Extreme Toyota’s Lesson for American Auto
November 19th, 2008 by Hal
While American Auto go hat-in-hand to Washington, I thought it might be instructive to take a look at what those firms have missed while Toyota has steadily out-invested, out-innovated and racked up more profits than all three combined. Who's got the answer? How about three professors from a Japanese business school.
In their book Extreme Toyota, Osono, Shimizu and Takeuchi claim that Toyota managers embrace contradictions, opposites and paradoxes. Rather than find the best on either side of the argument, Toyota pursues the approach they call "this yet that".
The authors identify six forces that feed the tension.
- Impossible goals
- These goals challenge current wisdom and practice. But Toyota achieves these impossible goals. In 2002 Toyota had an 11% worldwide market share. In pursuing that goal they passed Ford and caught up with GM. They expect to meet the goal in 2010.
- Experimentation
- PDCA everything! The scientific method and learning are at the center of everything they do.
- Local customizations
- Toyota is unwavering in giving the customer what they want everywhere they do business. After a number of failed attempts with a minivan in North America a Toyota executive toured the US in a minivan to understand for himself what it would take to satisfy customers. The Previa (ND the Honda Odyssey) is so successful that GM and Ford have virtually abandoned the market.
- Founders' philosophies
- Through stories and formal training Toyota keeps alive the lessons from the founders: tomorrow will be better than today; everybody should win; customers first, dealers second, and manufacturer last; and genchi genbutsu (go to the place of the real work).
- Nerve system
- Through a commitment that everybody knows everything Toyota is able to get surprising contributions at every level and every corner of their organization.
- Up and in
- Hard to explain — easier to contrast — competitors follow the up our out approach while Toyota keeps investing in training their staff.
The six forces…keep Toyota in a state of disequilibrium
The authors claim,
"(T)he six forces, in combination, create complex dependencies that strengthen each of the forces and keep Toyota in a state of disequilibrium, where radical contradictions coexist, generating healthy tension and instability within the organization."
$25 billion could do a lot of good in the right hands.
It might be too late for American Auto to learn the lessons of the best-run manufacturer in the world. $25 billion is real money. However, with a few strings attached, $25 billion could do a lot of good in the right hands.
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November 20th, 2008 at 7:51 am
I think it’s seductive to say, “Because this works for Toyota, GM should copy to succeed.” I don’t think copying what Toyota does is the key to even Toyota’s success. What they do is a resonance of who they are, not the other way around. Ford seems to be showing more progress toward transformation, and part of who they are will always be who they’ve been. Ford can’t just move to San Francisco and assume a different identity.
No one can legislate mindset change, either. This is subtle stuff. If you’ve ever sat in the presence of one of the captains of American industry, you will find few of them were selected for subtlety. They, like the rest of us, don’t see what we don’t see. And no one else can ever see for us. Yesterday’s congressional hearing’s a good example:
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/19/AR2008111903669.html?hpid=topnews
November 20th, 2008 at 9:52 am
I watched some of the hearings yesterday in a mood of dismay. While the auto execs were at times clueless, the committee members seemed to forget what they were there to accomplish. In the end, there’s no help on the way. As David put it, people are blind to their blindness. That goes for everyone at yesterday’s circus. Blindness is a central characteristic of the human condition. The situation with American Auto is not likely to change without significant strains on the three organizations and suffering to the world economy.
I wasn’t making the case for copying Toyota. Something dramatically different needs to happen. And some firms might not survive the change.
November 25th, 2008 at 10:59 am
Hal,
On the comment that “something dramatically different needs to happen.”
It’s just not the auto industry, what about the “financial industry?”
Deming’s advice to the Japanese in the 1950’s was to adopt a systems perspective where the consumer was the most important part of the production line, and reduce variation.
Variation typically defined using a scientific/statistical frame of reference. Expanded description adopted by the American Society for Quality at the following.
http://www.asq.org/learn-about-quality/variation/overview/overview.html