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Building upon the international bestselling Toyota Way series of books by Jeffrey Liker, The Toyota Way to Continuous Improvement looks critically at lean deployments and identifies the root causes of why most of them fail. The book is organized into three major sections outlining:
Section One: Using the Plan-Do-Check-Adjust (PDCA) methodology, Liker and Franz contrast true PDCA thinking to that of the popular, superficial approach of copying "lean solutions." They describe the importance of developing people and show how the Toyota Way principles support and drive continuous improvement. Explaining how lean systems and processes start with a purpose that provides a true north direction for all activities, they wrap up this section by examining the glaring differences between building a system of people, processes, and problem- solving that is truly lean versus that of simply trying to "lean out" a process.
Section Two: This section brings together seven case studies as told by the sensei who led the transformation efforts. The companies range from traditional manufacturers, overhaul and maintenance of submarines, nuclear fuel rod production, health care providers, pathology labs, and product development. Each of these industries is different but the approaches used were remarkably similar.
Section Three: Beginning with a composite story describing a company in its early days of lean implementation, this section describes what went right and wrong during the initial implementation efforts. The authors bring to light some of the difficulties the sensei faces, such as bureaucracies, closed-minded mechanical thinking, and the challenges of developing lean coaches who can facilitate real change. They address the question: Which is better, slow and deep organic deployment or fast and broad mechanistic deployment? The answer may surprise you. The book ends with a discussion on how to make continuous improvement a way of life at your company and the role of leadership in any lean transformation.
The Toyota Way to Continuous Improvement is required reading for anyone seeking to transcend his or her tools-based approach and truly embrace a culture of continuous improvement.
Continuous Improvement toward Excellence
The reason behind the absence of focus on product and people in so many American companies, it would seem, is ... overreliance on analysis from corporate ivory towers and overreliance on financial slight of hand, the tools that would appear to eliminate risk, but also, unfortunately, eliminate action.
—Thomas Peters and Robert H. Waterman Jr., In Search of Excellence
Continuous Improvement as the Pursuit of Excellence
It is hard to imagine any self-respecting CEO saying, "My vision for my company is mediocrity." Excellence seems to be a universal goal. Yet our experience working with many companies has been that the actions of their chief executives tend to lead to mediocrity, not excellence. Perhaps it is a matter of definition. When the CEO sets business goals, they're typically in terms of profitability and growth. Is being the profit leader in your industry or the growth leader in your industry equivalent to the pursuit of excellence? If a company grows rapidly through mergers and acquisitions and becomes the largest company in its industry with the fastest-rising stock price, has it achieved excellence?
Let's go back to basics. Your child is passionate about golf or music or cooking and thinks that he wants to make a career out of it. You explain if he is really serious about this, he will need to dedicate himself to what he loves, perhaps for the rest of his life. Above all, he will have to obsessively practice, practice, practice. If he would like it to be a hobby, that is also fine, because he can always pick it up and have some fun in his spare time, but treating it as a hobby is different from treating it as a vocation. Let's say your golf-loving son Johnny replies: "I don't really know about dedicating my life or sacrificing, but I really want to win the juniors tournament next summer so that I can impress Judy enough to go to the senior prom with me." As a parent, you might feel deflated and think that Johnny is not really dedicated and this will be a passing phase. The passion for excellence is just not there.
Defining excellence in an absolute sense is challenging. Is the standard for excellence in playing the violin being among the top 10 in the world, being the best in your country, or being the best in your town? Is the town virtuoso not excellent just because the best in the world are so much better? Is excellence an absolute value, as in achieving an A in the course? We believe it is more useful to define excellence as a pursuit rather than as an absolute value. If we improve, we're closer to excellence than we were before. The highest levels of performance give us a vision of excellence that provides a direction for our efforts—a "true north."
Now suppose that Johnny grows up, gets his MBA, and rises quickly to become the CEO of a global food-processing company. He is a brilliant public speaker, and he extols the virtue of making the highest-quality food for a competitive price. It all sounds good, but at the same time, his business decisions are all focused on short-term transactions to increase the company's share price—mergers, acquisitions, selling off businesses, moving production to low-wage countries, and training legions of "black belts" to drive cost-reduction projects. Costs are going down, down, down. Quality is acceptable; there are problems, but none of them are big enough to shut down the company. There is nothing distinctive about the products. The bottom line looks great. Is this true excellence as a producer of high-quality food, or is making food simply a means to quick profits, like a hobby? Johnny may be excellent at making money, but he is not excellent at making food.
