Jun 13 2013

The Toyota Way 2001: the Necronomicon of Lean

Unlike Jeffrey Liker’s 2004 The Toyota Way, The Toyota Way 2001 is not a publication but an internal company document distributed to US employees, who were not supposed to reproduce it. 12 years on, many consultants are quoting it, borrowing its terminology, and describing it as representing the essence of Lean. It is floating around, but it is still not readily available. If you google it, you find plenty of inquiries about it, but the document itself does not pop up. Unlike the Necronomicon, however, it does exist.

I have read it and my reaction was as follows:

About the document as a whole

It’s only 14 pages long, and probably worked as a “wrapper” for the methods Toyota employees were already using.  As a stand-alone document, however, it’s not that useful, as it does not clearly state what is special about the company. Based on its content alone, it would be difficult to tell the Toyota Way apart from other corporate philosophies like the HP way. A manager of a mid-size traditional plant, reading The Toyota Way 2001, would reasonably conclude that all he or she needed to do to emulate Toyota was follow its recommendations. With all the wheels that would have to be reinvented, this approach in such a plant might yield results in, say, 60 years.

In his introduction, Fujio Cho, then president of Toyota, describes the document as a statement of the company’s “DNA” and applicable everywhere in the world. The five major headings that follow — Challenge, Kaizen, Genchi-Genbutsu, Respect, and Teamwork — have come to be often used outside of Toyota, for example as a structure to explain why middle managers don’t practice A3 thinking.

A collection of quotations

The introduction is followed by a breakdown of each of these five headings, leading, for each subtopic, to a paragraph or two of explanations followed by a series of quotations from Toyota executives, including three Americans. I counted 73 quotations, which really make up the bulk of the document. The sources are as follows:
Sources Quotes
Eiji Toyoda 19
Kiichiro Toyoda 12
Alex Warren   9
Taiichi Ohno   9
Sakichi Toyoda   6
The Toyoda Precepts   4
Robert B. McCurry   3
Shoichiro Toyoda   2
Yale Gieszl   2
Hiroshi Okuda   2
Akira Takahashi   1
Declaration between TMC and Workers’ Union, 1962   1
Shotaro Kamiya   1
Taizo Ishida   1
Yukiyasu Togo   1
Total 73

Except for two quotes by Hiroshi Okuda, who was still running the company in 2001, all the authors were either retired or dead; Okuda himself retired in 2006.  With the exception of Fujio Cho in the introduction, the document does not reference any current leader. Eiji Toyoda, the most quoted author, is founder Sakichi Toyoda‘s nephew and will turn 100 this September. The second most quoted is Kiichiro Toyoda, who started Toyota in car manufacturing but died in 1952. The man best known outside Toyota as the father of the Toyota Production System, Taiichi Ohno, is only in 3rd place, with nine quotes. 80% of the quotes are from Japanese sources, and 53% are from three generations of the Toyoda family.

Influence of the US Lean movement

Outside of the quotes, the subtitles and the summary paragraphs use terms like “Lean,” “DNA” and “value” that are from the American Lean  literature. “Value” is used in multiple senses, sometimes for ethical principles as in “values and beliefs,” and other times as an abstraction of what the company delivers to its stakeholders, listed as “customers, shareholders, associates, business partners and the global community.”  The order in the sequence obviously matters, but there is a contrast with the US Lean literature and its exclusive focus on customers.

“Value added” appears once, in a definition of Muda as “no value added.” In the Japanese literature, Muda is not defined, and used in its common, everyday sense of “unnecessary.” “Added value” is used four times, and designates a quantity that can be high or low, as in  “goods and services with high added value.”  While it is not explicitly stated, this usage is consistent with added value being the difference between sales and the materials, energy and outsourced services consumed in producing the goods sold. This is the metric used to compute productivity, contribution to GDP, and Value-Added Taxes in countries that charge them. There is no reference to “value added” as an attribute of activities that customers are willing to pay for.

Improvement versus optimization

There is a reference to “Optimization,”  which surprised me, as I see the optimization mindset is antithetical to continuous improvement. Once you have optimized something, then, by definition, no more improvement is possible. I have heard managers say “We’ve optimized this line…” as a way to say that they had moved on to other areas and would not address glaring problems that remained. With continuous improvement, on the other hand, the completion of an improvement step is not an occasion to declare “mission accomplished”; it just sets up the stage for the next step.

Remarkable quotes

Following are comments on a few of the quotes in the document that I found most striking.

