Toyota Kata : Managing People for Improvement, Adaptiveness and Superior Results

by Rother, Mike

  Prior to the fifteenth century if you wanted a book, someone had to write it out by hand. Then Gutenberg began printing them. Eventually publishing companies were born and you could buy a book at the store, during business hours. Now you order the book online anytime, and perhaps it is even downloaded to your reading device or printer.

  At one time we sent letters by horse rider. Then came mail coaches. Following that came once-daily delivery to your doorstep. Today we communicate at any time, via telephone, e-mail, and Skype.

  Remarkably, we still find plenty of organizations that argue internally about whether to accept this endless trend toward 1×1 flow—as if it were something we have the power to control.

  When I first came across Toyota’s true north vision, I thought I had caught a mistake, and indicated as much to a Toyota person. “One hundred percent value added is probably not even achievable,” I said. “If you just move the product from one spot to the next then there is waste!” The response was, “Well, it could be that our production true north is theoretical and not achievable, but that does not matter. For us it serves as a direction giver, and we do not spend any time discussing whether or not it is achievable. We do spend a lot of effort trying to move closer to it.”

  In other words, it is acceptable and perhaps even desirable for the vision to be a seeming dilemma and thus a challenge.

  The Toyota person’s comments reminded me of the story about two people being chased by a hungry tiger. When one of them stops to put on some running shoes, the other says, “What are you doing? Do you not see the tiger coming?” The first person replies, “Yes I do, but as long as I am ahead of you I’ll be fine.” In a way, this is part of Toyota’s strategy. Toyota is by no means perfect and is still a long way from its ideal state condition. But as long as the product is what the customer wants, whoever is ahead on the way there will essentially get the money and survive. A trick for manufacturers is to stay ahead of your competitors in this direction.

  The striving for improvement in this direction, in all work activity, is a guiding light in Toyota’s manufacturing operations, and apparently does not change. Both the company’s philosophy of survival through improvement plus this direction giver have remained consistent beyond the tenure of any one leader.

  As production expanded during the 1950s, Toyota shifted its priorities from improving capacity and basic manufacturing technology to developing an integrated, mass-production system that was as continuous as possible from forging and casting through final assembly.

  —Michael A. Cusumano, The Japanese Automobile Industry

  Toyota’s progress toward this true north condition is by no means linear, but due in part to this consistent focus for over 50 years, Toyota has achieved a lead in eliminating waste and improving the flow of value. And it continues to move forward.

  Vision as an Overall Direction Giver, but Not Much More

  Toyota’s production system, for example, seeks to reduce cost and improve quality by moving ever closer to a total, synchronized, waste-free, one-by-one flow. But how do we get an organization of hundreds or thousands or tens of thousands of people to work continuously and effectively in the direction of a vision? We cannot simply move from where we are today to a low-cost, synchronized one-by-one flow from start to finish. In fact, it is dangerous to jump too far too fast; to cut too much inventory and closely couple processes too soon. A vision is far away, and the path to it is long, unclear, and unpredictable (Figure 3-6). How do we find and stay on that path?

  Figure 3-6. A vision serves primarily as a direction giver

  Figure 3-7. Target conditions are where the action is

  Target Conditions

  Toyota moves toward a vision by working with something I call “target conditions.” Across the organization Toyota people learn to set and work toward successive target conditions in the direction of whatever vision is being pursued (Figure 3-7). This condition typically represents a step closer to the vision and a challenge that goes somewhat beyond current capability. You can think of a target condition like a much shorter-term desired state that is more clearly defined than the distant vision. Like the vision, an interim target condition is also not a financial or accounting target, but a description of a condition.

  Once a target condition is defined, it is not optional nor easily changeable. It stands. How to achieve that target condition is optional and can tap into what humans are good at: roll-up-your-sleeves effort, resourcefulness, and creativity to achieve new levels of performance. That is, if they have a kata and are well-managed. Target conditions are a component of Toyota’s improvement kata, and we will look at them closely in Chapter 5.

  Utilizing the Sense of Direction to Manage People

  How does Toyota utilize its production vision to help manage people? A couple of examples will clarify this.

  Example 1: Sensor Cables

  In visiting the assembly area of a factory that produces automotive ABS-sensor cables (wires with a connector at one end and a sensor at the other), we found that the batch size in the assembly processes was one week. That is, a five-day sales quantity of one sensor-cable type is produced, and then the assembly process is changed over to produce a five-day batch of a different type. A quick calculation showed, however, that there was enough free capacity to permit more changeovers and smaller assembly batch sizes. The assembly area could set a target condition of a one-day batch size, rather than the current five days, and achieve that without even having to reduce the already short changeover time.

