AN ESSAY ON SUCCESS AND FAILURE OF SYSTEMS AND CONTROL AT TOYOTA

AN ESSAY ON SUCCESS AND FAILURE OF SYSTEMS AND CONTROL AT TOYOTA

INTRODUCTION

Here is some thinking on culture and those that have gone from heroes to villains, and the idea that there is no black or white in business but shades of grey and a swinging pendulum of change and context which sometimes are aligned and sometimes out of sync.

The hypothesis is based on In Search of Excellence is a book written by Tom Peters and Robert H. Waterman and the promise it proclaimed and the reality that came to pass.

CONTEXT

In Search of Excellence is a book written by Tom Peters and Robert H. Waterman, Jr.. It sold 4.5 million copies and explored the art and science of management and was part of my MBA Study.

However the research methodology employed by the authors of this book is also severely criticised by Phil Rosenzweigh in his book The Halo Effect as the "Delusion of Connecting the Winning Dots". In an article in Fast Company, Peters remarked that the criticism that "If these companies are so excellent, Peters, then why are they doing so badly now," was unfair.

I highly recommend reading this..
https://www.fastcompany.com/44077/tom-peterss-true-confessions

PURPOSE

Like all good MBAs, process, culture and change consultants I have read and studied Lean Manufacturing, Toyota Production System and all the books in that section of the Library. So it is interesting to make Toyota the focus of my exploration into heroes to villains and the pendulum of change and context.

The CEO of General Motors announced that GM wasn’t in the business of making cars, it was in the business of making money. (This came as a shock to most of GM’s customers, who were in the market to buy a car — or even better, a way of life — not to spend money.)

Against that context Japanese manufacturers were bound to do well.

PART A - HEROES

SUPERMARKET THINKING

The Toyota concept came from visiting a supermarket. The idea of just-in-time production was originated by Kiichiro Toyoda, founder of Toyota. The question was how to implement the idea. In reading descriptions of American supermarkets he noted the store restocks the shelf with enough new product to fill up the shelf space. Similarly, a work-center that needed only enough to replace the inventory that had been withdrawn. Less stock, less waste, means less cost and more profit.

The right process will produce the right results

>Create continuous process flow to bring problems to the surface.
>Use the "pull" system to avoid overproduction.
>Level out the workload (heijunka). (Work like the tortoise, not the hare.)
>Build a culture of stopping to fix problems, to get quality right from the start. (Jidoka)
>Standardized tasks are the foundation for continuous improvement and employee empowerment.
>Use visual control so no problems are hidden.
>Use only reliable, thoroughly tested technology that serves your people and processes.

Add value to the organization by developing your people and partners

>Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
>Develop exceptional people and teams who follow your company's philosophy.
>Respect your extended network of partners and suppliers by challenging them and helping them improve.

Source: Toyota Production System
https://en.wikipedia.org/wiki/Toyota_Production_System

4 P MODEL – PHILOSOPHY, PROCESS, PEOPLE & PARTNERS, AND PROBLEM SOLVING.

We can see from the article below, and the key points I have extracted Totoya's status as a role model.

Analyzing Toyota’s Recipe for Success – The Toyota Way
https://www.mbaknol.com/operations-management/analyzing-toyotas-recipe-for-success-the-toyota-way/

Key points

Toyota way can be described by using the following 4 P model – Philosophy, Process, People & Partners, and Problem solving.

1. The Toyota philosophy: management decisions are based on a long-term philosophy, even at the expense of short-term financial goals

2. Processes: the most important objective of the Toyota System has been to increase production efficiency by consistently and thoroughly eliminating waste. Closely linked to Toyota’s JIT Just in Time principle is the company’s supply chain management, as the high efficiency and effectiveness of a JIT inventory system is heavily dependent upon the smooth co-ordination of a company’s supplier network (a feature of the villain part of this essay)

3. People and Partners: The underlying principle is that a workplace with high morale and a high level of job satisfaction is more likely to produce reliable, high-quality products at affordable prices. In contrast to other car manufacturers like GM or Ford, Toyota has managed to create an organizational culture that strengthens employee motivation and encourages their participation,

4. Problem Solving: one always has to see for himself in order to thoroughly understand the situation (jap. Genchi Genbutsu), and that making decisions slowly by consensus, thoroughly considering all options, is the key for sustainable problem solving


ENOUGH THEORY, WHAT ARE THE PRACTICAL STEPS TO SUCCESS

Under the lean manufacturing system, seven wastes are identified: overproduction, inventory, motion, defects, over-processing, waiting, and transport.

An overall objective is to limit resources used in the manufacturing system to only those needed. There are six other objectives that are a key to obtaining the overall objective.

First — Optimize each individual step of the manufacturing system. In other words, make each part as efficient as possible to get the most from the least.

