Toyota Product Development Systems

Toyota’s LPDS starts with the customer who is represented by the Chief Engineer. Toyota uses the Chief Engineer’s concept paper as a guiding tool to align thinking on the planning process. They very efficiently use the Obeya (big room) to bring together the members of divergent teams and allows them to function as a unit. The teams are structured so that all of the voices that need to be heard, from the designers to the managers of the factory, who can provide input on the impact decisions will have on the workers and the final produce, are there.

One of the advantages to Toyota’s process is that it allows them to retain valuable employees. Their system of “Creating a Leveled Product Development Process Flow” means that workers will not be overworked and will be able to focus their full attention on the project at hand. When the project is finished, they are provided with new challenges to help them grow. The process of innovation is woven into the fabric of the organization. Toyota supplements its processes with a culture that is finely aligned with the process.

They have also developed a number of tools to serve the process such as the already mentioned Obeya, a system of checklists which until recently were kept in three ring binders, Hansei, teardowns, A3 reports which summarize problems and help to ensure alignment. All of the processes at Toyota are highly standardized, and their culture ensures that the standardization process continues. Toyota has a corporate structure that reinforces and perpetuates itself. Sakicki Toyoda learned the loom business from the ground up, and this instilled in him a belief that to be successful, one must understand all aspects of the business.

He used this knowledge to build an empire and it his conviction that one must learn by doing that still guides the thinking of Toyota employees. Power is gained through merit with all engineers working their way up “through the ranks. ” Unlike other automakers who hire the best and brightest out of college and immediately give them a great deal of responsibility, Toyota takes the best and brightest (discovered through a rigorous and highly selective process) and has them go through a mentoring system where they are judged at each phase of the training.

It is a socialization process that produces an employee who is trained in Toyota standards and procedures. It takes many years for a newcomer to be given a large responsibility such as a Chief Engineer. Consequently, the Chief Engineer is imbued with respect, as the entire organization knows that person has obtained the rank through perseverance, hard work, accomplishment and a deep understanding of the “Toyota Way. ” Toyota is fiercely loyal to its employees, retaining them even in times of economic downturn.

Even employees who are not living up to Toyota’s exacting standards are retained, however, they are given jobs with no responsibility; a great humiliation in an environment that values achievement. This has given Toyota a reputation as an excellent employer, and jobs there are highly prized. One realizes when one takes a job at Toyota that you are a highly valued part of the family, and the success of the rest of the family rests directly with you. This surely makes new employees dig into their work with great zest and humility.

By studying from the ground up, the workers are able to gain insight into the whole development process. They can see how their work literally fits into the larger structure. This harmony is further reinforced by their mantra of “Customer First. ” When trade-offs are presented, the overruling concern is that of the designer, as the designer is the customer. For items that are not necessarily “Customer First” issues, Toyota has developed “trade-off curves” and decision matrices to standardize decision-making. PROCESS PRINCIPLES

Anyone who has spent a long time at Toyota will have absorbed the Toyota Way. ” The processes of the LPDS will be firmly engrained in minds of the employees. It is difficult to separate the “lean thinking” of Toyota employees from the LDPS. They reinforce each other. The process principles of LPDS are a manifestation of the lean thinking that is a part of Toyota’s culture. By defining the customer as the starting point of the entire LPDS process, Toyota is able to align the thinking of the entire organization. It also sets the goal of eliminating waste to greater serve the needs of the customer.

Other companies have tried to adopt Toyota’s processes without success. This is due to the fact that the process is only one part of Toyota’s success, the other, and in some instances, more compelling part of the success, is Toyota’s ability to create a culture indoctrinated in that process. The culture subverts ego, and turns problems into learning opportunities. Toyota has developed the most effective “knowledge job shop” in the automotive industry. It beauty lies in its ability to bring together representatives of all facets of the production process in harmony.

