The leader of one of the most extraordinary organisational transformations in history, Eiji Toyoda, passed away this month aged 100. He led his firm from the penury of the 1940s to being perhaps the most effective business corporation ever. At times throughout its history, Toyota was worth more than the total of the big three US Auto corporations. Today, under the chairmanship of Eiji’s grandson, Akio Toyoda, the company is reaffirming its focus back on quality and building on its foundations to rise once more in the world industrial rankings.
For us in PMI, Toyota has always had a special place. They were amongst the earliest of the Japanese auto companies to take the lessons taught by Dr Deming into the heart of their business. Through the 1950s and 60s, as Taichii Ohno was developing the practical flow basis of the Toyota Production System (TPS), Deming’s teachings about variation and learning—SPC (Statistical Process Control) and PDCA (Plan Do Check, now Study, Act)—were providing the theoretical rigour that enabled their work to work smoothly. In addition, Toyota has soul, it thinks about its people and their place in the community and that also plays a part in TPS, something Lean doesn’t do.
The TPS has always been a multi-faceted creation, but the visible production flow has often been the only thing that visitors have remembered. They called it Lean and tried to replicate it in the West with varying success. What they missed was that tens of thousands of supervisors across the whole supply chain were able to use SPC to tell the difference between an abnormality and a problem, and hence develop and maintain capable processes that always delivered the quality that enables the flow to flow.
The Toyoda family appreciated the need for both theoretical training, so that all their engineers learned SPC as part of their education, and hands-on practicality, so those same engineers were always coached on-the-job, in making constructive changes within a discipline of standardisation.
Over the years many lessons have been learned from the TPS but two themes are particularly helpful for us today. The first is the value of the scientific method in management (PDSA) and the second is the idea of building competitive advantage by focussing improvement methods on the customer experience, as opposed to shareholders, administrators or professionals.