Saturday Jan 24, 2009


2009: Don't Just Do Something: "I had been looking at the problem in the wrong way. As is natural and intuitive, I had been looking at what to do, rather than what to not do." -- Matt May

Great quote. If I could only do more of this not doing I'd be much better off. I think too much. I do too much. And that's not an effective long term strategy.

Tuesday Dec 30, 2008

Real Leadership Starts with Real Action

I find most conversations about "leadership" little more than meaningless chit-chat. A waste of time. Talk is cheap. Just ignore it. Action speaks clearly. With that in mind, watch this CNN clip of Japan Airlines CEO Haruka Nishimatsu's attempt to manage his company through tough times -- Evolving Excellence: $20 Billion Company CEO ... Takes the Bus. (Video: here, here,)

What do you think? I've watched the darn thing a dozen times. I can't get enough. It's an inspiration. Yet, it's so stupidly simple. And it speaks quite clearly about this guy's priorities and those of his company. Can you imagine in your wildest dreams business, labor, and political leaders in modern America following this reality of leadership? Yah, I doubt it too.

Now, some of this is cultural in that the distribution of wealth in Japan is not nearly as insane as it is in the United States, and the so-called "talent" market in Japan is nothing like it is in the West as well. The Japanese think very differently about individual talent and its value in relation to an overall organization. It's difficult to explain, but I see it everywhere around here. And I can see both good and bad in it as well. So, I'm not saying that the Japanese know best in all cases. They don't. Neither do we, actually, but we tend to not recognize that. But I do find it remarkable that this story in Japan is really not a big deal at all. Should it be? Regardless of the obvious cultural differences, the United States may be forced to make some cultural changes like these in the near future. It will be fascinating to see how the country deals with it. Is all that "talent" worth all that cash? If it is, so be it. I'm all for paying for the best. But if not, can we finally recognize it, please? Can this be any more obvious now? So far the solution is simply to raid the pockets of us regular people to save all the experts and billionaires with a never ending series of bailouts. How long that will last who knows. I suspect not for very long before people get really pissed, but what do I know. I'm nobody. I have no power. I'm not special in that system, and don't think for a minute that that doesn't get me very down at times. I know, I know ... Obama is going to save us. Right. Got it.

Oh, and by the way, when I travel throughout Asia for Sun, Japan Airlines is always an option for obvious reasons. They fly there a lot. And I generally choose based on times and prices, etc -- just like everyone else (well, everyone else who flies 3rd class, I mean). So, do you think knowing that JAL's CEO is taking the freaking bus to work hanging on to the damn strap like I do and making less money than his pilots will affect my decision to choose an airline? You can absolutely count on it. Never mind that the service on JAL (and most Asian airlines) is vastly superior to every single American and European carrier in the air, I'm talking this guy's plane because he's talking the bus. Period. And Nishimatsu didn't initiate this no-frills style of management when the U.S. fell off the financial cliff a few months ago. Nope. He started a couple of years ago. Anyway, I gotta calm down. Here are some related links talking about this issue. Good stuff. All worth a read if you are just a regular working stiff trying to figure out how to retire and put your kid through college.

Ah, one more thing before I forget. And this is a big deal. If you want to build community in this new era -- one where the people have more of a voice than ever before -- do what Nishimatsu-san does. It's required. How else would you have any credibility whatsoever?

Tuesday Oct 28, 2008

Small Improvements Leading to Big Results

The Open Secret of Success: "Instead of trying to throw long touchdown passes, as it were, Toyota moves down the field by means of short and steady gains. And so it rejects the idea that innovation is the province of an elect few; instead, it's taken to be an everyday task for which everyone is responsible." -- James Surowiecki, The New Yorker

There is so much to say about that quote. I think it's anti-intuitive for many people, which is probably why many miss it. But what I love is that it's just liberating. If this is true, and if much of Toyota's success is based on everyone being responsible for innovation, then I find that inspiring. Empowering. It means that innovation is not exclusive. It's not necessarily only locked inside the special people with big names, big titles, big brains, big megaphones, or big salaries. How utterly democratic. That's not at all how innovation is generally characterized, though. Be careful what you read.

So, will the American auto companies eventually get this? I think they will. It's cool to see Ford getting back into the quality game -- Ford gains on Toyota -- the Toyota way -- now so things may be changing. This bit about companies trying to leverage the Toyota manufacturing system is really interesting to me. It seems difficult to implement because it's such a different way of thinking, but extreme circumstances are also efficient focusing mechanisms. People get back to basics because they have no choice. That's where Toyota's system came from, actually -- a group of people who built a company during difficult times.

