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How Toyota Turns Workers Into

Problem Solvers

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Toyota's reputation for sustaining high product quality is legendary. But the
company's methods are not secret. So why can't other carmakers match Toyota's
track record? HBS professor Steven Spear says it's all about problem solving.
by Sarah Jane Johnston
When HBS professor Steven Spear recently released an abstract on problem
solving at Toyota, HBS Working Knowledge staffer Sarah Jane Johnston emailed off some questions. Spear not only answered the questions, but also
asked some of his ownand answered those as well.
Sarah Jane Johnston: Why study Toyota? With all the books and articles on
Toyota, lean manufacturing, just-in-time, kanban systems, quality systems, etc.
that came out in the 1980s and 90s, hasn't the topic been exhausted?
Steven Spear: Well, this has been a much-researched area. When Kent Bowen
and I first did a literature search, we found nearly 3,000 articles and books had
been published on some of the topics you just mentioned.
However, there was an apparent discrepancy. There had been this wide, longstanding recognition of Toyota as the premier automobile manufacturer in terms
of the unmatched combination of high quality, low cost, short lead-time and
flexible production. And Toyota's operating systemthe Toyota Production
Systemhad been widely credited for Toyota's sustained leadership in
manufacturing performance. Furthermore, Toyota had been remarkably open in
letting outsiders study its operations. The American Big Three and many other
auto companies had done major benchmarking studies, and they and other
companies had tried to implement their own forms of the Toyota Production
System. There is the Ford Production System, the Chrysler Operating System,

and General Motors went so far as to establish a joint venture with Toyota called
NUMMI, approximately fifteen years ago.
However, despite Toyota's openness and the genuinely honest efforts by other
companies over many years to emulate Toyota, no one had yet matched Toyota
in terms of having simultaneously high-quality, low-cost, short lead-time, flexible
production over time and broadly based across the system.
It was from observations such as these that Kent and I started to form the
impression that despite all the attention that had already been paid to Toyota,
something critical was being missed. Therefore, we approached people at Toyota
to ask what they did that others might have missed.
Q: What did they say?
A: To paraphrase one of our contacts, he said, "It's not that we don't want to tell
you what TPS is, it's that we can't. We don't have adequate words for it. But, we
can show you what TPS is."
Over about a four-year period, they showed us how work was actually done in
practice in dozens of plants. Kent and I went to Toyota plants and those of
suppliers here in the U.S. and in Japan and directly watched literally hundreds of
people in a wide variety of roles, functional specialties, and hierarchical levels. I
personally was in the field for at least 180 working days during that time and
even spent one week at a non-Toyota plant doing assembly work and spent
another five months as part of a Toyota team that was trying to teach TPS at a
first-tier supplier in Kentucky.
Q: What did you discover?
A: We concluded that Toyota has come up with a powerful, broadly applicable
answer to a fundamental managerial problem. The products we consume and the
services we use are typically not the result of a single person's effort. Rather,
they come to us through the collective effort of many people each doing a small
part of the larger whole. To a certain extent, this is because of the advantages of
specialization that Adam Smith identified in pin manufacturing as long ago as
1776 in The Wealth of Nations. However, it goes beyond the economies of scale
that accrue to the specialist, such as skill and equipment focus, setup
minimization, etc.

The products and services characteristic of our modern economy are far too
complex for any one person to understand how they work. It is cognitively
overwhelming. Therefore, organizations must have some mechanism for
decomposing the whole system into sub-system and component parts, each
"cognitively" small or simple enough for individual people to do meaningful work.
However, decomposing the complex whole into simpler parts is only part of the
challenge. The decomposition must occur in concert with complimentary
mechanisms that reintegrate the parts into a meaningful, harmonious whole.
This common yet nevertheless challenging problem is obviously evident when we
talk about the design of complex technical devices. Automobiles have tens of
thousands of mechanical and electronic parts. Software has millions and millions
of lines of code. Each system can require scores if not hundreds of person-workyears to be designed. No one person can be responsible for the design of a
whole system. No one is either smart enough or long-lived enough to do the
design work single handedly.
Furthermore, we observe that technical systems are tested repeatedly in
prototype forms before being released. Why? Because designers know that no
matter how good their initial efforts, they will miss the mark on the first try. There
will be something about the design of the overall system structure or architecture,
the interfaces that connect components, or the individual components
themselves that need redesign. In other words, to some extent the first try will be
wrong, and the organization designing a complex system needs to design, test,
and improve the system in a way that allows iterative congruence to an
acceptable outcome.
The same set of conditions that affect groups of people engaged in collaborative
product design affect groups of people engaged in the collaborative production
and delivery of goods and services. As with complex technical systems, there
would be cognitive overload for one person to design, test-in-use, and improve
the work systems of factories, hotels, hospitals, or agencies as reflected in (a)
the structure of who gets what good, service, or information from whom, (b) the
coordinative connections among people so that they can express reliably what
they need to do their work and learn what others need from them, and (c) the
individual work activities that create intermediate products, services, and
information. In essence then, the people who work in an organization that
produces something are simultaneously engaged in collaborative production and
delivery and are also engaged in a collaborative process of self-reflective design,
"prototype testing," and improvement of their own work systems amidst changes
in market needs, products, technical processes, and so forth.

