usiness

Book

Business Book Review

We Select and Review Only the Best Business Books You Should Read.

vie Re w

Volume 21, Number 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

The Toyota Way

14 Management Principles from the Worlds Greatest Manufacturer

Jeffrey K. Liker
2004 McGraw-Hill Adapted by permission of McGraw-Hill ISBN: 0-07-139231-9

Reviewed by Lydia Morris Brown

Introduction
When Gary Convis, managing officer and president of Toyota Motor Manufacturing in Kentucky, joined Toyota after working in the U.S. auto industry for 18 years, he witnessed how one of the worst workforces in General Motors was transformed into one of the best in any U.S. manufacturing facility. This transformation, which occurred at NUMMI (the Toyota/GM joint venture plant in Fremont, California), was a direct result of the Toyota Way, the fundamental method by which Toyota does business. This approach, when coupled with the Toyota Production Systemthe basis for much of the worldwide lean production movementmakes up Toyotas DNA. The Toyota Way describes the 14 principles that form the foundation of this uniquely successful management style. Using profiles of a diverse group of organizations, from a variety of industries, it demonstrates how this model of success can be applied in any organization, to improve the quality, efficiency, and speed of any business process, including sales, product development, marketing, logistics, and management. This blueprint of Toyotas management philosophy offers
Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

The Toyota Way

Jeffrey K. Liker

managers in blue-collar, white-collar, manufacturing, or service environments specific tools and methods for becoming the best in their industries on cost, quality, and service.
PART I: USING OPERATIONAL EXCELLENCE AS A STRATEGIC WEAPON

Liker believes that Toyotas consistent success is a direct result of its turning operational excellence into a strategic weapon, using such tools and quality improvement methods as just- All manufacturing and service companies that want to be sucin-time (JIT), one-piece flow, jidoka, cessful in the long term must become learning enterprises. and heijunka (that make up the Toyota Toyota is one of the best models in the world. Production System [TPS]). But its its operations. This need to be flexible led to the critical continued success at implementing these tools comes discovery that when lead times are short, and production from its philosophy (the Toyota Way), which is based on lines are kept flexible, higher quality, better customer an understanding of people and what motivates them. Thus, response, better productivity, and better utilization of the companys achievement ultimately emerges from its equipment and space ensue. This drive (in the 1940s and ability to cultivate leadership, teamwork, and culture; to 1950s) to eliminate wasted time and material from every devise strategy; to build supplier relationships; and to step of the production process, from raw material to finished maintain a learning organization. In this manner, the Toyota goods, addresses the same need companies face today Way and the TPS form the double helix of the companys the need for fast flexible processes that give customers DNA, for they define its management style and what is what they want, when they want it, at the highest quality unique about the company. and affordable cost. TPS, Toyotas distinctive approach to manufacturing, is Toyota has discovered that non-value-added waste has the basis of the lean production revolution it helped spawn. little to do with running labor and equipment as hard as According to Womack and Jones (Lean Thinking), lean possible and everything to do with the manner in which manufacturing [is] a five-step process: defining customer raw material is transformed into a saleable commodity.

value, defining the value stream, making it flow, pulling from the customer back, and striving for excellence. A lean enterprise is, then, the end result of applying TPS to all these aspects of a business. After World War II, Ford and General Motors used economies of scale and big equipment to produce as many parts as possible, as cheaply as possible. However, because Toyotas market was small, forcing it to make a variety of vehicles on the same assembly line, flexibility was key to

About the Author

Jeffrey K. Liker, PhD, a principal of Optiprise, a lean enterprise/supply chain management consulting firm, is professor of Industrial and Operations Engineering at the University of Michigan, where he is also cofounder and director of the Japan Technology Management Program Lean Product Development Certificate programs. Dr. Liker, who was the editor of Becoming Lean: Experiences of U.S. Manufacturers (which won the 1998 Shingo Prize for excellence in manufacturing research), has written on Toyota for The Harvard Business Review, Sloan Management Review, and other leading publications. For more information, please visit: www.optiprise.com