  In the conference room, we pointed out the potential for smaller batch sizes to the management team. The benefits of smaller lot sizes are well known and significant: closer to 1×1 flow, less inventory and waste, faster response to different customer requirements, less hidden defects and rework, kanban systems become workable, and so on.

  Almost immediately the assembly manager responded and said, “We can’t do that,” and went on to explain why. “Our cable product is a component of an automobile safety system and because of that each time we change over to assembling a different cable we have to fill out lot-traceability paperwork. We also have to take to the quality department the first new piece produced and delay production until the quality department gives us an approval. If we were to reduce the assembly lot size from five days to one day we would increase that paperwork and those production delays by a factor of five. Those extra non-value-added activities would be waste and would increase our cost. We know that lean means eliminate waste, so reducing the lot size is not a good idea.”

  The plant manager concurred, and therein lies a significant difference from Toyota. A Toyota plant manager would likely say something like this to the assembly manager: “You are correct that the extra paperwork and first-piece inspection requirements are obstacles to achieving a smaller lot size. Thank you for pointing that out. However, the fact that we want to reduce lot sizes is not optional nor open for discussion, because it moves us closer to our vision of a one-by-one flow. Rather than losing time discussing whether or not we should reduce the lot size, please turn your attention to those two obstacles standing in the way of our progress. Please go observe the current paperwork and inspection processes and report back what you learn. After that I will ask you to make a proposal for how we can move to a one day lot size without increasing our cost.”

  Using Cost/Benefit Analysis in a Different Way

  As the sensor cable example illustrates, without a direction we tend to evaluate proposals individually on their own merits, rather than as part of striving toward something. This creates that back-and-forth, hunting-for-a-solution, whoever-is-currently-most-persuasive effect in the organization.

  Specifically, without a sense of direction we tend to use a short-term cost/benefit analysis to decide and choose on a case-by-case basis whether or not something should be done—in which direction to head and what to do—rather than working through challenging obstacles on the way to a new level of performance. How many tim
es have you witnessed a potentially interesting though still unformed idea quickly torpedoed and killed with the question, “Is there a financial benefit to that?”

  Toyota uses cost/benefit (CBA) analysis too, but differently than do we. While we have learned to utilize CBA to determine what to do, at Toyota one first determines where one wants or needs to be next—the target condition—and then cost/benefit analysis is utilized to help determine how to get there. At Toyota, CBA is used less for deciding whether something should be done, and more for deciding how to do it.

  Traditional: CBA determines direction; that is, whether we do something or not. “This proposal is too costly? Then we must do something else.”

  Toyota: CBA helps define what we need to do to achieve a predefined target condition. “This proposal is too costly? Then we must develop a way to do it more cheaply.”

  Do not think, however, that Toyota’s approach is about achieving target conditions at any cost. Toyota has strict budgets and target costs. The idea is to first determine where you want to go, and then how to get there within financial and other constraints. This is where the sense of direction from the vision plays its role. Do not let financial calculations alone determine your direction, because then the organization becomes inward-looking rather than adaptive, it oscillates on a case-by-case basis rather than striving toward something, and it seeks to find and implement ready solutions rather than developing new smart solutions. An economic break-even point is a dependent variable, not an independent constraint that determines direction.

  Example 2: New Production Process

  When a new assembly process is being designed, there are usually a few different process options from which to choose. For example, there may be a fully automated line concept, a partially automated version, as well as a manual line concept. When we run these options through a cost/benefit analysis—a return-on-investment, or ROI, calculation—more often than not the fully automated option wins and is what we select. Later, when the line is in place, there are complaints that the automated line does not fit well with the situation.

  To follow Toyota-style thinking, we would take a different approach. First we would determine where we want to be. In this case that means determining what type of assembly process is most appropriate for the particular situation. Fully automated, partially automated, and manual lines all have their place, depending on the situation, and all of them can be a “lean line.” In the early start-up phase of production for a new product, the product’s configuration is still apt to change and the sales volume ramp-up may be different than expected. In this situation it can make sense to begin with a flexible, easily altered manual line and move to higher levels of automation when the product matures and sales volume increases.

  Now comes the cost/benefit analysis, which, let’s say, shows that the manual line design is too expensive. In the Toyota way of thinking, this does not mean that the manual line option is dropped. The target condition, a manual line, has already been defined and stands. What the negative outcome of the cost/benefit analysis tells a Toyota manager is that more work is needed on the design of the manual line, in order to bring it into the target cost objective. The manager will ask his engineers to sharpen their pencils and go over the design again, and this will continue iteratively until the target condition is reached within budget constraints. The sense of direction was used to manage people—in this case the engineers who were charged with developing a new production process.

