Chapter 1 A Basis for Managerial Effectiveness Toyota Motor Corporation is arguably the mot tude company ofthe mod- cen era. More than a dozen books! have Been writen about the company, it management system and philosophy, and le approaches to varios busiest, and operational problems. One ofthe lates bons, The Tiyte Way by Jetty Lier, became an immediate bestelle,indcating te instant daw the Tayote ‘ame has within the business community. A serch on Busines Source Premier (cfnowrawe acu) turned up over 3000 articles published over ae yest period with “Toyo” in the tle. And this number does not inlade the an _ fpf an counts ales on ean mafic er vans pect cof ior example, 55, kanban, poks-yoke) that ar largely based on tool aad practices developed by Toyo. Such tention is well deserved. As of the wring of thls book, Tayots had jst surpased Ford Motor Company in mumiber of vehicles sol annually inthe United Seaes, having alee beat at Ford in global sales several years pio, and ics poised co topple General Mocs to become the ares auto manufac ture in the word In 2005, Toya produced one vehicle approximately every for seconds somewhere ia the world while at the same time sting the bench snark for product qual. Toyota peresilly wine national and incemational acclaim in all of the major automobile. quay ratings. Foc instance, Toyo Aagship Lexus nameplate at earned the op spo J.D, Power Intl Quslicy Survey fr over ten ynts running, On top oF all thi, Toyota ie proftable—infit, very poable Toyota st record profs a 2003, 2004, and 205, eating ver $10 bilion annually, even while fu Nor American compet sig nilfcat drops i exigs, anderen oes, Ba ote omnis have a been ace, Wht maker Toa inci ings tha its ucts as been usained oe an extemal longtime pet, by mos: basins standards. For thease of Wold Wa ly Tey inti strgged to mainain oven bu re oer the flowing decades to become Japan leading manafcurer. Asi grew, Toyota ban eekng markets eu of apa, and by the ea 1980, Toyota aswell eased he US. mace. ‘Toyota has grown each yar fr the pat Sify years and has not expesenced & Jos in nes earning since the ely 1950s This a sandou pecormane i at Industry characreied by eyelial up and downs “Toyo ilo gung because bins and management prophyis unique is approach to manufiring in exceptional and couse nd is collective understanding of peratonal dynamics i breathtakingly inh fa Tayo is peraps most well kaown fort proucin sytem, ft doc mented in «deed ighty-pgebanlook pbk icra in Japanese in 1973 Theft English pulention oni appeaed In 1977 by Sugimat et 2 as high-level summary. However, twas a0 unt che en} 19905 thatthe sniqunes of Toyou sem bec wll own, with the publics of the tok The Aackne Tha Chg be orld tase MIT profess dei the stkingly obs, eile, and ecient syste hey observed in Jape and dubbed clean manufcurng forthe abi to design, produce a deer high guy products in volume wih acto of the ures ed by th North Amercin and Europea competion. The manuicrring communiy lated tates that he model ofan manufactcing wa he Toyota Production Sytem (TP). Tayo hasbeen remackaly open in shating is eystem wih others, een csaishing he Toya Supple Support Center provide conulng nian 10 US. companies wancing to operte more efit at no cost the cen More recently we hve come to under that Toyout uniqueness eens nko many oher areas well inca produt development ad ogists. Cat tage indies ae routing in many zens o prove taining i lean tals anid coneps and assistance in implrenation. Lean aplcaios that were nc gee primarily a highvolume manuficuting plans ae api a dng thir way noe seco ofthe economy, ning ening, ancl sevice, ranspratin and logis, heh eae fod vd beerge sevice 2nd goremmene (dad rtcy operons). Toot impact being fle vel beyond the automotive inde PDCA: Heart of the Toyota Way “The lean model is dramatically akeing the face of manofactring in che deve oped world. Inventories are dropping, ead times areshoeeing, quality ibd ing eteady or inteating, and pices ae ling Weepecthis tend wil allow i ‘othe sectors, jus asichasin manufacturing Ye, to aur knowledge, wit lh ‘we kw, wit al that has been published, with all:he esoures the ae aa se, no American companies hate reached Toyotasleve of eficency and eff tiveness Fac, Toyota is bling fico inthe Unie States ren a8 mo ‘of U.S. manufacturing i trying to move operations overseas or ousoute then alrogether Why do we note more companies emulating Toots rece ‘While here may be many explanations, peshapsthe most crucial one th most fda not underand—or fe understand, donot apreciae—wha the hearof the Toyota business, management, and manufacturing aprcach ‘We tend to see the intricate set of tol athe system. Bue although they a limportane to the system as curendly enacted, they ae at che surface, ao th beat In fit, Taichi Ohno the father ofthe modern Toyota podusion sy tem, ad that che tal are us countermeasures to business problems tha Ty ‘ota has Faced and tht they will be used only unl beter countermeasures und. Tn other words, the interconnected we of ols and practices we kno as lean manufscering isthe outcome of «deeper se of procs. Thee deep processes, wea, ae athe heat of Toya system, So how did the Toyors system emerge In simple ems, ie emerged as Toy ‘outs people aw problems or opportunities, “saved” che problem aggresive tnd jrematialy to find «better way odo thing, ad sen gorously ved ‘hae he beter way was indeed bette. Ifthe eemedy di indeed improve the ‘ystems, the new way became the standard way to de che work; if