The Toyota Secret: Constant Change And Growth

A few years back, I was in Kirishima, Japan, watching and listening to an NHK television interview of Hiroshi Okuda, then the chairman of Toyota Motor Corporation. He said, "Failure to change is a vice! I want everyone at Toyota to change and at least do not be an obstacle for someone else who wants to change." This was a very powerful statement coming from the chairman of the most successful manufacturing company in the world, but it is not surprising. It is a phenomenon of Toyota to never stop continuously improving.

From Conscious Learning, by Norman Bodek to be published in October by PCS Press.

In 1950, Toyota almost went bankrupt. Around 1960, they sent over a few hundred cars to sell in the U.S. and returned 60 of them to Japan to be reworked. At the time, Americans looked at things made in Japan as junk.

How did Toyota go from making junk, to making a Lexus and becoming the world's largest and most successful automobile manufacturer? They improved every single day.

Improving Every, Single Day

So often, companies in America get excited about a new initiative such as Six Sigma or lean manufacturing and charge off, into the wild blue yonder. They get great initial results and then let the concept die and become another "flavor of the month." I see so many companies running hundreds of kaizen blitzes, saving lots of money but not knowing what to do next. For instance, I was at a great American manufacturer, a leader in their field, and noticed that they had trained virtually every employee on the lean wastes. Yet the day I walked through the plant, I saw half the people standing and talking -- not adding value. I didn't see anyone looking at reducing motion, studying defect reduction or how to reduce transportation. I didn't notice charts up on the factory wall to challenge workers to make continuous improvement every day.

The consequences of improving every day and not improving every day are part of American and Japanese manufacturing history, which is like the fable "The Tortoise and the Hare." America was like the Hare, much faster than the Tortoise (Japan), but we just lay down at the side of the road and slept, while Japan continuously improved every single day. Even when Japan was devastated by World War II -- over 100 cities were burnt to the ground -- they were able to rise above all limitations and slowly, eventually succeed.

At the end of the war, Toyota executives thought that they were going to make bean paste until McArthur told them to build trucks. And slowly, like the victorious Tortoise, Toyota used continuous improvement relentlessly, every day, to inch forward, changing all the way.

Why is failure to change a vice? A vice is defined as an immoral or evil habit or practice. Mr. Okuda was saying that if you are not changing every day, then in reality you are not using your potential to grow; you are allowing another company to catch up to you. And if you use General Motors and Ford Motor companies as examples, you can see why not changing is surely a vice -- they have collectively lost billions in the last few years despite having past success. They were ahead in the race and forgot to change and improve, every single day.

The Need To Change

What is "change?" Let us go to the dictionary: To make the form, nature, content, future course, etc., of (something) different from what it is or from what it would be if left alone. Of course, it is change for the better.

To my knowledge, Toyota has never laid off a single worker in over 50 years. Toyota has nine plants in North America and is opening a new plant in Mississippi, making cars with American workers with American wages equal to or better than other automotive companies. I believe that 75% of the cars assembled in North America contain parts and materials manufactured here. Only 25% of the cars' content comes from Japan or elsewhere. The question is, "How can Toyota build cars here in America and be so successful -- they made more than $14 billion in 2006 -- and American manufacturers have to go China and India to save money?"

Mr. Okuda revealed the answer: "I want everyone in the organization to change."

Isaac Newton, noted physicist, established some laws of motion:

• The first law states that every object will remain at rest or in uniform motion in a straight line unless compelled to change its state by the action of an external force. This normally is taken as the definition of inertia.
• The second law explains how the velocity of an object changes when it is subjected to an external force. The law defines a force to be equal to change in momentum (mass times velocity) per change in time.
• The third law states that for every action (force) in nature there is an equal and opposite reaction.

These laws apply to human behavior. Mr. Okuda wants everyone to change, but everyone is following Newton's law and resists change. When you want to do something new, the mind finds a good excuse: no money, it is not in the budget, it won't work, the boss won't let me, don't have enough time, etc. The mind can easily find a million ways not to change.

