Thursday, January 31, 2008

Toyota Will Win: Preserving Culture in the Face of Growth

February 16, 2007

Toyota Will Win: Preserving Culture in the Face of Growth

Thursday's New York Times had a terrific story on Toyota and the challenges they've had in spreading the "Toyota Way" across cultures, geographies and generations. I truly understand what they are going through, being a long-time supporter and student of Japanese quality management principles (TQM) (or, rather, U.S. quality management principles, if one considers the genesis of Japanese TQM as being the American visionary W. Edwards Deming. The weak U.S. response to Deming's teachings in the late 1940's likely squandered as much value for Corporate America as Xerox PARC's inability to commercialize leading-edge technologies that represented the foundation for 30 years of hardware and software innovation squandered for its shareholders).

But what the Toyota story highlights is an inexorable clash between culture and growth that is being faced by all global companies today, where the phase "Think Global - Act Local" is on the lips of senior managers everywhere. The big challenge: who will successfully navigate the rocky shoals of globalization, particularly as growth opportunities migrate from a handful of long-time "first world" countries to those that are less developed but approaching first-world status at a rapid rate, i.e., India and China (remember Ebay in China?). And this doesn't take into account the challenges of further penetrating those first-world countries where differences in culture and industry structures are significant, i.e., Toyota in the U.S., Wal-Mart in Germany. Here are some interesting extracts from the NYT article:


Toyota’s corporate culture has transformed it from a small manufacturer into a market-gobbling giant famous for quality circles and giving workers control over production lines. For years, aspiring factory leaders have come here to attend Toyota’s select technical high school, the Toyota Technical Skills Academy in Toyota City.

But Toyota — on course to become the world’s largest automaker — needs to sharpen its game to meet even larger challenges, including raising quality in the face of rapid overseas expansion and its largest recalls in history.


It is the Toyota Institute, charged with preparing executives to enter the leadership class at Toyota by inculcating in them some of the most prized management secrets in corporate Japan. The institute sends off its executives to offices around the world as missionaries of sorts for the Toyota Way. The institute does not quite aspire to be Japan’s answer to General Electric’s famed Crotonville training center in Ossining, N.Y., which spawned a generation of top executives across American industry. But it is Toyota’s best effort to avoid corporate short-sightedness and to keep the company true to its original mission of winning customers with quality cars, even as it comes under intensifying scrutiny.


“Before, when everyone was Japanese, we didn’t have to make these things explicit,” Mr. Konishi said. “Now we have to set the Toyota Way down on paper and teach it.”

“Mutual ownership of problems,” is one slogan. Other tenets include “genchi genbutsu,” or solving problems at the source instead of behind desks, and the “kaizen mind,” an unending sense of crisis behind the company’s constant drive to improve.

The whole company prizes visibility. To nurture a sense of shared purpose, Toyota has open offices — often without even cubicle partitions between desks.

Dissemination of the Toyota Way overseas, however, can be spotty, executives and analysts warn. Toyota prides itself on pampering customers, but analysts are reporting weak or uneven service at Toyota sales subsidiaries, particularly in emerging markets like China and India.

Worse, some executives like Mr. Konishi complain of managers at Toyota factories who have not adhered to some of the company’s most basic creeds, like allowing workers to stop factory lines when they spot defects. Empowering factory workers has long been central to Toyota’s quality control.


“If Toyota can’t infuse its philosophy into its workers, these quality problems will keep happening,” said Hirofumi Yokoi, a former Toyota accountant who is now an auto analyst at CSM Worldwide in Tokyo. “The institute was founded because Toyota is afraid of growing too fast and losing control. It’s still too early to know if it will work.”


Toyota’s culture, she said, is still grounded in a Japanese-oriented brand of group-think. But in some cases, Toyota has also adapted it to fit American culture, she said, dropping group calisthenics at American factories, for example, although that is still common at Japanese plants.

