Senior business leaders can learn much from the lean production system with iterative continuous improvements at Toyota.

Senior business leaders can learn much from the lean production system with iterative continuous improvements at Toyota.

Takehiko Harada (2015)

 

Management lessons from Taiichi Ohno: what every leader can learn from the man who invented the Toyota production system

 

Lean values and principles arise from the Toyota production system that Japanese senior engineer Taiichi Ohno gradually built in the post-war decades. The 15 main management lessons help senior business leaders, middle managers, and several other team members reduce waste in order to create the continuous flow of small batches of lean production with iterative continuous improvements over time. This lean approach helps most team members achieve the product-market fit, a delicate balance between work-life quality and employee motivation, and greater alignment between lean business processes and core value streams (the latter of which often cater to the essential customer needs and wants).

The lean CEO is the top executive manager who molds, changes, and then refines the organizational rules, functions, and key business operations. In a lean business environment, this top executive manager builds a solid and robust communication pipeline to most team members for better productivity. Senior business managers must learn to delegate critical tasks to subject matter experts by transferring major authority to the departmental supervisors. This delegation helps foster mutual trust, respect, recognition, and motivation for most team members. This mutual trust can effectively contribute to greater transparency and better regulation over time.

Specific challenges arise from the executive oversight of core business operations in foreign countries. Senior executive managers must learn the local cultures and customs with sufficient reliance on local middle managers and core team members as much as possible to integrate lean startup methods into their business functions. When push comes to shove, it is important for senior business leaders to promote better alignment between foreign value streams and lean business processes.

 

Senior business leaders can learn lean lessons from the Toyota production system.

The ingenious insight of Taiichi Ohno focuses on the continuous flow of both small parts and components to holistic products (or Toyota cars) with little waste of over-production. This one-piece flow becomes the Toyota production system in the lean business context. Senior business leaders can learn lean lessons from this Toyota production system:

 

1. Senior business leaders and middle managers should let actions speak louder than words. Senior supervisors and engineers play an important role in the lean production of Toyota cars with less waste and better value. These supervisors can demonstrate the core business methods and techniques to team members with little interruption to the continuous flow of small batches of lean production.

 

2. Senior managers should encourage team members and engineers to get closer to the final business process with less inventory. In fact, less inventory means less waste. Senior managers must work with most team members to ferret out the reasons and conditions for business process variability. In this critical way, most team members and engineers can work on the lean production of Toyota cars, small batches, or other components with less time, effort, and energy.

 

3. Minimalism dominates in the lean progressive assembly line at Toyota. Senior supervisors and engineers keep only the small parts and components for what enters the assembly line at the moment. Making the work as simple as possible means fewer mistakes. Less waste and inventory can result from this simplicity.

 

4. Senior supervisors must avoid stunting the growth of core business operations. Team members must find creative ways to sustain the continuous flow of small batches of lean production. These team members should consistently produce in the same sequence to make it easier to facilitate machine changeovers.

 

5. Senior supervisors and engineers should try creative solutions to make iterative continuous improvements over time. About 90% of senior managers can boost their productivity with respect to an increase in total volume. Only 10% of senior supervisors can enhance their productivity with respect to a decrease in overall volume. The latter can often sustain the whole continuous flow of small batches of lean production. As a consequence, these supervisors reduce the remainder time with lower personnel costs.

 

6. Senior managers and supervisors should often seek creative ways to raise the bar. Senior engineers often develop the standard work and then teach it to team members. Both senior supervisors and most team members should try out new methods to come up with better standard work over time.

 

7. Senior supervisors must allow most team members to learn the next processes. These team members should learn multiple skills and business processes, and so the continuous flow of standard work continues in an endless feedback loop. Senior managers should encourage both supervisors and most team members to help out other team members who may inadvertently experience interruption in the standard work flow.

 

8. Team members must learn not to fall into the trap of target figures or numerical goals. Both senior supervisors and team members may face the temptation to paint a rosy picture of good numbers. This attempt may inadvertently delay the major business processes that diagnose the root causes of particular problems. For this reason, managers must not manage numbers, but all team members must work together to solve particular problems with minimal interruption to the continuous flow of small batches of lean production.

 

9. Senior managers and supervisors set the standard work, so all team members can perform in accordance with this standard in a safe and correct way. Senior managers often establish the standard work, teach it to all team members, and continue to assess whether these team members conduct this work well in line with the standard. If some team members cannot conduct their work well in line with the standard, senior supervisors and managers should take time to retrain these team members.

 

10. Senior managers and supervisors should train all team members to fix specific technical problems when these problems arise from the wider business context. From time to time, quick fixes cannot resolve the root causes of specific issues. It is important for both senior supervisors and key team members to rectify the fundamental flaws. Meanwhile, senior managers must avoid making mountains out of molehills. Sometimes the better is the worst enemy of the good.

