Extreme Toyota

Extreme Toyota p 150 - 157

Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer
Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer

A good team is not a cozy team
Those providing feedback should complain, and the others should listen sincerely, and then we have a friendly fight – both sides have the same goal

The 1st item on my list of priorities is to make this an organization where nobody hides concerns or problems and where constructive discussion takes place routinely. Without such discussion people will tend to let problems slide with slapdash solutions that barely scratch the surface.

Authority, responsibility, and accountability reast with the person, not a title or years of seniority

Title and rank are irrelevant in discussions of quality. Confronting your boss is acceptable. Bringing bad news to the boss is encouraged. Ignoring the boss is excused in the process of coming to the right decision.

There’s nothing that’s decided in a top down manner. No matter what, if it’s too bizarre, employees either modify the msg or will not accept it (silent rejection).

There will always be differences of opinion in important matters between HQ and the local operations. In those instances, we shouldn’t blindly follow HQ, but do what we believe is right even I f it might cause friction.

Pricing is often a point of conflict between the local operation and HQ, but viewed positively, the back & forth on pricing is a healthy process of information exchange that leads to deeper understanding of the situation.

There are no reprisals if local operations ignore HQ’s advice or if subordinates disobey orders from their supervisors, refusal to listen to others is a serious offense. Listen thoroughly to everybody’s opinion is our calling.

However visionary the people at the top may be, it’s the people at the bottom who have the actual information about what can and cannot be done; where all essential information is processed and frontline employees make the judgments that take into account local conditions and the opinions from the top

…continually questioning and probing to find the better way

People rarely reach senior positions if they are the preacher type (someone who doesn’t listen to others).

Established association to foster consistency in advertising on national television, regional papers & local radio stations sponsored by local dealerships. – contrast to past practices of advertising in stages, 1st by the manufacturer, then distributors & finally dealers.

Extreme Toyota p 100 - 150

Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer
Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer

Gen Y
These consumers, especially women, are more educated than any previous generation; more ethnically diverse; more than 1/3 nonwhite; and optimistic about their income prospects including economic support from parents.

Their overexposure to contemporary marketing techniques makes them more demanding as consumers and more skeptical than other generations about the messages in television commercials and magazine advertisements. They are also more sophisticated in their awareness of technology and their expectations of design, quality & safety stds in a car. The car is a symbol of self expression for more people than is was for previous generations.

Capturing the interest of this highly attractive segment was not easy; This demographic strived to be different, not only from previous generations, but from one individual to another. Is also demanded to be entertained and to be given an opportunity to explore, while expecting hassle free products and services in addition to the usual product performance criteria. Innovation was the order of the day. Rethink the conventional business model in all respects.

For the 1st time in its history, the Toyota Engineering Department shared vehicle drawing with the Specialty Equipment Marketing Association in the US before launch to encourage independent accessory manufacturers and tuners (who modify cars) to develop accessories.

The Global Kn Center makes a repository of best practices worldwide available; it encouraged distributors around the world to use its educational programs, but the decision to do so is up to each distributor.

By not forcing the adoption of specific practices, they ensure distributors retain the flexibility to use the documented best practices as they best see fit; allowing local best practices to grow into global best solutions tailored to each local market.

The company’s relentless pursuit & dissemination of the values
Founders 4 Philosophies
1) Tomorrow will be better than today
2) Everybody should win
3) Customer 1st, dealers 2nd, manufacturer last
4) Go & see things for yourself, first hand

Toyota has persevered through hardship, and over the long term, b/c of a naivete in the mindset of people who see obstacles only as challenges; they genuinely believe that they can overcome all obstacles.
Hence, obstacles become a source of power to energize people, who are, by nature, optimists at heart. This naïve optimism leads the co. to set impossible goals, and it has been passed down from the founders of Toyota, whose slogans are filled with this spirit of naivete and optimism.

“Endure a 100 times, strengthen yourself a 1000 times, and you will complete your tasks in short order.”

“To do what you believe is right, to do what you believe is good, and doing these things right then and in a way is a calling from on high. Thus, do it boldly, do as you believe, do as you are.”

The point is, you have to be brave and persevere whether there is opposition or not; you have to think hard and come up with solutions until you succeed, and once you have done your best, most thorough work, you will find things turning on their heads, and that becomes a source of power.

Continuous improvement is the habit of wanting to do a little better every day by eliminating waste and continuously becoming more efficient. It is an attitude of never being satisfied with the status quo, which is why you persistently conduct experiments.

