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The Need to Improve Management While Building Organizations Fit For Human Beings

Posted on September 29, 2011  Comments (2)


Gary Hamel: Reinventing the Technology of Human Accomplishment

I agree with Gary Hamel that we need to adopt new management strategies. I happen to believe most of new strategies we need to adopt have been known for decades, we just fail to implement many of them.

He argues it is hard to retain knowledge advantages (within companies). I agree. However execution advantages it seems to me are not that difficult to maintain. Few companies actually focus on the customer and continual improvement. Toyota can be incredibly open but still few others are not willing to actually put in the effort to execute fully.

The reverse accountability idea he discusses I don’t love as much as he does. I do believe it is good to value the entire workforce more and not base decisions on HiPPOs. Accountability is a loaded term, in my opinion. Even in he talk he focuses on the “fear” – if the supervisor doesn’t fix the issue to the reporters satisfaction in 24 hours it is escalated to the next level. The process could be better, without what seems like driving in fear, to me.

I agree that the best management strategy is to adopt the thinking he captures with “you cannot build a company that is fit for the future, without building one that is fit for human beings.” The part I don’t agree with is phrase he lead that quote with: “Because I think for the first time since the industrial revolution…” isn’t right. I think Dr. Deming taught that idea to Japan in the 1950′s and as we all know Toyota adopted as the core “Respect for People” principle. That concept was important in 1950. That management idea is needed. Adopting that principle would be new for many of our organizations. But it also is true that the idea has been known for decades.

I return to this theme frequently. We don’t need many new ideas. We just need to adopt the good ideas that have been proven for decades. The new ideas are mainly just a bit of flavoring to tweak the good ideas we have had available and just chosen to ignore.

Related: Respect People by Creating a Climate for Joy in Work – Management Advice Failures – Positivity and Joy in Work

Respect for People Doesn’t Mean Avoiding Any Hint of Criticism

Posted on January 14, 2011  Comments (2)

As I said in a post a few years ago on respect for people and Taiichi Ohno‘s sometimes very aggressive style:

The difference between respect and disrespect is not avoiding avoiding criticism. In fact often if you respect someone you can be much more direct and critical than you can with someone you treat as though they don’t have the ability to listen to hard truths and improve. I think we often have so little respect for people we just avoid dealing with anything touchy because we don’t want to risk they won’t be able to react to the issues raised and will instead just react as if they have been personally attacked.

Masaaki Imai described Taiichi Ohno’s style this way

he had such a high expectation of the staff and managers under him. If they were not doing something the right way, he would explode. And when he exploded, he really would explode.

But for those who came to him and really asked for help, he was very patient. He wouldn’t give them the answer, but preferred to provide them with enough of an understanding of the situation, as well as help on how they could deal with the problem. So he was very much a teacher and a leader.

I would say that while Taiichi Ohno was truly remarkable that doesn’t mean he did everything right. And he might well have failed to communicate in a way that conveyed respect for people fully, when he exploded. He was great, but his methods could also be improved. At the same time some extent showing some fire may be helpful at times to get people to take things seriously (avoiding the need for this is even better, but not everything will be done as well as it possible can be).
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Good Process Improvement Practices

Posted on November 8, 2010  Comments (2)

Good process improvement practices include:

  • standardized improvement process (pdsa, or whatever)
  • Going to the gemba – improvement is done where the work is done. You must go to the where the action is. Sitting in meeting rooms, or offices, reading reports and making decisions is not the way to improve effectively.
  • evidence based decision making, data guides decision making rather than HiPPO
  • broad participation (those working on the process should be the ones working on improving it and everyone in the organization should be improving their processes)
  • measurable results that are used to measure effectiveness
  • pilot improvement on a small scale, after results are shown to be improvements deploy standardized solutions more broadly
  • visual management
  • Standardized work instructions are used for processes
  • one of the aims of the improvement process should be improving peoples ability to improve over the long term (one outcome of the process should be a better process another should be that people learned and can apply what they learned in future improvements)
  • quality tools should be used, people should be trained on such tools. The tools are essentially standardized methods that have been shown to be effective. And most organization just ignore them and struggle to reinvent methods to achieve results instead of just applying methods already shown to be very effective.
  • the improvements are sustained. Changes are made to the system and they are adopted: this seems obvious but far too often process improvements are really just band-aids that fall off a few weeks later and nothing is done to sustain it.
  • goals, bonuses and extrinsic motivation are not part of the process
  • The improvement process itself should be continually improved

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The Toyota Way – Two Pillars

Posted on April 15, 2010  Comments (7)

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 Lines – Akio Toyoda’s Message Shows Real Leadership – Deming Companies – Respect 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.