ot, problem telvng and verification continue ul che problem is exstactoly added, The soot ofthis process ae grounded inthe sient method of ing “The founders ofthe orignal Toyota companies were SakichiTayoda and hisson ‘iii, Sakich is eengnzed in Japanese textbooks a oe ofthe ret inven tor of his time. Hie primary accomplirene was che creation ofan automatic Toc in 1924 haf surpased the produsvgy and quality ofan similar prod ‘von the maker a that ime. Over 24 patents were granted on this machine lone. Most af the patents were fled by Sachi; howeves, quite few wera ‘developed by his son, Kichir, x graduate of the mechanical engineering depart iment of Tokyo Univers, the most prestigious university in Japan. Like his Fates, he had «knack for invention an ied co ceate and cake by nate “The machines they developed emerged aut of eepeted experimentation, This Inclination toward detins, and of tying ouc ideas ehrough experimenain, contin this day4 Understanding A3 Thioking “The problem-alving approaches in we st Toys today ate also deeply in cnced by highdevel methodology intially developed by Wale: Shewhare of Bal Lab ache 1930s, alter adopted by W. Edwards Deming who became is bigger proslizer? The methodology isthe Plan-Do-Cheele Act (PDCA) ‘jl lio called the Deming Cyle. Additonal eduction came from represen- tues af the Japan Unio of Scientes and Engineers JUSE, who pu on lec- ture at Teyota and other manufacturing companies in Japan after World War Teaching sient principe or quality contol and improvement The att of hee eachings ie che POCA cel “The PDCA eycle begins with che Plan sep, in which che problem-saher thoroughly studies «problem or opperwsty to understand ic rom as many vepiets a pose, analyst (quantaivey if possible o find the root “ses, develops one or more ideas to remedy the problem a exe the oppor ‘iy, and devise a plan for implementation. I the Do step, che plan is put Jiuo action a immediatly asi posible and pradene. Te Check tp involves ineasutng the efecs oF implemenation and comparing them tothe target ot prion, Act eer to eablihing the new proces, saluton oF system asthe ‘Honda if heres aresatsfacrory, or aking remedial action if they 260 “The PDCA cyelesiepl fellows the steps af the scent method: Plans deel= oping hypothe and experimental desiga: Dol conducting che experiment, Checks cillectng measiremenes and Acts interpreting she results and aking sppropriate action ‘Ove che yats Toyota has honed a set of norms and pacles on how 10 mow ffcively conduc ech step ofthe cyl. Ar each juncture, the problem ‘ole eto confroe i oe her een assumption and preconception in onder to gin Insight ago a station of phenomenon, ofr Yast tat his oe her “understanding is ect, I one gas insight, hat pew leenng mu be con: Famed through experimenation. If e's curene understanding is Found df ‘ent, anediate emedial eon required What Don’t We Get? [None ofthis should sound new or exotic to Westra managers. Indeed, the concep ofthe sientfe method er PDCA are ironically Western and no org ‘alo Japanese cau. So why have so many organiaations nt embraced this proces or spe of thinking tothe exten hat Toyota hae! We baieve mulile thape mor sigan inthe Wes, we tent be ont toward short team eke, We want 0 get the problem taken cae of and move on. At Toyota, were the proces by which theres ae achieved i equally not mote— ‘An Introduction to Managerial Effectiveness 5 import, andthe imate gol sn just a pole eae in the ned ane bu a tha the problem ss ly oon he ue bras there te pore snd 3} the prolsoher as eanced hor er proSsoiving lsd propa olen ee halenging ki e fur Th diene n peapcives fundamentally shen the way we ee PDCA Tt ht been sida the typi US fem, wen facing» Yexng problem in which ich one yao, wold pend hee monte aang, cee imo inpemenring, and sx rons weakng and picking up los ends ‘Tyo, fogs sma uation, woo spend teen mows planning sd ne month ilementing (wth no lore ed ocean). Ti compaion ivan exaggeration, of cone, but tao conan an Ingo eenent oF th Te renon Toyota pes ch ime and efor onthe pening phate ir eeu tha pate vo rea ering, Toyota manages wan © fre ve they deeply undenand the backround td ew fhe eset In bie moving frwa Afr he tent ae through probed, hey franco eb high dere of cersny ta they ba securely end Che ror enue of the problem. This nde undentndng che station fom "le eps nu oe rl sng a an tc iormance quam Toya pollen alo plan ot the change in del aching which eps wl be ke, by woman when) ad er eens fe ach id {alot and. if appropiate, cer superiors. Ti kee of inplemenaton planing is importan oem bee the expected improve no {chord che cn il wanteokoow nether iwaslackfundeandogof he Stein ora fly implementation hat produced the apoling res Fartbermor hereogh pansing ince» emonae prediction of the tangs in performance, along with plan flow wp—sgun, who wl do that tnd when. The pei of fre permance satay a0 infoal Sent oflyptieas bacon the ore of knoll the pl fatenent of typhi at pier eperimetsion) tha enable ea ing eo occur atte flap, We ether cnfm ow ate underanding tv unepvealyfed outa we have sree learn, Win he pote, these method uty devas nes gesrand check ciate ‘speach wit commensal In xsing ‘Wh ke planing unin comple, chen cn be xc Sih he Do scp us be acopled fr ay cag ocr Ag hy tn nirtinsem conten pe al of thr ten mewn a eve aly ead to dlg syn bore poole sec. Ton ‘rng ht the Dorp ies Ite cpr wa he hypothe. The Check sp ten where te individual involved valle thr caret ere of underage te ofthe lening poe ow do we know ha