We must discard our narrow elf interests and endeavor to serve the greater good. Neglect your duties and you’ll bringruin upon yourselves; fulfill your responsibilities and you’ll find yourselves enhanced. If each person makes the most sincere effort in his assigned position, the entire co. can achieve great things.

To contribute to society through ( the manufacturing of automobiles).

Factory workers as Knowledge workers
There is a wisdom of experience which can only be gained on the factory floor; expect every assembly line worker to direct their wisdom toward originating ideas for imrpvoing base costs, quality, and safety.
The job of the line manager is to create an environment in which line workers easily make suggestions and are supported to implement those suggestions.

We understand that we are just not all that smart; we have to work very hard. We have to rely on other people to do the very best job they can, every day of the week and every month of the year, in order for us to achieve mutual success.

Customer 1st, dealers 2nd, manufacturer last:
The priority in distributing the benefits of (_____) sales should be in the order of the customer 1st, the (_____) dealer, and lastly manufacturer. This is the best approach for winning the trust of customers and dealers and ultimately brings growth to the manufacturer.

The contribution of the team is greater than the sum of the contributions of each individual

One team, one aim, working together

Every team member has the responsibility to stop the line each time they see something that is below standard. That’s how we put the responsibility for quality in the hands of our team members. They feel the responsibility for quality in the hands of our team members. They feel the responsibility; they feel the power. They know that they count.

Who do you think is paying your salary? The company is not. It’s the customers. They buy our (_____), and the company uses that $ to make the next car than then sells it. Your salary comes from that transaction.

Since it’s the customer who pays our salary, our responsibility is to make the prouct they want, when they want it, and deliver quality that satisfies them.

Lexus Covenant:
Do it right from the start by providing the finst car ever built with the finest sales network, treating each customer as though they were ‘a guest in our home.’ Every dealer, mgr, & associate had to sign on the covenant, and it became common practice for all everyone to sign it once their training became complete.

1st Lexus recall
- each reported failure had occurred only once, without incident or injury; decision made to recall
- all 8000 car owners were sent letters signed personally
- production of replacement parts was ramped up & service personnel were trained
…proceeded to pick up every car directly from each owner’s home, providing a free replacement car. The repaired car was returned washed and with a full tank of gas. For customers in Alaska, personnel from the nearest area office made house calls by plane to make the repairs. All repairs were covered by Lexus, and completed in 20 days.
- dealers were thanked for the recall

If you have not seen something 1st hand, then your view of that thing is not credible. Top execs are the 1st to ask ‘have you seen it?’

Root causes of problems are revealed by on site investigation & inquiry.

Command respect by walking the talk

How can you expect to do your job without getting your hands dirty.

Try to solve problems with your own hands.
Before you say you can’t do something, try it
Never try to design something without 1st gaining at least 3 yrs hands on experience.

5 why’s

1) Why did the robot stop?
B/c the circuit was overloaded, causing a fuse to blow

2) Why was the circuit overloaded?
B/c there was insufficient lubrication on the bearings

3) Why was there insufficient lubrication on the bearings?
B/c the oil pump on the robot was not circulating sufficient oil

4) Why was the pump not circulating sufficient oil?
B/c the pump intake was clogged with metal shavings

5) Why was the intake clogged with metal shavings?
B/c there was no filter on the pump

Everybody know everything

The culture of communication is open & personal
Info flows freely up and down the hierarchy and across functional & seniority levels, extending outside the org. to suppliers, customers & dealers.

Personal relationships are of primary importance.
Email cannot replace real, human communication in the flesh. This requires cultivation of the skill of listening intently to all opinions in an environment of free and open exchange & in face to face interaction.
The result is an accumulation of relationships in an analog web that in many ways outperforms even the most advanced computer.

How the nerve system enables everyone to know everything

1) Open and lateral dissemination of know how
2) Freedom to voice contrary opinions
3) Frequent face to face interaction
4) Making tacit knowledge explicit in the Toyota way
5) Formal and informal organizational support mechanisms

Yokoten – unfold or open sideways

Give credit to the person or unit that came up with the idea 1st, but it is okay to steal best practices from others or have our best practices stolen by others.

Create an open and flat environment by having everyone work together in a large room with no partitions. (obeya)

Visualization (mieruka)

Posting all information on the walls helps improve communication, and b/c we’re human, if we share a common awareness of the issues, we will move in the same direction.

Everyone has to feel free to voice contrary opinions to top management & headquarters.