This is why TPS begins with the customer, because the only thing that adds value in any type of processbe it manufacturing, marketing, or development is the physical or information transformation of that product, service, or activity into something the customer wants. The roots of these TPS and Toyota Way principles can be traced back to the history and personalities of the companys founders, who left their indelible marks on Toyotas culture, through generations of consistent leadership. In the 1890s, Sakichi Toyoda used trial-and-error tinkering and getting his hands dirty (genchi genbutsu an approach that would become part of the foundation of the Toyota Way), to invent a sophisticated and highly successful automated wooden loom, which contained a special mechanism for automatically stopping the loom whenever a thread broke. It was a capability that evolved
Page 2

Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

The Toyota Way

Jeffrey K. Liker

into the broader system, jidoka (automation with a human touch), one of the two pillars of TPS. Essentially, jidoka means mistake proofing, or building in quality as material is produced. It also refers to designing operations and equipment so that workers are not tied to machines and are free to perform value-added work. In 1929, Sakichi sent son Kiichiro to England to sell the patent rights for the popular mistake-proof loom. With the 100,000 English pounds received from the sale, he gave Kiichiro the task of building the Toyota Motor Corporation. The objective was not to increase the family fortune, but to move the company into a future technology (automobiles) and to give his son his opportunity to contribute to the world.

leaders who shaped sales, manufacturing, product development and, most importantly, TPS. In 1950, Eiji gave plant manager, Taiichi Ohno, the assignment of improving Toyotas manufacturing process so that it equaled Fords productivity. Nonetheless, this did not mean competing head-on with Ford, it meant improving Toyotas manufacturing within the protected confines of the Japanese market. So Ohno began by benchmarking the competition and studying Henry Fords book, Today and Tomorrow, which preached the importance of creating continuous material flow throughout the manufacturing process, standardizing processes, and eliminating waste. What Ohno saw, however, was that the company did not always practice what it preached, for it used wasteful batch production methods that built up Everyone should tackle some great project at least once in huge banks of work-in-process inventory their life. should make an effort to complete something throughout the value chain, [pushing] that will benefit society. product onto the next stage of production. --Sachichi Toyoda Toyota did not have the luxury of creating Despite his formal engineering education, Kiichiro, like this kind of waste, but it could use Fords idea of continuous Sakichi, learned by doing and added his own innovations to material flow to develop an efficient system of one-piece his fathers philosophy and management approach. He was flow, flexible enough to change, according to customer especially influenced by the U.S. supermarket system of demand. replacing products on the shelves as customers purchased Ohno turned to Toyotas shop floor for a hands-on them. Thus, while Sakichi contributed the jidoka pillar to application of the principles of jidoka and one-piece flow, TPS, Kiichiro contributed JIT. Still, it was his actions as which he combined with the concept of the pull system, a leader that left the greatest imprint on Toyota. For after inspired by American supermarkets. On the shop floor, World War II, when rampant inflation threatened the this means that the first step in a process does not replenish company, Kiichiro resigned as presidentdespite the fact parts until the second step uses up its supply from step one, that the crisis was beyond anyones control. Not only did down to a small amount of safety stock. In this manner, this personal sacrifice help quell worker dissatisfaction, it every step of every process has the equivalent of a built in also laid the foundation for Toyotas philosophy (one still gas gauge (kanban), signaling the previous step when extant in the company today) of thinking beyond individual parts need to be replenished. This creates backwards pull concerns to the long-term good of the company and taking to the beginning of the manufacturing cycle. Thus, JIT is responsibility for any problems. dependent upon kanban. One of the family leaders who shaped the company Toyota also assimilated the teachings of American after Kiichiro was cousin Eiji Toyoda, who eventually quality pioneer, W. Edwards Deming, who taught that, in became Toyotas president and, then, chairman, helping to a business system, meeting and exceeding both external build the company into a global powerhouse. Like Sakichi and internal customer requirements is the task of everyone and Kiichiro before him, he learned to get his hands dirty, in the organization. Thus, he originated the the next learned the spirit of innovation, understood the value of process is the customer principle, which in a pull system, contributing to society, and had the vision of creating a translates into the preceding process must always do what special company with a long-term future. He also played a the subsequent process says (atokotei wa o-kyakusama); key role in selecting and empowering Toyotas subsequent otherwise, JIT does not work.

Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

Page 3

The Toyota Way

Jeffrey K. Liker

Deming also advocated the systematic Plan-Doopportunities for reducing waste by getting rid of, or Check-Act (PDCA) Cycle approach to problem solving reducing, non-value-added steps. that is a cornerstone of continuous improvement (kaizen). Toyota identifies seven major types of non-valueThis is the process of making incremental improvements, adding muda, to which Liker adds an eighth (all can be no matter how small, and achieving the lean goal of applied to any process in manufacturing, information or eliminating all waste that adds cost without adding value. It service): is a total philosophy that strives for perfection and sustains 1. overproduction, which generates excess inventory, TPS on a daily basis, in that it pushes the decision making which, in turn, leads to overstaffing and increased storage and/or proposal making down to the workers and requires and transportation costs; open discussion and a group consensus before any decision 2. waiting for the next step, tool, part, etc; can be implemented. 3. unnecessary transport or conveyance of work in progress This new manufacturing system, which Ohno and (WIP); his team created, did not just pertain to one company 4. overprocessing or incorrect processing due to poor tool in one market and culture, but was a new paradigm in and product design; manufacturing or service delivery. Out of the rubble of WWII with a creative spirit and courage It was a new way of seeing, [Ohno] solved problem after problem and evolved a new producunderstanding, and interpreting what tion system. This same process has been played out time is happening in a production process and again throughout the history of Toyota. and, as a result, propelling a company beyond the mass production system. Still, the power of TPS 5. excess inventory in the form of excess raw material, WIP, and lean manufacturing remained mostly unknown outside or finished goods, causing longer lead times, obsolescence, of Toyota and its affiliated suppliers until the business damaged goods, transportation and storage costs, and delay world was overtaken by the quality movement and learned (excess inventory also hides production imbalances, late that when companies focus on quality rather than solely supplier deliveries, defects, equipment downtime, and long on cost, costs are reduced even more. Moreover, through setup times); the work of Womack, Jones, and Roos (The Machine That 6. unnecessary movement, such as walking and/or looking Changed the World), manufacturing worldwide discovered for, reaching for, or stacking parts or tools; lean productionwhat the authors identified as Toyotas 7. defects that result in repair, rework, scrap, replacement way of shortening lead time by eliminating waste in each production, and inspection; and step of a process [so as to get the] best quality and lowest 8. unused employee creativity (i.e., losing time, ideas, skills, cost, while improving safety and morale. improvements, and learning opportunities by not engaging As Liker notes, the first question in TPS is always or listening to employees). What does the internal and external customer want from this process? Thus, many of the tools of TPS and PART II: FOURTEEN PRINCIPLESTHE CULTURE principles of the Toyota Way derive from the focused BEHIND TPS behavior of eliminating non-value-added waste, or muda, Liker contends that if a company does not understand in business or manufacturing processes. The traditional the culture behind TPS, even though it has all the tools and approach to process improvement focuses on identifying techniques of TPS in place, the real work of implementing local efficiencies, such as improving uptime, making a lean has just begun. Essentially, TPS is about applying cycle faster, or using automated equipment to replace the the principles of the Toyota Way so that workers are human being. And, though there might be a significant contributing to the improvement of the system and of improvement for an individual process, there is little impact themselves. The Toyota Way encourages, supports, and on the overall value stream. Without a lean improvement demands employee involvement, for it is people who bring initiative, most companies are unable to see the huge the system to life by working, communicating, resolving

Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

Page 4

The Toyota Way

Jeffrey K. Liker

Continuously Solving Root Problems Drives Organizational Learning Principle 12: Go and see for yourself to thoroughly understand the situation (genchi genbutsu). Principle 13: Make decisions slowly by consensus, thoroughly considering all options: implement decisions rapidly (nemawashi). Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). Throughout the company, every person has a philosophical sense of purpose that supersedes any shortterm decision making, and all work, grow, and align the entire organization toward a common purpose that is bigger than making money. Generating value for the customer, society, and the economy is the starting point, and every function is evaluated in terms of its ability to achieve this objective. Each person understands his or her place in the history of the company and works to bring the organization to the next level. Thus, individuals strive to be responsible, to act with self-reliance, to trust in their own abilities, and to maintain and improve the skills that enable them to produce added value. Toyota strives to cut back to zero the amount of time that any work project is sitting idle. When a customer places an order, this triggers the process of obtaining the raw materials needed for that specific order. These materials then flow immediately to supplier plants that TPS is not a toolkit. It is not just a set of lean tools. It immediately fill the order with components that is a sophisticated system of production in which all of flow immediately to a plant and are assembled. the parts contribute to the whole. When looked at more broadly, TPS is about applying the principles of the The completed order then flows immediately to the customer (the entire process is designed to Toyota Way. take a few hours or days, rather than a few weeks). Principle 8: Use only reliable, thoroughly tested technology Creating this kind of one-piece flow, whether of materials that serves your people and processes. or of information, and using small lots and closely situated Add Value to the Organization by Developing Your People processes, exposes any inefficiencies or defects that demand and Partners immediate attention, motivating everyone concerned to fix Principle 9: Grow leaders who thoroughly understand the the problem. It is an approach that builds in quality, creates work, live the philosophy, and teach it to others. real flexibility, results in higher productivity, frees up floor Principle 10: Develop exceptional people and teams who space, improves safety, improves morale, and reduces cost follow the companys philosophy. of inventory. Principle 11: Respect your extended network of partners Toyota provides its downline customers with what they and suppliers by challenging them and helping them want, when they want it, and in the amount they want. improve. This practice of letting consumption initiate material replenishment is the basic principle of JIT, which minimizes
Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved Page 5

issues, and growing together. Thus, it is a culture even more than a set of efficiency and improvement techniques. Based on the authors 20 years of studying Toyota, he offers 14 principles that constitute the Toyota Way and form the basis of the culture behind TPS. For ease of understanding, he divides these principles into the four categoriesPhilosophy, Process, People/Partners, and Problem Solvingthat correlate to the four high-level principles (genchi genbutsu, kaizen, respect, and teamwork) explained in Toyotas own internal Toyota Way training document. Long-Term Philosophy Principle 1: Base management decisions on a long-term philosophy, even at the expense of short-term financial goals. The Right Process Will Produce the Right Results Principle 2: Create continuous process flow to bring problems to the surface. Principle 3: Use pull systems to avoid overproduction. Principle 4: Level out the workload (heijunka)work like the tortoise, not the hare. Principle 5: Build a culture of stopping to fix problems, to get quality right the first time. Principle 6: Standardized tasks are the foundation for continuous improvement and employee empowerment. Principle 7: Use visual control so no problems are hidden.

