The Toyota Way?

A senior Human Resources VP mentioned the other day the value of having her senior executive read "The Toyota Way." I thought, "gee I wonder why we're still pushing that basic book from 20 years ago." A day or so later an email pitch arrived from the Canadian arm of a "world-wide" consulting firm specializing in "productivity improvement." It suggested the answer.

Since improving results is what I focus on from a human resources and leadership perspective the question is critical. Is someone missing something?

The consulting organization promotes typical North American and European-style approaches. It clearly grew out of an accounting firm broadening its offering to "productivity." Their approach is almost entirely lean manufacturing processes and similar "fixes" that can be "installed" in organizations to reduce cost and streamline out waste in materials and procedures. For a fee they'll happily come in and spend "4 to 10 months" at your business figuring out which would help. I've seen this done with teams of 5 to 25 people. It isn't cheap.

If you've ever tried this you'll hear them SAY frequently that none of it works unless the people buy into the processes. A very key point, they'll tell you... and then typically proceed to ignore input, order people to change and "install" the system the way they always do. When it doesn't work, "culture" gets blamed.

The Toyota Way by contrast outlines 14 core principles that have clearly worked over the years to make Toyota one of the most effective and productive organizations on the planet, with no signs of slowing down or petering out. While the book or ones with similar information about their approach continue to be updated (as recently as 2005) the principles have been applied since the mid-1970's... consistently - more than 30 years. Few corporate strategies survive anywhere near that long today, with most evaporating on appointment of new senior executives.

A quick review of the 14 principles (http://en.wikipedia.org/wiki/The_Toyota_Way) shows the first 8 appear a lot like the consulting firm - process improvement and so on, with the notable exception of the first principle: "take a long term view." When you read more closely you notice the principles are divided with the last six focusing directly on people and leadership. Look again and you notice that half of the first principles do, too. They may be about improving processes with process methodology, but they emphasize that it must work with and through the people.

The over-riding concept is building a "learning organization" for "continuous improvement" and there is only one ingredient that does the learning and improving - people! In fact, the processes are simply aids to help the people learn for themselves. They are not "solutions" to be "installed" by outsiders who know best. They are tools people in the organization use daily to improve things for themselves. Toyota long pre-dates Peter Senge's The Fifth Discipline, itself written more than 15 years ago, which is often said to be the origin of the term "learning organization."

Apparently very few organizations have learned. The dominant "solution" is still this sort of flawed consulting rather than the proven Toyota Way and its variations adapted to all sorts of industries by a tiny minority of very successful companies.

Comments

[Craig Allen]

Hi Dave,

A great piece! The Toyota Way sounds like a systematic and long-term way of choosing your own path. It's a blueprint for creativity that builds capability.

Reinforcing this is a piece I just saw in an weekly insurance magazine. This piece warns against slavishly emulating this year's market leader - and illustrates how wasteful and demoralizing that approach can be. In effect, we see why the Toyota Way is the way to go.

"Many insurers have their attention fixed on the company that is currently generating the greatest return on investment. This approach to management is flawed.

The company actually generating the greatest return constantly changes. By simply following the company that is currently on top, a culture of inconsistency is fostered and perpetuated.

This inconsistency within the corporate culture of the 'follower' company frustrates the natural ingenuity and creativity of that organization. Therefore, all the 'follower' can do is follow.

The 'follower' company has not done anything to foster its own creativity and ingenuity. It becomes dependent on the rest of the industry for new ideas. If every company in the industry is a follower, the best we will ever have is a circle of outfits moving in place and never being innovative."

[Dave Crisp]

Thanks Craig,

You comment is insightful. The tendency to follow what the current industry leader is doing seems very widespread - hire their CEO and staff, copy their bonus plans and steal their latest process improvements all seem to rate high on many companies' "to do" lists.

You're right that when you follow Toyota's approach you become increasingly different from competitors rather than more similar. You figure out what works for you, what makes you unique and what satisfies YOUR customers best instead of hoping you can take someone else's customers by beating them at a game they know better than any outsider can learn to mimic.