John Shook

A Keynote for Industry Week

Nashville Tennessee April 2009

Managing to Learn about Nashville…

Toyota is not perfect.

The point is not “Toyota”.

It’s not about Toyota; it’s not about cars.

I’m going to talk about Toyota, but…

Change – the leader’s role…

“John, I can’t get my people to do this…”

How can you get others to “do this”…?

Only one way…

First, a note on “What is Lean”?

Narrow definition

• tools

• cost cutting

Broader definition

• thinking, systematic

• entire enterprise, business system

Lean in an Economic Crisis

These are the most difficult economic

conditions in modern times.

They make it hard to keep our attention focused

on the long-term.

They tempt us to take short-term measures that

may hurt us in the long-term.

Economic Crisis -- Toyota’s Early Days

Economy in total shambles…

• Toyota 1000 units per month

• “Can we catch Nissan?”

No money…

• banks refused to loan

Kiichiro to Eiji to Ohno (and the others):

• “Catch up with Detroit in three years!”

Toyota’s Response

A system “for success in a down market…”

“It’s easy to make money when everyone is

making money. The key is to be able to

make money when times are bad.”

From Downsizing to Shared DestinyToyota’s Early Crisis

The Toyota Production System

Just in Time“The right part

at the right time

in the right amount”

•Continuous Flow

•Pull System

•Takt Time

HEIJUNKA

Jidoka

Production Lines

That Stop for

Abnormalities

•Automatic Machine Stop

•Fixed Position Line Stop

•Error Proofing

•Visual Control

•Labor-Machine Efficiency

Mutual Trust; Employee Development Robust Products and Processes

Stability; TPM; 5S Supplier Involvement

Best Quality - Lowest Cost - Shortest Lead Time

Through Shortening the Production Flow By Eliminating Waste

“Built-in Quality”

Standardized Work and Kaizen

From Internal Success…Transformation of NUMMI and beyond

What is the role of leadership?

Leadership:Three ModelsOld “Dictator” Style: “Do it my way…”

1970s “Empowerment” Style: “Do it your way... ”

Lean Style: “Follow me…

and we’ll figure

this out together ”

Kan Higashi to Gary Convis…(NUMMI’s senior Japanese and American leaders)

“Lead the organization as if you have no power."

“Lead as if you have no power."

In my five years in Toyota City, almost neverwas I told exactly what to do or how to do it.

Yet, I was not free to just do what I wanted.

I was given clear responsibility to propose countermeasures to problems I owned.

Toyota’s way of managing

Provides extraordinary focus, direction, “control.”

While at the same time providing maximum flexibility.

Thus resolving the dilemma of all large organizations: control vs. flexibility, direction vs. adaptability…

…is as different from the commonly

accepted notion of the “enlightened

modern manager” as it is the old

command and control dictator.

Lean Leadership…

Get each person to take initiative to solve problems and improve his or her job.

Ensure that each persons’ job is aligned to provide value for the customer and prosperity for the company.

Lean managers do two things

Get the job done and develop your people

A different way of saying the same thing…

How do you want to lead and manage?

-In these turbulent times?-In any times?

Chairman Cho of Toyota: Three Keys to Lean Leadership

Go See.

• “Sr. Mgmt. must spend time on the front lines.”

Ask Why.

• “Use the “Why?” technique daily.”

Show Respect.

• “Respect your people.”

“Data is of course important,

but I place greater emphasis on

facts.”

-Taiichi Ohno

“Go see”

Core Toyota View:

“You can understand everything that is

really important about a company by

observing from a good spot on the

plant floor.”

From p-D-p-D Fire-fightingto P-D-C-A Management Cycle

HYPOTHESIS

TRYREFLECT

ACT

CHECK

STUDY

PLAN

DO

GRASP the SITUATION

ADJUST &

STANDARDIZE

Ohno Circle + Deming Cycle = Management by Science at the Gemba

ACT

CHECK

STUDY

PLAN

DO

Lean Problem Solving

- at the gemba- five whys

GEMBAQUALITY ROOM

DEFECT!!

TOOLS

Mr. Cho

“Know normal from abnormal…Best Quality - Lowest Cost - Shortest Lead Time

J

I

D

O

K

A

Operational Stability and Kaizen

J

I

T

…right

now!”

S Q D C M

Respect for People

Focus on the front line worker

• Enable the worker

- To work safely

- To know his/her customer

- To be involved, engaged

- To be successful

• Worker-out or the Front Lines-back principle

- Build your operating system from the operator out

- Remove wasteful steps from his work,

- Giving it to support people: isolate the waste!

- Until nothing is left but value-creating steps.

Never waste the operator’s time and effort!

Leading as if you have no power…

Get the work done (design-build-ship-sell)while developing people at the same time

To “get the job done” requires:

Solving real business problems and

making improvements in the way work

is performed:

• at each level of the company

• in each activity of the company

• in real time

• at the root cause

To “develop people” requires:

Providing them with the skills to:

Solve real business problems and

make improvements in the way they

perform their work.

Toyota’s Cheryl Jones…(now VP, was floor supervisor)

“Continuous improvement comes

from making mistakes and

learning from them."

Problems, problems, problems…

How does your organization:

think about having them…

go about finding them…

deal with dealing with them…?

