Wednesday, April 22, 2009

The 5 rules of lean DNA

Steven Spear and H. Kent Bowen did an admirable job of describing what makes Toyota tick in their Shingo Prize-winning article, “Decoding the DNA of the Toyota Production System,” Harvard Business Review, Sept.-Oct., 1999. In that article they defined four “rules” that described how Toyota’s production workers carry our their activities (Rule 1), make connections between customers and suppliers (Rule 2), create pathways of material and information flow (Rule 3), and make improvements (Rule 4). In this post, I will argue in favor of a 5th Rule of lean DNA that describes how Toyota develops leaders. See my short article, The 5 rules of lean DNA. You will find Spear and Bowen’s first four rules restated there as well, with minor modifications.

It is often said that the Toyota Production System is a philosophy. According to the Merriam-Webster online dictionary, a philosophy is a theory underlying or regarding a sphere of activity or thought, or the most basic beliefs, concepts, and attitudes of an individual or group. This does not seem to be particularly helpful, particularly because Toyota is so very practical. I prefer to think of the Toyota Production System as a culture. The concept of “philosophy” is too small to contain Toyota’s system.

While definitions of culture abound, I prefer to think of culture in four dimensions,

A set of ideas (concepts, values, etc.);
A set of tools (i.e., a technology, including methods of communicating, i.e., language, and methods of getting things done, e.g., agriculture, manufacturing, etc.);
A method of adapting to changes in the environment; and
A method of transmitting all four of these elements to future generations.

Perhaps it is such a notion of culture that Toyota has in mind when it speaks of The Toyota Way. See Jeffrey Liker’s The Toyota Way. I cannot claim to be an anthropologist, but my definition of culture bears some resemblance to anthropological definitions of culture.

Toyota’s ideas

Toyota’s principal ideas may be summarized as follows:

Standard work. Work should be standardized as to task, sequence, time (i.e., takt time), and work-in-process inventory;
Just in time. Material and information should flow without interruption (i.e., one-piece flow) to meet actual customer demand; where you can’t flow, pull material and information according to average expected customer demand.
Jidoka or autonomation. Human work (the work of observation and thinking) should be separate from the work of unconscious machines and processes. All interfaces between--between process customers and process suppliers, and between employees and machines--should be perfectly unambiguous so the defects and/or equipment problems can be discovered and fixed in as close to real time as possible.

Those familiar with the Toyota “house” diagram will recognize these three things immediately. They are also consistent with the first three “rules” of lean “DNA” as articulated by Steven Spear and H. Kent Bowen in their Shingo Prize-winning article, “Decoding the DNA of the Toyota Production System,” Harvard Business Review, Sep-Oct, 1999.

Toyota’s tools

Here is a famous short list of lean tools, drawn from Hiroyuki Hirano’s JIT Implementation Manual (Productivity Press):

Standard operations (standard work)
Flow production (just in time)
Changeover (quick setup)
Visual control
leveling (level loading or heijunka)
quality assurance (successive checks, self checks, and poka yoke)
maintenance and safety (total productive maintenance)

Of course, we would need to create additional lists for different business functions such as engineering, marketing, and so forth. Generally speaking, Toyota’s tools can be identified by their incorporation of the Deming cycle. In other words, regardless of whether it is a tool of manufacturing, of service, or of administrating, a lean tool is a tool designed to adapt to change. See below.

Toyota’s method of adapting to change

As far as I can tell, Toyota has two basic methods of adapting to change:

The Deming cycle, or PDCA, with stands for Planning, Doing, Checking, and Acting upon a scientific experiment to continuously improve upon standard work.
Hoshin kanri, or strategy deployment (also known as strategy deployment). Hoshin is the systematic application of the Deming cycle to the articulation, deployment, and execution of a company’s long term strategic plan. Please see my book, Hoshin kanri for the lean enterprise (Productivity Press, 2006).

The first method listed here, the Deming cycle, is consistent with Spear and Bowen’s four “rule” of lean “DNA.” Their article was based upon observations made on Toyota’s shop floor and did not necessarily support generalizing to management systems such as hoshin kanri. It is clear, however, that since the early 1960s, Toyota has used hoshin kanri to develop its organization. In particular, hoshin kanri has been a critical part the cross-functional management of its value streams, as well as the interorganizational management of its supply chains.

Toyota’s methods of transmitting its culture to future generations

Toyota has essentially two basic methods of transmitting its culture to future generations:

The A3 process, as described by John Shook in his recent Shingo Prize-winning book, Managing to Learn (Lean Enterprise Institute, 2008). The A3 is a charter document printed on large-format paper (in America, we would print on 11” x 17” paper). It is essentially a contract between one manager and another by means of which the first manager delegates responsibility for developing countermeasures to resolve a problem. The method is significant as a leadership development method because it places senior managers in the role of coach or, in the Japanese style, sensei (teacher). To see just how seriously different this method can be from American “take charge” management, see Steve Spear’s “Learning to Lead at Toyota,” Harvard Business Review, May 2004. It is important to note that the A3 process is actually a feature of hoshin kanri (see above) as it is practiced at Toyota. The hoshin process ensures that all senior managers participate as coaches to their direct reports. See my book, Hoshin kanri for the lean enterprise (Productivity Press, 2006).
Systematic training in the ideas, tools, and methods of adaptation listed above. The style of training has been heavily influenced by the U.S. Government’s WWII program Training within Industry, which introduced many of the concepts and practices we recognize as “lean” today. Toyota’s Supplier Support Center, which for many years provided free training to its promising suppliers, is more evidence of the strength of Toyota’s belief in the power of improving human resources through training.

The A3 process is consistent with Spear and Bowen’s 4th rule insofar as they refer to the need to have a coach to oversee the use of the scientific method (PDCA) by employees on the shop floor. The A3 process, however, does not extend that far. As part of hoshin kanri, the A3 is for managers only.

Tom Jackson
Portland, Oregon
April 5, 2009

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