Toyota Taking the Lead

For a decade or so I have been saying terrible things about our automobile companies, and for a couple of years I have been saying them here. (Bullshitting in the Economist is a suitably provocative example. You can search the blog for automobile, Toyota, or Detroit and you’ll get a bunch more.)

Now Toyota is about to pass GM as the #1 auto company in the world. GM, Ford, and Chrysler are not catching up. They are headed in the other direction. Yes, I know the same old excuses are still on the table, to which now we see added “this unexpected economic turnaround.” “Who could possibly have predicted….?” Anyone who was paying attention. Many are culpable. The auto executives, who stopped thinking and learning a long time ago. The media, who have been buying the excuses. The rest of us, who have not spoken out early enough or strongly enough. Our American style of bravado, in which, Rocky style, we praise what is “ours” no matter how obviously troubled it may be.

Business Week, in a December article about the world’s most influential companies, doesn’t spend much space on their automobiles. They tout the way that the quality of thinking in the company is being applied to other fields. Healthcare in this case. (Anne Miller gave me the article.)

Toyota deserves the praise it is getting. What a pity that with 50 years to listen to them – and they have been talking to us for that long, and they have not been hiding their secrets under baskets – we still don’t know how to listen to them.

Argh.

Preparing the Way for Wisdom in Organizations – Part 5

Continuing the set of six tiny essays inviting reflection about the construction of the conditions and situations in which wisdom can be cultivated and exercised in organizational settings.

“Inventing” Waste

Historic inventions are often built from historic difficulties, and they always involve the invention of new distinctions. We have posted about the “Five Great Wastes” before, here.

Let us give two examples in which critical new distinctions of historic inventions have to do with what people at the time thought of as “wastes.”

Henry Ford, Mass Production, and the Model T

At the turn of the 20th century automobiles were expensive toys available only to the very rich. Henry Ford invented practices that we summarize as “mass production” and the “Model T.” He succeeded thereby in making automobiles less expensive and more accessible to the average American worker. At the same time, he produced a way of doubling the income of American Workers, thereby giving them the income to purchase the Model T. Ford’s new system produced cars quickly and so efficiently that it considerably lowered the cost of assembling the cars. He decided to pass this savings along to his customers, and in 1915 dropped the price of the Model T from $850 to $290. That year, he sold 1 million cars. (Parts of the story from http://www.ideafinder.com/history/inventors/ford.htm.)

Taiichi Ohno and the Toyota Production System

At the end of the Second World War, the people of Japan were in terrible trouble, their morale, productive capacity, and international relations demolished. An engineer named Taiichi Ohno, in the enterprise today known as Toyota, began the task of building a new capacity for Japanese production on top of Henry Ford’s designs, with some important additions. For example, Ford incorporated everything into one plant; Ohno designed for operation in a network. The operational heart of Ford’s designs was the way the engineers designed the coordination of the work on the assembly line (the employees found the repetition boring and only stayed because of what Ford called the ‘wage motive.’) Ohno centered his design in processes that built the capacity of each person on the production floor to take responsibility for the quality and coordination of their work. His invention became the foundation of the quality movement that swept the world starting in the 1970s and 80s.

Continue reading “Preparing the Way for Wisdom in Organizations – Part 5”

Bullshitting in The Economist: Homage to Fernando Flores and Harry Frankfurt

In the November 8, 2007 Economist we find a “Briefing” entitled “Toyota: A wobble on the road to the top.” It is a well-crafted article for someone who is not thinking. However, Greg and I were surprised to see an article like this, without attribution, in The Economist. Who is hiding what? Who takes responsibility for authoring this article? The editors of the Economist? If that is the case, this article invites me to make a major shift in my interpretation about the integrity of this journal, because it looks too much a “planted” article.

The article puts me in a mood of irony and frustration at the opportunities that the West is wasting by attempting to understand Toyota within the framework in which we have been so busy killing our own automobile industries for so long. Greg and my mother call what this article is doing, “Cutting off your nose to spite your face.”
What do I mean?