She said she understood the Toyota Way better after learning from people who had lived it their entire professional lives. She now uses the wall chart as a critical motivating tool for managing her employees.

“When I saw folks in high ranks, like Mr. Watanabe, and how consistent and dedicated they were, I knew they were true believers” in the Toyota Way, Ms. Newton said. “Now, I’m a true believer, too.”

What I am seeing here are a few things that make me confident that Toyota will get it right, and that they will become (if they aren't already) a model for how to globalize in the context of a complex, culture-laden industry:

They know they have a problem. Yes, uncharacteristic quality problems have cropped up all over the place. This is unacceptable and they know it. But rather than spitting out platitudes like "We'll get to the bottom of this; it will be better next quarter" or "These things happen; we're all about increasing our global footprint and increasing revenues," they are focusing on root cause. This is how you build a winner for the long-term instead of a hype machine for the short term.

They have defined the problem. "We need to grow but need to do so in a way that builds brand value. And increasing quality defects in the face of growth damages brand value." Toyota's is a problem akin to one playing Monopoly: is the right strategy to buy every property one lands on (the "Land Grab" strategy, where one has a lot of negotiating power if you survive but could result in bankruptcy with a little bad luck), to hoard money and only buy those prime properties that one can use to assemble a desired monopoly (the "High End" strategy, which could be successful if a monopoly is assembled but results in a small footprint and a potentially slow death if others don't land on you and build around you) or some combination of the two. I'd argue that Toyota's goal is a blend, where a measure of "Land Grab" (read: global expansion well beyond its own culture) and "High End" (read: expand in areas where it has a high likelihood of success) is at play. They have a clear sense of what they are trying to do. It is now a problem of execution.

They want to get the culture right. They have a way of doing things that has worked for a long, long time, but are breaking down in the face of rapid global expansion. As a result, they are emphasizing the Toyota Institute as a vehicle for training experienced evangelists who can bring the Toyota Way across the globe. But they are seeking to apply these principles in a manner that is acknowledging and respectful of the different cultures in which they operate. This strikes me as being somewhat similar to the Six Sigma training at GE, where it is an integration of scientific methods and tools and management techniques for instilling culture in far-flung operations. This a necessary element to building long-term success across geographies and cultures. This is just smart.

For people and companies committed to quality it is a sacred quest, spreading the mantra of TQM across the world. It is this kind of vision, commitment and long-term perspective that will make Toyota one of the winners in a rapidly flattening world. Globalization is a high-risk/high payoff game, and they are doing everything in their power to stack the odds in their favor. I hope they win. I think they will.


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The Toyota Way is well worth reading about.

| February 18, 2007 at 12:00 PM

There are a number of globalization hurdles Toyota has to overcome. Obviously, it should make no different where Toyota vehicles are made from quality perspective, however the Japanese cooperation of manufacturers, suppliers, distributors and banks in closely-knit groups (keiretsu) and big firm shushin koyo makes Japan unique as a nation. Nevertheless, despite record sales, Toyota's quality reputation has been hit by a series of recalls that you could blame on its rush to cut costs. Here in the UK we are not bad at making cars: Toyota's plant in Derbyshire and the Nissan plant in Sunderland are among the most efficient in Europe - although Nissan did report a 23% slump in profits yesterday for the last quarter of 2006, blaming the poor results on rising commodity costs, fierce competition and stagnant sales. Part of the problem Toyota may face in the US could stem from strict house agreements with unions and employee costs, eg healthcare, has risen faster than inflation for many years.

Rob (lean) (six sigma)

| February 18, 2007 at 10:14 AM

While they have indeed had a few quality issues, I'm not sure that qualifies as their "losing". They're doing a whole lot better than the other OE's both in terms of growth and profitability. Their valuation is much richer. Their equity is worth more than any other OE, period. Looking at the comps it seems to me that they're winning, but that perhaps they have some looming problems on the horizon.

