What Does Your Company’s Management System Look Like?

I just completed reading The Toyota Way by Jeffrey Liker.  It’s been out for over three years but I just got around to it. A terrific read for managers and business leaders. Really good stuff. The book talks about 14 principles of the Toyota Production Systems (TPS).  There are many gems that I think could be of use in all aspects of business leaders building their overall system of management for their company. 

Here is a brief summary of the 14 TPS management principles:

  1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
  2. Create a continuous process flow to bring problems to the surface.
  3. Use “pull” systems to avoid overproduction.
  4. Level out the workload (heijunka). (Work like the tortoise, not the hare.)
  5. Build a culture of stopping to fix problems, to get quality right the first time.
  6. Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.
  7. Use visual control so no problems are hidden.
  8. Use only reliable, thoroughly tested technology that serves your people and processes.
  9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
  10. Develop exceptional people and teams who follow your company’s philosophy.
  11. Respect your extended network of partners and suppliers by challenging them and helping them improve.
  12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).
  13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi).
  14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

We can not simply say that TPS can be used as it is (or even with minor variations) in every organization.  We need to evaluate and learn the logic/concept behind these 14 principles and see how they may be relevant to an organization.   Many organizations claim to have similar principles in place, but how well are they implemented, or do they primarily exist on a piece of paper? What is behind these 14 principles and how Toyota does it? How does Toyota make sure that these principles become part of the work life?

Toyota did not develop TPS overnight or copy it from somewhere else.  Toyota learned a lot from Ford and North American car manufacturing over a long period of time and incorporated their own Toyota philosophy in TPS. The book is a profitable read to understand how the whole process came together.

I was reminded of two things as I read the book. First, how difficult it is for a growing company to take the time to focus on the specific elements of their overall company management system. It doesn’t happen in most mid-market companies (under $1 billion revenue) that I see. But, the really hard part? After developing an overall corporate management system, not only staying the course, but continually improving all of the processes. Now you are talking about world class leadership. And that’s what Toyota did – in spades. Yes, there are lessons here for all business leaders, particularly at a time when the economy is creating some very serious challenges. Suggestion — review the 14 principles and see where you possibly can tweak your company’s overall management system. We need to be as lean and mean as possible. This may help. Good hunting.

Hal Johnson has been CEO of eight companies and has authored three books on business performance. He is Chairman/Co-founder of LeadershipOne, a business transition consulting firm.

He may be reached at (916) 391-3042 or at [email protected].