The Toyota Way

The Toyota Way is a set of principles and behaviors that underlie the Toyota Motor Corporation's managerial approach and production system. Toyota first summed up its philosophy, values, and manufacturing ideals in 2001, calling it "The Toyota Way 2001". It consists of principles in two key areas: continuous improvement, and respect for people.[1][2][3]

Overview

The Toyota Way has been called "a system designed to provide the tools for people to continually improve their work"[4] The 14 principles of The Toyota Way are organized in four sections:

Long-term philosophy
The right process will produce the right results
Add value to the organization by developing your people
Continuously solving root problems drives organizational learning

The two focal points of the principles are continuous improvement and respect for people. The principles for continuous improvement include establishing a long-term vision, working on challenges, continual innovation, and going to the source of the issue or problem. The principles relating to respect for people include ways of building respect and teamwork.

The 14 Principles

The system can be summarized in 14 principles.[5] The principles are set out and briefly described below:

Section I — Long-term philosophy

Principle 1

Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

People need a purpose to find motivation and establish goals.

Section II — The right process will produce the right results

Principle 2

Create a continuous process flow to bring problems to the surface.

Work processes are redesigned to eliminate waste (muda) through the process of continuous improvement — kaizen. The seven types of muda are:

Overproduction
Waiting (time on hand)
Unnecessary transport or conveyance
Overprocessing or incorrect processing
Excess inventory
Motion
Defects

Principle 3

Use "pull" systems to avoid overproduction.

A method where a process signals its predecessor that more material is needed. The pull system produces only the required material after the subsequent operation signals a need for it. This process is necessary to reduce overproduction.

Principle 4

Level out the workload (heijunka). (Work like the tortoise, not the hare).

This helps achieve the goal of minimizing waste (muda), not overburdening people or the equipment (muri), and not creating uneven production levels (mura).

Principle 5

Build a culture of stopping to fix problems, to get quality right the first time.

Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue.

Principle 6

Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.

Although Toyota has a bureaucratic system, the way that it is implemented allows for continuous improvement (kaizen) from the people affected by that system. It empowers the employee to aid in the growth and improvement of the company.

Principle 7

Use visual control so no problems are hidden.

Included in this principle is the 5S Program - steps that are used to make all work spaces efficient and productive, help people share work stations, reduce time looking for needed tools and improve the work environment.

Sort: Sort out unneeded items
Straighten: Have a place for everything
Shine: Keep the area clean
Standardize: Create rules and standard operating procedures
Sustain: Maintain the system and continue to improve it

Principle 8

Use only reliable, thoroughly tested technology that serves your people and processes.

Technology is pulled by manufacturing, not pushed to manufacturing.

Section III — Add value to the organization by developing your people

Principle 9

Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Without constant attention, the principles will fade. The principles have to be ingrained, it must be the way one thinks. Employees must be educated and trained: they have to maintain a learning organization.

Principle 10

Develop exceptional people and teams who follow your company's philosophy.

Teams should consist of 4-5 people and numerous management tiers. Success is based on the team, not the individual.

Principle 11

Respect your extended network of partners and suppliers by challenging them and helping them improve.

Toyota treats suppliers much like they treat their employees, challenging them to do better, and helping them to achieve it. Toyota provides cross-functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.

Section IV — Continuously solving root problems drives organizational learning

Principle 12

Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).

Toyota managers are expected to "go-and-see" operations. Without experiencing the situation firsthand, managers will not have an understanding of how it can be improved. Furthermore, managers use Tadashi Yamashima's (President, Toyota Technical Center (TTC)) ten management principles as a guideline:

Always keep the final target in mind.
Clearly assign tasks to yourself and others.
Think and speak on verified, proven information and data.
Take full advantage of the wisdom and experiences of others to send, gather, or discuss information.
Share information with others in a timely fashion.
Always report, inform, and consult in a timely manner.
Analyze and understand shortcomings in your capabilities in a measurable way.
Relentlessly strive to conduct kaizen activities.
Think "outside the box," or beyond common sense and standard rules.
Always be mindful of protecting your safety and health.

Principle 13

Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi).