1. “… not all is running smoothly at Toyota” is exactly the same condition that the company has been in every day for the last 50 years. They don’t expect it to run smoothly, and it has not run smoothly. The difference between Toyota and its competitors is that Toyota organizes itself to deal with a world in which things don’t run smoothly, and to take massive advantage of every breakdown.

2. Where GM (for example) pats itself on the back for making 20,000 changes in its operations a year, Toyota makes a million changes. Literally. They do that as part of paying close attention to the evolving space in which they interact in the world, and adjusting continuously. The article implies that the company is experiencing momentous, techtonic shifts that they are not in condition to deal with. There is no evidence for such a claim that I have seen. The evidence cited in the article is no more than the kinds of events that are happening every day in every company.

3. The website to which the article points us to show that “nine of America’s leading scientific and environmental organisations took out advertisements in newspapers and started up a website” is a political hit site without, as I can tell, any substance.

4. If someone wanted to do the research (I don’t have the time) I’d bet a good sum of money that this is a planted article originally constructed (or shaped less directly) by someone attempting to defend the American automobile establishment. “Toyota could be leapfrogged ….” In whose dreams? The time and money spent here, attempting to pretend a “balanced” report on the state of the Toyota enterprise, would be far better spent trying to figure out why for 50 years the Western auto companies have not been able to understand or build their own version of what Toyota has built.

5. The author, whoever he or she is, could not make sense of what Toyota’s president was doing in a “personal mobility concept,” and goes on to ridicule the man and the company, calling it a “silly stunt.” This reminds me of the report that my friend George Kuper gave me on returning from one of the earliest visits of US auto executives to Japan to tour Toyota plants that were beginning to use the Toyota Production System. The American executives had been invited by the Japanese to see what they were doing, as a gesture of goodwill originally born out of Taichi Ohno’s admiration and gratitude to Henry Ford for his inventions. At the end of the day, George told me, the American executives caucused in private to discuss what they had seen. One consensus: they could not figure out why the Japanese were so committed to try to convince them that they were running their plants without inventories and parts warehouses. They ridiculed the Japanese for their “silly show.” Everyone knows, the American executives agreed, that it is not possible to run a plant without inventories, and they could not grasp what kind of devious intention was hiding behind their hosts’ insistence that they were operating without these essential components of a good facility.

It only took 30 or so years for some of the people in the US auto industry to discover what was behind the “devious intention.” Perhaps 30 years from now someone from the Economist might want to investigate whether what the president of Toyota was doing with his “personal mobility concept” was really only attempting “to polish Toyota’s image as a car company with a highly developed sense of social responsibility rather than one chasing growth at all costs.” I know what I bet we’ll find….

About the title: My friend Fernando Flores has been talking about bullshit as a formal distinction for understanding deceptive misrepresentations for more than 20 years. I wrote about it here. Harry Frankfurt, in his marvelous little book “On Bullshit,” speaks of bullshitting and bullshitters: “… carefully wrought bullshit involves, then, a certain inner strain. Thoughtful attention to detail requires discipline and objectivity. In entails accepting standards and limitations that forbid the indulgence of impulse or whim. It is this [apparent] selflessness that, in connection with bullshit, strikes us as inapposite. But in fact it is not out of the question at all. The realms of advertising and of public relations, and the nowadays closely related realm of politics, are relplete with instances of bullshit so unmitigated that they can serve among the most indisputable and classic paradigms of the concept. And in these realms there are exquisitely sophisticated craftsmen who–with the help of advancend and demanding techniques of market research, of public opinion polling, of psychological testing, and so forth–dedicate themselves tirelessly to getting every word and image they produce exactly right. Yet there is something more to be said about this. However studiously and conscienntiously the bullshitter proceeds, it remains true that he is also trying to get away with something. …” (p23)

Five Great Wastes

Following a conversation with my friend Jim Selman, I decided to dust off my story about the kinds of things that I think are going to be the most important “wastes” of the time that is coming. Taiichi Ohno of Toyota fame was my original inspiration for this line of thinking.

