The Toyota Way – Two Pillars

Toyota is receiving plenty of criticism now, much of it for good reason. There is also a large amount of psychology involved. From what I have seen, the insurance companies still see better claims history (fewer and lower cost claims) against Toyota than other manufacturers. And there is another strain that seems to enjoy criticizing what has been praised. Toyota does need to improve. But that is improvement of the existing management system, not a need to radically change the management of the company.

I think Toyota, even with the problems, is a fantastic example of a very well managed company. Yet even with all the study of lean manufacturing even basic ideas are overlooked. For example, the two main pillars of the Toyota way are “continuous improvement” and “respect for people.” For all of us, it is valuable to refocusing on core principles. We are too often looking for the next new idea.

This is one way of looking at the pillars of the Toyota Production System, from the Toyota Technical Center – Austrailia

Image of Toyota's pillars of management: respect for people and continuous improvement

Continuous Improvement means that we never perceive current success as our final achievement. We are never satisfied with where we are and always improve our business by putting forth our best ideas and efforts: we are keen to create better alternatives, question our accomplishments and investigate future definitions of success.

There are three building blocks shaping our commitment to Continuous Improvement:

1. Challenge – we form a long term vision, meeting challenges with courage and creativity to realize our dreams;
2. Kaizen – we improve our business operations continuously, always driving for innovation and evolution
3. Genchi Genbutsu – we go to the source to find the facts to make correct decisions, build consensus and achieve goals.

Respect For People refers to our own staff as well as the communities and stakeholder groups that surround us and we are part of. We respect our people and believe the success of our business is created by individual efforts and good teamwork.

Respect For People is translated in:

1. Respect – we respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust
2. Teamwork – we stimulate personal and professional growth, share the opportunities of development and maximize individual and team performance.

These elements combined define our corporate DNA, provide a way of operating that is recognised by each and every Toyota-member around the globe and enables us to sustain our success in the future.

Back to Basics for Toyota by Akio Toyoda

When my grandfather brought Toyota into the auto business in 1937, he created a set of principles that has always guided how we operate. We call it the Toyota Way, and its pillars are “respect for people” and “continuous improvement.” I believe in these core principles. And I am convinced that the only way for Toyota to emerge stronger from this experience is to adhere more closely to them.

While recent events show Toyota obviously needs to improve, that has been true all along (it is just more obvious lately). Some may see this as an indication that these lean manufacturing ideas based on Toyota’s practices are no better than other management practices. I don’t believe this. I feel just as strongly about the value of lean management as ever. I think that the recent events show you that no matter how well an organization in managed there is plenty of room to improve. Toyota never was close to perfection. They have much to improve, but they are still one of the best managed companies in the world.

My comments in 2005:

I think the instances of such failures are just a sign that even Toyota still has quite a bit to improve. I think this announcement likely is a result of common cause variation (it is the natural result of the current system). The natural result (of the system) is not that they have this particular failure, but that this recall is consistent with the % of vehicles that required a recall of this general character. I believe they are getting better over time but they still have a long way to go. With a result based on common cause you want to look at the entire system when designing an improvement plan not at the root cause of the seat belt issue. See Responding to Variation online and the book, Forth Generation Management, by Brian Joiner.

Related: Toyota Stops Lines – Lots of LinesAkio Toyoda’s Message Shows Real LeadershipDeming CompaniesRespect for People Does Not Mean No Criticism

And my comments in 2007:

I don’t agree that they need to rethink their purpose in life (I have a feeling that is taken out of context). They need to maintain and maybe even increase their commitment to their purpose in life.


That is exactly how I see it now. What Toyota needs to do is increase their focus on the principle of the Toyota Way. The biggest failure I see is what appears to be the all too common focus on hoping you can just keep going when indications of problems crop up and hope that things get better. Respect for people, as quoted above, is looking at respect for all people in Toyota. In many other places they show that they understand Toyota’s purpose extends to respect for people everywhere. If I were at Toyota I would make sure the long term responsibilities Toyota has to society are given more weight. That and a focus on improving the practices of the Toyota Production System will get them back to the continual improvement track they need to be on. Let growth come as an outcome of doing those things well. Don’t focus on growth.

Toyota, and every organization, needs to continuously maintain a focus on actually doing what is said to be important (following the Toyota Way, for example). This is not easy. It is something that has to be re-enforced every day. And re-enforced with systemic re-enforcers that re-enforce behavior in line with principles as well as systemic measures to make obvious deviations from the desired behavior and encourage a return to the desired behavior.