As soon as I read these new links (thanks for the pointers, Chris), I thought about how the Toyota production system is open source, basically, and how leading FOSS developers embrace the very same principles of incremental improvement. Just see Linus Torvalds here and here for one obvious and high profile example, but any reading of open source culture and software development methodologies will bubble up many interesting associations.

Everything tagged Toyota here.

Thursday Jul 24, 2008

Toyota Gets Quick

Toyota Wins Few Fans at the Track. Interesting article in the WSJ. Toyota has been slowly earning its way in American racing for some time now, but lately there are some negative reactions from NASCAR fans to Toyota's success. But I wonder if that's more a result of a "cocky" and "arrogant" driver than a relatively low key car company.

Thursday Mar 20, 2008

Toyota: Don't Measure Against Rivals

Toyota finds success is a bitter-sweet pill: "From the moment he took the helm in 2005, [Toyota Motor Corp President Katsuaki] Watanabe has made it his mission to discourage employees from measuring Toyota against rivals but rather against a lofty goal: developing a dream car that 'cleans the air, doesn't cause accidents, makes drivers healthier and can go around the world on one tank of fuel. We have a long way to go,' he said." -- Reuters

Agree 100%. You can't win in the long run by playing defense and getting distracted by reacting to a competitor.

Monday Feb 04, 2008

Torvalds on Japan and OpenSolaris

Jim Zemlin released part two of his conversation with Linus Torvalds. I blogged about part one last month. Lots of interesting perspectives in the entire interview.

When asked to comment about OpenSolaris, Torvalds said, "It's generally hard to build a community around a commercial entity that also wants to be in control because everybody else around that commercial entity will always feel like they're at the mercy of Sun. And I'm not even going to go into OpenSolaris because, quite frankly, I don't even care." And there were a few more bits after that, but that's the gist of it. Following the comments of Torvalds about OpenSolaris has been interesting over the last few years. Sometimes supportive, sometimes negative, sometimes indifferent.

But more interesting were his thoughts about the Japanese and the value of incremental improvements: "But if you just incrementally improve on something, you will get there eventually. One analogy ... is the auto industry 40 years ago and how non-innovative Japanese companies that just plodded along, how they were looked down upon by the true innovators in the U.S. auto industry. And look -- who was it that actually ended up changing the auto industry?" Totally agree.

One of the things many Japanese are famous for is taking the long view. It's enough to drive the average westerner insane. But anyway. On OpenSolaris, very early on learned to embrace a long term perspective, and that came from dealing with many engineers at Sun who hold long term views of technology. So, I wonder, what happens if we just plod along, if we just keep improving OpenSolaris incrementally over time, if we keep learning from those who have gone before. I wonder what that perspective buys us?

Linus Torvalds - Part I | Linus Torvalds - Part II

Wednesday Dec 26, 2007

Globalizing Tokyo

Japan set for radical reform of markets: "There is a lot that is good in there," said a representative for a foreign bank. "It's not the end of the story. They need to keep doing more to globalise Tokyo as a financial centre." -- Financial Times

Encouraging more industries in Tokyo to think and act globally is a good idea for Japan. Many of Japan`s companies are global, sure, but the pervading attitude around the place is most certainly not global. I find China far more open to the west from a business perspective (and it ain`t even close). And many people agree. That`s why this set of reforms has been released by the government. Of course, they could call the guys at Toyota and Honda for a little advice. I`m serious.

Don`t Gloat

Toyota sees bright future as world number one -- "Toyota has been careful not to gloat about its success in the United States, fearing a protectionist backlash of the type seen when Japanese automakers first seriously penetrated the market in the 1980s." -- AFP

I think this is a good marketing strategy, but with Toyota it`s more than that. The company is more focused on being profitable, building great cars, and carefully expanding into emerging global markets (China, Brazil, Russia) then they are on beating the competition. They know what comes first.

Saturday Dec 22, 2007

Focus on Profitability, not Market Share and Competitors

The 'Myth of Market Share': Can Focusing Too Much on the Competition Harm Profitability? -- "We're not saying companies shouldn't pay attention to their competitors; they might be doing reasonable things that you may also want to do. What we're saying is that the objective should not be to try to beat your competitor. The objective should be profitability. In view of all the damage that occurs by focusing on market share, companies would be better off not measuring it." -- J. Scott Armstrong, Wharton marketing professor.

