The Toyota Production System -- A Humanitarian Economic System?

In August,  Olivier Larue publsihed a book entitled The Toyota Economic System: How Leaders Create True Prosperity Through Financial Congruency, Dignity of Work, and Environmental Stewardship, which analyzes the purpose and relationship between the different elements of the Toyota Production System (TPS) and how they add up to an economic system rather than just a production system that brings engineering and managerial solutions to businesses. It argues how TPS can be viewed as a science as opposed to a tool-based technique. 

When I spoke with Olivier this month, I asked him, "Why do you believe that the various components of the Toyota Production System (TPS) constitute a humanitarian economic system rather than just a production system?" Here is his complete response:

Many people associate societal economic progress with the creation of goods. However, from the era of craftsmanship to the advent of mass production, the way we organize work also plays a pivotal role in enhancing living standards.

The Toyota Production System represents the most recent methodology in this realm and possesses the potential to become the third and most advanced production system. It comprises three distinctive elements: the better-known technical element, which focuses on eliminating unevenness, waste, and overburden; the familiar managerial element, which prioritizes human safety and development; and the lesser-known philosophical element, which serves as the guiding principle for both the technical and managerial elements. When all three elements are simultaneously implemented, the benefits derived from adopting TPS are not confined to a company's gains alone. Instead, as with previous production systems, these benefits extend to the broader spectrum of our society. However, this is particularly pronounced with TPS because it is not primarily the result of technological advancements, as was the case with mass production systems. TPS also emerges from the application of human principles guided by a distinct philosophical concept of efficiency that markedly deviates from the efficiency favored by the mass production system.

Rather than fixating on a singular notion of efficiency—individual efficiency—with the belief that it will yield the optimal level of efficiency for all, TPS centers around total and true efficiency through the elimination of waste to remove the trade-offs inherent in optimization. Total efficiency entails resolving issues that hinder all factors or actors from attaining their full benefits. True efficiency entails eliminating costs rather than transferring them elsewhere. Eliminating waste entails increasing the ratio of value-added activity in work. 

The principle of total and true efficiencies through the elimination of waste is not confined to the shop floor, where TPS originated. 

• The principle of total efficiency doesn’t stop at a particular line, process, or piece of equipment which should not be boosted independently from the efficiency of preceding or subsequent processes. Total efficiency extends to the broader realm of efficiency management. For instance, it applies in the boardroom, where the pursuit of profit should not come at the expense of cash flow. Profit is undoubtedly essential for competitiveness, but it is equally crucial and substantially more efficient to achieve sufficient cash flow from operations to meet financial obligations promptly. 

• The principle of true efficiency is not restricted to the shop floor either, where the aim is to use the minimum number of workers, equipment, and materials required to produce only what is needed. True efficiency also implies not trading one self-worth in the workplace for better comfort at home, or raising the living standards of people in the present at the expense of the future when payments are due later. 

• The principle of eliminating waste is not limited to increasing the portion of value-added activity in the work, reducing unevenness and overburden to reduce cost but it also extends to reducing the environmental footprint as a result of all activities, value-added or not. 

Together, the philosophies of total and true efficiencies through the elimination of unevenness, waste, and overburden extend to all the stakeholders of society that contribute to a firm's success. This includes customers, employees, and the ecological environment of our planet. Each benefit supports the other as opposed to itself individually regardless of the cost to others. When all parts of the system reap their full benefits without incurring future costs, it coalesces into an economically humanitarian system. It contrasts with a more primitive economic system based on competition where losers are necessary in order to have winners. 

Of course, this call for a specific course of action necessitates problem-solving, and the unattainable remains beyond our reach. However, what is attainable is not always accomplished unless guided by economic humanitarian principles. As Pastor Tim Keller reminds us of what the critical philosopher Jurgen Habermas said “Science might tell us what is, but it doesn’t tell us what ought to be.” Today, The Toyota Production System offers possibilities beyond what a company can gain from adopting it. It presents an opportunity to eliminate socio-economic and environmental contradictions that have historically compelled economic trade-offs. 

What do you think of Olivier's thoughts regarding the far-reaching effects of the Toyota Production System? Do you feel TPS can be an "economically humanitarian system"?

The Role of Leadership in Continuous-Improvement and Lean Journeys -- What's Missing?

“What is missing from leadership in most continuous-improvement and Lean journeys?” That's the question I posed this past week to Brent Timmerman, who recently published a book entitled Starting Lean from Scratch: A Senior Leader’s Guide to Beginning and Steering an Organizational Culture Change for Continuous Improvement that addresses this topic head on. Here is Brent's complete response:

When an organization is beginning a continuous improvement and Lean journey, the leaders must be prepared to change their behaviors. It’s almost certain that some of the legacy approaches that the leaders have been previously using to manage their people will contradict the culture that they must build to facilitate a Lean journey. These mixed messages will stop the desired transformation in its tracks.

