“How Toyota became #1.” A book that has great tidbits for any manager or owner. David Magee, the author, talks about the various ideologies that are ingrained within the Toyota culture. The Toyota Production System (TPS) which cuts waste and improves efficiency, is a large part of Toyota’s success. Every employee is expected to help improve every aspect of the business. If a suggestion is implemented they will receive between $5 and $2,000 depending on the value of the suggestion. In 2005 99% of employee suggestions were accepted, which totaled to almost 600,000 accepted suggestions.
“Dig deeper into Toyota's history and one finds steady growth, much-better-than-industry-average shareholder returns, off-the-charts consumer loyalty ratings, and some of the happiest employees in the world.”
- David Magee
Not every company can implement the same concepts. Ford tried to create a new inventory system that was supposed to surpass Toyota and failed because they didn’t have the infrastructure. Toyota uses the pull technique when building cars, which means they only build as many cars as their customers demand. Toyota actually had to change their system somewhat in America because customers buy their cars off the lot. In Japan they are ordered then built for the customer – the customer pulls for the car and Toyota builds it. In America they had to build cars to sit on the lot, but they still only build to fill that next space that was taken by a customer. Ford uses the push technique – they build the cars then push them out to the dealers. The dealers have to sell them and if they can’t sell them fast enough they go on sale, which means less profit.
Ford thought they could implement the TPS system into their factories because it worked for Toyota. They didn’t look at their strengths and try to implement a concept that would fit in with their culture.
Understanding The Company's Culture
Businesses bring in consultants that spit out ideas that have worked for other companies, but don’t tailor the ideas to the company’s culture. The excitement and money flows through the organization, at first, but eventually everything goes back to the way it was because they weren’t ready for such a shake up.
Working happy is so much more than refining a perfect system like Toyota's; it’s understanding the culture of the the employees. When Ford tried to implement a TPS system, it shocked the employees. They were probably overwhelmed and they didn’t understand how to make it successful. My guess is they were probably told to do something a certain way, but never understood the reason behind it. They didn’t understand why and how it would help. I’m not sure about Ford’s commitment to their employees, but it did fail and it’s probably due to a lack of communication. A company’s poor communication is one of my biggest pet peeves. Every company I ever worked for rarely told me why we were making certain big decisions. They just did it and expected us to follow.
The world is evolving and businesses have to adjust their manager-employee relationships. A company like Toyota who shares their vision with their employees and gives them the ability to improve the company at every level will only get stronger. The employees understand what direction the company wants to head in and can make decisions accordingly.
“The Toyota system is teaching people to think [for] themselves and find a better way to do the job...to take individual ownership.”
- Dennis Cuneo from How Toyota Became #1
Companies have studied Toyota since the 1970’s and still have trouble implementing their ideas. I believe they don’t get the same results because they don’t look at their company’s strengths. They don’t customize the ideas to fit their own company’s culture. They want concepts that they know will work, but the problem is that these patchwork ideas don't fit because they aren’t built for their company.
Make Small Changes
My suggestion to struggling companies is to start small and make changes in increments. Create a philosophy that doesn't revolve around money. Focus on the employee then improve from there. Employees that understand why they do what they do and enjoy doing it will make profits.
“Simply put, winning means listening to and responding to the customer, not just telling them what they need or should want.”
- David Magee
I've owned a Toyota Corolla and loved it. It lasted until 204,000 miles. It's still is my most cherished vehicle in my fifteen year driving span. I would buy another Toyota in a heartbeat and that's the loyalty companies strive for and Toyota has achieved throughout the world.
Toyota is #1 in the car making world because they empower their employees to make their work better. GM, Ford, and Chrysler don't even come close to creating the enjoyable work environment that Toyota has accomplished. Not every employee fits into their culture, but the ones that do thrive. Toyota doesn't force their ways on the American employees. For instance, in Japan, Toyota has a morning exercise routine for all their employees. They tried to implement an exercise routine for the Americans and they resisted so Toyota canceled it.
Toyota adapts to what the customer wants as well as the employees. There are many companies that try to do the same thing, but fail to make both happy. Toyota understands that they must create a mutually beneficial relationship with their employees, customers, and suppliers to continue their success. Toyota has built cars for over 50 years without an employee strike. They also work with suppliers to reduce costs when needed, looking for a solution that benefits both parties.
The book is well worth the read and shows the accomplishment a company with a long-term vision that doesn’t just focus on profits, but on the customer’s satisfaction.
The author David Magee was kind enough to answer a couple of questions. Tomorrow I will post the short interview.
The questions he answered was...
Toyota has a knack for encouraging their employees to stay engaged by empowering them to improve the company. Why do you think American companies struggle to implement such a process?
In your book you write that Toyota thinks about long term instead of short term gains. How do you think America companies can change their culture to embrace the long term value instead of quarter to quarter success?
So check back in tomorrow and see how he responded.
You can also check out his book at Amazon or go to his website.
Check out the short interview here:
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