In fact, I think one of the biggest problems they have now is just how much they've been winning. I get the impression all eyes are on Toyota right now, trying to find all the ways Toyota is extracting advantage unfairly. Number of plants in the US versus cars shipped in. Manipulation of the yen. Blah blah blah. And if you read between the lines of what Toyota is saying, they hear everyone loud and clear, and have responded accordingly. The pricing on the Tundra seems very much on the high side. Building brand equity, or keeping their competitors in the game? They're building out multiple plants in the US now to normalize their vehicle imports. They're in discussion with Ford.

Toyota is a winner in this, but I think they'll need to (and intend to) "ease off the throttle". I think they'd rather have a mangled but breathing Ford than go full force for the death blow. But are they "losing"? No way! Not from my vantage point at least.

| February 16, 2007 at 05:30 PM

Toyota culture keeps auto giant in the fast lane

Japanese automaker poised to pass General Motors in worldwide sales

By Ron Mott
NBC News
updated 3:31 p.m. ET Jan. 18, 2007

Ron Mott

GEORGETOWN, Ky. - Later this year, Toyota could overthrow General Motors to become king of the world's automakers by selling more vehicles than the once-mighty American giant.

Analysts say the keys to Toyota’s success aren't just design and reliability, but the culture that exists inside their plants.

The cars may be high-tech at Toyota, but employees like Howard Artrip are expected to find simpler ways to build them

One idea is using plastic totes to separate parts by the car model, not by the type of part.

“We actually bought these from Wal-Mart down the street," says Artrip.

The Japanese call this kind of thinking "kaizen," or continuous improvement. Toyota has embraced it wholeheartedly, just about everywhere you look at its seven north American assembly plants.

Take motorized carts for example. Toyota used to buy them. But it was discovered that car parts could be used instead, steered by a power-window motor. By building these carts themselves, Toyota has cut its costs in half.

And savings of $3,000 per cart is just a small part of Toyota’s overall good fortune, which continues to elude their American competitors.

“It's not just the Toyota culture,” says AutoWeek Editor and Associate Publisher Dutch Mandel. “It's the Japanese culture that they've brought to corporate America. And they've melded in such a way that takes the benefits of both.”

Those benefits led to record sales last year at Toyota. But don't expect a big party here.

“It's not to say that Toyota doesn't recognize its accomplishments,” said Chad Buckner, a paint shop engineering manager. “But there's a healthy sense of paranoia that that's not enough.”

That's why every worker is empowered to yank the line to a halt if they see a problem.

“In the Toyota system, no problem equals a problem,” said John Robinson, an assembly engineering manager. “So we want to expose problems.”

Problems expose opportunities for solutions, which employees seem eager to find.

“At the end of the day if you see a change, and my job is better, my process has improved, it makes you want to come back,” said Robinson.

Back, that is, to keep Toyota moving forward toward No. 1 in the world.

© 2007 MSNBC Interactive

Seagare Sinagapore won MAX Award 2006 ebcause of their Lean effort



Seagate is the worldwide leader in the design, manufacture and marketing of hard disk drives, providing products for a wide range of applications, including Enterprise, Desktop, Mobile Computing, Consumer Electronics and Branded Solutions. Seagate's business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, and to be the low cost producer in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world's growing demand for information storage. Singapore is Seagate's Regional Headquarters. Its operations in Singapore includes two disc media manufacturing facilities, an assembly of high end
disc drives in Ang Mo Kio, and an R&D Centre at the Science Park.


Wednesday, January 30, 2008


The Shingo Prize is regarded as the premier manufacturing award recognition program for North America. As part of the Shingo Prize mission and model, the Prize highlights the value of using lean/world-class manufacturing practices to attain world-class status.

The Vision of the Shingo Prize is to be the "Nobel prize" in business, grounded in lean enterprise management leading to world-class and globally competitive business.