There is evidence that over the long term, companies that are striving for true excellence in the products they make and the services they provide outperform companies that are focused only on short-term financial goals. One of the best- selling business books of the 1980s was In Search of Excellence. Peters and Waterman identified the most successful American companies based on long- term financial performance and came up with a list of generalizations of what they had in common. Excellent companies "stuck to their knitting"; that is, they focused on what they were good at and worked to be the best at it. At the core of their model were shared values. The managers in excellent companies valued customers and had a passion for innovation within their industry:
The rational model causes us to denigrate the importance of values. The top performers create a broad and uplifting, shared culture, a coherent framework within which charged-up people search for appropriate adaptations. Their ability to extract extraordinary contributions from very large numbers of people turns on the ability to create a sense of highly-valued purpose.
Some people have pointed out that many of Peters and Waterman's "excellent" companies did not perform so well in the 10 years after the book came out. But there is further evidence that pursuing excellence pays over the long term. In Built to Last Jim Collins and his associates chronicled 18 "truly exceptional and long-lasting companies" and compared them to less competitive counterparts in terms of growth and financial performance over many years. Almost 20 years after In Search of Excellence, Collins and his associates also found that the most successful American companies had vision, were innovative, and had developed a strong set of shared values. The leaders of these companies were uniformly passionate about their customers and their quality and intentionally developed next-generation leaders who shared that passion. Among Collins and his associates' many insights was that the company itself is the ultimate creation. "We had to shift from seeing the company as a vehicle for the products to seeing the products as a vehicle for the company."
In many companies, we hear inspiring speeches by CEOs who are very convincing about their commitment to excellence. Unfortunately, when we have had an opportunity to investigate the actual state of the company, we have seen something entirely different. We have seen disarray everywhere, people coming to work who seem more interested in watching the clock so that they can go home than energetically doing excellent work, department managers who are more interested in growing their budgets than in performing a real service for customers, and poorly organized work processes.
In The High Velocity Edge, Steven Spear documents the success of leaders like Boeing, Toyota, and Pratt & Whitney that are out front in business success while their competitors huff and puff and struggle to keep up. He identifies operational excellence as a key differentiator. In a personal interview, he explained that the lack of interest in operational excellence starts with deficiencies in our business education system:
Current management training, especially the typical MBA, suffers a fatal flaw. It is largely "transactional" in orientation, with students taught to think in terms of buy/sell, enter/exit, hire/fire decisions. Business strategy courses are mainly about transactional decisions—entering or exiting markets, licensing, outsourcing and so forth to gain a positional edge over competitors, suppliers, and customers. Even many operations management courses have taken on a transactional bent, with focus on facility site location, technology selection, production control tool use, and the like. However, outside of a few courses, missing is the critical idea of actually managing work in a way that uses operational excellence to give the firm competitive advantage, not merely f
Excerpted from THE TOYOTA WAY to CONTINUOUS IMPROVEMENT by JEFFREY K. LIKER. Copyright © 2011 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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Part 1: Preparation- Building a Foundation for Lean Flow Processes; Chapter1. What is a lean process and why are companies failing at it; Chapter 2. People and Processes Grow Together through PDCA; Chapter 3. Lean Out Processes or Build Lean Systems;Chapter 4. Lean Processes start with a Purpose; Chapter 5. How do you do it. Mechanistic and Organic Lean Deployment; Part 2: Toyota Way Process Principles in Action: Cases; Chapter 6. The Cases that Follow; Chapter 7. A Repetitive Manufacturing Process as a Baseline (CAT-Mitsubishi JV example); Chapter 8. Lean Systems in High Volume, Process-Type Case: Iron Ore Mining; Chapter 9. Developing a Lean System in Defense Remanufacturing; Chapter 10. Developing a Lean Systems in Health Care; Chapter 11. Developing a Lean Systems in Knowledge Work; Chapter 12. Developing an Action Plan for Change; Chapter 13. Verify Results and Make Adjustments; Chapter 14. The Continuous Improvement Cycle
Jeffrey K. Liker, the author of the bestselling The Toyota Way, is professor of Industrial and Operations Engineering and cofounder and Director of the Japan Technology Management Program at the University of Michigan. His work has appeared in The Harvard Business Review, Sloan Management Review, and other leading publications.
James K. Franz learned lean as a Toyota Production Engineer in Japan, and has more than 22 years of manufacturing experience.
Posted August 24, 2011