Learning DNA

Toyota strongly believes that the capacity to learn is the main source of competitive advantage and that continuous improvement is about learning. Toyota has two major cultural biases with regard to learning:

Learning is tacit. This is the most important one. By definition, you can only transfer tacit knowledge when there are dense ties under the guidance of a skilled mentor. At Toyota, every leader is a teacher – personally training anc coaching junior people in the Toyota Way.
Learn by doing which means trying. You cannot learn by theoretically determining the best way and then executing only the best way. There are many possible solutions, and you can only learn by trying them, enjoying your success, and reflecting on your failures. If you are always trying to figure out the best theoretical solution, you will be in a constant state of waiting, missing many opportunities to learn.

Toyota leaders often refer to this learning-by-doing way of thinking as part of the Toyota DNA. Leaders are guides, encouraging and watching for the right opportunities to impart significant lessons.

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Principle 10: Build a Culture to Support Excellence and Relentless Improvement

“TPDS is rooted much deeper in the culture in things like genchi genbutsu, the chief engineer system, kaizen, TPS, etc. it is the totality of it working together in the culture established across many years that makes it all work. What is actually happening in your workplace? A good understanding of that is critical. To have a clear understanding of what your work is and how you are doing, that is what is important.”
Takeshi Uchiyamada, Chief Engineer of the original Prius

An organization’s culture defines what goes on in its workplace, and no company can develop a lean PD system without a strong and vibrant culture.

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Principle 9: Build in Learning and Continuous Improvement

“The ability to learn faster than your competitors may be the only truly sustainable competitive advantage.”
De Geus (1988)

At Toyota, learning and continuous improvement are fundamental to how each person does his or her job every day and are inseparable from Toyota’s culture. Toyota sets challenging performance goals for every project and holds both real-time and postmortem learning events (called Hansei or reflection) that encourage functional specialists to verify and update their own knowledge database. Learning and continuous improvement are also embodied in a problem-solving process that develops root-cause countermeasures: multiple potential solutions that prevent recurrence. In fact, Toyota’s awesome ability to learn quickly and improve at a regular cadence may well be the characteristic of Toyota its competitors should fear most.

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Principle 8: Fully Integrated Suppliers into the Product Development System

“Achievement of business performance by the partent company through bullying suppliers is totally alien to the spirit of the Toyota Production System.”
Taiichi Ohno

A Part is Not a Part, and A Supplier is Not a Supplier

When customers buy cars, they do not care who makes the engine, radio, seat, carpet, etc. they want and expect reliable quality and hold the automaker totally accountable for anything that is not up to their expectations. Toyota recognizes this and makes sure that every car part reflects Toyota quality. To achieve this and makes sure that every car part reflects Toyota’s PD process and lean logistics chain.

Other companies largely failed in emulating the Toyota model because they have not grasped the concept of true partnering. When the market gets though and there are serious earnings pressures, they have been less than forthright with suppliers, vacillating between public statements of commitment to partnership and trust and then unilaterally cutting supplier prices after signing contracts. They have even cut off suppliers in the middle of contract, resourcing it to a lower bidder. Toyota (as the supplier’s most demanding customer) to the contrary works on improving the supplier’s efficiency. For example when Toyota noticing that they were paying suppliers for many key parts above the lowest prices competitors paid globally, it issued a new target for all key suppliers as part of a program. The new program asked suppliers to reduce prices by 30 percent for the next model line; typically this would over a period of about three years.

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Principle 7: Develop Towering Technical Competence in All Engineers

“We develop people and new products simultaneously using the Toyta way.”
Uchi Okamota, former Vice President, N.A. Body and Structures Engineering

To excel at the talent-driven business of product development, a company must have highly-skilled, capable, motivated people. Achieving a lean PD process with a precise and synchronized execution of a leveled flow means that everyone working on a PD program must do his or her job correctly and on time. To prevent disruption and ensure success a company must be willing to take major investments in the process of selecting and developing technical competence in all of its engineers. In a lean system, people learn best from a combination of direct experience and mentoring.

