To understand Toyota’s success, first understand its DNA
I read this book when it was first published in 2004 and recently re-read it, curious to know how well Jeffrey Liker’s explanation of Toyota’s management principles and lean production values have held up. My conclusion? Very well. However, since this book was published, Toyota’s reputation for almost flawless operational performance has been somewhat tarnished. Liker discusses that in his latest book, The Toyota Way to Continuous Improvement: Linking Strategy and Operational Excellence to Achieve Superior Performance, co-authored with James K. Franz and also published by McGraw-Hill (2011). Is is so often the case these days, scandal-mongering usually dominates the daily headlines.
No good purpose would be served by merely listing the 14 management principles, out of context. Liker devotes a separate chapter to each, carefully explaining not only what each of the 14 is but also how it guides and informs everyone at all levels and in all areas of the Toyota organization. What Liker also accomplishes, and what cannot be adequately summarized in a review such as this, is to explain how all 14 principles are interdependent. Together, they serve as the company’s DNA. In the Preface, he recalls asking Fujio Cho (President of Toyota Motor Company) what was unique about his company’s remarkable success. His answer was quite simple: “The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements…But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner.” To understand Toyota’s success, therefore, it is important to understand that lean production is not a methodology; it is literally a way of life.
The 14 principles are divided into four thematic categories:
• Having a long-term philosophy that drives a long-term approach to building a learning organization
• Absolute faith that the right process will produce the right results
• Adding value to the organization by developing its people and partners
• Continuously solving root problems to drive organizational learning
As Liker points out, it is important to understand that the Toyota Production System is not the Toyota Way. TPS is the most systematic and highly developed example of what the principles of the Toyota Way can accomplish. The Toyota Way consists of the foundational principles of the Toyota culture, which allows the TPS to function so effectively.
Note: Those who have a special interest in the evolution of the Toyota culture are urged to check out Toyota Culture: The Heart and Soul of the Toyota Way, co-authored by Liker, Michael Hoseus, and the Center for Quality People & Organization, and also published by McGraw-Hill (2008).
How does lean improvement differ from traditional process improvement? “Briefly, whereas the traditional approach to process improvement focuses on local efficiencies, in a lean improvement initiative, most of the progress comes from a large number of non-value steps being squeezed out. For example, overproduction, delays, and wasted motion. In fact, the ultimate goal of lean manufacturing is to apply the ideal of one-piece flow to all business operations, from product design to launch, order taking, physical production, and shipment.” Some of the differences are subtle but no less significant.
To repeat, anyone can read this book and then understand what the Toyota Way is. Possessing a gourmet chef’s recipe, however, does not ensure that a gourmet meal will be prepared. Toyota has its own way. Other companies must develop theirs based on their own “roots.” In other words, lead from their traditional strengths but not be limited by them. In fact, companies may need to re-invent themselves, not once but several times. That is what Toyota did…and continues to do. Use operational excellence as a strategic weapon and the rewards and results will far outweigh the great effort required.
It remains for each person who reads this book to determine which of the 14 management principles are most relevant to her or his own enterprise, and then to determine how to translate each into effective action. Presumably Liker agrees with me that most companies have 3-5 areas in which “lean” initiatives are urgently needed. Developing an execution plan can be tricky, however, because all business transactions involve a process of some kind and improvement of one process inevitably has a direct impact on several others. Here’s one possibility, suggested to me by a COO to whom I gave a copy of this book: Read the final chapter, Chapter 22, first. Its title is “Build Your Own Lean Learning Enterprise, Borrowing from the Toyota Way.” He thinks that will provide an appropriate framework within which to proceed from Gary Convis’ Foreword and Liker’s Preface to the conclusion of Chapter 21. That suggestion is worth consideration.