 

11. Senior supervisors should check with all team members whether the standard work continues to serve the current product-market fit (as the main purpose of lean production). Senior managers and supervisors who continually update the standard work can continue to keep their facilities on the right path toward high quality, safety, and cost-effective production. This main path of least resistance can often formulate a positive feedback loop.

 

12. In many business organizations, both senior supervisors and all team members must undertake lots of preparations before the next major product launch. Key product milestones precede lots of supervisory advice and collaboration. In this light, senior managers must empower team members to sustain the continuous flow of small batches of lean production when the preparatory work snowballs into the next major product launch.

 

13. Senior managers must not expect an expensive specialist to run an expensive machine. When smart machines combine with some human intelligence, senior managers can help reduce costs by recruiting a few generalists who have some essential institutional knowledge to operate the smart machines. It may be too expensive to hire specialists to conduct mundane operational tasks.

 

14. Senior supervisors and engineers must seek to develop a cohesive production system. The lean production system should combine the foundational elements with respect to quality, safety, delivery, and the overall cost structure etc. These senior supervisors and engineers need to analyze these foundational elements before these key men and women jointly make wise business decisions on the lean production system.

 

15. Senior supervisors must keep the number of incremental steps to about 5 to 7. Managers must emphasize this simplicity. In effect, this simplicity makes a lean complex production system clear, basic, transparent, and self-explanatory.

 

 

The chief executive manager integrates several lean business endeavors with core value streams and distinctive capabilities.

The top management style and corporate culture must change for the better. The chief executive manager integrates most of the lean business processes with core value streams and distinctive capabilities. In this important way, the lean business approach differs much from the traditional management style of getting orders from senior executive committees.

The main organizational structure includes its rules, functions, and core business operations. Departmental functions designate what team members and individual contributors need to accomplish within reasonable time frames. Both functions and rules are critical business decisions on the standard work. Senior supervisors and team members carry out core business operations to pull together both individual contributions as well as collaborative efforts.

The lean CEO can change the corporate rules, functions, and business operations in response to external forces and circumstances. From time to time, such changes bring about iterative continuous improvements. The lean CEO needs to establish a robust direct communication pipeline from the key business operations to the top management team. This positive communication helps ensure alignment between critical business operations and the top management team members (who monitor delicate changes in both the external circumstances and customer demands).

 

Senior managers and other team members strive to sustain the continuous flow of small batches of lean production.

Both senior supervisors and team members should strive to sustain the continuous flow of small batches of lean production. These senior business leaders must build a sustainable organizational structure that empowers all team members to see how their core business operations contribute to the eventual fulfillment of bold strategic goals. Sometimes shorter-term tactical solutions help senior supervisors and most team members achieve the longer-term strategic goals in due course. In this light, senior managers and supervisors often must triangulate both business decisions and issues from alternative perspectives. For this reason, the senior management team should include top executive leaders with diverse analytic skills, backgrounds, and experiences. In essence, senior managers and supervisors need to delegate tasks well enough so that team members can carry out core business operations in accordance with the standard work priorities and long-term corporate strategies. When push comes to shove, the law of inadvertent consequences often counsels caution. Iterative continuous improvements become possible in this context.

Senior managers and supervisors cannot monitor the standard work on a continual basis. Instead, these senior managers and supervisors often need to facilitate the continuous flow of small batches of lean production. At the same time, these senior managers and supervisors need to identify new business opportunities for iterative continuous enhancements such that core business operations can change for the better. Senior managers should delegate proper authority to both supervisors and most team members to ensure relentless standardization. In-depth standards help minimize the chances of technical mistakes, setbacks, abnormalities, and so forth. The bilateral communication between senior managers and team members helps ensure better alignment between lean business processes and long-term strategic goals. In this important way, senior managers can diagnose proper solutions (but not quick fixes) in order to resolve the root causes of recurrent technical issues.

Moreover, good business leaders must often recognize the collaborative efforts of both team members and individual contributors. This recognition helps boost team morale and employee motivation. All the team members and individual contributors should be able to see the immediate results and rewards of the standard work. All team members should further feel the eventual results of positive changes that can boost output gains per unit of input factors. Iterative continuous improvements can become part of core business processes over time. These iterative improvements are both short-term tactical solutions as well as medium-term strategic solutions at the heart of lean business production.

 

Senior managers and key team members must adapt foreign business operations to the local cultures and customs.

Senior managers who head core business operations in a foreign country may face specific challenges. When these managers find out their international assignments, these senior executive managers should take time to visit the core business men or women who led business operations in that foreign country. This communication can allow senior managers to acquire valuable information about the local cultures, customs, rules, laws, consumer tastes, habits, lifestyles, preferences, and so forth.

