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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.

How Culture Can Stand Between You and Lean

The assumption is that if lean has eliminated or reduced waste in manufacturing, it can do the same for product development. Invariably, their organizations expect them to bring back effective waste-bursting tools that will cut lead-time and cost. Of course, it’s not that simple. Comments from companies whose engineers have taken suck courses or have attempted to apply Toyota’s lean PD tools illustrate the problem:

  • We invested millions in a “book of knowledge”. It is web-based system and several people were assigned full time to load it up with standards and best practices. But we are getting almost no hits – engineers are not using it!
  • We created a new role of chief engineer. A bunch of engineers in different project manager roles were given this new title. But they still acted just like the old project managers and still did not have any power to get anything done.
  • We value stream mapped and came up with great ideas. We created A3’s and developed action plans. Then we got three new programs dumped on us, the crisis mode kicked in, and the action plans went out the window.

As these examples show, companies cannot simply have their engineers learn and apply these powerful tools and then sit back and watch the waste evaporate. What is missing is a lean culture to sustain the tools. Loosely defined, culture is the soft, imprecise, fuzzy stuff of everyday life. Definition of culture:

“… the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

An explication of four key concepts in this definition follows:

  1. Culture operates at an unconscious level. By basic assumptions our core belief system, begins at an unconscious level, the roots of which go back to early life experiences. As individuals grow up and mature, they learn what is right and wrong, what is good and bad, what they enjoy and what they want to avoid. In much the same way, as people enter an organization and begin to find their way around that organization, they learn what it values and rewards and what it punishes. People modify their behavior accordingly, even though their deep-seated personal cultural assumptions remain. The Toyota culture uses many basic assumptions for defining the best way to “perceive, think, and feel”. This is especially true in relation to problem solving and is a major reason why Toyota’s PD system is difficult to teach – woven throughout its many tools and techniques are assumptions on behavior that are rooted in both the Toyota and Japanese culture.
  2. Necessity-driven and empirically-based production system. Toyota’s PD system was invented, discovered, and evolved over decades to cope with Toyota’s unique challenges in dealing with external adaption and internal integration. Toyota’s external adaption challenges started with building an automotive company from scratch in a weak, post-World War II economy. The challenges of internal integration were shaped by the “collectivist” Japanese environment in which most companies assume employees should subordinate their individual desires to the needs of the company that employs them. This cultural and economic context – the fact that the people had to band together to survive – mad it relatively easy for Toyota to get suppliers to buy into its specific goals and processes. A corollary to this is that a collaborative spirit is essential to lean product development. Historically, Toyota’s PD system emerged from trial and error and from a scientific method used to find real solutions to real problems that were rooted in the broader socioeconomic context of the time.
  3. Adapting systems. Toyota has made a tradition of adapting new methods that work and fit into its cultural framework. Very simply, if a system or tool works, it is kept and used but only after it is adapted precisely to a Toyota process. If it cannot be adapted, it is dropped. This reflects Toyota’s empirical approach: working to find real solutions to resolve real problems in actual experience and not falling into the bureaucratic trap of letting internal beliefs or policies dictate the best way of doing things.
  4. Learn the system by doing. Toyota uses an explicit approach for teaching the Toyota PD system to new employees in real-tie and real situations. People do not learn the Toyota Way in a classroom or online. Senior mentors take on the responsibility of developing subordinates, and young engineers learn by doing. Learning at Toyota is also a process of socialization. Although leadership style is not identical, every Toyota leader teaches the same core assumptions with a very clear set of beliefs about the philosophy of the Toyota PD system.

This broadly-shared cultural DNA is fundamental to the success of lean thinking. Paradoxically, this same cultural DNA is one of the reasons it is a challenge, even within Toyota, to teach the lean product development system to new employees globally. Toyota works hard to bridge differences, and as a result, most Toyota employees do share basic assumptions about values, priorities, and how to get work done.