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Principle 6: Organize to Balance Functional Expertise and Cross-Functional Integration

“One result of the Prius development project is something called obeya – big room – where the chief engineer gathers the team of people responsible for that project. That is where simultaneous engineering can be even more effectively implemented by all the key people coming together in this area.”
Takeshi Uchiyamada, first chief engineer of the Prius Hybrid

One Best Organizational Structure?

The functional organization groups like specialties and like-minded professionals into departments. The functional organization had several advantages but there was one big problem with this organizational approach – functional specialists tended to bond and become more wedded to their function and profession than to the company and its products and customers. Their measure of success was how well the functional department performed and how big a budget it garnered. They believed their profession could be the savior of the company; if they ran things, the company would be successful beyond belief. As a result, no function did a particularly good job of working in coordination with the other functions. Today, these isolated functions are often denoted by derogatory terms like functional silos or chimneys.

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Principle 5: Create a Chief Engineer System to Lead Development from Start to Finish

“We can be successful at Toyota only when we do something better than our competitors or when we surpass the average for the industry. If we are designing a new product, and know there is no room for failure, our attitude certainly must not be just to aim for the average. If we do that, we will surely fail. We must do our all-out best at such times, and allow ourselves no thought of failure.”
Kenya Nakamura, first chief engineer of Toyota Crown

The Cultural Icon Behind the CE System

The responsibilities of the Chief Engineer (CE) and his/her small staff:

voice of the customer
customer-defined value
product concept
program objectives
vehicle-level architecture
vehicle-level performance
vehicle-level characteristics
vehicle-level objectives
vision for all functional program teams
value targets
product planning
performance targets
project timing

The CE ultimate responsibility is delivering value to the customer. While Toyota always emphasizes teamwork, there is always one person who is accountable for the success of the team. For product development, this person is the CE.

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Principle 4: Utilizing Rigorous Standardization to Reduce Variation and Create Flexibility and Predictable Outcomes

“Today’s standardization is the necessary foundation on which tomorrow’s improvement will be based. If you think of ‘standardization’ as the best you know today, but which is to be improved tomorrow – you get somewhere. But if you think of standards as confining, then progress stops.”
Henry Ford

Standardized work is one of the core disciplines of the Toyota Production System (TPS) in which jobs are specified down to the second to match takt time – the rate of customer demand. Standardization, coupled with a culture of discipline are the most powerful weapons a product development organization can bring to bear against the destructive power of variation identified (queuing theory). Standard development processes build trust, enable development speed through precise synchronization and are key to successfully managing the very complex process of developing new vehicles.

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Principle 3: Create a Leveled Product Development Process Flow

At Toyota we try to make every process like a tightly linked chain – where the processes are connected by information and by physical flow. There’s nowhere for a problem to hide. The chain never works perfectly. But if we know where our breaks are and our people are trained to fix the breaks, we get stronger every day in the company. It keeps us on our toes, it self-identifies muda and, five whys is our method to eliminate muda.
Glenn Uminger, Toyota Manufacturing Corporation, North America

The Power of Flow

Using cellular manufacturing, Toyota extended the concept of “one-piece flow,” or leveled flow, throughout its operations – even into supplier operations.

Toyota’s success starts with viewing the Product Development (PD) as a process. Like any process, PD has a cadence and repeated cycles of activity. Toyota has done an exceptional job of standardizing the PD process to bring to the surface the repeated cadence that allows continuous improvement through repeated cycles of waste reduction. Toyota has managed to “level the flow”, not only by eliminating waste (muda) but also by eliminating “unevenness” (mura) and “overburden” (muri).

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Set-Based concurrent Engineering

Examining multiple alternatives during the styling activity is an example of set-based concurrent engineering. Toyota considers a broad range of alternatives and systematically narrows the sets to a final, often superior, choice.

Set-based concurrent engineering considers the different design perspectives proposed by different parties, a phenomenon that can best be graphically illustrated by Venn diagrams. Each party has some acceptable range of alternatives – a solution space that will work from its own perspective. Front-loading finds where the sets overlap and, in the process, identifies the winning design solution.

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