office is also done a little bit but basically, I think thinking that there’s anything Japanese about it is kind of the wrong way to think of it. There’s really nothing very much Japanese about it. There probably a hundred or so companies in Japan that are really deeply into lean. 

So no more than you would find I think here anyone there or anywhere. Else. So, thank you good question. Yes. It’s good morning. You talked about showing respect for people. What’s what’s the best way to measure morale? 

The best way to measure it. Um. The thing that I look for. 

Is a degree to which a company in their lean initiative is seeking compliance versus people actually taking initiative. And for example standardized work Because standardized work really gets into the work people do and I don’t know. I don’t know many companies most places that I go that’s still something we struggle with. 

And I spoke with actually George Coney saker who’s someone many of you may know who was talking about his his visit to Toyota not so many years ago, he said, what are you working on now? He was expect he was looking for the next great advancement. What’s the next big advancement in lean? 

So, what are you working on now? And the Toyota leader the President said we’re working on standardized work. So after 30 40 50 years, we’re working on standardized work and actually getting in place. But the key to putting standardized work in in place is ideal to talk a lot of companies that say how we’re not having luck with it I work force just isn’t cooperative We’re often seeking compliance. 

So as soon as you see you soon as you detect that we’re chasing compliance. You know that you’re doing something wrong. The standardized work should be making work better for the people for the employees. It’s to be making the work easier because you’re getting them involved in taking barriers away from them being successful when they do their job. 

So whenever there’s this this fight this imbalance that we’re going out to compliance the workers won’t do the standardized work. Why don’t they do it? So actually going to the works and seeing why can’t you do this standardized work is a step that often folks don’t do They saying well we’ve developed this great standardized worker engineers worked on it We did it during a Kaizen event and this workers aren’t following it That’s the problem. 

Why aren’t they following it? There’s something that’s wrong in there. In our job is to go in and find out what that is. So that’s what I look for. For internal measures, you know, people look, you know what total looks at is number of effective suggestions is one of the most important things that they look for. 

But that means having an effective suggestive system in place to begin with. So when the numbers suggest to start falling off you ask why is that? You know, what’s going wrong here? I offer you find that the workers aren’t engaged and people not being engaged I think is a result of the feeling that they’re not feeling respected And that was the starting point for what we did in the turnaround in Newmie 25 years ago and at other affected transformations. 

I’ve seen is where we show that we’re doing this. We’re making we’re trying to make our lives better. We want to do things better for the company for the customer we want the company to make money and we’re gonna do that by making your job better for you. So if we have that in place and we have measures for that and number of suggestions is a good one that means doing all the work to put a real suggestion system in place. 

So the people aren’t just doing standardized work, but they’re doing Kaizen at the same time. So a good question an important question to be glad to explore farther as we finish up here. Thanks. 

I think that’s any any other is yes. Good morning. I’m basically this goes in line with what you just satisfy, however related to people engagement process to generate an implement ideas by employees what have you seen as the best people engagement programs to allow employees to use a their creativity and implement ideas by themselves. 

The sound appears in great if I if I understood you it was what what means if I seen the their best to be able for people engagement systems for getting people to submit ideas and get those ideas implemented. Let me tell okay, let me tell you take a minute for a quick story. 

I’m gonna go back to new me again, not because I’m not because I want to go back to old day stories, but I cause I think it’s still applies. That joint venture again was with it was intended to be it was a 50/50 joint venture, so GM folks were involved as well. 

So part of my job was to teach General Motors. Even when I worked for it for Toyota, Now, one of the things the GM wanted to learn about was Toyota’s suggestion program. Our suggestion system. So they sent a specialist on suggestion systems from Detroit to work with us at NuMe for six months in 1985. 

So I met with this individual in the beginning and we talked about what the program is he stayed there and he worked with it for several months and then met with him a nice long conversation just before he was leaving after six months of studying Toyota suggested system, he didn’t want to go back. 

Didn’t want to go back to Jim. So, why not? He said well when he visited when he was sent by GM dispatched to new me to learn about Toyotas and Newman’s suggestion system. He was given marching orders, he was given the instructors the instructions to not bring back any suggestion process that would accept a suggestion that did not save at least $20. 

Now, why did he have those marching orders? Because someone of done a financial analysis inside GM and realized that to process a suggestion was going to cost at least $20 of administrative time. So if it didn’t save at least $20, it wasn’t going to be worthwhile. So after six months, you know, he was slapping his head against his forehead and saying, you know, this is insane because he understood then what Toyota’s suggested system was all about which it had nothing to do with saving $20 or $100 or $1 what we were doing was actually buying people’s engagement. 

Into this case the suggestion system is you make a suggestion on your work not on where to place the coat machine not on you know not on something that this grandiose that has to go to some evaluating committee that’s far away. You make a suggestion based about your work, you make that suggestion to your supervisor your team leader group leader you implement it now. 

Right now you get immediate gratification in terms of trying your idea. As it works then they’ll give you usually at least when I was there 10 or 20 dollars something like 10 or 20 dollars. It’s not a lot of money. It’s not like several thousand dollars, but whenever you have a suggested system the gives a Ward. 

