Wednesday, April 22, 2009

Et tu, Toyota?

So, mighty Toyota is asking for handouts, a $2 billion handout from the Japanese government and a loan from the European Investment Bank. See Ian Rowley’s recent Business Week article, Auto Bailout: Et tu, Toyota?).
This is all very disappointing, especially to management consultants like myself who have championed Toyota’s approach to managing business. I suppose that we believed that, faced with an economic downturn, Toyota would simply spend a little of its famous cash reserves. But this is not any economic downturn. The scenario darkens ominously minute by minute.
Toyota’s owners are only human, more human, perhaps, than we imagined, but not inhuman. While American banks may spend their handout on dubious retention bonuses (where are all these failed bankers going to go?), Toyota will spend its handout on researching clean technologies and avoiding layoffs.
Should consultants stop preaching the Toyota Way? No. Our current economic kerfuffle has nothing to do with the Toyota Production System. The kerfuffle is a failure of markets, a failure of intellectual understanding, and a failure of political will to fix those markets. Despite what may happen to the demand for your products and services or the availability of capital, organizations that adopt Toyota’s business systems will fare far better than businesses that do not.
Most businesses are still stuffed full of Toyota’s 7 deadly wastes: overproduction, transportation, waiting, inventory, motion, overprocessing, and of course defects. And most businesses still systematically ignore the knowhow of middle and frontline managers and hourly workers, which many consultants classify as the 8th deadly waste: the waste of human creativity.
That creativity is the wellspring of the world’s eventual recovery. If only we can get the bankers to believe in it again.
Bottom line: Don’t throw Toyota’s amazing production or management systems out with the economic bathwater, however murky it might become.

Tom Jackson
Portland, Oregon

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