Extreme Toyota p 50 - 100

Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer
Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer

- you will never accomplish anything if you only harp on the risks

- let’s give it a try
- don’t be afraid to make mistakes
- initially we may experience some setbacks in entering the market, but all the time we’ll be gaining precious experience and gradually improving our business performance
Plan - develop an action plan
Do – put solution into action
Check – verify results
Act – make necessary adjustments to the action plan & solutions

- problem solving is considered to be a critical capability that is implanted in all employees early in their careers through vigorous training

- until employees 10th year, repeatedly administer a 3 stage training process designed to develop problem solving skills

- learning to solve problems well is the absolute minimum requirement for success
- Toyota Business Practices (TBP) 8 step process

1) Clarify the problem
2) Break down the problem
3) Set a target
4) Analyze the root cause
5) Develop countermeasures
6) See countermeasures through
7) Monitor both results and processes
8) Standardize successful processes

- the most practical way to realize mission impossible is the think deep but act small, taking measured steps & never giving up
- different from other is the way it thinks in this process and organizes it

• Think of the ”objective of the objective”
• Break down large, complex problems into smaller or more concrete problems
• Start small and take incremental steps
• Repeat experiments even if they fail
• Institutionalize successful practices
• Continue to raise the standard

Author: Date:
Objective of the Objective

- most important step to clarify the problem
- involves clarifying tha ultimate objective in relation to the more immediate aims
- objective should have public & society in mind, otherwise managers ask things like “Do you really expect to be a full fledged member of this company with the kind of objective you’re written down?

- considered critical every function in the project be represented & local operations understand all potential problems they might encounter

- ignore established customs & routines & concentrate on creative innovations

p 83
- Fireside chat meetings; face to face
- started as meeting between heads of Division and dealers to ease the minds of dealers by disclosing the company’s plans for surviving a crisis
- a candid exchange of opinion in small groups was very effective as a method of communication building relationships
- these practices were not made official, but sharing them as recommendations allwed Toyota to gently institutionalize such successful new practices while ensuring dealers the freedom to discover what worked best for them

- many company’s do not put enough time & effort into embedding effective new practices into their processes

- Once we solve a problem and reach a nedw level we have to raise our standards, otherwise they deteriorate as the environment changes and new problems arise… When new problems suddenly become visible, we have to reconstruct our indicators and renew our objectives [and raise the bar].

- Before you say you can’t do something, try it.
- An engineer who has the ability to criticize but does not take action is not able to make ____.

- failure is viewed as an everyday event at the company – a mechanism for learning
- you have to fail to progress
- when something goes wrong it is viewed as an opportunity to take corrective actions and learn
- if you’re 60% sure, take action
- taking action and not succeeding is okay because doing nothing is worse
- expensive learning lesson

- consider that those who did not succeed with one set of circumstances might succeed with another
- rely on results of experimentation to learn what works and what doesn’t but this process cannot succeed if employees feel they have to hide bad news or fabricate positive results.
- Encourage all employees to admit problems exist, make them visible and see them as opportunities for improvement, to identify their root causes and take concrete countermeasures to prevent problems recurring over the long term

- data is important, but put the greatest emphasis on facts; (data can be skewed)
- saw these practices no only as a motivating force, but as a duty of employees that enable the company to be of service to humankind. The ultimate purpose was not only to make $ but to do good for society

5 Main Principles of Toyoda

1) always be faithful to your duties, thereby contributing to the company and to the overall good
2) always be studious and creative, striving to stay ahead of the times
3) always be practical and avoid frivolousness
4) always strive to build a homelike atmosphere at work that is warm and friendly
5) always have respect, and remember to be grateful at all times

- one of the recent presidents carries a sheet with him listing the principles and makes reference to them in his speeches

By their nature, experiments at the outset draw more naysayers than believers b/c there is no assurance of success.
PCDA, 8 steps, A3

Local customization provides an outlet where local employees can direct their creative energy toward “satisfying the specific needs of customers and fulfilling the aspiration of growing local business.”

Local customization comes 1st, followed by model integrations, shared platforms, and common parts to reduce complexity. Not the other way around, nor at the same time. Global co. who choosing 1 optimal solution may be very efficient but sacrifice the creative potential of employees in local ops.

Extreme Toyota p 1 - 50

Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer
Extreme Toyota: Radical Contradictions That Drive Success at the World's Best Manufacturer

Emi Osono
Norihiko Shimizu
Hirotaka Takeuchi

P 3
Hard Side of Toyota: Toyota productions system, allowing the manufacture of higher quality, more reliable products at lower cost; and faster response to fluctuating market demands in meeting current orders and faster product development cycles.