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Toyota’s Journey to Lean Software Development

Posted on March 18, 2010  Comments (0)

Toyota’s journey from Waterfall to Lean software development by Henrik Kniberg

Toyota builds cars (duh). In the past that didn’t involve much software, and the little software that was needed was mostly developed by suppliers and embedded in isolated components. Toyota assembled them and didn’t much care about the software inside. But “The importance of automatic electronic control system has been increasing dramatically year by year” said Ishii-san.

A modern car is pretty much a computer on wheels! In a hybrid car about half of the development cost is software, it contains millions of lines of code as all the different subsystems have to integrate with each other. He mentioned that a Lexus contains 14 million lines of code, comparable to banking and airplane software systems. Ishi-san concluded that “Therefore Toyota needs to become an IT company”.
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Most of Toyota’s ideas about how to do Lean software development resonated well with me. My feeling was that they are on the right track.

One thing bothered me though – the extreme focus on detailed metrics. I agree with the value of visualization, standardization, and data-driven process improvement – but only if used at a high level. My feeling was that Toyota was going to far. They say engineer motivation is critical, but how motivating is it to work in an organization that plans and measures everything you do – every line of code, every hour, every defect, how many minutes it takes to do an estimate, etc?

via: Justin Hunter

Related: Toyota IT Overview – Toyota Canada CIO on Genchi Genbutsu and Kaizen – Lean Software Development – My First Trip to Japan by Peter Scholtes – Toyota IT for Kaizen

Management Improvement Carnival #87

Posted on February 1, 2010  Comments (0)

The Curious Cat Management Improvement Carnival provides links to recent articles to help managers improve the performance organization.

  • Lean in Sweden: Tools < Thinking by Mark Graban – “Tools have some value, but only in context of lean thinking and the lean management philosophy. Tools aren’t value-less, but thinking is better.”
  • Manufacturing starts to come home by Dan Markovitz – “NCR sees domestic manufacturing as key to increasing sales as well. It enables them to make higher value-added products that their customers want.”
  • Correlation or Causation? Interceptions and the Playoffs by Jeff Hajek – “this is a classic case of confusing correlation with causation. If this data truly was a cause and effect relationship, meaning interceptions caused losses, fixing the problem would be simple… If you never threw the ball, you could win nearly four out of five times.”
  • Learning from Toyota’s Stumble by Steven Spear – “But as we are now sadly seeing, the capacity for developing people can be overstretched. It was not recognizing this and succumbing to the temptation to make growth its first priority that led to Toyota’s current problems.”
  • When in doubt, timebox it by Mark Imbriaco – “If we can solve the compatibility problems in those 30 minutes, it will be a nice win and we can make use of the plugin that we want to. On the flip side, we already have a known solution to the problem.”
  • Be Proactive – Prevent your problems! by Sonja Hughes – “Monitoring process performance through statistical process control or other performance measures allows us to detect changes or trends so we can take appropriate action before problems occur.”

    • Continue reading →

Toyota Stops Lines – Lots of Lines

Posted on January 26, 2010  Comments (3)

The practice of stopping (either the machine automatically detecting a problem and stopping or a person stopping) the line when a problem is detected is part of Jidoka. Jidoka is also highlighting and making problems visible. Jidoka and Just in Time are the two pillars of the Toyota Production System. Today Toyota practiced Jidoka on a large scale: Toyota Halts Sales of Eight Models After Recall

Toyota Motor, still struggling to resolve a problem with accelerator pedals, said Tuesday it would temporarily stop selling and building eight models in the American market, including the popular Camry and Corolla sedans
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“This action is necessary until a remedy is finalized,” Robert S. Carter, a Toyota group vice president, said in a statement. “We’re making every effort to address this situation for our customers as quickly as possible.”