  Stay Home

  One lesson implicit in this chapter is that we should not spend too much time benchmarking what others—including Toyota—are doing. You yourself are the benchmark:

  Where are you now?

  Where do you want to be next?

  What obstacles are preventing you from getting there?

  For example, if you find that your technical support staff cannot respond quickly enough to machine problems, you might think, “I wonder how Toyota handles this?” Or you could stay home and ask, “How fast do we want our technical support to respond? What is preventing that from happening? What do we need to do to achieve the desired condition?”

  Remember, the ability of your company to be competitive and survive lies not so much in solutions themselves, but in the capability of the people in your organization to understand a situation and develop solutions.

  And you don’t have to be perfect, just ahead of your competitors in aspects of your product or service.

  Notes

  1. “Open the Window. It’s a Big World Out there! The Spirit and the Ideas That Created Toyota,” pamphlet published by Toyota Kaikan, Toyota Motor Corporation, October 1993.

  2. Note that this may no longer be an effective vision for an organization in the transportation business in the twenty-first century.

  3. In early years this production vision was referred to as “Highest quality, lowest cost, shortest lead time.”

  Chapter 4

  Origin and Effects of Our Current Management Approach

  Much of our current managerial template comes out of the United States automobile industry of the 1920s, and a short, focused look back at the early history of its two giants, the Ford Motor Company and the General Motors Corporation, sheds light our current thinking.1

  The Ford Motor Company Approach (1906–1927)

  In regard to pursuing the 1×1 flow ideal state, Toyota was clearly preceded by the Ford Motor Company, which undertook, arguably, Western manufacturing’s last focused and sustained pursuit of the contiguous flow vision early in the twentieth century. (Note that I am intentionally using the word contiguous rather than continuous.)

  Flow Experiments in Fabrication Processes

  Everyone has heard about Ford’s 1913 moving-conveyor final assembly line for the Model T automobile at the Highland Park, Michigan, factory. But Ford’s flow experiments had already begun before the Model T was introduced in 1908.

  In 1906, to meet expanding sales of the Model N automobile, Ford engineers began arranging machine tools for the fabrication of engine and transmission parts in the sequence of processing steps, rather than grouping them by machine type, as was then common practice. For example, if a heat treatment was required, then the heat-treat oven would be located directly between the previous and next machining steps, rather than in a separate oven area. The result was considerably higher productivity. Over the next few years, Ford strove to apply this sequential processing concept to the production of many different fabricated parts.

  At that time, Ford’s various assembly processes (engine, transmission, axle, magneto, dashboard, final assembly, and so on) were still set up as stationary tables or stands on which a whole item was assembled, typically by a single person who fit all the parts together. Even when Ford moved its parts fabrication and assembly processes to the Highland Park factory in 1910, the primary assembly approach remained stationary tables and stands.

  Sequential Flow Assembly Line

  By 1913 the Highland Park factory still could not meet the runaway demand for the Model T; more orders were coming in than cars going out. Ford engineers, seeking ways to fill those orders, established their first sequential and moving assembly line for subassembly of the flywheel magneto. After a few weeks of experimentation and fine-tuning, the productivity of this process was increased fourfold.

  You can imagine the enthusiasm with which Ford’s engineers then worked to spread this sequential, flowing, and often moving-conveyor based assembly approach to the many other assembly processes at Highland Park, including the famous final vehicle assembly lines.

  Putting It All Together

  By the end of 1913, Ford had more or less the following situation in its Highland Park factory. The upstream parts-making processes (stamping, machining, etc.) had been arranged in the order of processing steps for some time. As indicated in Figure 4-1, the various downstream assembly processes (engine, final, etc.) were now also being put into sequentially flowing line arrangements.

  Figure
4-1. Fabrication and assembly

  Furthermore, there was also only one product being produced, the Model T, which meant that no changeovers were required. Except for a few different body types, all other parts on every Model T in production were the same.

  What would Ford’s next step be in this situation?

  With their successes in making both fabrication and assembly processes flow, and since they were only manufacturing one product, Ford engineers tried to take flowing production to its logical conclusion: Why not connect all processes in one contiguous flow from raw material to finished product (Figure 4-2)?

  We were not there and we cannot interview the Model T era Ford engineers to ask them about this, but they did leave us an exoskeleton of their thinking with the unusual, still-standing six-story buildings at Highland Park. These buildings (one of which is depicted in Figure 4-3 in its original elevation drawing)2 were added to the Highland Park factory complex in 1914, and Model T–related production took place there until 1919.

  Figure 4-2. Connecting it all into a single flow