Soft Side
Practices related to HR, culture
- a shift from the industrial (focus on lines, machinery, automation) society to the knowledge (smarts in people) society; growth depends not just on operational efficiency but also people and org. capability
- Toyota positions people at the center of all things.
- Factory workers accumulate wisdom from work on the lines; ideas come from anywhere, even outside the firm

• Toyota’s mgmt is predominantly male & Japanese & they have no plans to relocate their head office from rural setting to central Tokyo
• Many people attend Toyota meetings, including several who do not participate in the discussion, and many whose responsibilities bear no relation to operational or financial performance. In its sales org they deliberately assign more employees to regional offices than other auto co.
• Structure is formal & bureaucratic; many top execs are inaccessible to middle mgrs. & reflective of rigid hierarchies in Japanese culture
o Visitors meeting a middle mgr wear a visitor badge 7 receive a 35 degree bow from reception
o Meeting with an exec means no badge & a 90 degree badge
• Up and In culture – instead of our rise through the ranks or pushed out. Employee retention is high & employees work hard & compete with each other.
• No clear strategic focus. They seem to try anything & everything to stay ahead of all the others, and tries to be good at all of it.

- the company actively embraces and cultivates contradictions instead of passively coping with them
- we are constantly confronted with 2 opposing propositions, sometimes 3, sometimes 4. It is a way of deliberately introducing a positive level of tension into the workplace on a regular basis. Each organizational unit avoids making any kind of compromise and we argue it out till the end across the units.. This process ensures that we come up with the best solution.

1) Moving gradually and also taking big leaps

Content is accumulated gradually, over many years, however the results enable the company to make great leaps forward

2) Cultivating frugality while spending huge sums (R&D, manufacturing facilities, brand equity, dealer networks, HR development)

3) Operating efficiently as well as redundantly

Toyota holds a lot of meetings attended by a lot of people, many of whom do not participate in the discussion.

4) Cultivating stability and a paranoid mindset

Constantly hammer in messages like “Never be satisfied”
“There’s got to be a better way”
“Reform business when business is good”
- doing nothing and changing nothing is the worst thing to do in the new century
“No change is bad”
Creating a list of high expectations, some which may be close to impossible to conceive.

You have to put your life on the line in order to make something good. If you compromise in the process, nothing good will come of it. If you listen to this person’s and that person’s opinion, your spiky horns get dull. You have to keep sharpening your horns.

Seize every opportunity to instill an atmosphere of urgency.

5) respecting bureaucratic hierarchy and allowing freedom to dissent

The voicing of opinions contrary to those of top management or headquarters is an everyday occurrence.
Dissenting against your bosses, not blindly following their orders, bringing bad news to them and generally not taking them too seriously are all permissible behaviours.
Voicing concerns about the status quo does not illicit any fear or stigma about bad mouthing the company.
They portray confidence they are doing the right thing by providing constructive criticism.

6) Maintaining simplified and complex communication
Constantly describe yourself in easily understood terms. A3.

Relentless focus on the human being as the center of production and consumption drives continuous success.

Taylorism – management scientist Frederick Taylor prescribed scientific methods & procedures such as time and motion studies to eliminate conflict and contradiction in the workplace and increase efficiency on the factory floor.
- learning by doing and being forced to reconcile our unique perspective with those of others who disagree with us

6 Opposing Forces driving the company’s expansion, and keeping it from breaking apart:

Expansive Forces
1) Impossible Goals
a. Solutions should be found that are not compromises or an easy way out of conflicting demands but is optimal
2) Experimentation
a. Includes 8 step problem solving process, the practice of defining objectives and breaking down complex tasks using A3 analysis, and the institutionalization of new practices in the organization
3) Local Customization
a. Customizes its products and operations to match the level of consumer sophistication in each locale

Integrative Forces
4) Founders’ philosophies
a. Continuous improvement mindset/kaizen
b. Values of respect for people and their individual capabilities
c. Teamwork
d. Humility
e. Putting the customer first
f. Seeing things first hand/genchi genbutsu
5) Nerve system – open communication, cross training of knowledge to ensure everyone knows everything
6) Up an in
a. Performance evaluation assess the ability to handle issues creatively, resilience, and trust from other employees/jinbo

- the six forces keep the company in a state of disequilibrium, where contradictions coexist generating healthy tension and instability.
- all companies facing a shortage will carefully and creatively allocate them to maximize returns. Danger lies in overabundance of resources.

- setting goals that seem difficult or even impossible to achieve, pushes beyond conventional practices and drives continuous reinvention & growth

p 44
The #1 enemy is it’s own success, causing people to coast and not move to the next challenge, stay on top of things, challenge the current situation, or doing anything that might disturb the current success in the efforts to gain future success. What are you going to do next?

- the essence of strategy is choosing what not to do