TRUE NORTH VALUES

The following article comes directly from the online course, The Toyota Way to Lean Leadership, by Dr.Jeffrey K. Liker with George Trachilis. These materials are also part of the book, Developing Lean Leaders at All Levels.

The teaching objectives for this section are the following:

1.     Define what continuous improvement and respect for people means.

2.     Describe the meaning of the 5 core values of The Toyota Way.

3.     Re-define Lean as being much more than waste reduction.

The Toyota Way 2001 is their model of their values system. It’s their philosophy. The pillars are continuous improvements and respect for people. They say these two pillars are intertwined; you can't have one without the other. Continuous improvement literally means: we are improving all the time in everything we do. So if you're packing carts, you're improving how you do that.

If you're developing the next Camry, you're improving the process by which you develop the next Camry (the process by which you get customer feedback, the process by which you turn that customer feedback into design characteristics so that manufacturing can easily build what you design). So everything that happens in the company--accounting, financing, every aspect of the company--is continually concerned with the question, “How can we make it better?”

 The philosophy is that we want to be continually reflecting, checking how we're doing and getting better. And who's going to achieve that? So far we don't have a super computer that can do that, and we don't have a robot that can do that. Only humans can do that; so to get continuous improvements, you need a team of people who share the values and identify with the company, and that takes respect.

In Toyota's view, respect means a more than we will treat you nicely, or we won't yell at you and hit you or we'll have a nice work environment with good temperatures and lighting. It actually means we will challenge you to keep improving yourself. That's how you're going be valuable to the company and that's how you're going be a better person. The foundation for that philosophy amounts to five core values.

DEFINING THE FIVE FOUNDATIONAL CORE VALUES

The first core value is challenge and every part of the company from the senior leaders to the regular workers should be challenged because they’re not going to continuously improve themselves or the process unless they feel pressure, and that pressure comes from the desire to do better; it comes from having a specific targeted goal; it comes from a clear understanding of where you are trying to go versus where you are.

All this must be done on a minute-by-minute basis, ideally or at least an hour-by-hour or day-by-day basis. It requires the attitude that whatever the challenge is, we will find a way to meet the challenge. 

When the earthquake in Japan happened and five hundred parts were not available to Toyota and a lot of the plants were in rubble, Toyota had to stand up to the challenge and go through the process of finding out what the problems were, and finding ways to solve the problems and one by one bringing in the needed parts. They did that through Kaizen.

There is a distinctive process for Kaizen, which I call problem-solving. Continuous improvement is what you want, and Kaizen is the way you get it. Genchi Genbutsu – also known as Go and See - is very closely related to Kaizen. 

Genchi Genbutsu means the way that you understand the problems is by going to the actual places where the actual things are happening. It could be where people are designing. It could be where customers are using the car. It could be the test track where the car is being driven. Wherever the thing is happening, you go there and obsessively study it and try to understand the strengths and weaknesses, and that's the starting point for problem-solving. Now if that’s not enough, you need a vision of where you want to go, but the vision should be grounded in the reality so you can see the gaps between where you are and where you want to be.

Hence, the being with the actual part and in the actual place, is termed the Gemba. Respect requires detailing what respect for people means. And teamwork is teamwork. The only thing that’s a little bit unusual is when Toyota talks about teamwork, they do not separate individual development from teamwork; they believe that the best team has individuals who are constantly being challenged, constantly growing and becoming better team members, and then they are working together toward a common goal.

If you're putting together a winning team, you're going to go through a selection process. You're going to want your team to go through training drills, strengthening the team, and you want the best players; and then you want those best players to work together cooperatively so both individual development and team development are intertwined. 

What does Toyota say about this? What is this thing, this house to Toyota? Is it a recipe to be implemented? Is there a set of tools associated with each of these values and measurements to see how good you are at each? Do measurement systems exist for these five foundation values and do they use the measurement systems for judging people? The important role is to provide what Toyota calls a True North Vision as they say in The Toyota Way 2001, an ideal, a standard and a guiding beacon. 

Leadership is fully aware that continuous improvement is impossible. It's an impossible dream. There will always be some time, whether seconds or minutes or days, where you're not improving in some part of the company.