The following are decision parameters:

Find what is really going on (go-and-see) to test
Determine the underlying cause
Consider a broad range of alternatives
Build consensus on the resolution
Use efficient communication tools

Principle 14

Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

The process of becoming a learning organization involves criticizing every aspect of what one does. The general problem-solving technique to determine the root cause of a problem includes:

Initial problem perception
Clarify the problem
Locate area/point of cause
Investigate root cause (5 whys)
Countermeasure
Evaluate
Standardize

Research findings

In 2004, Dr. Jeffrey Liker, a University of Michigan professor of industrial engineering, published The Toyota Way. In his book, Liker calls the Toyota Way "a system designed to provide the tools for people to continually improve their work."[4] According to Liker, the 14 principles of The Toyota Way are organized in four sections: (1) long-term philosophy, (2) the right process will produce the right results, (3) add value to the organization by developing your people, and (4) continuously solving root problems drives organizational learning.

Long-term philosophy

The first principle involves managing with a long-view rather than for short-term gain. It reflects a belief that people need a purpose to find motivation and establish goals.

Right process will produce right results

The next seven principles are focused on process with an eye towards quality outcome. Following these principles, work processes are redesigned to eliminate waste (muda) through the process of continuous improvement — kaizen. The seven types of muda are (1) overproduction; (2) waiting, time on hand; (3) unnecessary transport or conveyance; (4) overprocessing or incorrect processing; (5) excess inventory; (6) motion; and (7) defects.

The principles in this section empower employees in spite of the bureaucratic processes of Toyota, as any employee in the Toyota Production System has the authority to stop production to signal a quality issue, emphasizing that quality takes precedence (Jidoka). The way the Toyota bureaucratic system is implemented to allow for continuous improvement (kaizen) from the people affected by that system so that any employee may aid in the growth and improvement of the company.

Recognition of the value of employees is also part of the principle of measured production rate (heijunka), as a level workload helps avoid overburdening people and equipment (muri), but this is also intended to minimize waste (muda) and avoid uneven production levels (mura).

These principles are also designed to ensure that only essential materials are employed (to avoid overproduction), that the work environment is maintained efficiently (the 5S Program) to help people share work stations and to reduce time looking for needed tools, and that the technology used is reliable and thoroughly tested.

Value to organization by developing people

Human development is the focus of principles 9 through 11. Principle 9 emphasizes the need to ensure that leaders embrace and promote the corporate philosophy. This reflects, according to Liker, a belief that the principles have to be ingrained in employees to survive. The 10th principle emphasizes the need of individuals and work teams to embrace the company's philosophy, with teams of 4-5 people who are judged in success by their team achievements, rather than their individual efforts. Principle 11 looks to business partners, who are treated by Toyota much like they treat their employees. Toyota challenges them to do better and helps them to achieve it, providing cross-functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.

Solving root problems drives organizational learning

The final principles embrace a philosophy of problem-solving that emphasizes thorough understanding, consensus-based solutions swiftly implemented and continual reflection (hansei) and improvement (kaizen). The 12th principle (Genchi Genbutsu) sets out the expectation that managers will personally evaluate operations so that they have a firsthand understanding of situations and problems. Principle 13 encourages thorough consideration of possible solutions through a consensus process, with rapid implementation of decisions once reached (nemawashi). The final principle requires that Toyota be a "learning organization", continually reflecting on its practices and striving for improvement. According to Liker, the process of becoming a learning organization involves criticizing every aspect of what one does.

Translating the principles

There is a question of uptake of the principles now that Toyota has production operations in many different countries around the world. As a New York Times article notes, while the corporate culture may have been easily disseminated by word of mouth when Toyota manufacturing was only in Japan, with worldwide production, many different cultures must be taken into account. Concepts such as "mutual ownership of problems", or "genchi genbutsu", (solving problems at the source instead of behind desks), and the "kaizen mind", (an unending sense of crisis behind the company's constant drive to improve), may be unfamiliar to North Americans and people of other cultures. A recent increase in vehicle recalls may be due, in part, to "a failure by Toyota to spread its obsession for craftsmanship among its growing ranks of overseas factory workers and managers." Toyota is attempting to address these needs by establishing training institutes in the United States and in Thailand.[6]