A similar view shows the Toyota Production System supported by the principles of jidoka and Just-in-Time (which can sometimes confuse people – since it is very similar, yet different, than the 2 pillars noted above), from Toyota Japan’s web site:

The Toyota Production System (TPS) was established based on two concepts: The first is called “jidoka” (which can be loosely translated as “automation with a human touch”) which means that when a problem occurs, the equipment stops immediately, preventing defective products from being produced; The second is the concept of “Just-in-Time,” in which each process produces only what is needed by the next process in a continuous flow.

Toyota Europe:

As a company, we seek to instil in each employee the desire to be more, and to achieve more. We strive to create an environment in which this enthusiasm is nurtured and encouraged, in which people are rewarded for their efforts.

Challenge. This means not only embracing challenges, but also challenging what we know and do, and being prepared to change things to make improvements.

Respect. This means respecting the individuality of each person within the group, respecting their contributions, their ideas, as well as their cultural or personal beliefs. It also means respecting the natural environment.

At the heart of The Toyota Way is a core belief that our workforce is a critical asset and that all permanent employees should benefit from stable employment. We also believe that our success as a sustainable organisation depends on the commitment of employees who understand and work according to The Toyota Way.

This is why we invest in each Toyota employee – no matter their level of seniority – via on-the-job training and the Toyota Business Practices (a Toyota-developed problem solving methodology). In this way, we can nurture their development and maximise their contribution to the organisation longer-term.

16 thoughts on “The Toyota Way – Two Pillars

  1. Harish

    Greetings,

    I get confused when I see posts on two pillars of TPS. 🙁

    TPS has only Jidoka and JIT as the two pillars.

    Toyota Way, as I have been told, has the two pillars you mentioned. The trick question is how is TPS different than Toyota Way?

    -Harish

    Reply
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  3. Ryan

    John,

    I agree with most of your post. However, Toyota has forgotten Deming’s principle that the customer is the most important part of the manufacturing process. I recently purchased a Toyota based on their cultural roots with Deming and was thoroughly disgusted by the purchasing process. Toyota’s entire management system may be 100%, but if they fail to please their customer, Deming would hold that their values are backwards.

    Ryan

    Reply
  4. John Hunter Post author

    I agree Toyota has failed to manage the dealer process http://management.curiouscatblog.net/2009/06/07/penske-to-buy-saturn-from-gm/ My understanding is that car dealers in the USA have an extremely political corrupt setup. I may be wrong but my understanding is there is all sorts of political interference in allowing Toyota, or any dealer, from managing dealers. Now that doesn’t excuse Toyota from finding a way to provide a decent customer experience but I think Toyota has just given into the system (remember as Toyota was growing in the USA there were huge biases against them – even bashing up Toyotas with baseball bats in pep rally type events showing their buy American preferences).

    Toyota could improve the customer experience dramatically if they just required CarMax like pricing. But my understanding is dealers pay politicians a lot of money to gain big interference in what car manufacturers can do http://www.alternet.org/story/126714/why_you_can%27t_buy_a_new_car_online/?comments=view&cID=1135079&pID=1134506 How politicians justify special favors for those trying to trick their constituents out of money is beyond me (actually it isn’t, the politicians are easily bought with cash taken from those constituents and given to the politician). http://www.edmunds.com/advice/buying/articles/42962/page001.html

    Reply
  5. Keith Farren

    I recently bought a Toyota, according to their cultural roots and Deming, and thoroughly disgusted with the procurement process. Toyota's overall management system 100%, but if they do not please their customers, Deming would think they are the values of regression

    Reply
  6. Becker

    Deming Toyota have forgotten the principle that customer is in the production of the most important part. I recently bought a Toyota, according to their cultural roots and Deming and thoroughly disgusted the procurement process.

    Reply
  7. Pirate

    For Harish, TPS is a methodology for production; the Toyota Way is a corporate philosophy on how to conduct business. They are not one in the same. It is unfortunate but dealers are independently owned and operated and not franchises. The result is that each one views their relationship with the customer differently. I believe that the design and production of the vehicles themselves are still customer driven. This is supported by the fact that even with poor dealer experiences and bad press the Camry is still the most popular car in the US.

    Reply
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