You know, several thousand dollars you’re gonna have a committee that evaluates it right and that’s gonna take time and by the time that’s done the the problem is already gone by then or engineering says well we were gonna do that anyway and you get into all kinds of problems like that whereas I’ve seen in on you one case when I worked actually at Taco plant in 84 where I knew one person who submitted a suggestion about how to do the word differently. 

And he got his twenty dollars, okay, it was a small thing as a small standardized work adjustment and of course when you do standardize work one of the problems, of course is communicating with other shifts goes other people do the same job and so they did that and after a few weeks they found that you know, what the other way of doing the work was actually better after all. 

So what did they do? That GM way of thinking would have said, okay, give us a $20 back. What we did in that case is we said to the worker submit another suggestion will give you another $20 to put the job back the way it was it’s $20. Buying the engagement that individual. 

So it’s very important that all those kind of suggested progress deal with the person’s work that it be immediate and that in that again is the way I think of showing respect when anything else we’re saying we want you to engage your mind so that’s why Toyota has on average about one suggestion per worker per week. 

And 99% of those are implemented those incredible numbers compared the way we usually do suggestion systems Nissan Honda have similar programs in place those are just phenomenally different than within what we have in most companies I know because what we’re chasing what we’re trying to do is very different often the suggest won’t even save any money at all, it might be a safety suggestion that actually costs money so what you’re trying to achieve needs to be very very clear is to be communicated very very well to all the people and then it’s gonna take some take a while to get that culture in place for it to work but if you stick to that and with sincerity about what you’re trying to achieve then it can’t work. 

So again very important question, thank you. And Ron says we can have one more. 

Okay and try to speak up it’s a little hard for me to hear you up here. I John, can you hear me yes, okay. I’ve always wondered about the what I call the paradox of the Toyota production system where Toyota like most major manufacturer carp manufacturers has a captive customer base in their dealers, okay, most major manufacturers, tell the dealer is how many automobiles they’ll take of what model each year and the deal is have to take those models the ultimate customer me the consumer. 

Goes to the dealer and hopefully finds what we’re looking for. BMW is going more to a make to order where the I can go in as a customer and tell them what I want and when I want them and the plant will make that model for me and I’ll get it. 

How do you see Toyota moving more to a make to order, you know, really tying production to customer demand and if so what kind of changes do you think that will mean for Toyota or for the rest of the auto industry? Okay yeah maybe that’s when we want to explore some you know after we finish here as well I get’s a great question I agree with your point the Toyota production the the part of the paradox is that in terms of their capability and the plants they can build to order but to much greater degree than they do and over the last I think 10 years they’ve gotten further actually away from that and are they one of the reasons I that about 10 years ago. 

I think Toyota started to kind of go off rails just a little bit and one of the ways they did that as opposed to challenging to be the best challenging to they decided to start to be the biggest. And as they started chasing numbers and even profit per vehicle in recent years I think that took them down a path his further away from the from what the customer necessarily really wants so if any of you have ever actually been to a Toyota dealer to try to buy one you’ll you’ll realize exactly what he’s saying there’s some truth to it which is often you can’t get exactly what you want and that’s not what the Toyota says the production system was based on now when I worked for Toyota in Japan, let’s see if I can explain this briefly we had orders that we would set the orders the basic running pattern for the plant in terms of volume. 

One week before the month started. Then we would adjust that volume every week during the month but we didn’t actually send the order from the cut from the dealers in until every day every single day, there would be a number of actual different orders and that sequence would be set we’re gonna make it a four door green one with automatic transmission, then we’re gonna make a two door hatchback with a manual transmission that sequels will be changed every single day based on customer orders that were coming in daily from the dealers, they’re in Japan, so that capability was was in Japan and that’s the way they were working 25 years ago. 

They had that capability here in terms of the manufacturing system but they never put that ordering system in place and something I would agree with you that they need to look to if they’re looking at that right now. I don’t know but as they revisit the basics which is they say is what they’re doing. 

I certainly hope that I think that’s one of the things that they should do. I think the new look of what BMW does, but they need to do that and it must sort of lead time with BMW anality it’s about a three-month lead time, you can get what you want, but it takes the usually at least three months. 

And what they need to do with the plan a capacity they have here now. I think they could be able to do that within the month and I think that’d be a great goal and challenge for them to undertake so great question. 

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3 Responses to The Toyota Production System: a milestone and revelation in human affairs, or just a rightward shift of the supply curve?

  1. rog says:

    No, I didn’t watch the video but I can say that I did hear that when a Toyota manager is appointed he starts to train his replacement.

    That might be a bit simplistic but it does illustrate the chasm between our cultures.

  2. Chris Lloyd says:

    What software are you using for the transcript Nick? It is pretty accurate! It also shows how incoherent speeches are. Listening to it our brains can edit our all the mangles, but reading the same text makes it almost indecipherable!

  3. Nicholas Gruen says:

    Yes, it’s damn good. It’s Android Recorder – I think Google tie it to their Pixel phones (which are also damn good now). But I may be wrong.

    It revises things a clump of words at a time so does a little bit of working out context. I reckon it could do a better job still if it revised again at the end of sentences and paragraphs.

    The amazing thing is that it’s quite bad at taking dictation. If you speak clearly it gets the words out, but then does strange things in arranging it into sentences and paragraphs.

    And it’s hard to find programs that accept simple instructions at a ‘meta’ level like “New sentence”, “comma”.

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