The mission of the Shingo Prize for business, the public sector, and research is to:

• Promote world-class business and manufacturing processes that will enable organizations to achieve perfection in quality, best cost, and 100 percent on-time delivery to fulfill the customer experience..
• Foster the sharing of "True North" core business and manufacturing processes for continuous improvement.
• Recognize research and applied materials that support the vision and mission of the Shingo Prize.

The Shingo Prize achievement criteria provide a framework for identifying and evaluating world-class operational competence and performance.


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Superfactory: Lean Manufacturing

Resources supporting lean manufacturing and lean enterprise excellence.

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Hospitals around the world are successfully implementing Lean methods for the benefit of patients, employees, physicians, and the hospital organizations. It is possible, through Lean and the Toyota Production System, to simultaneously provide better care, better quality, and lower costs.

Hospitals worldwide face a wide range of problems and pressures that have inspired them to look outside of healthcare for inspiration. Payers, ranging from government agencies to private insurers, are forcing price reductions on hospitals, which requires hospitals to reduce costs in order to maintain their margins. Even not-for-profit hospitals need to have a surplus to remain financially viable and to drive future growth. Hospitals are becoming less able to demand “cost plus” pricing that pays them for their efforts as opposed to being paid flat rates based on patient diagnoses.

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The largest lean enterprise excellence conference in North America, for practioners by practioners. Workshops, seminars, plant tours, and keynote speakers.
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David has been an industry analyst in the enterprise software sector for 10 years and was a software marketing executive for the prior 15 years. He currently follows manufacturing software solutions for Industry Directions. From 1998 to 2005 he directed the Enterprise Applications research teams at Aberdeen Group. Before joining Aberdeen, David held executive leadership positions including: VP of Sales and Marketing at Xchange, Inc., a leader in customer relationship management; SVP of Sales and Marketing for Work Management Solutions, a developer and marketer of project and program management software for Fortune 1000 IT organizations; VP of Marketing for leading PLM vendor Parametric Technology Corporation; and VP of Alternate Channel Distribution for Computer Corporation of America.

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Sunday, January 27, 2008

Lean Culture: 2nd Letter

Creating a Lean Culture: Tools to Sustain Lean Conversions (Paperback)
by David Mann (Author) "Most prescriptions for lean production are missing a critical ingredient: a lean management system to sustain it..."

  • Distinguishes the much-discussed, abstract concept of "lean culture" from the concrete, implementable practices of lean management.
  • Describes and illustrates 4 key principles of lean management: leader standard work; visual controls; daily accountability process, and discipline.
  • Shows how visual controls bring process focus to life, tie in lean's requirement for highly disciplined execution, and make leaders' new jobs far easier to explain, model and evaluate.
  • Moves beyond models and theories of lean management to show how to implement the daily practices that are the key to implementing and sustaining a lean transformation. Lots of case examples, figures and photographs.


    Lean production has been proven unbeatable in organizing production operations, yet the majority of attempts to implement lean end in disappointing results. The critical factor so often overlooked is that lean implementation requires day-to-day, hour-by-hour management practices and skills that leaders in conventional batch-and-queue environments are neither familiar nor comfortable with.

    Creating a Lean Culture helps lean leaders succeed in their personal batch-to-lean transformation. It provides a practical guide to implementing the missing links needed to sustain a lean implementation. Mann provides critical guidance on developing and using the key elements of a lean management system, including: leader standard work, visual controls, daily accountability processes, maintaining a process focus, managing key HR issues, and much more. In addition, a questionnaire is included to help assess current management practices and monitor progress.

    "David Mann has provided an excellent review of one of the most common implementation issues in a lean transformation -- the essential day to day work practices of team leaders/supervisors/value stream managers that enable the lean system."

