A way of Thinking

Another interesting article on Toyota -- From 0 to 60 to World Domination. This is a really long piece, over 8,000 words, but it's really nicely done.

Toyota employees think long term. They invest heavily in R&D -- much more than their competitors. Goals of quality and efficiency pervade the organization in engineering and marketing and manufacturing and pretty much everywhere else. Serving customers and building great products while not simultaneously hurting the environment (or at least not making it any worse) don't seem contradictory to these guys. They skip the utterly obscene executive pay packages common in the U.S. Unions are not present, nor are the American-style health care costs. They value evolution, not revolution. They prefer long-lasting and well-researched yet flexible strategies over short term sprints based on fads or whims. Their engineers very clearly lead and do significant -- at times obsessive -- field research first hand behind the wheel all over the world. Marketing is both traditional and grass roots and apparently quite simple and effective. They learn from their mistakes. They are remarkably open about their processes, but they also keep secret some of their innovations just as any smart company would. They are a culture built on top of Japanese culture, for sure, but they are by no means exclusively Japanese. They evolved based on the personal experiences of a unique group of people who dealt with the challenges of a country destroyed by war in a particularly innovative way. They are not perfect and don't lead in every market, but they are certainly on a roll in the biggest market and are delivering one body blow after another to the U.S. auto industry. Very interesting story.

There are a lot of great quotes in this article, but this one just jumps off the page:

Toyota spends $20 million a day ... on research and factories. "They are outspending G.M. in R.&D., product development and capital spending," says Sean McAlinden, an economist at the Center for Automotive Research, a not-for-profit consulting firm in Ann Arbor. "If that trend continues, we're dead. The problem is, suppose we made a car" as good as a Toyota. "Then we only have a car as good as they do. It's not just about catching up, or getting into the game. You’ve got to get ahead somehow. But how?"

So, even though the Toyota Production System is open, and even though this article makes it clear that Toyota "has never really caught the Big Three by surprise," people are still asking "how" they do it. Fascinating. Just having access to an open process will only take you so far, I guess.

Further down in the article you'll find the bit that helps explain why so many miss this point:

Management theorists who study Toyota's production system tend to say that it is difficult to replicate, insofar as the company's methods are not simply a series of techniques but a way of thinking about teamwork, products and efficiency.

A way of thinking. That's tough to copy. Even Toyota formally teaches the system to employees now since the company is growing so rapidly outside Japan, and they are concerned about quality in some markets. I'd like to take that class, actually. Wouldn't you?

What is truly telling about Toyota is it can leverage its U.S. design studios, employing American industrial designers, to create a design for the U.S. market, and bring those designs to the U.S. market faster than its U.S. competitors can.

I remember a class where the instructor summarized the Ford's "Toyota Problem" to the simple issue that it took Ford six years from deciding to build a new car design to Toyota's four years to do the same. I said that was hogwash, because it assumes both Toyota and Ford both have at least four, but less than six years of insight into future auto customer desires.

I also said I thought Ford could shrink its speed into action cycle to four years and still would get trounced by Toyota. Because Ford cannot even see four years into the future.

The simply truth of any product company is its ability to see into the future and predict customer demands must match its ability to design and build products for that demand. This goes to the heart of strategy.

Posted by Mark on February 19, 2007 at 06:03 PM JST #

Someone I know makes the point that continuous improvement, while no secret, is put into practice by Toyota. There is a part that his warehouse handles, it goes into the A-pillar structure of the car; they handle this part both for Toyota and one of the American car companies. This part was designed once by the American car company, and has not changed over the years it is being produced. Toyota has made 7 design changes to this part during the same time period. That is what CI is about.

Posted by Patrick Giagnocavo on February 19, 2007 at 06:44 PM JST #

American companies fail to produce more things that just cars. Ford tried to reinvent itself many times just like GM. This article says one important point. American nation in majority and American citizens individually do not believe in evolution. Evolution (constant improvement) is a way of thinking for Toyota. GM and Ford believe in revolution. They think that if they pay more to their executives they will win. But evolution (system) beats revolution that new execs bring to the table.

Posted by Pavel Agafonov on March 04, 2009 at 01:29 PM JST #

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