In thinking about Goldratt’s principle of identifying and bottlenecks, you can see that Toyota has developed a process to dramatically reduce the number of bottlenecks it will face. By using standardization of parts and platforms and bringing in the right representatives to the Obeya to discuss problems before they are built into the design, Toyota is able to smooth out the potential bottlenecks before they occur. There is a great deal of alignment between all members of the team, so one is not operating in a vacuum; trying to solve problems without seeing how your solution fits into the larger product.

Toyota’s focus on a leveled product development process also helps to eliminate bottlenecks by keeping the batches of work at a manageable level, eliminating variability and keeps utilization levels constant. As mentioned before, standardization is extremely important in creating a successful innovation environment. Standardization creates a common language that fosters greater communication. It even promotes communication of best practices over time as the best practices are engrained in the process by being adopted a standards.

It enhances the scheduling process by allowing anticipation in the schedule, which in turn leads to great synchronization of efforts. It allows platforms, technology and subsystems to be reused in different designs saving time and money. As a result of their standardization process, Toyota is often able to eliminate the expensive prototyping phase of vehicle development. This can be done because with so many “tried and true” components being used in consistent ways, prototyping would be redundant. Standardization is one the key element to Toyotas speed in developing new vehicles.

PEOPLE PRINICPLES Toyota uses a matrix system rather than a skunk works operation to develop new vehicles, Toyota’s LPDS is fully integrated into Toyota’s structure. They assemble a cross functional team that has representatives from the full range of functions involve with design, manufacturing and sales. Unlike other cross functional teams, where there is some ambiguity as to who the employee serves, Toyota is able to get an extremely high level of productivity out of them. This is due to several factors.

Toyota’s culture where employees have a high level of trust for one another and deep understanding of the process thanks to the leadership to the Chief Engineer. The Chief Engineer (CE) is the head of the development project. This position is given to a senior engineer with a proven track record as an outstanding engineer and as one who is successful in using the “Toyota Way. ” Management chooses CEs based on their ability to handle challenges and then tasks them with developing a vehicle that satisfies an overarching strategic direction.

The CE acts as the voice of the customer who is the main focus of the LPDS. As such, the CE articulates the overall concept for the vehicle in a concept paper. This concept paper is the guiding principle that aligns the entire team working on the project. The CE is not the direct supervisor of the engineers working on the program, however, the CE does have full responsibility for the design’s success from development through sales and the concept paper ensures accountability. Unlike the “heavyweight project managers” the CE is imbued with more authority.

Even without direct supervisory responsibilities, the position of CE is highly revered within the Toyota organization and commands great respect. Many within the Toyota family strive to achieve the role of CE. In fact, it is the continual striving for excellence that has helped Toyota to develop and maintain a culture of continuous learning. When an employee starts at Toyota, they undergo a long mentoring and socialization process. The socialization process that Toyota employees go through instills them with the spirit of Kaizen, which says that there is always an opportunity to learn and that learning is ongoing.

This is reinforced by Toyotas practices of Hansei (reflection). Toyota builds in time and encourages its workers to step back and reflect on the work that they are doing. Toyota’s culture that embraces problems, because problems combined with Hansei can lead to Kaizen. This gives them a huge advantage over American car companies were problems are not valued and people will often cover up problems that they are having in order to maintain their status. By not embracing their problems, the problems get compounded as they are often discovered too late. TOOLS AND TECHNOLOGY

The best thinking to be used in choosing supporting technology is to think about it in terms the broader framework of your company’s people and processes. Toyota uses this thinking very effectively. At Toyota, technologies do not stand alone. On the contrary, their product development systems are all seamlessly integrated into their V-Comm system. This enables information to be passed quickly and efficiently to all team members. Toyota also adheres to a belief that technology should support your processes and not drive it. Consistency of process is valued at Toyota more highly than keeping up with the latest advancement.