From time to time, these senior managers may fall into the trap of misconceptions about foreign business operations. Many missions that senior managers may view as difficult may turn out to be quite easy, whereas, many other missions that senior managers may view as easy may turn out to be difficult or virtually impossible. For this reason, it is paramount for these senior managers to talk with their local team members to better assess difficulty levels before these managers undertake major changes in foreign business operations.

In foreign business operations, senior managers need to cultivate a healthy team environment where it is okay for team members to say sorry. Team members must be able to admit mistakes, setbacks, and disappointments with no adverse career consequences. Otherwise, some team members would choose to cover up errors at work. Senior managers must remain true and authentic to themselves and their subordinates in foreign business operations. When new issues and obstacles arise from the broader business context, senior managers would be able to work closely with their local team members to find the root causes of specific technical problems. In this unique fashion, these senior managers and local team members can better diagnose proper solutions that rectify the fundamental flaws for good. Therefore, it is important for these senior managers to focus on the root analysis of the problem rather than the literal words of the apology.

Senior managers must find suitable local middle managers to work with upstream suppliers. These local middle managers can gradually mold specific suppliers into key lean production partners. In a delicate way, these local middle managers can train most upstream suppliers to learn the continuous flow of small batches of lean production. If senior managers select multiple local middle managers, these multi-trainers may inadvertently exhibit differences in the style and substantive content of communication with upstream suppliers. Sometimes such differences can cause unnecessary confusion.

These local middle managers hence serve as upstream supplier-trainers in charge of several companies. These trainers need to visit the respective suppliers at least once per month. During these regular visits, the trainers get to know the pervasive issues of core upstream suppliers, report these issues to senior managers, receive instructions on what can constitute proper solutions, and then deploy these proper solutions at the supplier sites in accordance with the standard work priorities and longer-term strategic goals. At least once per quarter, senior managers should go with the local trainers to verify the current progression of upstream supply chains. In fact, it is quick and effective for senior managers to localize all middle managers and supplier-trainers to encourage better collaborative efforts.

 

 

This analytic essay cannot constitute any form of financial advice, analyst opinion, recommendation, or endorsement. We refrain from engaging in financial advisory services, and we seek to offer our analytic insights into the latest economic trends, stock market topics, investment memes, personal finance tools, and other self-help inspirations. Our proprietary alpha investment algorithmic system helps enrich our AYA fintech network platform as a new social community for stock market investors: https://ayafintech.network.

We share and circulate these informative posts and essays with hyperlinks through our blogs, podcasts, emails, social media channels, and patent specifications. Our goal is to help promote better financial literacy, inclusion, and freedom of the global general public. While we make a conscious effort to optimize our global reach, this optimization retains our current focus on the American stock market.

This free ebook, AYA Analytica, shares new economic insights, investment memes, and stock portfolio strategies through both blog posts and patent specifications on our AYA fintech network platform. AYA fintech network platform is every investor's social toolkit for profitable investment management. We can help empower stock market investors through technology, education, and social integration.

We hope you enjoy the substantive content of this essay! AYA!

 

Andy Yeh

Chief Financial Architect (CFA) and Financial Risk Manager (FRM)

Brass Ring International Density Enterprise (BRIDE) © 2013-2023

 

 

Do you find it difficult to beat the long-term average 11% stock market return?

It took us 20+ years to design a new profitable algorithmic asset investment model and its attendant proprietary software technology with fintech patent protection in 2+ years. AYA fintech network platform serves as everyone's first aid for his or her personal stock investment portfolio. Our proprietary software technology allows each investor to leverage fintech intelligence and information without exorbitant time commitment. Our dynamic conditional alpha analysis boosts the typical win rate from 70% to 90%+.

Our new alpha model empowers members to be a wiser stock market investor with profitable alpha signals! The proprietary quantitative analysis applies the collective wisdom of Warren Buffett, George Soros, Carl Icahn, Mark Cuban, Tony Robbins, and Nobel Laureates in finance such as Robert Engle, Eugene Fama, Lars Hansen, Robert Lucas, Robert Merton, Edward Prescott, Thomas Sargent, William Sharpe, Robert Shiller, and Christopher Sims.

 

Follow AYA Analytica financial health memo (FHM) podcast channel on YouTube: https://www.youtube.com/channel/UCvntmnacYyCmVyQ-c_qjyyQ

 

Follow our Brass Ring Facebook to learn more about the latest financial news and fantastic stock investment ideas: http://www.facebook.com/brassring2013.

 

Free signup for stock signals: https://ayafintech.network  

Mission on profitable signals: https://ayafintech.network/mission.php 

Model technical descriptions: https://ayafintech.network/model.php

Blog on stock alpha signals: https://ayafintech.network/blog.php

Freemium base pricing plans: https://ayafintech.network/freemium.php 

Signup for periodic updates: https://ayafintech.network/signup.php

Login for freemium benefits: https://ayafintech.network/login.php