Historic inventions are often built from historic difficulties, and they are always accompanied by new distinctions. At the end of the Second World War, the people of Japan were in terrible trouble, their morale, productive capacity, and international relations demolished. An engineer named Taiichi Ohno, in the enterprise today known as Toyota, began the task of building a new capacity for Japanese production, on top of Henry Ford’s designs, with some important additions. Ford incorporated everything into one plant; Ohno designed for operation in a network. Ford went all out for volume, and minimized variety, in the interpretation that this was the most efficient way to support the US market, and make the money that he needed to support enormous investments and pay his workers enough to buy his cars (roughly doubling the historic pay for that kind of employment). Ohno built a production system that would optimize scarce capital and raw materials, allowing efficient operation with small production runs. The operational heart of Ford’s designs were the way the engineers designed the coordination of the work; Ohno’s design was centered in processes that built the capacity of each person on the production floor to take responsibility for the quality and coordination of their work. Ohno’s inventions became the foundation of the quality movement that swept the world starting in the 1970s and 80s. Continue reading “Five Great Wastes”

What will it take to develop a new story?

On the one hand, GM, Ford, and (Daimler) Chrysler are all in very serious trouble, and Toyota is flying, the most interesting large company in the world today. On the other hand, the media is full of opinions and strategies all constructed inside the very same philosophical structures in which the “big three” have gotten themselves into trouble – blame the unions, finished goods of $15 billion, millions of cars stacking up on lots, deep discounts and advertising campaigns, laying off thousands of employees, considering getting out of the car business, the truck business, sell off the company, … what next?

In a February 14th article titled “In Humbling Overhaul, Chrysler Faces Big Cuts”, Wall Street Journal writers begin, “… Chrysler becomes the last of the Detroit Big Three to abandon hope of growing its way out of problems. Now it has a humbler goal: making money.” The article quotes Tom Lasorda, Chrysler Group Chief Executive, explaining the way that the strategy functions: “We lost money building inventory, and then we lost money trying to get rid of it.” 

We are sure that the management of Chrysler, or Ford, and GM, are not humbled. If they were, they would begin to question the way they are thinking about the mess. 

What is it going to take for the Big Three to recognize that their stories about why Toyota has out-paced, out-flanked, out-thought, out-designed, and bested them in all aspects the running an automobile business are bad stories. Good stories give hints about what to do to change the situation. For literally decades the stories we have listened to from the Big Three have failed to point to new effective actions.

A Great Article about Toyota

Greg found a wonderful article by Charles Fishman in last month’s Fast Company that gives the best answer we’ve seen in writing to our question, why do so many attempt and fail to copy what Toyota has been doing so well for so long.

Here are selections from the conclusion of the article:

Lots of companies have tried to learn and use the methods that Toyota has refined into a routine, a science, a way of being and thinking. …

And the Big Three have each gotten better at making cars: … But they all still trail Toyota.

Without any fanfare at all, Toyota is confounding, if not defying, conventional wisdom about the current state of the U.S. economy.

Typically, though, the Big Three take an all-too-American approach to the idea of improvement. It’s episodic, it’s goal-oriented, it’s something special–it’s a pale imitation of the approach at Georgetown. “If you go to the Big Three, you’d find improvement projects just like you’d find at Georgetown,” says Jeffrey Liker, a professor of engineering at the University of Michigan and author of The Toyota Way, a classic exploration of Toyota’s methods. “But they would be led by some kind of engineering group, or a Six Sigma black belt, or a lean-manufacturing guru of some kind.