A Tool Is Not a Solution

Simply buying reams of A3 paper, requiring engineers to write A3 reports, and expecting to get the same result as Toyota will not work. At Toyota, A3 works because it takes place within a particular cultural context. Without a deep thought and consensus-based process, the A3 report is a tool generated for the wrong reasons. In lean thinking, it is the process of producing not the result of producing the A3 that makes it a powerful method.

Technical and Engineering Excellence Are Intertwined in the Culture

At Toyota, formal education is a foundation that is not, in and of itself, useful until employees have been fully acculturated. Toyota’s cultural structure includes the following precepts:

  • Run by engineers, making it a technical hierarchy
  • Fundamentally a manufacturing company that translates into core value-added manufacturing activities and those supporting manufacturing.
  • Focuses on developing technical mastery using the “hands on” Toyota scientific method.
  • The individual engineer is central to the product development system.
  • Learning and continuous improvement (every-day kaizen) is fundamental to how work gets done.
  • Process discipline, hard work and loyalty is expected of everyone (especially leaders).
  • Data focused

Toyota is a manufacturing company run by engineers. This is important in a lean PD system because it makes the individual engineer the center of that system – all decisions, processes, and ideas germinate from the individual engineer working in teams and reporting up to the chief engineer. What develops during this process is “towering technical competence” that comes from learning by doing from the ground up rather than from technical training exercises that “upgrade” engineers. In combination, these are the elements that make a company a culture of technical excellence that is firmly grounded in technical mastery, both in product development and manufacturing.

Discipline and Work Ethics

  • Standardization and working to process. Kaizen begins with a stable, standardized process. All Toyota engineers believe in the importance of standardization – investing in creating and improving on standards and then strictly adhering to them when they have been selected as the standards.
  • Maintaining schedules. It is easy to use project planning software to make beautiful charts with detailed timing, but Toyota engineers actually take them as gospels and follow them precisely. For instance, it is not entirely unusual for Toyota engineers to sleep near their worksites to ensure that they start or finish something exactly on time. Consider some of your most important deadlines, the deadlines you would move heaven and earth to meet. Toyota engineers view all schedules and deadlines this way.
  • A3 disciplined communication method. The process of boiling a project down to the essential facts and creating a visual one-page report is excruciating. Americans who work for Toyota report that this is one of the most difficult and at times frustrating processes to learn, you must have disciplined workers who have an absolute commitment to the process, no matter how uncomfortable and onerous that process is.
  • Nemawashi. A key part of A3 report writing is the process of getting consensus while the task is in progress. Meeting after meeting with person after person seems tedious and wasteful. If this procedure is not ingrained in the culture, engineers will quickly begin to find shortcuts, but these inevitably defeat the purpose

Customer First Spirit

At Toyota, one common denominator aligns everyone to the same goal.

  • How can Toyota make a matrix organization work? In most companies with a matrix, engineers have conflicting allegiance to the functional boss and the program manager.
  • How do different Toyota chief engineers avoid competing for the best resources?
  • How does Toyota use metrics and incentives to direct engineers toward common goals?
  • How do Toyota engineers work cooperatively with styling instead of fighting over appearance versus function?
  • How do product engineers work cooperatively with manufacturing instead of pursuing only product engineering objectives?

The answer to all these questions is the same. It is customers come first.

The Culture Supports the Process

Many automakers would like to adopt Toyota’s lean PD process, but many have tried and encountered large disappointments. The main reason companies have so much difficulty adopting and sustaining these simple, common sense principles is culture. The figure below compares the cultures of Toyota and NAC. A quick glance shows how diametrically opposed Toyota and NAC are on every critical dimension.

Toyota vs NAC

NAC is business driven company, meeting expectations from quarterly profits for Wall Street is the highest objective, so it has a finance-dominated culture. Technical excellence is secondary because NAC is about getting bottom line results in any way at any cost. Where Toyota reveres technical excellence and invests heavily in the development of its people, many NAC executives are fond of saying that “costs walk in on two legs” and focus efforts on people reduction, even if this may lead to losing core competencies. Toyota is about the process. Follow the right process and you will get the desired results. NAC is often motivated by the latest, cutting-edge initiatives and technologies that can make work easier and faster – shortening the line between two points. Forget about the daily mundane activities, like detailed engineering, or building cars that are not exciting. In contrast, Toyota is about continuously improving mundane processes. Engaging in detailed planning to an almost compulsive degree is the norm at Toyota. NAC’s result orientation leads to a “just do it” mentality, without any effort to capture any learning to leverage for the next program. Toyota is all about learning, program to program, engineer to engineer.