Second — Make a product with no flaws or defects. This ensures that each part of the production line will go as planned.

Third — Reduce the manufacturing cost. The cheaper it is to make the product the larger the profit for the company.

Fourth — Make a product that is demanded by consumers. If there is no demand then there is only money lost.

Fifth — There needs to be flexibility in the system. Things will not always go as planned and the system must be flexible enough that it can be modified easily.

Sixth — There needs to be a strong and reliable relationship between customers and suppliers. Since Just-In-Time manufacturing means there is virtually no extra stock or materials on hand, companies need to rely on each other to be reliable and on time.

Read more: Lean Manufacturing Made Toyota the Success Story it is Today
https://www.rcbi.org/updates/lean-manufacturing-made-toyota-the-success-story-it-is-today/

BUT THATS NOT THE WHOLE TRUTH

An industry of lean-manufacturing experts have extolled the virtues of TPS so often and with so much conviction that managers believe its role in Toyota’s success. HBR research shows that TPS is necessary but is by no means sufficient to account for Toyota’s success.

The company succeeds because it creates contradictions and paradoxes in many aspects of organizational life. Employees have to operate in a culture where they constantly grapple with challenges and problems and must come up with fresh ideas.

During the first phase of HBRs research, they uncovered six major contradictory tendencies, one of which influences company strategy and the others Toyota’s organizational culture.

1. Toyota moves slowly, yet it takes big leaps: the launch of the Prius in Japan in 1997 was a huge leap.

2. Toyota grows steadily, yet it is a paranoid company - Never be satisfied

3. Toyota’s operations are efficient, but it uses employees’ time in seemingly wasteful ways - You would be amazed to see how many people attend a meeting at Toyota even though most of them don’t participate in the discussions.

4. Toyota is frugal, but it splurges on key areas. - In Japan, the company turns off the lights in its offices at lunchtime. At the same time, Toyota spends huge sums of money on manufacturing facilities

5. Toyota insists internal communications be simple, yet it builds complex social networks -Toyota fosters a complex web of social networks because it wants “everybody to know everything.”

6. Toyota has a strict hierarchy, but it gives employees freedom to push back -Pick a friendly fight.

The ying and yang of contradictions and paradoxes appear to be as follows...


Forces of Expansion 1: Impossible goals- For example, Watanabe has said that his goal is to build a car that makes the air cleaner, prevents accidents, makes people healthier and happier when they drive it

Forces of Expansion 2: Local customization - Local customization forces Toyota to push the envelope in numerous ways. For instance in 1998 when it developed the Innovative International Multipurpose Vehicle (IMV) platform. Toyota engineers had to design the platform to meet the needs of consumers in more than 140 countries in Asia, Europe, Africa, Oceania, Central and South America, and the Middle East.

Forces of Expansion 3: Experimentation - People test hypotheses and learn from the consequent successes and failures. The development team, called G21, first came up with a car that delivered a 50% improvement in fuel efficiency. Toyota’s senior executives rejected the prototype and demanded a 100% improvement

Three Forces of Integration 1: Values from the founders - Toyota has succeeded in the long term because of its naive optimism. Its employees see obstacles as challenges. Toyota’s chairperson Fujio Cho translated genchi genbutsu as “Have you seen it yourself?” The implication is that if you have not seen something firsthand, your knowledge about it is suspect.

Three Forces of Integration 2: Up-and-in people management - In 1977 The order had come down from then president Hiroshi Okuda: “Cut all costs, but don’t touch any people.” Toyota trains employees in problem-solving methods during their first 10 years with the company. Another feature of its people management policies is the role exemplary employees play as mentors.

Three Forces of Integration 3: Open communication - Information flows freely up and down the hierarchy and across functional and seniority levels, extending outside the organization to suppliers, customers, and dealers.

HBR conclude People often ask us, “Tell me one thing I should learn from Toyota.” That misses the point. Emulating Toyota isn’t about copying any one practice; it’s about creating a culture. That takes time. It requires resources. And it isn’t easy

Read more: The Contradictions That Drive Toyota’s Success
https://hbr.org/2008/06/the-contradictions-that-drive-toyotas-success

CONCLUSION

So far, so good. Toyota looks like a great success story and the articles picked indicate why and how. But nothing is perfect forever. There may be dark side.

PART B - VILLAINS

GREED - TO GRAB THE TITLE OF WORLD'S LARGEST AUTOMAKER FROM GENERAL MOTORS

When in 2009 Toyota Motor halted sales of eight models in the United States because of potentially fatal sudden acceleration problems, industry pundits were quick to cite Toyota's rapid expansion into the States as the key culprit.

Key issues

1. Bureaucracy: Toyota lost its key bridge between management in Japan and various U.S. constituencies — and its ability to respond rapidly when crises hit.

