Toyota Decoding the Success Formula

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ToyotaDecoding the Success Formula

• Bryan Bergsteinsson

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Its been great to work for Toyota!

• 36-year career with Toyota Motor Sales, USA
• 20 different positions

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Most recent assignments

• Group Vice President, University of Toyota
• Group Vice President and GM, Lexus
• Vice President, Human Resources
• Vice President, Strategic and Product Planning

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Lets look back

• The early 1950s
• The Big Three own the market
• Toyota on the verge of bankruptcy

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Today

• Big Three market share and profitability is the
  lowest ever
• Toyota is the most profitable car company in the
  world

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Why is Toyota so successful?

• Japan Inc.?
• Toyota Production System?
• Superior product quality?
• Our business model?
• Our culture?

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Success best explained in the Toyota Way

• Continuous improvement
• Respect for people

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Share some insights and lessons

• Start with manufacturing example
• Advances in knowledge work
• Implications for you and your work

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• NUMMI
• Decoding the Lean Success Formula

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How dramatic was the turnaround from GM-Fremont
to NUMMI?

• From worst to first in two years
• Achieved world class productivity and quality
• Enhanced worker motivation and satisfaction

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What were the key performance facts regarding
GM-Freemont (Pre-NUMMI)?

• Lowest rates of productivity and quality
• 20 more workers than needed due to 20
  absenteeism
• 4 wildcat strikes since opening
• High incidents of alcoholism and drug abuse
• Militant union
• Backlog of over 5,000 union grievances
• Closed February,1982

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Why did Toyota GM make for good partners?

• Complementary objectives
• GM learn the secrets of lean and gain access to
  a world-class subcompact
• Toyota ease trade tensions and gain experience
  with American unions and suppliers
• Formally organized in February, 1984

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Only one thing changed!

• Same plant
• Same equipment
• Same people
• Same union
• Different management system

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What happened after the agreement between Toyota
and GM signed?

• By the end of 1986, productivity higher than any
  other GM plant
• Absenteeism 3 to 4
• Participation in suggestion program rose steadily
  from 26 to 92 in the first 5 years
• Over 90 of associates satisfied or very
  satisfied

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What was different about the Toyota management
system?

• Workers were Scientists
• Taught them the scientific method -- PDCA
• Workers were Industrial Engineers
• Understood work analysis, planning,
  problem-solving
• Workers were Quality Inspectors
• Empowered to stop the line when a defect was
  encountered
• Enhanced motivation and self-esteem

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What other actions supported a positive culture
change?

• High levels of engagement in the work
• Team-based 5 to 7 people per team
• No layoff policy (freedom to make suggestions)

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So, how would we define the mass approach to
quality?

• Many buffers added to minimize variance
• Inspection oriented rather than prevention
  oriented
• Defect detection rather than upstream
  problem-solving to eliminate the cause of
  problems
• Defect detection creates a coercive approach to
  learning policing quality (I caught a mistake
  in your work)

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What barriers are created through this approach?

• Jobs too small and rigid to encourage learning
• Quality is maintained as a staff function (with
  others feeling little responsibility for it)
• Overall, its quality control instead of
  continuous improvement

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How does continuous improvement create a
learning orientation?

• Encourages on-going experimentation
• Focuses on solving problems at the root cause
  level
• Continual refinement of jobs and work processes
• Well supported suggestion program
• Learning orientation captures everyones
  imagination

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What was the mass view toward workers?

• Dumb the job down
• Control through supervision
• Motivate through extrinsic rewards
• Believe that the human aspect can be worked out
  of the process
• Reality Cant fragment the human issues you
  get the whole person

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What was the Toyota view toward workers?

• Part of team
• Key to overall effectiveness
• Dependent on them to feed the continuous
  improvement system
• Invested in them
• Empowered them
• Treated them fairly and consistently

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What are the advantages of continuous
improvement?

• Toyotas CI system helps the workers be more
  rational
• The least expensive way to get better is through
  continuous improvement. Why?
• Getting the whole thing right the first time
  would be too expensive

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TMS leadership challenge

• TMS a knowledge-based organization
• Our manufacturing excellence is well known
• Challenges in adapting the secret sauce to
  knowledge work

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• More
• or
• Less

Complex
Time
Work-life balance
Resources
Expectations
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Productivity Shift
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What makes it challenging?
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Our knowledge worker journey

• Created the Center for the Toyota Way
• In-depth deployment of Lean Thinking with
  internal and external teams

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Were busy but . . .
Value Added
Waste
Not Value Added
But Unavoidable
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Developed a diagnostic survey to . . .

• Measure the strength of cultures around
• Value
• Flow
• Mastery
• Over 1,500 participants
• Fifteen (15) questions test alignment

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Value Questions

• My workgroup consistently strives to understand
  the needs of our customers.
• People in my organization clearly understand how
  our workgroup delivers value to our customers.

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Flow Questions

• My workgroup places a high priority on
  eliminating waste.
• My workgroup effectively organizes our business
  processes to optimize the delivery of value to
  our customers.

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Mastery Questions

• My workgroup places a high priority on continuous
  improvement.
• My workgroup effectively solves problems at the
  root cause level.

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Overall scores

• Not very good!
• 3s!
• What are they saying?

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1,500 responses
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It feels like this . . .
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• What kind of intervention will help us get out of
  this dilemma?

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In search of the one thing . . .

• Six Sigma is the new darling
• Renewed popularity
• Quality and process improvement

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Been there . . . done that!

• The tool doesnt fit the challenge
• The tool (improving quality)
• Doesnt fit the challenge (knowledge work)

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True or False

• Problem solving is generally not taught in our
  education system.

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But it is in ours . . .

• A unifying force
• A guiding principle
• A daily tool
• A source of competitive advantage

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Just enough structure

• To guide a group level process
• More like a shared framework
• Common path
• Common language
• Common tools

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Supported by a continuouslearning approach

• Plan-Do-Learn or PDL cycle
• Adapted from Demings PDCA cycle
• A philosophy and a tool

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PDL features 6 problem-solving steps

• Grasp the situation
• Select the best alternative
• Build the plan
• Implement, monitor, and adjust
• Measure and analyze
• Learn and continue the next cycle

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The Learning is in the Doing
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It feels like this . . .
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What does this mean to you?

• A cultural foundation based on respect?
• A relentless focus on the customer?

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Value Questions

• My workgroup consistently strives to understand
  the needs of our customers.
• People in my organization clearly understand how
  our workgroup delivers value to our customers.

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Flow Questions

• My workgroup places a high priority on
  eliminating waste.
• My workgroup effectively organizes our business
  processes to optimize the delivery of value to
  our customers.

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Mastery Questions

• My workgroup places a high priority on continuous
  improvement.
• My workgroup effectively solves problems at the
  root cause level.

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• Thank You!