Most people feel that if they get through the day without a disaster then, "Why make waves?" But, if you want to grow, if you want to meet international competition, then you don't have much choice. And Mr. Okuda recognized that Toyota's success depends on everyone in the company doing their job to grow and change every day. The manager's real job to lead and support that change process.

Every day the manager should look around the company, take videos and still pictures, and challenge people to grow, to eliminate non-value adding wastes, to use their brains to identify and solve problems, and to improve their skills and capabilities. Why else do we need managers? A manager's job is to stimulate people to change for the better, every day.

Toyota managers are asked to write annual growth plans and submit them to their supervisors. The manager decides for himself or herself what he/she needs to grow. Each quarter they sit and review their growth plans with their bosses. This process surely stimulates people to take charge of their growth.

What To Change?

The manager's job is to create the structure to foster change -- first to encourage change but, if necessary, to "force" people to change. Most of us don't like the work "force."

For the moment, let us accept Mr. Okuda's statement that he wants everyone to change at Toyota. Now the questions come: What to change? How to change? What is management's role in the change process?

Toyota established the Toyota Production System (TPS), or more recently called just-in-time in America's version of TPS -- lean. Lean looks at eliminating non-value adding wastes. Just take out a stopwatch and look at one product being made and measure the time from beginning to end, from the first process to the finished product. You will find that over 95% of the time does not add value. Value is added by converting raw material to finished goods; thus milling, grinding, drilling, painting, polishing, bending, cutting, and sanding can be called value-adding steps. But waiting, moving, and transporting things are called wastes.

Dr. Shigeo Shingo, co-creator of lean, liked to talk about bananas when lecturing. "Why should you pay for the skin of a banana if you are not going to eat it?" He was jesting, of course, but his point was that the customer should not be charged for something that he doesn't need. And, that the customer surely does not need the myriad of wastes conducted and created in most companies. Toyota focused, not on new machines, but on eliminating those wastes. If Toyota did not change, they would still be back where they were just after World War II.

So, change everything that blocks productivity improvements, cost reductions, better quality, safer workplaces or good customer service.

The biggest obstacle is the boss -- or using the boss as an obstacle. Let me explain.

Remember -- all people resist change. But, because the boss has more influence and power then workers, the bosses' resistance to change has much greater effects. For example, you come up with a new idea. The idea costs some money -- not in your budget -- so you go to your boss to seek approval. What is the likelihood that your boss will grant you approval? From my personal experience, 90% of the time the boss is going to say No. It is much easier to say No than Yes. No means we continue to do it exactly as we did before. Yes is a gamble. With Yes, there is a chance the new idea might not work. But, as Mr. Okuda says, "I don't want you to be an obstacle for someone else who wants to change."

So where should new decisions be made and who should make them? Decisions should be made at the point of need. Example: A customer calls your customer service department and needs help. You, the customer service agent, know exactly what to say to please the customer, but you are afraid to make a decision that your boss might not like. It might cost a little bit more money than you are allowed to give. So you tell the customer you can't do it. The customer gets annoyed and says, "I will never buy from you again," or the customer says, "Let me talk to your supervisor." And very often the supervisor with a little bit more power and discretion agrees with the customer. How does the customer service agent feel that the supervisor has the power to please the customer but he or she does not?

The decision should be made by the person with the most knowledge, the person who does the job every day. This is what Conscious Learning is really all about. If we are always learning, then we have more knowledge and power to please our customers. We can learn, of course, from our experiences, but we can also learn consciously by looking at our organization as an ongoing college. Like a college, there are courses to take, and like college, there is a curriculum to follow.

All change is threatening. But, without change there is no progress.

Think a little bit more about Mr. Okuda's saying about change and start today to find things to change to make your work easier, more interesting and to build your skills and capabilities, and never be an obstacle for someone else who wants to change.

Norman Bodek was the former owner of Productivity Inc. Press and is now a writer, publisher and consultant. He wrote The Idea Generator -- Quick and Easy Kaizen, All You Gotta Do Is Ask, Kaikaku The Power and Magic of Lean and Rebirth of American Industry.