Results

Toyota Way has been driven deeply into the psyche of employees at all levels that it has morphed from a strategy into an important element of the company's culture.[7] According to Masaki Saruta, author of several books on Toyota, "the real Toyota Way is a culture of control."[8][9] The Toyota Way rewards intense company loyalty that at the same time invariably reduces the voice of those who challenge authority.[10][11] "The Toyota Way of constructive criticism to reach a better way of doing things 'is not always received in good spirit at home.'"[12] The Toyota Way management approach at the automaker "worked until it didn't."[7]

One consequence was when Toyota was given reports of sudden acceleration in its vehicles and the company faced a potential recall situation. There were questions if Toyota's crisis was caused by the company losing sight of its own principles.[13] The Toyota Way, in this case, did not address the problem and provide direction on what the automaker would be doing, but managers instead protected the company and issued flat-out denials and placed the blame at others.[14] The consequence of the automaker's actions led to the 2009–11 Toyota vehicle recalls. Although one of the Toyota Way principles is to "build a culture of stopping to fix problems to get quality right the first time," Akio Toyoda, President and CEO, stated during Congressional hearings that the reason for the problems was that his "company grew too fast."[15] Toyota management had determined its goal was to become the world's largest automotive manufacturer.[16] According to some management consultants, when the pursuit of growth took priority, the automaker "lost sight of the key values that gave it its reputation in the first place."[17]

References

"Environmental & Social Report 2003" (PDF). Toyota Motor (Japan). p. 80. Retrieved 26 March 2012.
Toyota Motor Corporation Annual Report, 2003, page 19. "The Toyota Way, which has been passed down since the Companyʼs founding, is a unique set of values and manufacturing ideals. Clearly, our operations are going to become more and more globalized. With this in mind, we compiled a booklet, The Toyota Way 2001, in order to transcend the diverse languages and cultures of our employees and to communicate our philosophy to them." (Mr. Fujio Cho, President, Toyota Motor Corporation)
"Sustainability Report 2009" (PDF). Toyota Motor (Global). p. 54. Retrieved 26 March 2012.
Liker, Jeffrey (2004). "The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS" (PDF). University of Michigan. p. 36. Retrieved 26 March 2012.
Liker, Jeffrey K. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill. ISBN 978-0-07-139231-0.
Fackler, Martin (February 15, 2007). "The 'Toyota Way' Is Translated for a New Generation of Foreign Managers". The New York Times. Retrieved 26 March 2012.
Heskett, James L (2012). The culture cycle: how to shape the unseen force that transforms performance. FT Press. p. 130. ISBN 9780132779784. Retrieved 29 January 2014. Toyota way so shocking that it may have led to some amount of denial as well as loyal customers.
Glionna, John M. (24 March 2010). "Toyota's rigid culture criticized in light of recalls - Automaker's Toyota Way handbook dictates details of employees' lives, even in their off time". Chicago Tribune. Retrieved 29 January 2014.
Hino, Satoshi (2006). Inside the mind of Toyota : management principles for enduring growth. Productivity Press. p. 65. ISBN 9781563273001. Retrieved 29 January 2014.
"Relations with Employees". Toyota Motors. Retrieved 29 January 2014.
"Toyota Code of Conduct" (PDF). Toyota Motor Europe. October 2006. Archived from the original (PDF) on 14 September 2012. Retrieved 29 January 2014.
Stanford, Naomi (2013). Corporate culture: getting it right. Wiley. p. 130. ISBN 9781118163276. Retrieved 29 January 2014.
Tseng, Nin-Hai (10 March 2010). "Can the Toyota Way survive Toyota's ways?". CNN Money. Retrieved 29 January 2014.
Ordonez, Edward (1 December 2010). "When the Toyota Way Went Wrong". Risk Management. Retrieved 29 January 2014.
"Hearing before the Committee on Oversight and Government Reform: Toyota gas pedals: is the public at risk". U.S. Government Printing Office, Serial No. 111-75. 24 February 2010. Retrieved 29 January 2014.
Harden, Blaine (13 February 2010). "'Toyota Way' was lost on road to phenomenal worldwide growth". The Washington Post. Retrieved 29 January 2014.
Harrison, Denise. "Success Sows the Seeds of Failure - Toyota's Complacency Causes Reputation to Crash". Center for Simplified Strategic Planning. Retrieved 29 January 2014.