    George Koenigsaecker, President, Lean Investments, LLC 03/18/05

    "The purpose of lean systems is to make problems glaringly obvious. If implementation does not include standard leadership and cultural support systems to constantly address problems, the point of the system is missed. Many books address lean tools and initial conversion, but if you want the system to stick, read David's book."
    --Robert W. Hall, Editor-In-Chief, Target, Association for Manufacturing Excellence 03/21/05

    "Mann's book is an excellent start toward Lean Leadership as 'process-dependent' rather than 'person-dependent' in style. The idea of leader standard work is simple and valuable."
    --Ross E. Robson, Executive Director, Shingo Prize for Excellence in Manufacturing, Utah State 04/04/05

    "At last! A book that bridges the huge gap between the lofty visionary outcomes of Lean Leadership books - and the practical thinking and tools needed to put competitive outcomes in place. This practitioner approach spells out real work needed. All of us should use Mann's first five chapters to crystallize a 'Lean Management System' with the following five chapters to inspire us to roll up our sleeves".
    --David Hogg, P. Eng., President High Performance Solutions, Inc. 04/04/05

    "The book lays out the component of lean management systems, discusses how the different parts work together and shows how to implement these new practices, by emphasizing that the totality of these changes is essential to cultivate a lean culture."

    "Mann has created a book that does a very good job explaining a critical component for a successful lean system. A word of caution; I know from experience, doing this isn't easy. Like we've heard many times about lean, it is easy to say but hard to do. Having the discipline to change your management system won't be easy but if you read this book and follow its advice you'll be much better off."

    Book Description

    Lean production has been proven unbeatable in organizing production operations, yet the majority of attempts to implement lean end in disappointing results. The critical factor so often overlooked is that lean implementation requires day-to-day, hour-by-hour management practices and skills that leaders in conventional batch-and-queue environments are neither familiar nor comfortable with.

    Creating a Lean Culture helps lean leaders succeed in their personal batch-to-lean transformation. It provides a practical guide to implementing the missing links needed to sustain a lean implementation. Mann provides critical guidance on developing and using the key elements of a lean management system, including: leader standard work, visual controls, daily accountability processes, maintaining a process focus, managing key HR issues, and much more. In addition, a questionnaire is included to help assess current management practices andmonitor progress.

    8 of 8 people found the following review helpful:
    5.0 out of 5 stars Clearly shows you why something so simple is so hard to do, April 11, 2007
    By Kate and Mike (Madbury, NH) - See all my reviews
    I've been doing Lean since 2000 (Six Sigma earlier, 1997) and have been applying general Toyota methods with what I'd consider a very good amount of success. The problem has been, how do you convey the necessity of the Toyota Lean method as a complete "business system" as opposed to JIT and "tools" thinking for busy, batch-thinking individuals? This book fills the gaping void.

    -Straight forward principles, complete and thorough
    -Appear to be true to the Toyota principles as I have seen demonstrated by ex-Toyota executives/leaders turned consultants
    -Drives to the heart of lean as a business system, with many elements that I've personally tried or seen work well
    -A Shingo Prize winner... impressive
    -Avoids excessive Japanese terminology (not an issue for me, but sometimes an issue for others)

    -I think that the power of IT applications is somewhat understated, and pitfalls of using or attempting to use IT-related systems not well described. Would like to see a better description of pitfalls and issues more specifically. Until then, think of IT as you would if you were automating a process... it had better be high volume and well understood/mature.

    Bottom Line: I think this a must-have text, and it is excellently written and laid out... plus it's to the point reinforced with numerous short case study examples. I'd recommend pairing this book with "The Toyota Way" (read that first to pave the way for this book). Also consider "The Toyota Way Fieldbook" as the ideal 3rd text to study. A word of caution, these books require a whole new way of thinking and commitment.
    Comment Comment | Permalink | Was this review helpful to you? YesNo (Report this)

    6 of 6 people found the following review helpful:
    5.0 out of 5 stars Book has quite an impact on new lean leaders, June 19, 2007
    This is a fantastic book, one of the small number of "core" lean books that I recommend to people. I've used the book with many healthcare clients who are new to lean. They have loved the book so much that they have read it three times, learning something new each time, and learning something different at each stage of their lean learning journey. The most frequent comment I hear is that the book means one thing to them before they start but it means even more to them after they have "struggled" with a lean environment on their own, revisiting the book and its concepts helps immensely.