The Toyota Way

Jeffrey K. Liker

work in process and warehousing of inventory by stocking Why? five times when a problem is uncovered, in order small amounts of each product and frequently restocking, to get a root-cause analysis and to discover the proper based on what the customer actually takes away. Thus, countermeasures. Toyota is responsive to day-by-day shifts in customer At Toyota, standardized work is not intended to be a demand and does not rely on computer schedules and coercive management tool imposed on a hapless workforce; systems to track wasteful inventory. quite the contrary. Rather than enforcing rigid standards Pulling a system to avoid overproduction goes hand in that make jobs routine and degrading, standardized work hand with heijunka. Eliminating waste is just one-third of is the basis for empowering workers and innovation. As the equation for making lean successful. It is also necessary a foundation for flow and pull, the organization uses to eliminate any overburden to people and equipment stable, repeatable methods everywhere to maintain the (muri) that comes as a result of uneven production schedules predictability, regular timing, and regular output of its (mura). Thus, as an alternative to the stop/start approach processes. In this way (by standardizing todays best of working on batches that is typical at most companies, practices), it can capture the accumulated learning about Toyota levels out both volume and product mix of all a process up to a point in time. This allows creative and manufacturing and service processes. If production levelsthe outputvaries from day to day, there Instead of building products according is no sense in trying to apply those other systems, because to the actual flow of customer orders, you simply cannot establish standardized work under such cirwhich can swing up and down wildly, it cumstances. takes the total volume of orders in a period and levels them out so the same amount and mix are made individual expression to emerge from those actually doing each day in a predictable sequence, spreading out different the work so that they can improve upon the standard and product types and leveling volume. This provides Toyota hand this learning off to the next person. the flexibility to make what customers want when they In Japan there are 5S programs for eliminating want it, reduces the risk of unsold goods, balances use of wastes that contribute to errors, defects, and injuries in labor and machines, and smoothes demand on upstream the workplace (i.e., for cleaning it up, making it visual). processes and the plants suppliers. These five Ss are: (1) sortseparate items and dispose Nonetheless, warns Liker, there are some basic of what is not needed); (2) straightenmake a place for requirements to meet before any of these benefits can everything and put everything in its place; (3) shineas be garnered. Not only must the first three principles, a form of inspection, clean up, so as to expose abnormal be in place, principles five, six, seven, and eight must conditions that could hurt quality or cause machine also be adhered to. Because Toyota believes that quality failure; (4) standardizedevelop systems and procedures should be built in, devices are built into machines to to maintain and monitor sort, straighten, and shine; detect abnormalities and automatically stop an operation. and (5) sustainimpose self-discipline to maintain a Moreover, in the case of humans, the company gives them stabilized workplace as an ongoing process of continuous the power to push buttons, or pull cordscalled andon improvement. Nonetheless, the Toyota Way is not about cordswhich can bring an entire assembly line to a halt. using 5S to maintain a clean and shiny environment, but Every team member has the responsibility to stop the line to support a smooth flow and to help make problems every time something is out of standard. Thus, quality is visible. the responsibility of every individual, and every individual At Toyota, visual control refers to the design of JIT is empowered to make it happen. information of all kinds, integrated into the process of Because building in quality is a principle, not a value-added work, to ensure fast and proper execution technology, quality control is simple and involves team of operations and processes. Its well-developed visual members, rather than a lot of complex statistical tools. It control system (which includes such lean production tools entails: going and seeing, analyzing the situation, using as kanban and andon) increases productivity, reduces one-piece flow and andon to surface problems, and asking defects and mistakes, helps meet deadlines, facilitates
Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved Page 6

The Toyota Way

Jeffrey K. Liker

companys philosophy. This is not a matter of adopting simple solutions or applying motivational theories as an afterthought. Rather, it is about making the training of exceptional people, and the building of individual work groups, the backbone of the companys management approachone that integrates the social system with the technical system. Toyotas respect-for-humanity social framework and its culture of continuous improvement fully support the system in which one-piece flow drives positive problem-solving behaviors and motivates people to improve. Toyota also follows a principle of finding solid partners and growing together with them so both can benefit in the long term. New suppliers must prove their sincerity and commitment to Toyotas First work out the manual process, and then automate it. Try to high performance standards for build into the system as much flexibility as you possibly can. quality, cost, and delivery. If they And always supplement the system information with genchi gendemonstrate this, they get larger butsu, or go look, go see. orders, are taught the Toyota Way, thoroughly evaluated and tested, with a broad cross-section and adopted into the Toyota family. Once inside, they are of people, to ensure it adds value to the process and does not not kicked out except for the most egregious behavior. As conflict with the principles of valuing people over systems, Ohno has stated, Achievement of business performance using consensus decision making, and eliminating waste. by the parent company through bullying suppliers is totally If it meets these criteria, it is used to support continuous alien to the spirit of the Toyota Production System. It is flow in the production process and help employees perform unthinkable for the company to switch suppliers simply to better, according to Toyota Way standards. save a few percentage points in cost. Nonetheless, Toyota Throughout Toyotas history (with the Toyoda family, is not an easy mark. Just as it challenges its employees to behind the scenes, carefully selecting and grooming), key improve, it challenges its suppliers to develop by setting a leaders have been found within the company, at the right series of aggressive targets and challenges. time, to shape the next step in the companys evolution. Liker has found that genchi genbutsu is the factor that Unlike typical U.S. companies that at every crisis, go most distinguishes the Toyota Way from other management shopping for new CEOs and presidents to take them approaches. Tables and numbers may measure results, in new directions, Toyota develops its leaders to live and but they do not reveal the details of the actual process thoroughly understand its genchi genbutsu culture day by being followed every day. Thus, whether they are in day. Leaders must demonstrate this ability and understand manufacturing, product development, sales, distribution, how work gets done at the shop-floor level. Leaders must or public affairs, people trained in the Toyota Way take teach their subordinates the Toyota Way, which means nothing for granted, nor do they rely on reports, but go they must understand and live the philosophy. And, they and see for themselves. Moreover, observing is not enough, must support the culture continuously so that it can create employees and managers must also deeply understand the the environment for a learning organization and lay the processes of flow and be able to provide critical evaluations foundation for genuine long-term success. and analyses. Toyota encourages its employees to work diligently, to According to Alex Warren, former senior vice president do their jobs perfectly, and to strive for daily improvement of Toyotas manufacturing plant in Kentucky, Toyota will by building a system that conforms to the principle of spend nine to ten months planning a yearlong project. Then developing exceptional people and teams who follow the it will implement in a small way with a pilot project and
Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved Page 7