Given the culture at NAC (and similar companies), it is no real wonder that implementing and sustaining Toyota-like development processes can be nearly impossible. Three examples of what tends to happen are presented below.

Chief Engineering System. You develop a chief engineer system to integrate development from start to finish. That is, the chief engineer drives the entire product development system – this is a foundation of the lean PD system. Several traditional auto companies recognized this and ordered that their company create chief engineers. This, of course, raises at least three questions: Will the new CEs have the technical expertise and organizational respect to get the job done? Will functional bosses assign the right people to programs at the right time? Will people who are evaluated by their functional bosses and also report to a chief engineer on a program follow the instructions of one or the other? It’s not surprising that the failure rate of these “instant CEs” was quite high at all of these companies.

Front-load. Front-load the product development process to thoroughly explore alternative solutions while there is maximum design space. By front-loading, you anticipate and solve problems before tools are even designed and before any capital investment. Toyota uses a kentou phase to do this. Will the kentou phase be taken seriously? Wil engineering managers assign the best engineers to work on the kentou phase? Will engineers have the time, know-how, or discipline to work through each and every drawing, root out possible problems, and put in countermeasures? Will they overcome functional boundaries and turf mentality to work collaboratively across functional organizations? In a “just do it” hurry-up culture, will broad circulation of the kentou lead to deep reflection on each detailed design feature? The global answer is “not likely”.

Level the workload. Create a leveled product development process, leveling the workload depends upon flexible staffing as the program proceeds. At peak points in the program you need to pick engineers anad technicians from flexible pools and from suppliers. Can the company flexibly recruit engineers who will seamlessly contribute to the engineering process? Will this pool of engineers be properly trained in the “NAC Way” to understand the design process and design philosophy? Will engineers from this pool speak the same language as full-time career employees? Will they be as motivated as NAC engineers to contribute to the common goal of putting the customer first? Again, not likely.

Leaders Renew the Culture

Within the Toyota system, leaders serve as the bearers of the Toyota culture and exemplify the culture in their daily behavior. It can certainly be tedious to follow the right process day in and out. No Toyota leader has ever assumed that lean sustains itself. On the contrary, the company’s leaders intuitively understand that the natural evolution of a culture will atrophy and deteriorate unless its leaders are continually renewing and passing the DNA to others.


In Summary:

Build a culture to support excellence and relentless improvement

Lean tools will not be effective unless used in a supportive culture. Culture is the way work is done and the way people think about the work and products. Some of the core cultural values that support lean product development are genchi genbutsu, set-based thinking, hansei, and putting the customer first. This broadly-shared cultural DNA is fundamental to the success of lean thinking and a further reason why it is a challenge, even within Toyota, to teach the lean product development system to new employees globally. Key characteristics of Toyota’s high performance culture, which should be used within your own organization, include the following:

  • Technical and engineering excellence must be highly valued.
  • The culture must be based on discipline and strong work ethic.
  • Improving through kaizen every day must be engrained as the way to do work.
  • Everyone involved in the development process must have a customer-first spirit.
  • Learning as an organization must be engrained in the company’s DNA.
  • Individuals must be willing to stand up and take responsibility when things do not go well.
  • Investing in engineers and treating them like valued assets must be the norm.
  • All engineers must step up to challenges as a matter of course.
  • Strictly following the right process of doing the work must be highly valued.
  • Mistakes must be viewed as learning opportunities.
  • Leaders must be the cultural bearers and lead by example every day.

Source: Liker, J.K and Morgan, J.M, The Toyota Product Development System: Integrating People, Process and Technology, Productivity Press, 2006


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