The Toyota Way
Volume 17, Number 3 Article by Rajesh K Aithal September, 2005
The Toyota Way : By Jeffrey K Liker, Tata McGraw-Hill, New Delhi, 2004, pp 330, Price Rs 250/-. :
The automobile industry has profoundly influenced the development of modern management, and The Toyota Way is an addition to the many books written on management in the industry. Alfred Sloan's My Years with General Motors left an undeniable mark on management. Though this book may not be in the same league, it makes its contribution by helping readers understand how Toyota has become the world's greatest manufacturer.
The author has the right credentials for writing the book, having studied the company for twenty years and won the Shingo Prize four times for his research work. He is the Director, Japan Technology Management Programme, and Co-Director, Lean Manufacturing Certificate at the University of Michigan. The author's stated objectives in writing the book are to share the cultural insights of a successful company, provide a different look at the reasons for the success and help other companies learn the Toyota way.
The book falls into three broad sections. The first one introduces the company, its history and current status, the second part deals with the central theme of the book, the fourteen principles of the Toyota way. The last two chapters are devoted to the application of the Toyota way to transforming technical and service organisations. The chapters are small and readable, and the size of the book with 330 pages is also manageable.
To understand the roots of the Toyota way, the history of the company and the personalities of the founders have been discussed in the first part of the book. The philosophy and leadership at Toyota has been quite consistent over the years. The current practices of continuous improvement and learning-by-doing are traced to the founder Sakichi Toyoda, who was himself an inventor and an experimenter. The long term philosophy of adding value to customers and society were also ingrained into the company early on. The founders of the company were influenced by their visit to the factories of Ford and GM. They realised that the same mass-production techniques could not be applied in the Japanese markets. World War II also forced the company to look at ways and means of reducing their work-capital requirement. Thus a mix of external and internal forces drove the company to come up with the Toyota way. The author also gives a brief overview of the Toyota production system in the first part of the book, and explains that the problem with most of the companies adopting the Toyota production system is that they try to adopt a piece-meal approach, which gives them sub-optimal results. This book, he says, goes beyond the tools and techniques and elaborates the principles behind them.
It is in the second part of the book that the fourteen principles which drive Toyota are elaborated. A chapter is devoted to each of the principles. The author has used two examples _ the development of the Lexus and the Prius _ to demonstrate some of the principles, which have been divided into four Ps _ Philosophy, Process, People and Partners, and Problem-Solving.
The first principle is basing your decisions not on short-term objectives but on long-term goals. To demonstrate this principle the author cites the example of almost life-long employment in Toyota and the NUMMI joint venture with GM. The next seven principles of the Toyota way are those related to processes at Toyota. The company believes that the right processes will lead to the right results. The principles of continuous flow, `pull' system and levelled production demonstrate the fact that production in Toyota is very closely linked to the customer order. And it is achieving these seemingly contradictory principles is what Toyota's success is all about.
The fifth principle of the Toyota way is passion for quality. The driving force behind this according to the author is the realisation on Toyota's part that it is cheapest to fix problems at the first instance rather than do it later. The quality initiative is not driven by complex statistics, but on observing the problem and using the `five whys' technique to solve it. The technique is demonstrated through several examples. The sixth principle is managing standardisation as a foundation for continuous improvement and employee empowerment, while the seventh is about the extensive use of visual controls so that no problems are hidden. The use of single A3 sheets of paper for most of the communication is mentioned as a demonstration of the principle. The last principle about processes at Toyota is on technology adoption: as a company Toyota is very slow in adopting new technology, and believes that only tested technologies which are in sync with the people and existing processes should be adopted.
The next three principles deal with people and partners, including how leaders are developed and trained in Toyota. The company has always had leaders from people within the company and they are entrusted with the responsibility of both following and teaching the Toyota philosophy. Respecting the extended network partners and suppliers is one of the principles that drives the company.
The last three principles deal with problem-solving, decision-making and continuous improvement. In problem-solving the company emphasises that the decision-maker himself should go and see for himself to understand the situation. In decision-making the emphasis on consensus is considered very important. One of the cornerstones of the Toyota manufacturing system is continuous improvement, which also helps the company achieve its goal of becoming a learning organisation.
Each of the principles has been dealt with very thoroughly, and at the end of each chapter the author makes an attempt to show the application of the principle to contexts other than car manufacturing. Though the last two chapters are also devoted to teaching other companies the Toyota way, this aspect of the book is unsatisfactory. One drawback is the fact that the author hasn't touched upon more Japanese examples. Most of the other Japanese car manufacturers have their own versions of the Toyota production system. A comparison with them would have helped the reader understand what it is that is different in the Toyota way that has made it more successful than the other Japanese companies. But overall the book is a must read for people interested in applying the principles to their organisations.
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