communication, improves safety, lowers costs, and generally gives workers more control over their environment. And, because the Toyota Way recognizes that visual management complements the visual, tactile, and auditory orientations of humans, it seeks a balance and takes a conservative approach to using information technology to maintain its values. It does not avoid information technology, but creatively uses the best available means to create true visual control. Although Toyota does not lead the industry in acquiring technology, Liker notes that it is a global benchmark on how to use value-added technology that supports the appropriate processes and people. At Toyota, new technology is introduced only after it has been

The Toyota Way

Jeffrey K. Liker

be fully implemented by the end of the year, with virtually difficulty of understanding the workflow in technical and no remaining problems. This is in direct contrast to most service organizations in the same way it is possible to map American companies that tend to spend about three months the transformation of a physical product, it can indeed planning, before implementation, and then spend the rest of be made more manageable via the following five-step the year correcting all the problems they encounter. procedure: (1) Identify who the customer is for the each For Toyota, how a decision is arrived at is just as process as well as the added value the customer wants. important as the quality of the decision. Underlying the (2) Separate the repetitive processes from those that are entire process of planning, problem solving, and decision one-of-a-kind and apply TPS to the repetitive processes. making lies careful attention to every detail including: (1) (3) Map the flow to determine value added and non-value finding out what is really going on (genchi genbutsu is added. (4) Think creatively about applying the broad an important part of this); (2) understanding underlying principles of the Toyota Way to these processes, using a causes (asking Why? five times); (3) broadly considering future-state value stream map. (5) Start implementation and alternative solutions and developing a detailed rationale learn by implementing, using a PDCA cycle. Then, expand for preferred solutions; (4) building consensus within implementation to the less repetitive processes. the team, including employees and outside partners; and The author notes, however, that it is the broader (5) employing very efficient communication vehicles to philosophythe way Toyota leads people and partners, complete the first four items, preferably using one side of solves problems, and learnsthat is the most difficult for one sheet of paper. This five-step approach helps to uncover organizations to adapt, develop, and sustain. The toughest facts that could lead to many problems down the road, it and most basic challenge is how to create an aligned gets support from all parties before implementation begins, organization of individuals who each have the DNA of the and a great deal of learning is achieved up front before organization and are continually learning together to add anything is planned or implemented. value to the customer. Thus, the essential thing to take from Liker believes that this last point, learning, is Toyotas Toyotas example is the importance of developing a system, greatest accomplishment. The company is a true learning sticking with it, and improving it. The Toyota Way model organization, for it views continuous improvement as was built from the ground up, intentionally, starting with a relentless companywide process in which superiors a philosophy that starts with the CEO. The top executive motivate and train subordinates, A prerequisite for change is for top management to have an predecessors do the same for understanding and commitment to leveraging the Toyota Way to successors, and team members at become a lean learning organization. all levels share knowledge. As he has emphasized, the Toyota Way is far more than tools and the executive team must be committed to a long-term and techniquesit is designed to push everyone to think vision of adding value to customers and society in general, and grow through a process in which mistakes are used as and they must be committed to developing and involving opportunities for learning. This involves: perceiving the employees and partners. Moreover, there must be continuity problem, clarifying it, determining the root cause of the in top leadership philosophy. This does not mean that the problem, providing effective countermeasures, evaluating same people should run a company forever, only that they the results, and standardizing the approach. Then, the new must develop successors with the companys DNA (as knowledge is transferred to the right people so as to make opposed to installing a new cast of characters with each it part of the companys repertoire of behavior. crisis and/or frequent buyout). In the meantime, Liker offers the some general tactical PART III: APPLYING TPS AND THE TOYOTA WAY tips for transitioning into this kind of lean enterprise: Start As manufacturing companies worldwide apply TPS on with changes in the technical system; follow quickly with the shop floor and experience extraordinary improvements, cultural change. Learn by doing first and training second. many ask how the process can be applied to their technical Start with value stream pilots as a means of demonstrating and service operations. Although Liker acknowledges the lean as a system and providing a go see model. Use value
Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved Page 8