“They might even do as good a job as they did at Georgetown. But here’s the thing. Then they’d turn that project into a PowerPoint. They’d present it at every place in the whole company. They’d say, ‘Look what we did!’ In a year, that happens a couple of times in a whole plant for the Big Three. And it would get all kinds of publicity in the company.

“Toyota,” Liker says, “is doing it in every single department, every single day. They’re doing it on their own”–no black belts–“and they’re doing it regularly, not just once.”

So you can buy the books, you can hire the consultants, you can implement the program, you can preach business transformation–and you can eventually run out of energy, lose enthusiasm, be puzzled over why the program failed to catch fire and transform your business, put the fat binders on a conference-room shelf, and go back to business as usual.

What happens every day at Georgetown, and throughout Toyota, is teachable and learnable. But it’s not a set of goals, because goals mean there’s a finish line, and there is no finish line. It’s not something you can implement, because it’s not a checklist of improvements. It’s a way of looking at the world. …

If you’re looking for a plateau, you’re going to be frustrated. There is no ‘solution.'”…

“Once you realize that it’s the process itself–that you’re not seeking a plateau–you can relax. Doing the task and doing the task better become one and the same thing,” Shook says. “This is what it means to come to work.”

Much as we like the article (Greg loves the way that Fishman ‘distinguishes the two paradigms’ in the way that he talks about Toyota), we still doubt that anyone from the big three are going to begin the transformation of the US Automobile Industry from here. Why? What more is missing?

Talk to you later.

“Bold Moves” at Ford

I just ran into Ford’s “Bold Moves” initiative, which imitates the “Reality Television” style of working out problems in front of an audience. 20 “Episodes” have been published already at http://www.fordboldmoves.com/default.aspx. In the episodes, Ford spokespeople where they say things like “We have to change or die.” and “Ford doesn’t have a PR prooblem; we have a product problem.” Meanwhile, the initiative is subtitled “Documenting the Future of Ford” – my suspicion is that this will turn out to be an attempt to do a new kind of PR.

Turns out Ford is a sponsor of “American Idol.” I suppose this is a very fancy case of life imitating (art).   

I will be reviewing the 20 “Episodes” shortly, and seeing what is there. Perhaps the designers of the program have begun to address some of the questions we have been bringing over the last postings. We shall see, and make assessments.

I attempted and failed to put the “Bold Moves” feed into my blog. If someone out there knows how to do that, the code is <script language=’javascript’ src=’http://www.fordboldmoves.com/clientscripts/externalflash.aspx?episode=20′></script&gt;, but I can’t figure out what to do with it.

More later; I am getting ready for a trip to Europe right now.

Give me your reactions and comments!

Best,

Chauncey Bell

The Toyota Dilemma

Over the past weeks we have been following threads that come from several questions that Greg and I have been asking. Our questions are like this:

  1. How come people keep trying and failing to copy what Toyota has done?
  2. Is Toyota really that good? Or does the spotty record of wanna-be copiers indicative of a half-baked theory? Does it work in Japan, but not here?
  3. How disastrously bad is their competition in the automobile industry? Is that why they are taking over the #1 spot globally, and winning so handily?
  4. What are people in the automobile industry watching that they keep (apparently) missing the beef? We think that they are not stupid people; then then they must be trapped in a really bad story about how the world works, and must be misunderstanding what Toyota has been doing.

One of the conversations that Greg and I have says that we are playing out different stories. We fell in love with cars in different ways than did the Japanese. Their national story about extraordinary human beings has in its background the Samurai tradition – in which, among other things, people surrender to disciplines and traditions, and build excellence out of time and practice. In the US, we fell in love with cars as part of our exploration of the dimensions of freedom. It is still a rite of initiation in this country for a young person to reach the age of 16, be licensed, and move towards owning a car. This is a nation of people who escaped from other tribes and refused to be dominated. Kind of the opposite of Toyota. We think, however, that it is possible to build a version of the Toyota Production System that fits with our impatient, freedom-loving, entrepreneurial and strongly independent way of being.