And interesting examples of this concept cited in the article include Japan's Toyota and Canon.

Sunday May 27, 2007

Toyota & UAW

It will be fascinating to see how Toyota deals with the United Auto Workers union now that the company is taking out GM and Ford and all eyes are on the Japanese automaker. Publically, Toyota seems to be positioning itself quite differently from its American competitors -- In Kentucky, Toyota Faces Union Rumblings: "We think the historic American approach to things is to run full blast, pay out as high as you can in the short term while times are good, and then when times go bust, you lay people off, you shut plants and you destroy communities," said Pete Gritton, a Toyota vice president who oversees human resources at the company's plant. "Toyota does not want to do that."

Monday Feb 19, 2007

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?

Thursday Feb 15, 2007

Toyota Story: Unsecured Report Used as Source

Fascinating article here -- Toyota fears U.S. backlash over gains. Nothing in the article is out of the ordinary, really. Apparently, Toyota is concerned about public opinion in the U.S. because the company is doing very well there, and its American competitors are not. Not a big deal.

But what fascinated me was this part right here in the 7th paragraph: "In the briefing to other Toyota managers, Sudo cited political and social risks. The report, left unsecured on computers at the company's Georgetown, Ky., complex, said Toyota could come under fire for: ..." and then there's a list of items. And "Sudo" is Seiichi Sudo, president of Toyota Engineering & Manufacturing in North America. Ok, so what's up with the bit about "the report, left unsecured on computers at the company's Georgetown, Ky., complex" doing in there? Did the reporter hop on to the president's computer right there in his office and hack around while everyone else was chatting out in the hall or something? Or was the preso left on the computer right there in full view for all to see as the interview was taking place? Was it leaked to the reporter and therefore deemed "unsecured" in that respect? Did the reporter whip out a cell phone and take a quick picture of the screen while the others were ducking down to pick up a pencil from the floor? I'm dying to know. How did this happen?

Judging from the amount of information from that so-called "unsecured report" used in the article and how that source material is characterized, I can just imagine the reporter sitting there in front of the computer taking notes. All alone. For a long time. My goodness.

Saturday Dec 23, 2006

The Toyota Way and Open Source

More news of Toyota taking out GM -- Toyota’s Sales Projections Show It Surpassing G.M. And more analysts are pointing to the famous "Toyota Way" business processes the company uses as the critical factor. From the Times article:

Toyota’s rise would also prove a victory of sorts for its unique corporate culture, the so-called Toyota Way, which is rooted in an obsession with craftsmanship and constant improvement, or "kaizen." Analysts said the Toyota Way would likely become enshrined as the industry’s gold standard, and the model to mimic or surpass for new challengers from South Korea and China.

"Enshrined as the industry’s gold standard, and the model to mimic," eh? That sounds like open source coming to the auto industry. After all, Toyota's processes are open, aren't they? But the notion of simply mimicking someone else's processes sounds trivial. The implementation is just as important as the source or specification of any business process. And that's much more difficult to mimic because what makes an implementation special is buried deep within the culture of every person doing the implementing. It's not necessarily secret, but it's oftentimes incomprehensible.

Tuesday Sep 12, 2006

Toyota's (Open)TPS

Really long and comprehensive article in Baseline on Toyota -- What's Driving Toyota? Nice piece, actually. I don't know where to begin since so many bits in the article interest me. How about starting with some basic business assumptions and how the Toyota Production System is defined. To quote the article:

The engine behind its success, say insiders and outsiders alike, is the Toyota Production System (TPS), a set of principles, philosophies and business processes to enable the leanest manufacturing.

And behind TPS is information technology -- supporting and enabling the business processes that help Toyota eliminate waste, operate with virtually no inventory and continually improve production.

Technology does not drive business processes at Toyota. The Toyota Production System does. However, technology plays a critical role by supporting, enabling and bringing to life on a mass scale the processes derived by adhering to TPS.

"What strikes me about Toyota is, if you were to ask them if they have a technology strategy, they would probably say no, we have a business strategy," says Philip Evans, a senior vice president at the Boston Consulting Group who has studied Toyota. "They have a very clear understanding of the role technology plays in supporting the business."