The Toyota Way

Jeffrey K. Liker

stream mapping to develop future state visions and to help learn to see. Use kaizen workshops to teach and make rapid changes. Organize around value streams. Make the shift to lean mandatory. Be opportunistic in identifying opportunities for making big financial impacts. Realign metrics with a value stream perspective. Build on your companys own roots to develop its own Toyota Way. Hire or develop lean leaders and create a succession system. And, use experts for teaching and getting quick results. * * * End notes by chapter, a chapter-by-chapter bibliography, recommendations for further reading, and a subject index are provided.

Remarks
Everyone in the auto industry is familiar with Toyotas dramatic business success and, of course, consumers are demonstrably aware of the companys world-renowned quality. In fact, Toyota has done so well that, as Liker points out, many consider the company to be boring. For, after all, steadily growing sales, consistent profitability, huge cash reserves, operational efficiency (combined with constant innovationnot an easy complement to pull off), and top quality, year after year, are not the stuff of breaking news. But, despite this reputation as the best manufacturer in the world, and despite the huge influence of the lean movement, most attempts to emulate and implement lean production have been fairly superficial, with less than stellar results over the long term. Dabbling at one levelthe Process level, U.S. companies have embraced lean tools, but do not understand what makes them work together in a system. This integration is precisely what The Toyota Way examines, explaining how to create a Toyota-style culture of quality, lean, and learning that takes quantum leaps beyond any superficial focus on tools and techniques. Suffice it to say, there are hundreds of books out there explaining, analyzing, and advocating leanproviding details and insight into the tools and methods of TPS. The two most noted among this treasure trove are, of course, the contributions of The Machine That Changed the World (Womack, Jones, Roos, 1991) and Lean Thinking (Womack

and Jones, 1996), and both stand as excellent resources on the subject. The first introduced the world to the tools and techniques of lean manufacturing by extracting its principles from their initial Japanese application and examining them in detail. And, the second explained how to make value flow smoothly at the pull of the customer in pursuit of perfection. The Toyota Way is, however (according to Liker), the first business book in English to provide a blueprint of Toyotas management philosophy for general business readers, dispelling the misconceptions that TPS is merely a collection of tools that lead to more efficient operations. Of course, there is no way of ascertaining the validity of this claim, without an extensive and time consuming exploration of the literature, but that truly doesnt matter. The Toyota Way is an approach of such breadth, depth, and significance to the world of business that it has yet to be fully understood; thus, the subject has not yet been fully exhausted. Likers keen sense of the subtleties of TPS intrepidly challenges conventional understanding and transforms it with eloquent simplicity. He takes the reader deeply and comprehensively into the heart and intelligence of Toyotas way, giving businesses in diverse industries some very practical and effective ideas that they can use to develop their own unique approach to TPS.

Reading Suggestions
Reading Time: 28-30 Hours, 352 Pages in Book

Liker notes that if you follow only a select few of the Toyota principles, the result will be short-term jumps on performance measures that are not sustainable. And, Fujio Cho, president of Toyota Motor Company, says that what is unique about Toyotas remarkable success is putting all the elements of the Toyota Way together as a system and practicing this system daily and consistently, not in parts. Thus, as far as were concerned, if implementation doesnt work in bits and pieces, fits and starts, theres no point in reading this book in bits and pieces, fits and starts. Even if your company has already dabbled in TPS (especially, if youve merely dabbled), your greatest value lies in practicing a little genchi genbutsu from the beginning and discovering and understanding as much as possible about
Page 9

Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

The Toyota Way

Jeffrey K. Liker

the purpose of The Toyota Way, the centrality of people in that purpose, and appropriately applying that understanding to your particular situation. Liker is a longtime fan of the Toyota Way and brings the incisive energy of a perennial admirer to his vigorous, articulate, and accessible discussion. The book is an easy read, and each chapter is mercifully short and to the point, but you should not expect to just zip through. Our estimated reading time of 28 to 30 hours might be an overestimate, but we want to impress upon you the importance of taking your time. We suspect that you will want to take notes, take time to reflect, and perhaps even reread much of the material. In any event, you should perhaps plan ahead, schedule a block of time each day, and prepare to read no more than two or three chapters each sitting.
CONTENTS PART 1: THE WORLD-CLASS POWER OF THE TOYOTA WAY Chapter 1: The Toyota WayUsing Operational Excellence as a Strategic Weapon Chapter 2: How Toyota Became the Worlds Best Manufacturer the Story of the Toyoda Family and the Toyota Production System Chapter 3: The Heart of the Toyota Production System Eliminating Waste Chapter 4: The 14 Principles of the Toyota Wayan Executive Summary of the Culture Behind TPS Chapter 5: The Toyota Way in Actionthe No Compromises Development of Lexus Chapter 6: The Toyota Way in ActionNew Century, New Fuel, New Design ProcessPrius PART 2: THE BUSINESS PRINCIPLES OF THE TOYOTA WAY Section 1: Long-Term Philosophy Chapter 7: Principle 1Base Your Management Decisions on a Long-Term Philosophy, Even at the Expense of Short-Term Financial Goals Section 2: The Right Process Will Produce the Right Results Chapter 8: Principle 2Create Continuous Process Flow to Bring Problems to the Surface Chapter 9: Principle 3Use Pull Systems to Avoid Overproduction

Chapter 10: Principle 4Level Out the Workload (Heijunka) Chapter 11: Principle 5Build a Culture of Stopping to Fix Problems, to Get Quality Right the First Time Chapter 12: Principle 6Standardized Tasks Are the Foundation for Continuous Improvement and Employee Empowerment Chapter 13: Principle 7Use Visual Control So No Problems Are Hidden Chapter 14: Principle 8Use Only Reliable, Thoroughly Tested Technology That Serves Your People and Processes Section 3: The Right Process Will Produce the Right Results Chapter 15: Principle 9Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others Chapter 16: Principle 10Develop Exceptional People and Teams Who Follow Your Companys Philosophy Chapter 17: Principle 11Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve Section 4: Continuously Solving Root Problems Drives Organizational Learning Chapter 18: Principle 12Go and See for Yourself to Thoroughly Understand the Situation (Genchi Genbutsu) Chapter 19: Principle 13Make Decisions Slowly by Consensus, Thoroughly Considering All Options; Implement Decisions Rapidly Chapter 20: Principle 14Become a Learning Organization Through Relentless Reflection (Hansei) and Continuous Improvement (Kaizen) PART 3: APPLYING THE TOYOTA WAY IN YOUR ORGANIZATION Chapter 21: Using the Toyota Way to Transform Technical and Service Organizations Chapter 22: Build Your Own Lean Learning Enterprise, Borrowing from the Toyota Way

Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

Page 10

The Toyota Way

Jeffrey K. Liker

A Note to Our Readers

We at BBR encourage our readers to purchase the business books we review. BBR Reviews are intended as a service to busy professionals, as we recommend only those books that are worth your time to read in their entirety. We apply stringent criteria in selecting only the best business books, and in that selection process, strive to help you make informed book-purchasing decisions.

This book is available at bookstores and online booksellers. Business Book Review is a service of Business Book Review, LLC For more information about BBR, to subscribe to BBR, or to provide us feedback, visit our Web site. www.businessbookreview.com Business Book Review, LLC 1549 Clairmont Road, Suite 203 Decatur, GA 30033 Copyright 2004 Business Book Review, LLC All Rights Reserved No copies may be made of this review unless appropriate license has been granted. ISSN 0741-8132

Business Book Review Vol. 21, No. 12 Copyright 2004 Business Book Review, LLC All Rights Reserved

Page 11