Toyota said it would immediately stop selling the Camry, Corolla and Avalon sedans, Matrix wagon, RAV4 crossover, Tundra pickup, and Highlander and Sequoia sport utility vehicles. It will also stop building those models the week of Feb. 1. All of the vehicles are assembled in the United States or Canada, at a total of five plants.

The models affected accounted for more than a million sales in 2009, 57 percent of Toyota’s American total for the year.
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The most recent recalls follow what Toyota insisted was a companywide effort to improve quality that was started by Katsuaki Watanabe, who served as its president before he was replaced last year by Akio Toyoda, grandson of the company’s founder.

My guess is there are quite a few people in Toyota that are getting a frustrated that they continue to have problems that they have been unable to successfully address. This strikes is as the kind of action initiated near the top of the organization chart to remind the organization that problems must be addressed immediately. It is not ok to continue business as usually when problems have not been addressed in the Toyota Production System. Toyota is capable of failing to live up to the principles of lean manufacturing. But they also seem to understand this risk and continue to strive to improve. To succeed though they need to improve results – intentions alone are not enough.

Related: Cease Mass Inspection for Quality – Recalls at Toyota and Sony – Reacting to Product Problems – Workplace Management by Taiichi Ohno

Don’t Hide Problems in Computers

Posted on August 11, 2009  Comments (3)

Making things visible is a key to effective management. And data in computers can be easy to ignore. Don’t forget to make data visible. Paul Levy, CEO of Beth Israel Deaconess Medical Center in Boston recently hosted Hideshi Yokoi, president of the Toyota Production System Support Center and wrote this blog post:

Together, we visited gemba and observed several hospital processes in action, looking for ways to reduce waste and reorganize work. It was fascinating to have such experts here and see things through their eyes. Mr. Yokoi’s thoughts and observations are very, very clear, notwithstanding a command of English that is still a work in progress.

The highlight? At one point, we pointed out a new information system that we were thinking of putting into place to monitor and control the flow of certain inventory. Mr. Yokoi’s wise response, suggesting otherwise, was:

“When you put problem in computer, box hide answer. Problem must be visible!”

The mission of the Toyota Production System Support Center to share Toyota Production System know-how with North American organizations that have a true desire to learn and adopt TPS.

Related: The Importance of Making Problems Visible – Great Visual Instruction Example – Health Care the Toyota Way

Lean Manufacturing Webcast from India

Posted on July 28, 2009  Comments (1)

This lean thinking webcast from India actually does a pretty decent job of providing an overview (for a business TV channel) even if they get some things a bit confused. The discuss TQM in India preceding lean which is an accurate view in my opinion – quality management shared many lean principles. They even talk of lean at Ford doing lean first. But they get the decades for that a bit off. They seem to mash together the “quality is job one” refocus on quality lead by Dr. Deming in the 1980′s with Henry Ford in the early 1900′s.

The webcast includes Jim Womack discussing lean thinking. He mentions the misunderstanding of lean as primarily cost cutting.

Related: Curious Cat Lean Management Resources – 2008 Deming Prize: Tata Steel – Lean management in India – TVS Group Director on India, Manufacturing and the Economy

Akio Toyoda’s Message Shows Real Leadership

Posted on July 26, 2009  Comments (8)

Speech by Akio Toyoda

Since the birth of Toyota, the company’s philosophy has always been to “contribute to society.”
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“Contributing to society” at Toyota means two things. First, it means, “to manufacture automobiles that meet the needs of society and enrich people’s lives.” And second, “to take root in the communities we serve by creating jobs, earning profits and paying taxes, thereby enriching the local economies where we operate.”
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Toyota has overcome many challenges during its seven decades of business. What has made this possible is the way we make our cars under our “customer first” and “genchi genbutsu” principles
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Rather than asking, “How many cars will we sell?” or, “How much money will we make by selling these cars?” we need to ask ourselves, “What kind of cars will make people happy?” as well as, “What pricing will attract them in each region?” Then we must make those cars.
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Through these processes, I would like to make Toyota’s product development and product lineup more region-focused. We will change our policy from achieving “a full lineup everywhere” to “a lineup necessary to meet the needs of each region”. We will also launch new vehicles that anticipate consumer needs and are exciting to drive.
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At the press conference in January, I talked about my desire to become “a president who is closest to the frontlines, or gemba.” I believe that the essence of management lies in the gemba, and Toyota employees play a vital role there.

