Toyota has become the world’s largest automobile manufacturing company this year, overtaking General Motors which reigned supreme since the 1930s. Before then, Ford was the global leader. Toyota’s market capitalization is more than five times that of Ford and General Motors combined. Toyota must have been doing something right these past 20 years since it has become the most productive manufacturer in the world. The company owns the newly created market in hybrids. Toyota’s example offers an excellent insights and a guide toward improving personal productivity.
The two main pillars of Toyota’s approach boil down to: 1) respect for people and 2) continuous improvement; constant and never-ending improvement in all areas. Toyota made a major innovation over the American automobile manufacturers in the process of how the company viewed its people. General Motors and Ford viewed factory workers as a replaceable variable cost component – labor as a commodity. Toyota viewed its workers as the main place to turn for productivity and quality improvements. Toyota further innovated by challenging the planned obsolescence approach. The company started producing cars with fewer defects that were more durable and would hold their value longer. American car companies were forced to respond in kind by producing longer lasting, better quality cars with greatly extended warranty packages. This is not all Toyota has done in terms of process innovations. American accounting methods valued inventory the same as cash, without any incentives for reducing inventory.
Toyota pioneered “lean manufacturing” based in large part on creating value in the eyes of the customer and having products being “pull” or demand-based that would be responsive to the customer rather than “push” or supply-based from the production end. Lean manufacturing also includes identifying and minimizing waste (including inventory), empowering employees and aiming for perfection in the processes. This is an evolutionary change in the way cars are made that is currently sweeping through the other modern manufacturing sectors of the global economy. The ‘Toyota Way’ can also be applied toward improving personal productivity. The Toyota Production System (TPS) works as a complete philosophy. It is a consistent set of processes and principles applied over a long period of time. The following principles form core parts of the highly effective TPS that can be used to enhance personal productivity.
- Create manual systems first, then use technology as a tool to assist the process. Toyota people are often found making signs and putting them up all over the place and using them along with manual lists to coordinate activities. Once the manual system is worked out, then technology is brought in to assist and improve the process. There is a strong aversion to acquiring and using technology just for the sake of the technology. Hold off of the expensive software until the basics are worked out.
- Create an environment where constant learning occurs. Toyota is full of people who strive to be teachable and who are very willing to share information and be involved in the learning process. Put aside some time for focused learning – a course, book-a-week, seminars, workshops, reviewing articles, etc.
- Eliminate – don’t just reduce waste. In the U.S. system, the production line has slack built into it so that there is extra time and stuff available to ensure the line stays running. In the Toyota system, there is not. Unplug the television set and cut the end off the cord.
- Build quality into everything. Standardizing to create consistent quality while constantly working to raise the standards. Anything worth doing is worth doing well. Aim for “great” rather than just “good enough” wherever there is opportunity to do so.
- Create systems to respect and treat partners well. Self-improvement toward increased personal productivity is a two way street. Toyota’s people work on self improvement but consider that to be tied to helping others improve – for mutual benefit.
- Work with others but maintain core competencies. Do not outsource the important decisions. For Toyota’s cars, electronics has become a big part so the company has decided to make that a core area. Take the time to learn the areas that can impact life. Understanding tax planning and basic financial matters are a classic area of neglect that many people should put more effort into.
- Chose friends and associates carefully. Toyota is very picky. Employees are often hired through a one to two year process. Partners and suppliers similarly go through extensive processes. Associate with people who can help you and that you can help in a two way manner.
Toyota has pioneered its process and one of the great outcomes was becoming the world’s first mass producer of hybrid automobiles, with over half the world market for hybrids. The Toyota process itself is a hybrid of best practices that have evolved over time that can be used to enhance personal productivity.
Peter Paul Roosen and Tatsuya Nakagawa are co-founders of Atomica Creative Group, a specialized strategic product marketing firm. Through leading edge insight and research, sound strategic planning and effective project management, Atomica helps companies achieve greater success in bringing new products to market and in improving their existing businesses. They have co-authored Overcoming Inventoritis now available.