The Toyota Way by Jeffrey Liker outlines 14 management principles centered around long-term thinking, continuous improvement, and respect for people, emphasizing the importance of viewing organizations as living systems rather than machines.
The second edition of The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer by Jeffrey Liker. This book delves into Toyota's management philosophy, offering a blueprint for building sustainable organizations that thrive on continuous improvement and respect for people.
Understanding the Toyota Way
Many associate Toyota with lean manufacturing, but Liker emphasizes that merely applying lean tools without grasping the underlying philosophy is misguided. He argues that organizations should be viewed as living, breathing entities that adapt and evolve, rather than as mechanical systems. As Margaret Wheatley notes in the preface, we often treat organizations like machines, which undermines their potential.
Updates in the Second Edition
The second edition of The Toyota Way incorporates insights from the past 15 years, including the impact of the digital age and new approaches to fostering scientific thinking within organizations. A significant update is the distinction between mechanistic and organic approaches to lean management.
Mechanistic Approach: Focuses on tools and top-down control, often yielding quick but unsustainable results.
Organic Approach: Purpose-driven, engaging individuals at all levels in a continuous improvement journey.
Liker uses the analogy of a model line, where deep development in one area promotes learning and ownership, contrasting it with a mechanistic approach that seeks quick, broad rollouts with minimal lasting impact. Think of the organic approach as the tortoise and the mechanistic as the hare.
The Four Ps of The Toyota Way
Liker distills the Toyota Way into 14 principles grouped around four key areas: philosophy, processes, people, and problem-solving. At the heart of these principles is scientific thinking, which involves questioning assumptions, experimenting, and learning.
Philosophy
The cornerstone of Toyota's philosophy is long-term thinking, even at the expense of short-term financial gains. Toyota's mission is to contribute to society, its customers, employees, and partners, viewing profits as a means to that end. This long-term perspective is evident in Toyota's substantial cash reserves, which serve as a buffer against unforeseen circumstances, such as the 2008 recession and the COVID-19 crisis.
During the 2008 crisis, instead of laying off workers, Toyota invested in training and continuous improvement (Kaizen). Employees noted that this investment allowed them to enhance their skills rather than face unemployment.
Processes
In terms of processes, Toyota emphasizes creating a continuous flow of value to the customer. The ideal is one-piece flow, where products move through processes without interruption. Liker likens this to a river flowing smoothly, free from stagnant pools or obstacles. However, he warns against merely rearranging equipment without addressing underlying issues.
One-piece flow exposes problems, compelling teams to solve them. For instance, if an issue arises during one-piece flow manufacturing, the entire production line halts, prompting team members to think critically and grow in their roles.
To manage production effectively, Toyota employs pull systems, such as Kanban, which trigger replenishment only when needed, akin to supermarkets restocking shelves based on customer demand. Liker cites a General Motors office that implemented a Kanban system, resulting in increased interest in continuous improvement beyond mere cost savings.
People
Liker highlights the importance of respect, challenge, and growth in Toyota's approach to people. Toyota cultivates leaders from within, fostering a consistent culture and deep understanding of the work. These leaders are humble, dedicated to building a learning organization, and embody the characteristics of level 5 leaders as described by Jim Collins in Good to Great.
A common saying at Toyota is, "Before we build cars, we build people." Leaders practice jenshi jenbutsu, which means going to the source to see for themselves. For example, a Lexus chief engineer drove across North America to understand customer needs firsthand. Toyota's organizational structure reflects this philosophy, placing team members at the top and team leaders in supportive roles.
Problem Solving
Problem-solving is where scientific thinking truly shines. Liker references Mike Rother's work on Toyota Kata, emphasizing the need for a scientific mindset that approaches problems through facts, experimentation, and iterative learning. The famous 5 Whys technique is not merely about asking why five times but about uncovering root causes.
Liker distinguishes between PDCA (Plan Do Check Act) for breakthrough changes and SDCA (Standardized Do Check Act) for addressing deviations from the standard. The A3 report, a simple one-page document, becomes a powerful tool for coaching and making thinking visible.
Hoshin Kanri plays a crucial role in aligning problem-solving efforts across the organization, promoting a collaborative process of learning and improvement rather than a top-down approach.
Key Takeaways
The main takeaway from The Toyota Way is that it is not about blindly copying Toyota's practices but understanding the principles and adapting them to your organization. Building a culture of continuous improvement and respect for people is essential, where everyone is a thinker and problem-solver.
Liker offers several heuristics to remember:
Think long-term; do not sacrifice the future for short-term gains.
Go and see; observe and understand the reality on the ground.
Ask why; dig deep to uncover root causes.
Experiment and learn; embrace the PDCA cycle.
Respect people; develop your team members and partners.
Strive for flow; create a continuous stream of value.
Challenge everything; embrace continuous improvement.
In conclusion, The Toyota Way provides invaluable insights into operational excellence that can be applied across various industries, encouraging organizations to foster a culture of learning and respect.