Eiji Toyoda on time

Eiji Toyoda is quote as saying: “A person’s life is an accumulation of time – just one hour is equivalent to a person’s life. Employees provide their precious hours of life to the company, so we have to use it effectively, otherwise, we are wasting their life.”

It  builds on the famous Benjamin Franklin quote  “Dost thou love life? Then do not squander time, for that’s the stuff life is made of.” (‘Poor Richard’s Almanack, June 1746). But Franklin’s exhortation is for individuals and about themselves. The twist Eiji Toyoda adds is that the company should not squander its employees‘ time, and the reason given is not that it is paid for, as Taylor would have said, but that it is a piece of that person’s life. I don’t recall seeing such an expression of respect for humanity in the American management literature.

Taking this further, if we squander an employee’s time, we are also sending a message. We are telling the employee that we can afford to waste his or her time and therefore that it is worthless. And since that is “the stuff life is made of,” the employee’s life is worthless, so that the final message is “You are worthless.” It is difficult to imagine a  more disrespectful or insulting stance.

Most discussions of respect for humanity in TPS are about making full use of employees’ skills, and, in particular, their intellectual and creative abilities. What Eiji Toyoda says here is that it is also about their time.

Squeezing water out of a dry rag

About Kaizen, Eiji Toyoda is quoted as saying “Even a dry towel can produce water when ideas are conceived.”

In Japan, I had heard it said admiringly of Toyota that “they could squeeze water out of a dry rag,” (乾いている雑巾を絞ると水が出る) but I didn’t know it was a quote from Eiji Toyoda. And it was about rags, not towels.  I suppose the translator just thought “towel” sounded more professional, but “rag” is more true to life.

About software and manufacturing

Eiji Toyoda is also quoted as saying “Why make only software? Software exists only because there is product manufacturing.”To this resident of Silicon Valley in 2013, it is obvious that, even though Photoshop and Netflix are not made of materials you can touch, they are as tangible as goods and services as cars and oil changes.  I understand why a man born 100 years ago who spent his life growing the best car manufacturing company in the world would feel that way, but, on this one, I respectfully differ.

JIT and GM

 Kiichiro Toyoda is quoted as writing the following about JIT in 1938:

“I plan to cut down on the slack time within work processes and in the shipping of parts and materials as much as is possible. As the basic principle in realizing this plan. I will uphold the ‘just·in.time’ approach. The guiding rule is not to have goods shipped too early or too late.”

In 1927, 11 years earlier, this is what GM’s Alfred P. Sloan said in a speech on the same subject:

“The quicker merchandise can be moved from the raw material to the ultimate consumer and the minimum amount of merchandise, of whatever it may consist, involved in the ‘float,’ the more efficient and more stable industry becomes.” Speech to Automobile Editors of American Newspapers, 9/28/1927.

Of course, stating a goal and achieving it are two different things. Alfred P. Sloan was the manager who led GM back from near bankruptcy to overtake Ford in the 1920s, become the largest car maker in the world until that position was snatched by Toyota. He knew that JIT was worth pursuing but, for all his management savvy, he was not able to make it happen.

Standardization and the “Best Way”

The document includes a  quote from Alex Warren that describes standardized work as the best known way to complete a job.  Art Smalley and Mike Rother  disagree, specifically with the notion that this is the way standardized work is used within Toyota. To Art Smalley, the standard is a basis for comparison; to Mike Rother, a target condition. I consider Standardized Work to be just a set of rules published for the purpose of ensuring that different people perform the same tasks in the same way. Because it has to be enforced, it is more than a basis for comparison, and it cannot be a target.  While it may be the best known way, describing it as such is hardly a way to encourage improvement.

The risks and benefits of publishing your “way”

A document of this type about the way a company does business gives employees a framework to understand management decisions and business processes.

The challenge in publishing it — even if only for employees — is to actually say something without binding management to courses of action that may become inadequate as business conditions evolve. When crises occur, as it did for Toyota in 2010, management is easily accused of having acted in contradiction to the company’s way by expanding too fast. HP is likewise blamed for having strayed from the “HP way.”

By definition, the Toyota Way is what Toyota says it is. But the Toyota Way 2001 document is intended to serve a specific purpose for the specific audience of Toyota employees in the US. As outsiders, we must consider it on its own merits and see what use we can make of it as a stand-alone document, taken out of context. My read on it is that it is misleading for readers who are just starting their Lean implementation in that they may believe that all they have to do is continuous improvement with respect for people.

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