I think that you can imagine three “spaces” within the organization that must be shaped and sustained by the leaders for the continuous improvement transformation to be successful:

• The Space of Trust—this is the space of individual and collective trust relationships between the leadership and the staff; it is the “feeling” of trust within the organization. This space is crucial and foundational before the organizational journey can even commence.
• The Space for Change—this is a smaller space, set within the Space of Trust, where organizational change happens. When this space is properly formed, the people begin to support change, get excited by change, and they even want to get involved with the changes themselves.
• The Space for Continuous Improvement—this is the smallest space, contained within the Space for Change, and it consists of every continuous improvement event, activity, or effort. In the early days of a Lean journey, you must get colleagues to believe that the organization is serious about the transformation it is undertaking. As a result, the leaders must shape each continuous improvement event so that the team can be successful. When the team feels success, they start to believe. When others see teams of their colleagues succeed, they start to believe as well.

In short, the leaders cannot simply delegate to others the support of a Lean journey and expect success. This requires truly a shift in the culture of the organization, and the culture is defined by the behaviors of the leaders. Before the leaders can ask the staff to change, the leaders must be prepared first to change some of their own approaches to management.

What do you think of Brent's perspective? Have you seen instances in which leadership behavior completely contradicts the culture the organization is trying to foster through a Lean initiative?

How Do You Engage, Involve, and Motivate Employees?

Any Lean or performance-improvement initiative cannot survive on tools alone. Leaders must cultivate learning environments and develop the shared values that serve as the foundation for  dynamic culture. This month, Janis Allen and Mike McCarthy published an interesting book called How to Engage, Involve, and Motivate Employees: Building a Culture of Lean Leadership and Two-Way Communication that shows just how important it is to motivate and excite employees to take ownership of their roles.

When I spoke with Mike recently, I asked him, "Why do current employee-engagement programs fall short?” Here is his complete answer:

When asked, “Do you have an employee engagement program?” many managers answer, “Sure! Look at these engagement survey scores.” Beware! Quite often, people tell us what we want to hear on engagement surveys. If you really want to know about engagement, gemba gembutsu (go to the shop floor and see for yourself). Ask questions. Ask operators what ideas they have for improving the work. Then: 1. listen, and 2. help them test their ideas. You are now engaging people in improving their own work.

“Engagement” is a noun. Nouns are names of objects. Engage is a verb. Verbs are action. So, instead of asking your company’s managers “Do you have engagement?” say “Let’s go walk the shop floor and engage with our operators by asking what improvements they are making.” It’s the difference between saying “I have a stapler,” (the name of the object sitting on the desk doing nothing) and saying “I’m stapling these papers” (stapling is a verb, action, and you are doing something).

Engaged = observable actions by employees working on improvements. So, when a visitor comes into your workplace and asks, “Are your employees engaged?” say, “Let’s go talk to them. Then you tell me.” Take that visitor to the work area and introduce him to an employee. Say, “Allie, would you show our visitor the changes the team made on the shop floor?” If your employees can do this, they are actively engaged. The purpose of engaging employees is to inspire them to make improvements they can be proud of.

Survey Scores Vs. Go Engage. My new automobile monitors oil level, tire pressure, and other indicators electronically. I get an email with a link once a month that shows me if the tire pressure etc. has been low during the past month. What’s wrong with this picture? After all, I “have” a tire pressure report. Here’s what’s wrong: If I’m about to go on a long trip, I need to know right now if the tire pressure is low. I need to go to the garage (gemba gembutsu) and measure the psi in my tires by pressing (action verb) my tire pressure gauge to each valve stem and see for myself. When your focus is on a measurement tool rather than the actions you want, you get off track. If you steadily gazed at the speedometer while driving, you’d run off the road!

“What do you want me to say, Boss?” Many employees don’t tell the truth on engagement surveys; they say what they think management expects them to say. And in case this so-called anonymous survey isn’t really anonymous, who wants to be the one who says, “I’m not engaged?” This is another reason survey data is not an accurate indicator of actual engagement.

At an airline departure gate, we heard the announcement, “Please complete our customer survey when you receive the email. We want you to rate us a five, not a four. Five is alive; four is out the door. Ha ha. Just to help you remember to rate us a five, we have this basket of snacks here on the counter for you. Help yourselves. It’s not a bribe or anything.”

We saw a half-dozen people help themselves to the snacks. We wonder how many completed the survey, and even if they all rated the airline “Five is alive,” if it was an accurate indicator of their customer experience, whether they would fly with that airline again, and what they tell their colleagues about that airline. Often, people say what they think someone wants to hear. Why not? The person giving the score has nothing to lose. So beware of surveys. People have all kinds of wrong motives for the ratings they give.

Leaders can show people how they can take actions to make improvements they can be proud of. You can help them to do it. The most important results for your organization are the real actions taken to make improvements. But a positive side-effect of those engagement actions is that answers on engagement surveys will also improve. The survey improvement will be based on employees’ actions, their good results, and the satisfying feeling of being on a team. With action-focused engagement, your survey results will be based on actions and their real experience, not just words! And your company will be growing and prospering. 

Does your company have an employee-engagement program? Does it commit many of the mistakes Mike McCarthy mentioned here?