What do you think?

What do our questions provoke for you?

When the Same “Error” is Repeated Over and Over ….

Hal Macomber, writing in Reforming Project Management, tells us that Jim Womack, has been advising Ford CEOs for many years about how to stay out of trouble: ‘copy Toyota:’

“…my prescription for new Ford CEO Alan Mullaly is the same (as it was for former CEO Jac Nassar): Fundamentally rethink the supplier management system. Fundamentally rethink the product development system. And fundamentally rethink the production system from order to raw materials and from raw materials to delivery, with special attention to the information management system. (Much can still be learned from Ford’s Mazda subsidiary, which became an able pupil of Toyota after a crisis in 1973.) Above all, fundamentally rethink what mangers do and how they do it in order to regain the gemba consciousness that originally took Ford to world dominance. In brief, Ford needs to remake itself once more, this time in the image of the company that copied Ford’s original system: Toyota.”

Why is he repeating a failed prescription, and as if the listener has not attempted to apply it? Greg points out that there is a major failure of speaking and listening happening here. Is what Womack is saying not sensical? Are the listeners not listening? Are they interpreting something different than what Womack is thinking himself?

Can it be possible that no one at Ford has done the homework to re-think what they are doing? Yes, it is.

More likely is the way that Greg put it: the cultural background in which people in the US tend to ask these questions – and to listen to Jim Womack, for example – is shallowly connected to questions of improving for the next quarter, for the next model year, and improving the things they are making. In that tradition, it is easy for no one to notice that what needs to be changed is the way that people are thinking about what they are doing, how they are oriented to the business, how they speak and listen to one another.

We don’t like the interpretation of our earlier list of possible sources of the failure of Ford, are they simply too stupid, block-headed, pig-headed, obtuse, perversely concerned with greedy topics, ensnarled in historic fights with labor and labor advocates, etc., etc.??

Well???

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

“Advice to Ford: Dump cars”

David Olive, writing in the Toronto Star on Aug 28th, tells us the “truth” of Toyota’s secret of success, in an article about Ford’s difficulties:

“Ford Motor Co., revealed last week to be in even worse shape than its ailing crosstown rival, General Motors Corp., really should think about dumping everything but its truck business. Almost everything else at the world’s third-largest automaker is a costly distraction — conspicuously its crowded stable of car brands, including Volvo, Mazda, Jaguar, Land Rover and Aston Martin. …

“What we do know is that Ford’s core North American operation has bled $3.8 billion (U.S.) in red ink over the past year and a half. That its U.S. business has been losing market share for 11 consecutive years. And that its credit rating has been downgraded ever deeper into junk territory, sapping profits at its Ford Motor Credit division — one of Ford’s few reliable cash cows. …

Even a cursory glance at Ford, with its revolving-door senior management woes and periodic crises dating from the 1940s, tells you it’s simply not a natural car maker, in the way that Toyota, Honda and BMW just naturally are. …”

Now, 50-odd years after starting the odyssey in which it invented its production system, we discover that Toyota is a born natural. God and destiny determined that they would succeed, and, sadly, that Ford would fail.

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

You Can Waste a Lot of Money Eliminating Waste

Here is one reason that we think so many people have put so much effort into imitating the Toyota Production System and still we find Detroit in such a mess.

One of the cornerstones of the Toyota Production System is the commitment to eliminate waste. But “waste” in this context doesn’t mean what most people think it does.

Value and waste are interpretations, shaped by the concerns of the cultures and enterprises in which they appear. The most important wastes (and values) of the last 100+ years were shaped by industrial era concerns for conserving physical and economic resources, financial capital, and production capacity.

The most important values and wastes for the era we have entered are not the same.

Many of those hell-bent on eliminating waste are “looking for love in all the wrong places.”

The central wastes of the new era will be shaped by our concerns for building effective relationships to deal with the challenge of coordinating in this continuously changing, globally connected world.

