12 Oct 1999  Research & Ideas

Decoding the DNA of the Toyota Production System

How can one production operation be both rigidly scripted and enormously flexible? In this summary of an article from the Harvard Business Review, HBS Professors H. Kent Bowen and Steven Spear disclose the secret to Toyota's production success. The company's operations can be seen as a continuous series of controlled experiments: whenever Toyota defines a specification, it is establishing a hypothesis that is then tested through action. The workers, who have internalized this scientific-method approach, are stimulated to respond to problems as they appear; using data from the strictly defined experiment, they are able to adapt fluidly to changing circumstances.

 

The Toyota Production System is a paradox. On the one hand, every activity, connection, and production flow in a Toyota factory is rigidly scripted. Yet at the same time, Toyota's operations are enormously flexible and responsive to customer demand. How can that be?

After an extensive four-year study of the system in more than 40 plants, the authors came to understand that at Toyota it's the very rigidity of the operations that makes the flexibility possible. That's because the company's operations can be seen as a continuous series of controlled experiments. Whenever Toyota defines a specification, it is establishing a hypothesis that is then tested through action. This approach — the scientific method—is not imposed on workers, it's ingrained in them. And it stimulates them to engage in the kind of experimentation that is widely recognized as the cornerstone of a learning organization.

The Toyota Production System grew out of the workings of the company over 50 years, and it has never actually been written down. Making the implicit explicit, the authors lay out four principles that show how Toyota sets up all its operations as experiments and teaches the scientific method to its workers. The first rule governs the way workers do their work. The second, the way they interact with one another. The third governs how production lines are constructed. And the last, how people learn to improve. Every activity, connection, and production path designed according to these rules must have built-in tests that signal problems immediately. And it is the continual response to those problems that makes this seemingly rigid system so flexible and adaptive to changing circumstances.

The Experiments of the Toyota Production System

When organizations are managed according to the four rules, individuals are repeatedly conducting experiments, testing in operation the hypotheses built into the designs of individual work activities, customer-supplier connections, pathways, and improvement efforts. Click here to see a summary of the hypotheses, the way they are tested, and the response if they are refuted.

HBS Working Knowledge Close Up

How Toyota's Workers Learn the Rules

If the rules of the Toyota Production System aren't explicit, how are they transmitted? Toyota's managers don't tell workers and supervisors specifically how to do their work. Rather, they use a teaching and learning approach that allows their workers to discover the rules as a consequence of solving problems. For example, the supervisor teaching a person the principles of the first rule will come to the work site and, while the person is doing his or her job, ask a series of questions:

  • How do you do this work?
  • How do you know you are doing this work correctly?
  • How do you know that the outcome is free of defects?
  • What do you do if you have a problem?

This continuing process gives the person increasingly deeper insights into his or her own specific work. From many experiences of this sort, the person gradually learns to generalize how to design all activities according to the principles embodied in rule 1.

All the rules are taught in a similar Socratic fashion of iterative questioning and problem solving. Although this method is particularly effective for teaching, it leads to knowledge that is implicit. Consequently, the Toyota Production System had so far been transferred successfully only when managers have been able and willing to engage in a similar process of questioning to facilitate learning by doing.

- Steven Spear and H. Kent Bowen

The Experiments of the Toyota Production System

Rule Hypotheses Signs of a problem Responses
1

The person or machine can do the activity as specified. If the activity is done as specified, the good or service will be defect free.

The activity is not done as specified.

The outcome is defective.

Determine the true skill level of the person or the true capability of the machine and train or modify as appropriate.

Modify the design activity.

2

Customers' requests will be for goods and services in a specific mix and volume.

The supplier can respond to customers' requests.

Responses don't keep pace with requests.

The supplier is idle, waiting for requests.

Determine the true mix and volume of demand and the true capability of the supplier; retrain, modify activities, or reassign customer-supplier pairs as appropriate.
3

Every supplier that is connected to the flow path is required.

Any supplier not connected to the flow path is not needed.

A person or machine is not actually needed.

A nonspecified supplier provides an intermediate good or service.

Determine why the supplier was unnecessary, and redesign the flow path.

Learn why the nonspecified supplier was actually required, and redesign the flow path.

4

A specific change in an activity, connection, or flow path will improve cost, quality, lead time, batch size, or safety by a specific amount.

The actual result is different from the expected result.

Learn how the activity was actually performed or the connection or flow path was actually operated. Determine the true effects of the change. Redesign the change.

Based on an article in the Harvard Business Review, September/October 1999.

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