It is our conclusion that Toyota has developed a set of principles, Rules-in-Use


we've called them, that allow organizations to engage in this (self-reflective)
design, testing, and improvement so that (nearly) everyone can contribute at or
near his or her potential, and when the parts come together the whole is much,
much greater than the sum of the parts.
Q: What are these rules?
A: We've seen that consistentlyacross functional roles, products, processes
(assembly, equipment maintenance and repair, materials logistics, training,
system redesign, administration, etc.), and hierarchical levels (from shop floor to
plant manager and above) that in TPS managed organizations the design of
nearly all work activities, connections among people, and pathways of connected
activities over which products, services, and information take form are specifiedin-their-design, tested-with-their-every-use, and improved close in time, place,
and person to the occurrence of every problem.
Q: That sounds pretty rigorous.
A: It is, but consider what the Toyota people are attempting to accomplish. They
are saying before you (or you all) do work, make clear what you expect to
happen (by specifying the design), each time you do work, see that what you
expected has actually occurred (by testing with each use), and when there is a
difference between what had actually happened and what was predicted, solve
problems while the information is still fresh.
Q: That reminds me of what my high school lab science teacher required.
A: Exactly! This is a system designed for broad based, frequent, rapid, low-cost
learning. The "Rules" imply a belief that we may not get the right solution (to work
system design) on the first try, but that if we design everything we do as a bona
fide experiment, we can more rapidly converge, iteratively, and at lower cost, on
the right answer, and, in the process, learn a heck of lot more about the system
we are operating.
Q: You say in your article that the Toyota system involves a rigorous and
methodical problem-solving approach that is made part of everyone's work and is
done under the guidance of a teacher. How difficult would it be for companies to
develop their own program based on the Toyota model?

A: Your question cuts right to a critical issue. We discussed earlier the basic
problem that for complex systems, responsibility for design, testing, and
improvement must be distributed broadly. We've observed that Toyota, its best
suppliers, and other companies that have learned well from Toyota can
confidently distribute a tremendous amount of responsibility to the people who
actually do the work, from the most senior, expeirenced member of the
organization to the most junior. This is accomplished because of the tremendous
emphasis on teaching everyone how to be a skillful problem solver.
Q: How do they do this?
A: They do this by teaching people to solve problems by solving problems. For
instance, in our paper we describe a team at a Toyota supplier, Aisin. The team
members, when they were first hired, were inexperienced with at best an average
high school education. In the first phase of their employment, the hurdle was
merely learning how to do the routine work for which they were responsible.
Soon thereafter though, they learned how to immediately identify problems that
occurred as they did their work. Then they learned how to do sophisticated rootcause analysis to find the underlying conditions that created the symptoms that
they had experienced. Then they regularly practiced developing countermeasureschanges in work, tool, product, or process designthat would
remove the underlying root causes.
Q: Sounds impressive.
A: Yes, but frustrating. They complained that when they started, they were
"blissful in their ignorance." But after this sustained development, they could now
see problems, root down to their probable cause, design solutions, but the team
members couldn't actually implement these solutions. Therefore, as a final round,
the team members received training in various technical craftsone became a
licensed electrician, another a machinist, another learned some carpentry skills.
Q: Was this unique?
A: Absolutely not. We saw the similar approach repeated elsewhere. At Taiheiyo,
another supplier, team members made sophisticated improvements in robotic
welding equipment that reduced cost, increased quality, and won recognition with
an award from the Ministry of Environment. At NHK (Nippon Spring) another
team conducted a series of experiments that increased quality, productivity, and
efficiency in a seat production line.