Have you got examples? Can you see what we are pointing at?

 © Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Maybe the Great US Auto Industry is a Goner.

Greg Neil speculates that maybe the construction industry will be first to invent a 21st century version of what Toyota did, and the US will pass out of contention in the manufacture of automobiles over the coming decades. (Ps: Toyota is a major player in the housing industry in Japan ….)

In the 1950s, Japan was really listening. Life itself was at stake. For fifty years now, our executives in Detroit have had the opportunity to listen, and have not been listening. We have been copying Voltaire’s idiot, Candide, spouting “It’s all for the best in this best of all possible worlds.” I remember when my friend George Kuper returned from an early visit to a Toyota plant in Japan with a covey of US executives, who were puzzled, “What possessed those Japanese businessmen to try and convince us that they were running automobile plants without inventories and warehouses?”

Are essential qualities that have made this a great country disappearing? … no longer relevant? What were those of earlier eras in this country listening to? What are those running the automotive companies today listening to?

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Why Haven’t US Automakers Caught On?

While we are at it, let’s follow some other threads as well.

Why have GM and Ford, (and Daimler-Chrysler, and a host of others) not simply copied the successful practices of Toyota? Is what they are doing so unusual, mysterious, or hidden? Since the 1950’s Toyota has invited people to come and tour their plants. Later they sent some of their most senior engineers to Detroit to teach for a number of years in US schools. They said they were doing that to give honor to Henry Ford and others from whom they had learned.

For decades US automakers have picked up popular jargon that originated with the Toyota Production System – just-in-time, continuous improvement, eliminating waste, five why’s, root causes, and so forth – and used it in improvement programs and in describing to the press the things they were doing to improve their companies.

(Is this all marketing hype? Are the companies actually trying to do anything there? From a good deal of work inside the auto industry, I have the interpretation that a large number of people inside the companies are actually trying to improve what they are doing.)

Some claim that Japanese culture lends itself to the kind of operation that Toyota has, and the US culture does not lend itself to this. Taiichi Ohno, Continue reading “Why Haven’t US Automakers Caught On?”

Why Toyota Dominates (part 2)

Shigeo Shingo, Chief of Industrial Engineering (who trained the company’s industrial engineers in the time that they built the Toyota Production System), explained that the key to the success of the production system was SMED – the Single Minute Exchange of Dies – which allowed them to run many different products on the same production line, and eliminated many kinds of waste.

Company executives ascribe their success to following the 14 principles of the Toyota Way (see http://en.wikipedia.org/wiki/The_Toyota_Way).

Why do you suppose that these might not be compelling answers for US Auto Industry Executives?

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.

Why Toyota Dominates.

Toyota continues to dominate the automotive industry, reporting for FY 2006 “… earnings of US$180.29 billion, an increase of 13.4% over 2005.  This was the fifth consecutive year of sales increases at Toyota Motor (and since 2001, sales have increased a total of 57%).” 

They claim that the single most important reason for their success is that they follow ‘the 14 principles of the Toyota Way.’

US auto makers have heard Toyota talking loudly about the Toyota Production System and the Toyota Way since the 1970s.

 Our question is this: Why is it that the major US auto makers say they practice ‘lean principles,’ and yet are unable to produce even a shadow of the kind of robust performance in difficult times that Toyota has demonstrated for decades?

Do you find the standard list of excuses satisfying?

  • Labor contracts that contribute $1,000 per car to the cost of GM automobiles.
  • Bad marketing intelligence, so that the company(ies) aren’t offering what the customers want.
  • Excess capacity.
  • Inefficient plants and unproductive workers.
  • Workforces that don’t want to work.
  • Incompetent management.
  • Greedy management.
  • Slow innovation.  
  • etc.

I think the problem runs deeper than this. What do you think?

Chauncey Bell (with Greg Neil)

© Copyright 2006, Chauncey Bell and BABDI, LLC. All rights reserved worldwide.