    Mann's book helps make concrete the vague notion of a "lean culture" and spells out steps leaders can take to start moving in that direction. The book doesn't promise quick fixes, nor should it, but it puts you on the right path to developing your people, your leaders, and your problem solving skills. Kudos to David Mann for a very practical, actionable guide for lean leaders or those of us who strive to become lean leaders.
    Comment Comment | Permalink | Was this review helpful to you? YesNo (Report this)

    12 of 12 people found the following review helpful:
    4.0 out of 5 stars An Executive's Management Guide that's long overdue., August 25, 2006
    By Danny T. Moore "lean cuisine" (Bay Area, CA United States) - See all my reviews
    One of the chronic problems to successfully implement and sustain a lean initiative is the confusion of management's role--how to be engaged and support beyond funding and verbal endorsement of a lean initiative. Surveys show a 56% success rate with lean. There is a crying need for a guideline for management to be aligned with the floor changes at ALL levels of management. This is key to developing a lean culture. The reason I like Mann's book is that he touches on things that aren't found elsewhere to developing a LEAN MANAGEMENT SYSTEM. Companies typically will hire consultants in hopes of taking them to lean nirvana. But, for most orgs, there are two components that could hurt you: the recalcitrant manager (typically 15-20%) and the rest of the organization that want to be engaged but don't know their role. Both could doom your efforts. Mann's provides an excellent prescription to help you get management realigned with standard roles and specific daily tasks at all levels. Without this, you're dead. I only wish his book was better written to facilitate application. The content is practical but the format isn't--more visuals are needed and a too wordy--but, the goods are definitely there. You won't be disappointed; I still highly recommend this book. If you are looking for some guidelines for conducting a Gemba walk or developing an assessment (don't miss his Appendix) he goes into great detail. The book is divided into two major sections:
    What is the Lean Management System?
    Ch 1: The Missing Link in Lean
    Ch 2: The Lean Management System's Principle Elements
    Ch 3: Standard Work for Leaders
    Ch 4: Visual Controls
    Ch 5: Daily Accountability Process
    Learning Lean Management & Production: Supporting Elements
    Ch 6: Learning Lean Mgmt: Sensei and Gemba Walks
    Ch 7: Leading a Lean Operation
    Ch 8: Solving Problems & Improving Processes--Rapidly
    Ch 9: People--Predictable Interruption; Source of Ideas
    Ch 10: Sustain What you Implement
    Appendix, Glossary, References, Index.

    Lean Culture: 1st Letter

    Lean manufacturing is easy to implement in terms of lean tools implementation. So far, our team in HRd has been facilitating with managers and engineers from three pilot lines. We have done some work fro 5s, visual management, toc, setup time. TPM. Now we are in the process of setting up Kanban. We not only deal with 36 pilot project teams in three production lines, but we also work with the same teams to proliferate to other non-pilot lines.

    Now it is the time for us to look into cultural aspects of lean in our organization. Now this is a tall order. Our team is looking into few books for ideas such as Toyota Culture, Developing a lean workforce, and Creating a lean culture. No concrete formula except for the lean supervisor roles propose by Chris Harris in the book of Developing Lean Workforce. More to come.....

    Maxis Academy Visitation II

    Maxis Academy Visitation

    Friday, January 25, 2008

    IBM and Web 2.0

    Education Is Hope

    Informal education is more powerful than class room training. I learn faster and apply more in Web 2.0 environment. Explore the Web 2.0 - technorati, blog, webinar, digg, wikis etc to enhance your competencies. In 21 Century, you will left behind if you learn only through Classroom.

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