Q: What is the role of the manager in this process?


A: Your question about the role of the manager gets right to the heart of the
difficulty of managing this way. For many people, it requires a profound shift in
mind-set in terms of how the manager envisions his or her role. For the team at
Aisin to become so skilled as problem solvers, they had to be led through their
training by a capable team leader and group leader. The team leader and group
leader were capable of teaching these skills in a directed, learn-by-doing fashion,
because they too were consistently trained in a similar fashion by their immediate
senior. We found that in the best TPS-managed plants, there was a pathway of
learning and teaching that cascaded from the most senior levels to the most
junior. In effect, the needs of people directly touching the work determined the
assistance, problem solving, and training activities of those more senior. This is a
sharp contrast, in fact a near inversion, in terms of who works for whom when
compared with the more traditional, centralized command and control system
characterized by a downward diffusion of work orders and an upward reporting of
work status.
Q: And if you are hiring a manager to help run this system, what are the
attributes of the ideal candidate?
A: We observed that the best managers in these TPS managed organizations,
and the managers in organizations that seem to adopt the Rules-in-Use
approach most rapidly are humble but also self-confident enough to be great
learners and terrific teachers. Furthermore, they are willing to subscribe to a
consistent set of values.
Q: How do you mean?
A: Again, it is what is implied in the guideline of specifying every design, testing
with every use, and improving close in time, place, and person to the occurrence
of every problem. If we do this consistently, we are saying through our action that
when people come to work, they are entitled to expect that they will succeed in
doing something of value for another person. If they don't succeed, they are
entitled to know immediately that they have not. And when they have not
succeeded, they have the right to expect that they will be involved in creating a
solution that makes success more likely on the next try. People who cannot
subscribe to these ideasneither in their words nor in their actionsare not
likely to manage effectively in this system.

Q: That sounds somewhat high-minded and esoteric.


A: I agree with you that it strikes the ear as sounding high principled but perhaps
not practical. However, I'm fundamentally an empiricist, so I have to go back to
what we have observed. In organizations in which managers really live by these
Rules, either in the Toyota system or at sites that have successfully transformed
themselves, there is a palpable, positive difference in the attitude of people that
is coupled with exceptional performance along critical business measures such
as quality, cost, safety, and cycle time.
Q: Have any other research projects evolved from your findings?
A: We titled the results of our initial research "Decoding the DNA of the Toyota
Production System." Kent and I are reasonably confident that the Rules-in-Use
about which we have written are a successful decoding. Now, we are trying to
"replicate the DNA" at a variety of sites. We want to know where and when these
Rules create great value, and where they do, how they can be implemented most
effectively.
Since we are empiricists, we are conducting experiments through our field
research. We are part of a fairly ambitious effort at Alcoa to develop and deploy
the Alcoa Business System, ABS. This is a fusion of Alcoa's long standing value
system, which has helped make Alcoa the safest employer in the country, with
the Rules in Use. That effort has been going on for a number of years, first with
the enthusiastic support of Alcoa's former CEO, Paul O'Neill, now Secretary of
the Treasury (not your typical retirement, eh?) and now with the backing of Alain
Belda, the company's current head. There have been some really inspirational
early results in places as disparate as Hernando, Mississippi and Poces de
Caldas, Brazil and with processes as disparate as smelting, extrusion, die
design, and finance.
We also started creating pilot sites in the health care industry. We started our
work with a "learning unit" at Deaconess-Glover Hospital in Needham, not far
from campus. We've got a series of case studies that captures some of the
learnings from that effort. More recently, we've established pilot sites at
Presbyterian and South Side Hospitals, both part of the University of Pittsburgh
Medical Center. This work is part of a larger, comprehensive effort being made
under the auspices of the Pittsburgh Regional Healthcare Initiative, with broad
community support, with cooperation from the Centers for Disease Control, and
with backing from the Robert Wood Johnson Foundation.

Also, we've been testing these ideas with our students: Kent in the first year
Technology and Operations Management class for which he is course head, me
in a second year elective called Running and Growing the Small Company, and
both of us in an Executive Education course in which we participate called
Building Competitive Advantage Through Operations.
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