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The Toyota Way

        posted by , August 14, 2013

Japan is unique.

Japan was the first non-western nation to emerge as an industrial and technological power.

As you might expect, the evolution of management took a very different path in Japan than it did in the West.

There's much to learn in Japanese management traditions.

In 2001, Toyota published 14 management principles. They're nothing short of brilliant. Since their publication, they've influenced virtually every Fortune 500 company.

They're essential reading for any manager interested in leadership and innovation.

1. Make decisions on a long-term philosophy, even at the expense of short-term financial goals.

The words "even at the expense of short-term financial goals" will get you fired in many companies.

Virtually every manager claims to value a long term strategy but few actually prioritize long term goals.

Toyota is different. For example, they appear to have a long term strategy to conquer robotics and aviation. They've shown in the past they can execute complex long term strategies.

2. Design processes so that problems quickly come to the surface.

In many organizations, the focus is on workarounds rather than fixing problems. When an employee or system encounters a problem they log it somewhere and continue on.

Toyota suggests that processes be designed to highlight problems. Problems should quickly rise to management attention.

3. Use "pull" systems to avoid overproduction.

Toyota was an early innovator in pull-production systems.

A pull-production system doesn't manufacture a car until it's ordered. Inventory is almost zero. Manufacturing lead times must be very low.

Their are numerous benefits of pull-production. Capital doesn't sit around deprecating. You don't over produce unpopular products. Products can be built-to-order.

4. Eliminate overburdens on people and equipment.

Many companies suffer from peaks and valleys of work. Employees are stretched to the limit one week and idle the next. This situation is stressful, error-prone and generally inefficient.

Toyota aims to level work so that people and resources aren't stretched.

5. Build a culture of stopping to fix problems, to get quality right the first time.

At Toyota, every worker has authority to stop a production line to resolve a problem. Equipment is also designed to stop when it detects a problem.

6. Standardized tasks and processes are the basis for continuous improvement and employee empowerment.

You can't improve processes you don't understand. Standard processes and task checklists are the basis for improvement.

Processes should empower employees with authority to do their job and address problems.

7. Design visual controls so that problems aren't hidden.

Visual controls should be intuitive and close to the source of potential problems. Ideally, management reports are a single page.

8. Use only reliable, thoroughly tested technology that serves your people and processes.

Japanese companies tend to be slow to adopt new technologies. The idea of introducing a bug-ridden system just to meet an imposed schedule is foreign to Toyota.

9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Large Japanese companies seldom hire experienced employees. They prefer hiring directly out of university. They invest heavily in training and offer employment for life.

Salary is modest at the start but escalates if you stay with the company long enough. There's little incentive to leave the company.

Management trainees are given the opportunity to work in a wide variety of positions. You might work in accounting one year and IT the next.

The lifetime employment system is designed to build a highly uniform management culture. Managers know the company inside-out and follow the company way with dedication.

10. Develop exceptional people and teams who follow your company’s philosophy.

The lifetime employment system also builds teams that are completely dedicated to the company way.

11. Respect your extended network of partners and suppliers by challenging them and helping them improve.

Seek a harmonious relationship with suppliers and partners. Challenge them and invest in their success.

Toyota Global President Akio Toyoda
(Toyota Global President Akio Toyoda)

12. Go and see for yourself to thoroughly understand the situation (manage by walking around).

When there's a problem go directly to the people closest to its root. Managers and executives are expected to connect with the situation on the ground.

13. Make decisions slowly and implement rapidly consider all options

Every option should be considered before choosing a path.

Managers should seek the consensus of their peers for major decisions. This helps to identify alternatives. It also gets everyone onboard for rapid implementation.

14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

Toyota was an early innovator in continuous improvement. It goes something like this:

Mistakes and problems are quickly identified. Employees, management and executives are quick to take personal responsibility for mistakes. Often an apology is in order.

Clear plans are set out to ensure that the problem doesn't happen again.

No problem is a problem. If you aren't identifying problems on a regular basis you're not looking hard enough. When you stop seeing your mistakes you stop learning.

Standard processes are continually improved to fix problems and better identify problems early on. Workers are empowered to stop work to escalate problems.

Managers and executive managers are hands-on when a problem occurs.

If something goes wrong on an assembly line, don't be surprised if the CEO shows up. He's not there to yell at you, he's there to contribute.

This is an installment in the ongoing series of posts called Management: The Missing Manual.

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