Four Key Lessons from Toyota Production System for Process Improvement

The Toyota Production System (TPS) is much studied and emulated for use in other companies around the world. Unfortunately, many study the Toyota Production Systems’ Tools and Tactics such as the Kanban pull systems, cords, production cells, etc rather than the underlying principles!

Ran across this very interesting article published in 2004 in the Harvard Business Review - Learning to Lead at Toyota.

The author Steven J.Spear argues that the underlying principles of TPS are more useful to study, and emulate, rather than the Tools and Tactics. Could not be more useful for Process Improvement in Services! Let’s see how Stevn Spear’s principles apply to services:

1. There Is No Substitute For Direct Observation : Improvement of business processes is impossible without direct observation of how business processes are executed now, today, no matter what the Visio diagrams of the business processes say how they should be executed! Invariably,studying how business processes are being executed today is the only way to unearth process improvement possibilities. Currently, most process improvement efforts seem to be focused on measurements and improvement of Key Performance Indicators. They may miss a whole boatload of improvement opportuities related to elimination of waste in the process.That can be best done only with direct observation and lots of it.

2. Proposed Changes Should Always be Structured As Experiments: If you want to improve a business process, you can spend money on employee training, buying a new software package and implement it, or address the way the process itself moves forward, eliminating steps that are non-value adding, or speed up value adding steps. Now which of these may be the most effective for the time and money spent? Not all improvement efforts yield the same magnitude of improvement. Design of Experiments in Six Sigma practices have long offerred a very useful technique to effect improvements as experiments. These can be rolled back if they have unintended consequences or they don’t yield the expected results!

3.Workers and Managers Should Experiment As Frequently As Possible: In many Six Sigma and Lean Six Sigma process improvement activities, the emphasis may be on a single consolidated effort in process improvement, as opposed to a committment to improve business processes constantly! TPS advocates standardization of a process and once it standardized, it emphasizes constant improvement! If that approach is used in business process improvement, you can get significantly better results. This underlying principle can make a lot of difference than specific tactics and tools that are used without experimentation first.

4. Managers Should Coach, Not Fix: This principle that has worked very well in Manufacturing and in the Toyota Production System is perhaps the least used one in business process improvement. Many process improvement activities are organized and conducted by management rarher than the people who do the work. Of course, manufacturing may be different somewhat from services where you may need to have an eye on the overall process flow and avoid any sub-optimization at a process step level. This principle is also a great way to ensure buy-in of the participants!

Good article and good principles to think about when thinking about continuous business process improvement!

Rules are not necessarily sacred, principles are. - Franklin D. Roosevelt.