They also realize respect for people is an impossible dream. Someone is always going to be disrespectful when you have hundreds of thousands of people in the company and many times that among your dealers and suppliers. There's going be somebody someplace at any point in time who is doing something disrespectful. So it's not possible to have zero variability, but the goal is to reduce the variability and get closer and closer to this True North vision.

LEAN CAN COMPLETELY SATISFY CUSTOMERS AND LOWER COSTS

When you talk about Lean, what are you trying to accomplish? Some accountants might say we've got too many people and we need to lower our cost structure, which means we need to reduce labour costs. Other accountants might need to reduce inventory costs so as to free up cash; there may be a need to measure inventory turns and speed up the flow of inventory through the system. Other leaders talk about lead time. In a hospital one might look at the patient and ask 'how long it takes from the time the patient enters until they leave. Some people feel reducing the length of the stay will lead to a more satisfied patient and a more efficient system.

Lead time is often associated with Lean and to put what Lean can do in a broader context what it can do is this: it can completely satisfy customers in many ways and it can lower costs in many ways, and following are some examples that differ from the usual thinking. 

For example, if you can engineer products that solve your customer's usage problems, that's a Lean project in my opinion. It’s not lead time, it’s not cost reduction, and it’s really about innovation and creativity. If you can engineer and manufacture defect-free products, we might call it designing for quality or building quality into manufacturing¾to me that's a part of Lean.

On time delivery is often associated with shortening lead time and being more reliable and predictable. Offering a full product range at market price and renewing the models frequently is another Lean goal, and you can do that by being able to, for example, in a factory do mixed model production and become very flexible; therefore, you're able to offer a greater range without large capital investments. 

Renewing models frequently means you have a very agile, a very predictable and stable engineering process and launch process through products. And then lowering costs can, in fact, come from cutting heads; but if you're cutting heads, you're cutting valuable resources and you're also getting everybody nervous and perhaps lowering their commitment.

Things like value engineering look at the product and ask how can we simplify it; how can we simplify it so that instead of using two moulds to make this plastic part, we can use one mould to make this plastic part? It is important to eliminate waste in all company activities and every part of the enterprise, not just manufacturing. 

Assemble different products in the same product units. Again, mixed model assembly allows you to be very flexible, to respond to changes in cost and demand and at the same time level your schedule because you can make a similar volume over time. You know one product sells more, another project sells less and it tends to average out. 

Finally, let’s consider designing products for manufacturing. That means that you have one organization of engineers who came out of engineering schools and they are clean and neat, and then you have these dirty manufacturers who are getting their hands dirty on the shop floor; they actually become a team and work together.

They don’t see themselves as different parts of the company with different goals, but rather they're all a part of the same company. So you see can see why I identified with Jim Collins’ work, which is a much broader picture of Lean than simply the idea that we shorten the lead time by eliminating waste. We use people more productively and we can cut heads and lower our labour costs. It really touches every part of the company and adds value to the customer.

LEAN IS MUCH MORE THAN WASTE REDUCTION

Unfortunately, too often Lean is reduced to a waste reduction toolkit. Here is a paraphrase of a quote from Taiichi Ohno, “All we're trying to do is shorten the time from when the customer places the order to when we build and ship the product, “ and his vision for Toyota was to be a build-to-order company. We have no waste; when a customer wants a car, we build a car based on that customer’s specification. This was the vision. What we're trying to do is eliminate waste, for example when we were working for the Navy and then later the Air Force. They loved the phrase “war on waste” and one guesses why they might like that. What image represents a war on waste? You’re there with your machine gun or your sniper or your ballistic missile, and you've got a target, and you hit the target; you wipe it out and the target is gone and the mission succeeded. So it’s a vision of eliminating things, eliminating wasted steps, eliminating wasted activities and it is blown up and it’s gone and now you can move to the next target. Is that really Lean? Is that what Sakichi Toyota was doing? Could Sakichi Toyoda have invented the best loom in the world by going through the shop and finding ways to eliminate waste? 

________ The End, This was one of 75 sections of the online course. _______

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