They chose technology to solve specific problems and do not look for a one size fits all solution. Finally, Toyota makes sure that the technological solutions are the right size for the problem rather than constantly going for the biggest and best. While Toyota uses this principled approach to technology, their tools that support successful innovation and organizational learning are not technology driven. Along with the V-Comm system mentioned earlier One of the first tools that is used is the CE’s concept paper. This paper is used to align the thinking of the product development team.

It provides enough guidance that it allows the team to work in harmony, but at the same time, it gives the team enough flexibility that they are able to be creative. They also use a simple device called the A3 report, which distills problems and solutions down to their essence. It is really the process of reducing a problem to one sheet of paper that helps to hone the thinking and promote learning. However, the A3 also facilitates increased communication. They also use teardown analysis performed by the engineers who are working on the project and have a system of checklists that provide guidelines for product design.

One of the most effective tools in Toyota’s arsenal is their constant and codified post-mortem process of Hansei. The standardization of Toyota’s processes allows the learning from this reflection to be captured and implemented. THREE CONCEPTS In looking at Toyota, one might say that they are an ambidextrous organization. Or one could say that they are successful because they have achieved a strong balance between the red and green quadrants of the Competing Values Framework. Much like Dell computers, Toyota’s culture looks very red on the surface.

The strict adherence to checklists and standardization seem to indicate a company that is focused on control. But like Dell, the rigorous structures that the put in place are actually innovative (green). And in fact, the reason that Toyota and Dell are able to be successfully innovative is that they have these supporting structures in place. It is an interesting dichotomy to be at once extremely controlled and very innovative. However, by balancing these two aspects of the corporate culture, Toyota has gained great success.

Toyota has also developed strategies that help it to avoid the “enemies of innovation”. First they use standardization to speed the innovation process to avoid lengthy development times. Second, by using tools like the concept paper, the Obeya, Hansei and standardization they are able to coordinate their efforts to a high degree. Third, they have come to grips with the risks that they are willing to take and have a high degree of trust throughout the organization. Finally, the CE truly understands the customer and has done much anthropological work to foster that understanding.

KEY TAKE-AWAYS There were three main take-aways I gained from reading “The Toyota Product Development System: 1. Creating a culture that is aligned with your strategic goals is the greatest goal a manager could achieve. The Toyota LPDS works because it is engrained in the culture of the organization. The great reward for an engineer is to become a CE and lead a team in producing something that will best serve the needs of the customer. In order to become a CE, you have to demonstrate that you can work effectively within the systems of Toyota.

This gives one a great incentive to work within the structure of Toyotas system. 2. Do not let technology drive your process, let your process drive technology. I was amazed to learn that a company with such advanced capabilities in development used checklist bound in three-ring binders to ensure that its processes were followed. It seems that most people, including myself, feel that newer and faster technology will lead to productivity breakthroughs. We are usually disappointed with the results. Toyota shows us that the problem is that technology without a solid process to back it up seldom works.

If one can find technology that will improve a successful process, then it has great potential to have that breakthrough quality we expect. Toyota did this with their V-Comm system, which made the information previously stored in three-ring binders more accessible. 3. Structure leads to greater innovation It always seem counter-intuitive to me that by being more structured, one could be more creative. Having been trained as an artist, I often bristled at structure and standardization as I felt it stifled creativity. But Toyota’s LPDS made me realize that structure is the platform that allows innovation to happen.

I then began to realize that within jazz music, there is a great deal of standardization. Jazz musicians spend years studying chord progressions, scales and modes and learning the songs that make up the jazz repertoire. They also spend years listening to other players and absorbing many of their ideas. This provides a foundation for musicians to communicate. Many people often ask me how it is that a group of jazz musicians who have never met before can come together for the first time and create great music together.

It is because of the standardization of the repertoire that they are able to do that. The musicians know and understand the structure of a song and the “rules” for performing. This provides them with a common language to communicate their ideas to each other. In my own business, I see increasing our standardization preventing us from constantly reinventing the wheel. It is the best ways to promote and capture organization learning. The great challenge will be to change the culture, which I have created, from one that is adverse to structure to one that embraces it.