Once again Toyota shows they are the type of management I want to invest in. In my last post I discussed another: Jeff Bezos at Amazon. Google management is another management system I am glad to invest in. Toyota, Amazon and Google are 3 of my 12 stocks for 10 year portfolio.

Toyota continues to show they are an exceptional company that doesn’t waver due to short term pressures. They know the management system they have in place is excellent. They always try to improve. And they react to evidence that shows they have room to improve. They then access the situation and move forward.

via: Toyoda on Toyota: A New Regime, A New Future

Related: New Toyota CEO’s Views (2005) – Interview with Toyota President (2006) – Deming Companies – “2007 has been a difficult year for Toyota” – No Excessive Senior Executive Pay at Toyota – Webcast on the Toyota Development Process

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Toyota Develops Thought-controlled Wheelchair

Posted on June 30, 2009  Comments (2)

Toyota has developed a thought-controlled wheelchair (along with Japanese government research institute, RIKEN, and Genesis Research Institute). Honda has also developed a system that allows a person to control a robot through thoughts. Both companies continue to invest in innovation and science and engineering. The story of a bad economy and bad sales for a year or two is what you read in most newspapers. In my opinion the more important story is why Toyota and Honda will be dominant companies 20 years from now. And that story is based on their superior management and focus on long term success instead of short term quarterly results.

Yes Toyota can improve their performance, based on the last few years. Does management understand what they need to do? I think so. Does management understand that the system needs to be improved rather than the numbers on the spreadsheets of various managers have to be made better? I think so. Do I think most companies today, with bad results, understand the difference between bad numbers on spreadsheets that are used to judge various managers and a system that needs to be improved? No.

I do not believe the bad earnings for the last year for Toyota are indicative of a failed system. The results do show a weakness in the Toyota system that allowed them to perform this poorly during this credit crisis. The risk to Toyota’s future is that they become too focused on short term results, mistakenly thinking the problem to be fixed in the bad quarterly results recently. They need to focus on improving the system for the long term. And the recent experience likely shows some areas that need to be improved. But in no way do the fundamental tenants of the management system need to be changed. For many other companies today, changing fundamental aspects of their management is what is needed.

Related: Toyota as Homebuilder – Honda’s Robolegs Help People Walk – Honda has Never had Layoffs and has been Profitable Every Year – Toyota’s Partner Robot – NUMMI, and GM’s Failure to Manage Effectively – Toyota iUnit – Invest in New Management Methods Not a Failing Company by William Hunter, 1986
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Toyota Posts Loss of $6.9 Billion in Last Quarter

Posted on May 8, 2009  Comments (1)

Toyota Posts Loss of $6.9 Billion in Last Quarter

For January-March, Toyota booked a $6.9 billion loss, in line with consensus estimates, and cut its annual dividend nearly 30 percent — the first cut since at least 1994, when it changed its reporting period.
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Toyota President Katsuaki Watanabe was more downbeat, stopping short of predicting when sales would pick up in major markets, or when the company would return to profitability as it remains saddled with excess capacity. “Of course the external environment doesn’t help, but we were lacking in the scope and speed of dealing with various problems and issues, and for that I am sorry,” he told a news conference.

For the year to next March, the maker of the Prius hybrid forecast an operating loss of 850 billion yen, more than double the average forecast in a survey of 20 analysts by Thomson Reuters. It sees an annual net loss of 550 billion yen based on the dollar and euro averaging 95 yen and 125 yen.

The bleak forecasts prompted ratings agency Standard & Poor’s to downgrade Toyota’s long-term debt ratings to AA from AA+, with a negative outlook.
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To return to profit, Toyota must sell more cars or cut costs further, Watanabe said. But he predicted the U.S. market would be around 10 million vehicles industrywide at best this year, down from more than 13 million in 2008.
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Toyota is bleeding overhead costs, with about a third of its global assembly lines working on single shifts. It will slash capital spending by more than a third this year to 830 billion yen as it puts expansion projects on hold, but it said it was not thinking of closing any production lines for good.