This strikes me, too, because I'm so used to focusing on the technology that the business case sometimes gets lose or the technology ends up driving the business case or obfuscating the business case. The sequence, however, seems quite clear at Toyota. But reading only this far, I thought for sure that this TPS thing must certainly be based on Toyota proprietary IP, right? It appears not. Later in the article you'll find this:

Unlike the formulas to blend Coca-Cola or the latest blockbuster drug, there is no veil of secrecy behind the Toyota Production System. In fact, Toyota openly invites general visitors and competitors alike into its plants to observe its operations and manufacturing techniques.

In 1992, it opened the Toyota Supplier Support Center in Erlanger, Ky., about an hour's drive north of the Georgetown plant, to teach other companies the principles and concepts behind TPS and to help implement TPS in their own operations. To date, it has worked with more than 100 companies as varied as office furniture maker Herman Miller, seat manufacturer Trim Masters and several hospitals. The supplier center now operates as an independent consulting firm.

It even created a joint venture with GM in 1982, taking a plant that was to be closed in Fremont, Calif., and reengineering it into a lean manufacturing facility based on TPS. That plant, renamed New United Motor Manufacturing Inc. (NUMMI), quickly surpassed all of GM's plants in North America in productivity, quality and inventory turns. NUMMI became a living laboratory for hundreds of GM executives and now manufactures Corollas, Tacoma pickup trucks and the Pontiac Vibe.

Toyota is open with the strategy behind TPS because it wants to raise its North American suppliers up to its own level of efficiency and quality, Liker says. At the same time, it can afford to be open with its competitors because Toyota is constantly raising the bar. By the time they copy its current processes, Toyota will have moved on.

So, the business model comes first at Toyota, and technology supports the business model -- not the other way around. Then both are packaged and implemented via the TPS, which is open and enables others to benefit while Toyota profits and drives its thinking deeper into the market. And Toyota is not worried about opening up its production processes because the company is confident it can out innovate competitors and, actually, the company would like suppliers to come up to its standards. Talk about confidence. My goodness. I think I'm going to cite this example the next time someone is worried about opening their code. This has an open community dynamic to it of sharing as well as competing.

The article goes on to explain the core elements of the TPS: Just-in-Time, Jidoka, Kaizen, Andons, Poka Yokes, and Genchi Genbutsu. To me, that last one in the list is the most interesting. According to the article,

The literal translation of this term is, "Go and see for yourself." Rather than hear about a problem, Toyota requires its workers, team leaders and executives to go and see a problem directly and to work collectively on a solution.

Interesting. So, there seems to be a community dynamic occurring internally as well as externally. There are several other examples of this in the article. If Toyota were a software company, I bet they'd participate in open source, don't you think?

Back to the article ...

Together, the elements of TPS form the basis for a system of business process management that allows Toyota to continuously look for ways to optimize its operations and put thought into action. Sounds simple, but it requires a basic cultural change in an organization, and that, according to Gary Convis, can be the most difficult challenge. Convis, chairman of Toyota Motor Manufacturing Kentucky, oversees the company's manufacturing plant in Georgetown, Ky.

By the way, after his promotion, this guy Convis moved his office from the administrative building to the factory floor. The chairman. On the factory floor.

So, why can't the American car companies tap into a system like this? It obviously works pretty well since Toyota just picked off Ford and is on its way to taking down GM. Why are those guys doing so poorly while Toyota (and Honda as well) are doing so well? Especially, when at least Toyota opens its processes? I think I'm just now beginning to understand what the answer is and why Toyota isn't afraid of opening those processes. Ok, the answer is obviously massively complex -- especially when you consider American union, health care, pension issues, and missing market shifts - but perhaps a few of these elements are involved as well: (1) openness can help build markets, (2) those who open some of their stuff end up leading within those markets, (3) and the culture of pervasive quality is almost impossible to copy because it leads to unique value every time it's implemented. And by "culture" I don't necessarily mean Japanese vs American. Yes, I think the Japanese notion of quality and service is somewhat higher than what most Americans can even imagine, but it doesn't have to be that way and it wasn't always this way in the past.

Now, the article is not all rosy for Toyota. In fact, the company has actually had some tough times lately with re-calls and quality issues. But most analysts feel that things are turning around, they have confidence in the company, and they still put Toyota quality way above that of their competitors. Nevertheless, "[a]t a news conference in July, Toyota president Katsuaki Watanabe bowed deeply and apologized for the recall troubles. 'I take this seriously and see it as a crisis,' Watanabe said at the conference. 'I want to apologize deeply for the troubles we have caused.'"

Bowed deeply and apologized. So, perhaps I should add a touch of humility to my little list of elements to consider.



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