“No problem…”

is problem!”

GEMBAQUALITY ROOM

DEFECT!!

TOOLS

The Thinking Production System

Just in Time“The right part

at the right time

in the right amount”

•Continuous Flow

•Pull System

•Takt Time

HEIJUNKA

Jidoka

Production Lines

That Stop for

Abnormalities

•Automatic Machine Stop

•Fixed Position Line Stop

•Error Proofing

•Visual Control

•Labor-Machine Efficiency

Mutual Trust; Employee Development Robust Products and Processes

Stability; TPM; 5S Supplier Involvement

Best Quality - Lowest Cost - Shortest Lead TimeThrough Shortening the Production Flow By Eliminating Waste

“Built-in Quality”

Standardized Work and Kaizen

Getting

people to

think and

take initiative

is the key!

Do you have a process or structure to help you…

• Identify problems?

•Solve problems?

•Lead and develop people?

• be able to ask questions and mentor

people?

Basic problem to solve at different

levels of the enterprise

A Difficult Struggle at the Mid-management

and First Line Supervisory Level

FRONT LINES

SENIOR

MANAGEMENT

MIDDLE

MANAGEMENT

MUST PROVIDE VISION

AND INCENTIVE

MUST “DO”

MUST LEAD THE ACTUAL

OPERATIONAL CHANGE

Likes

the involvement

Likes the results

Wants to be

successful

Role Impact

Problem:

MUDA

Problem:

MURA & MURI

Problem:

MURA & MURI

Muri: overburden

Mura: variation

Muda: waste

PDCA Tools for different levels

Provide the right tool for the right job

FRONT LINES

SENIOR

MANAGEMENT

MIDDLE

MANAGEMENT

MUST PROVIDE VISION

AND INCENTIVE

MUST “DO”

MUST LEAD THE ACTUAL

OPERATIONAL CHANGE

Likes

the involvement

Likes the results

Needs the right tools

and skills to be

successful

Role Impact

Problem:

MUDA

PDCA tool:

Policy Management

PDCA tool:

VSM or A3

PDCA tool:

Standardized Work

Problem:

MURA & MURI

Problem:

MURI & MURA

Muri: overburden

Mura: variation

Muda: waste

Change – the leader’s role…

“John, I can’t get my people to do this…”

How can you get others to “do this”…?

Only one way…

Change – the leader’s role…

“How can you get others to “do this”…?

Only one way…

The challenge is not “getting other

people to do this”…

The challenge is getting YOU to do

this!

Core Toyota View:

“You can understand everything that is important about a

company by observing from a good spot on the plant

floor.”

Okay…How do we go to the gemba??

What do we look for?

What do you look for?

Lean is…Lean is “process-focused”.

Which process is most important?

The process of creating processes

through “root cause thinking”

Lean is not jumping to conclusions.

The famous lean tools

Even more than the “mechanical” or tangible benefits they bring,

They are frameworks for learning and improvement,

Designed to make it:

• Easy to see problems

• Easy to improve

• Easy to learn from

(What is calculus??

A solution? Or a means to derive solutions?)

What to look for- let’s make it easy for ourselves…

Plan vs. Actual

Standardized Work

PDCA –

the scientific method

A Problem with Problem Solving

Our Natural Human Tendency (?)

Problem The

SOLUTION

Impressions & Assumptions Theory

FACTS

FACTS

FACTS

FACTS

From David Verble

Solving the Problem of Problem Solving

Problem A

SOLUTION

Impressions & Assumptions Hypothesis

FACTS

FACTS

FACTS

FACTS

From David Verble

People and Process

People

Management

And Development

Process Design or

Design of the Work

Suggestion Programs

Employees as Citizens

Standardized Work/Kaizen

Pull-based Authority

QC Circles

Employee Development

Rewards and Recognition

Examples

Empowerment Training

JIT/JIDOKA

A3/VSM/HoshinKanri

Improvement

and Engagement

Kaizen Events

Processes and People

What to do?

An effective lean system will be equal parts:

“Social” - People

• All the people, thinking, organizational, people, cultural aspects of how your organization engages and aligns its people to accomplish its purpose

“Technical” - Process

• All the process, technical, mechanical, process, ways work is designed to deliver value to the customer and accomplish its purpose

Management must align those to achieve the purpose of the organization. That’s your job.

Lean Transformations:Social and Technical

1985

Lean Transformations:People and Process

1990

People & Process – balanced by management

FOCUS

Sr.

Mgmt.

Front

Lines

System KaizenEliminate

Muri and Mura

Point KaizenEliminate Muda

Middle

Mgmt.

People & Process – balanced by management based on purpose

Lean Enterprise Transformation

It’s easier to act

your way to a new

way of thinking

than to think your

way to a new way

of acting.

What is your strategy?

Yesterday Tomorrow

Good Times Good Times

CHANGE

CHANGE

CHANGE

CHANGE

What is your strategy?

Yesterday Tomorrow

Good Times Good Times

LEAN

PROCESS

LEAN

PEOPLE

What do leaders need to do now?

A large enough tsunami will sink any boat

This is when the sea will separate the lean wheat from the chafe

For most companies, surely that means this is a time for back to basics

This is where the lean companies will separate themselves

That can happen – simply if not easily – through your leadership.