In my opinion these negative results are a sign of Toyota’s strength not weakness. The credit crisis and economic downturn has resulted in a poor economic environment. Toyota has managed to sustain the blow and hold firm to their principles and likely will come out of this downturn stronger as a company (mainly re-enforcing the importance of planning for bad economic conditions and not getting too excited about growth potential versus risks of growing too fast) and in a better position compared to their competitors. I continue to be an owner of Toyota stock and happily so.

Related: Idle Workers Busy at Toyota – Financial Market Meltdown (Oct 2008) – “2007 has been a difficult year for Toyota” – New Toyota CEO’s Views (2005) – Jim Press, Toyota N. American President, Moves to Chrysler

NUMMI, and GM’s Failure to Manage Effectively

Posted on February 25, 2009  Comments (2)

Gipsie Ranney recently sent me an article on her thoughts on NUMMI and the current problems with the Big Three car makers to post to the Curious Cat Management Improvement Library. NUMMI is the plant that Toyota and General Motors run together as a joint venture. The article is excellent.

The answer to a question asked by someone else on the tour was stunning to me. The person asked what kind of computerized inventory system they had at NUMMI. The leader of the tour at the time – a materials management person – responded, “we don’t have one; the Japanese say that computerized inventory systems lie.”
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The most remarkable insight I gained at NUMMI came as an answer to a question from a member of the touring group. The person asked what had been learned about the reasons that management/labor conflict had been reduced so much. The tour guide answered, “The answer we get from members of the labor force is that the Japanese do what they say they will do.” This was the same labor force that had held the record for most grievances filed per year in an assembly plant in the U.S.
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The Big Three are responsible for managing their organizations wisely. I think that will take more than money. It will take a different culture and a different mind.

I agree. The problem is that management fails to manage well and has been failing to do so for decades. They have improved over the last few decades but not nearly fast or consistently enough. Gipsie worked closely with Dr. Deming and serves on the W. Edwards Deming Institute Board of Trustees.

Related: Could Toyota Fix GM (2005) – At Ford, Quality Was Our Motto in the 1980s – Big Failed Three, Meet the Successful Eight – Why Fix the Escalator? – Invest in New Management Methods Not a Failing Company (AMC) by William Hunter, 1986 – Ford and Managing the Supplier Relationship – No Excessive Senior Executive Pay at Toyota

Invest in New Management Methods Not a Failing Company, 1986

Posted on November 22, 2008  Comments (0)

Invest in New Management Methods Not a Failing Company by William Hunter, 1986

I predict American Motors will stop making cars in Wisconsin in the near future, whether or not the state’s money is used for a temporary propping-up operation.

These competitors are beginning to understand how essential it is to take a long-term view of their businesses. Toyota, for example, took its top 40 managers on a two-day retreat to ponder what their corporation will look like in the 21st century. They are studying totally new methods of management [20 years later large portions of these "new" methods are still ignored by many - John]. These methods take continuous quality improvement as a central, guiding principle.
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Investing in American Motors now, in any form, is a mistake. If Wisconsin is to become a trend-setter in economic development, we need some long-term thinking in forming wise, creative policies.
It is difficult, I know, for legislators and other elected officials to take a long-term view when the tangible reward is re-election and elections come around quite frequently.
Our founding fathers are remembered for their long-term vision. We need to change the way our democracy works so that long-term visions is an integral part of all important discussions on economic development on the local, state and national level.

Don’t reward shortsightedness by James Cook

In 1985 I assumed the role of plant manager of one of the world’s foremost automotive tool manufacturers in a small northern Iowa town. It was then that I was introduced to W. Edwards Deming. At the time, the company had a greater market share than any of its individual domestic or foreign competitors, but ominous and encroaching signs from abroad began to threaten its pre-eminence in the automotive aftermarket. So steps had to be taken to arrest this incursion that could mean the end of its reign.

It was then, as I began my tenure at the company, that we began with Deming’s concept of Statistical Process Control, later changed to Quality Control, and the practice of Toyota’s kanban cell manufacturing techniques that would enhance the already high-quality standards that had defined the company for decades.
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If we had listened, if we had followed him, if we had incorporated his thinking not only in the automobile industry but in government, in the ubiquitous economy collapsing around us and in our private lives, we would now be far better for it.