2. Over confidence - information is shared only on a “need to know” basis, confides one American employee. And long a scrappy underdog to General Motors and Ford Motor, Toyota developed a sense of cockiness

3. Weak Management - When he took the job, Toyoda told the world that he would practice “genchi genbutsu,” which translates as “going to where the problem is.” But when the safety flap came to light, Akio Toyoda, 53, grandson of the company’s founder remained silent and even attended the annual gathering of world leaders in Davos,

The impact

Toyota’s problem-solving mechanism clearly broke down. The company revealed as much in the series of explanations it released. Initially, Toyota announced the floor mats were the problem. Then it was the gas pedals, which were made by an Indiana-based supplier and thus limited the problem only to U.S.-made cars. But that story didn’t hold up because of a well-publicized case involving a Lexus in California in which four people died — and that vehicle was made in Japan. Then in early February, problems developed with the Prius hybrid and its brakes in both the U.S. and Japan. Toyota described it as a software issue.

Now it seems the underlying problem involves the software and the computerized controls governing acceleration and braking in many Toyota vehicles. CEO Toyoda has only compounded the crisis. When he finally held a press conference in Japan to apologize, he pointedly did not make a deep bow to demonstrate regret.

Read more: Toyota Recall Highlights Deep Organizational Failures
https://www.cbsnews.com/news/toyota-recall-highlights-deep-organizational-failures/

POOR UNDERSTANDING OF PUBLIC COMMUNIATIONS

In Japan, executives bow as a form of apology. The deeper the bow, the deeper the regret the executives hope to express. In the United States, however, apologies are not enough (“Toyota’s President Getting,” 2010). Americans often desire answers and explanations for the crisis that has occurred.

During the recall crisis, reports surfaced of Japanese and American public relations practitioners would get into screaming matches during phone conferences as they tried to convince one another that their methodology of communication was the more effective one.

When a crisis strikes in Asian countries, the company involved works silently to resolve the problem before addressing the media. However, this method is seen as unprofessional in the United States where consumers, politicians and other affected parties expect answers first and action second.

When the crisis struck, each of the public relations teams in different countries should have developed a specialized response for each country’s communicational expectations.

Read more: Toyota’s Cultural Crisis A case analysis of the company’s 2010 recall and the communications crisis that could have been avoided.By Ashley Nichols
https://silo.tips/download/toyota-s-cultural-crisis

SCALE AND GROWTH IMPACT ON INFORMATION AND COORDINATION

During the 1990s, Toyota began to experience rapid growth and expansion. With this success, the organization became more defensive and protective of information.

Toyota’s CEO, Akio Toyoda, the grandson of its founder, has conceded, “Quite frankly, I fear the pace at which we have grown may have been too quick.”


Case in Point: Toyota Struggles With Organizational Structure
https://saylordotorg.github.io/text_principles-of-management-v1.1/s11-01-case-in-point-toyota-struggles.html

KEY LESSONS

1. Aggressive growth can create unmanageable risk. Toyota’s desire to supplant General Motors as the world’s number-one car-maker pushed it to the outer limits of quality control.

2. Get the facts quickly and manage your risks aggressively. One of the more troubling aspects of Toyota’s recalls (there have been two) has been the company’s differing accounts of the source of the problem.

3. Your supply chain is only as strong as your weakest link. The reality is that auto companies make hardly any of their parts.

4. Accept Responsibility. This is one area where Toyota seems to be doing a good job, albeit maybe a year or more too late.

5. Take the Long View. The three leading factors burnishing corporate reputation these days are “quality products and services, a company I can trust and transparency of business practices,”

Read More: Toyota Recall: Five Critical Lessons
https://business-ethics.com/2010/01/31/2123-toyota-recall-five-critical-lessons/

CONCLUSION

My hypothesis was that no company is truly excellent and often success is contingent on circumstances. My starting point was inspired by the book In Search of Excellence, whose 'excellent' examples were not so excellent a few years later.

Form my reading of all the articles listed it seems to me that Toyota has good DNA but have suffered pain as a result of geographic and cultural expansion straining systems and compromising communications.

A question in the current social economic climate has to be: Is all growth good? Are the problems experienced by Toyota an inevitable consequence of scale? When the underdog becomes the overlord the change almost resembles a switch in polarity rather than a gradual process.

The systems thinking and process control that Toyota has been famous for appears to have become so complex that its now part of the problem rather a method of quality and control. It is what science-fiction speculates will happen when complex systems start making the decisions rather than following them.

It seems to be inevitable that more like this will happen in the future.\

If you are interested in helping people, organisations achieve change through process, projects or coaching get in touch.

Tim HJ Rogers
MBA Management Consultant + Change Practitioner
ICF Trained Coach IoD Business Mentor
Mob 447797762051 Tim@AdaptConsultingCompany.com
#people #process #performance #projects #change