Related: At Ford, Quality Was Our Motto in the 1980s – Ford’s Wrong Turn – Could Toyota Fix GM (2005) – Ford and Managing the Supplier Relationship – No Excessive Senior Executive Pay at Toyota – Creating Jobs

Financial Market Meltdown

Posted on October 10, 2008  Comments (8)

The financial market meltdown has grown to the point where it has profound ramifications for everyone. The common wisdom for financial market variation, for most of us, is just to focus on the long term and don’t worry about short term fluctuations. That is good advice. This panic is threatening to override that wisdom however. There are at least 2 areas to consider: personal finance and business prospects (how managers need to take this crisis into account).

On personal finance I still believe the same smart personal financial decisions last year, or five years ago are wise today: avoid credit card debt, have an emergency fund of 6 months of expenses, save for retirement, have proper health insurance, don’t buy what you don’t need and can’t afford… The biggest change I see is that the risks of failing to do these things (and the risks of failing to have done them in the past) are increasing greatly.

One of the challenges with personal financial matters is they are by nature long term issues. What you did over the last 5 years cannot be fixed in a few weeks, most likely it takes years. For more details follow the links in the paragraph above (to posts on the Curious Cat Investing and Economics Blog). You can’t make much progress quickly on these matters if you failed to do so over the last 5 years. However, you can at the very least start doing so now and you can even go a bit further if you were doing well (I am seriously considering raising my retirement contributions to take advantage of low stock prices).

On the impact to management area, this crisis has reached the point at many companies that managers not involved in finance have already been dealing much more with the importance of cash flow. And all indications indicate the risks related to manage cash flow are increasing dramatically. The expected sources of cash to provide for long term investments, for medium term investments and even short term cash flow needs are disappearing in a way I don’t think anyone predicted was possible.

What will happen in the next 1-6 months is very hard to predict. Most likely the credit markets will recover some (it is hard to imagine they could stay this broken). But to what extent is hard to say. And the real business risks of almost unimaginable (anytime the last 70 years anyway) problems raising cash, require managers to evaluate how to react today based on these risks. Even a month ago, for most businesses (outside of the financial industry or those with extremely heavy financing needs) this was not likely a consideration.
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Webcast on the Toyota Development Process

Posted on September 18, 2008  Comments (0)

Kenji Hiranabe talks about Toyota’s development process (webcast). Kenji shares a presentation he attended earlier this year by Nobuaki Katayama, a former Chief Engineer at Toyota, and the lessons he learned from him.

The webcast takes awhile to get going. If you are impatient you might want to start at the 6 minute mark. Some thoughts from the talk:

  • Voice of the Customer is diffuse. A strong concept (for a project – new car for example) is very important to focus thought, listening to voice of the customer is important but must use strong concept to avoid losing focus (due to diffuse customer feedback).
  • Honest face to face communication is important. Bad news first – present bad news first [don't try to hide bad news - my thoughts in brackets, John Hunter].
  • Everyone must think about cost reduction, many efforts add up to big impact [the importance of reducing waste everywhere].
  • benchmark, not to copy others, but to learn from what others do well.

The webcast includes a nice (though short) discussion of agile management in software development and lean manufacturing (the different situation of manufacturing versus software development). Kenji Hiranabe has also translated several agile and lean books into Japanese including Implementing Lean Software Development.

Related: Kenji Hiranabe’s blog – Marissa Mayer Webcast on Google Innovation – Articles and webcasts by Mary Poppendieck – Future Directions for Agile Management – Interview with Toyota President

Gary Convis is the New CEO of Dana

Posted on April 17, 2008  Comments (1)

Another former Toyota USA leader is talking a leading role at another company. Gary Convis from Toyota retired last year.

Related: articles by Gary Convis – Toyota Management Speech by Gary Convis – Toyota Management Develops the New Camry – Quality Conversation with Gary Convis – Jim Press, Toyota N. American President, Moves to Chrysler

Dana Holding Corporation Names Gary L. Convis Chief Executive Officer

Dana Holding Corporation (NYSE: DAN) emerged from bankruptcy recently and today announced that it has named Gary L. Convis, 65, to the post of Chief Executive Officer. Convis was appointed to Dana’s new Board of Directors in January 2008 after retiring from Toyota Motor Corporation, where he had spent more than 20 years culminating in his role as Chairman of Toyota Motor Manufacturing, Kentucky.

“We are delighted to welcome Gary as Chief Executive Officer,” said Dana Executive Chairman John Devine, who had served as the company’s acting CEO since January. “Gary is widely respected as one of the leading experts in lean manufacturing and management systems, including the Toyota Production System. Along with his strong leadership and global industry experience, we believe he is an ideal choice as our new Chief Executive.”

“I am honored by the Board’s confidence in me to lead Dana,” Convis said. “I’m also eager to join with our people in establishing world-class manufacturing systems and returning this great company to the leadership ranks of the global automotive supply industry.”
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Toyota’s Commitment

Posted on March 8, 2008  Comments (4)

From Toyota’s blog, Living Up to Our Commitment

We’ve received reports that on a small number of model-year 1995 to 2000 Tacomas, excessive corrosion of the frame has caused perforation of the metal. The reason for this, it appears, is that the frames of some of the 813,000 vehicles built during this time-frame may not have adequate corrosion protection.
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Because of our oft-stated commitment to standing behind our products, we’re extending the rust-perforation warranty covering these trucks for a period of 15 years from each vehicle’s original date of purchase, with no mileage limitation, for corrosion damage that results in perforation of the vehicle’s frame material. Owners of these Tacomas need not be the original owners. Even if you bought your Tacoma second- or third-hand, it’s covered by this extended warranty.

Once again Toyota shows what it means to go beyond the traditional way of thinking (where often MBA bean-counters and lawyers decide what should be done) instead of someone interested in having the company actually live up to a higher mission. From a previous post on their blog:

The Toyota Way is a management philosophy involving 14 principles that is the essence of the DNA of our organization and really all those who make up the company. In its basic form, the Toyota Way boils down to two fundamental practices: Respect for People and Continuous Improvement.

Related: Toyota IT Overview – Deming Companies – Reacting to Product Problems – Toyota Management Develops the New Camry – Corporate Blogging – Dell Innovation

Toyota Presses On

Posted on February 24, 2008  Comments (0)

At Toyota, a Global Giant Reaches for Agility

With plants in 27 countries, more new factories under construction and workers speaking languages that include Russian and Turkish, Toyota’s top executives are trying a difficult balancing act – replicating the company’s success and operating principles in other countries while ceding more control to these new outposts at the same time.
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Next year, it expects to sell more than 10.4 million cars worldwide, double what it sold in 2000.
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At Motomachi, more than 3,000 tasks on the assembly line have been translated into video manuals that are displayed on laptop computers above 30 simulated workstations, situated where their functions would be carried out inside the factory.

The videos show everything from the correct way to hold a screw to the best way to hold an air gun so that a worker’s hand will not tire in a few hours. This month, workers from Toyota’s plant in Thailand took part in training required for jobs in their plant’s paint shop. Listening as an interpreter translated from Japanese into Thai, the workers were shown how to bend their knees and spray a water gun across a clear panel of Plexiglas.

Yet another article on the management of Toyota. And here is another: Toyota heir slowly following in family footsteps. And another: Toyota explores more efficient methods to build cars.

Related: 12 Stocks for 10 Years Feb 2008 Update – No Excessive Senior Executive Pay at Toyota – New Articles on Toyota Management – Toyota’s Effort to Stay Toyota – More Positive Press for Toyota Management – Toyota in the US Economy

Gemba Keiei by Taiichi Ohno

Posted on May 31, 2006  Comments (1)

Jon Miller has been posting thoughts on chapters of Gemba Keiei by Taiichi Ohno for quite some time. His latest post in on chapter 23 (of 37): Producing at the Lowest Possible Cost. The series of posts provide great doses of management wisdom. As he said in the first post: “As I re-read this book in the original Japanese, I will summarize the nuggets of wisdom from each chapter in Mr. Ohno’s book.”Some great examples, If You Are Wrong, Admit It:

If you fancy yourself a Lean thinker go ahead and test your beliefs the next time you think you are right. If you are wrong, admit it. Make Mr. Ohno proud.

Great idea. The PDSA is a great tool to help test your beliefs (when related to an idea for improvement). Make sure you predict and then test your prediction. Continue reading →

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