The Toyota Engagement Equation, page 1
P R A I S E F O R
TH E TOYOTA E N G A G E M E NT E Q U ATI O N
“ In The Toyota Engagement Equation , Tracey and Ernie Richardson achieve the remarkable feat of describing from their first days at Toyota the systematic Lean education they received—and they do so in a way that allows readers to grow alongside them. This is the education, particularly the Lean thinking behind Lean methods, that you need whether you are a team leader or a CEO, a director of continuous improvement, or a Lean coach. As I read chapter after chapter, I keep thinking that this is the education I wish I had received 30 years ago. I would have made (and written down) many fewer mistakes. You will too.”
—James P. Womack, coauthor of The Machine
That Changed the World and Lean Thinking, and
founder of the Lean Enterprise Institute
“ A brilliant and insightful firsthand account capturing how Toyota builds unique strengths through developing capabilities and growing leaders.”
—Daniel T. Jones, coauthor of The Machine That
Changed the World, Lean Thinking, and Lean Strategy
“ This terrific book from Toyota veterans Tracey and Ernie Richardson delivers the secret ingredient in Toyota’s magic potion for enduring success: developing and nurturing people, carefully and patiently, to improve the business by creating a culture of problem-solvers, and achieving superior performance. They capture their lifelong learning experience in a simple but subtle formula that will change how you think about Lean and unlock the infinite potential of your people’s talent and passion for continuous improvement.”
—Michael Ballé, coauthor of the Shingo Prize winning
The Gold Mine trilogy and cofounder of Institut Lean France
“ Tracey and Ernie continue Mr. Cho’s vision to share wisdom with the next generation. Filled with knowledge gained from failures and successes inside Toyota and beyond. . . . illustrating their leadership in coaching and developing others striving to implement a Lean culture.”
—Cheryl Jones, former Vice President of
Toyota Motor Engineering and Manufacturing,
North America, and founder of F1Help
“ Tracey and Ernie have captured the most critical parts of what we learned at Toyota as well as the learning process. Equally important, they’ve shared their personal journeys in vivid detail, revealing how it was such a meaningful experience. I predict this book will become an invaluable resource for leaders and companies in their Lean and continuous improvement efforts.”
—David Verble, former North American Toyota
Manager, partner at Lean Transformations Group, and
coauthor of Mapping to See and Perfecting Patient Journeys
“ Rarely do we get an in-depth view of how excellence is actually born.
In this powerful book, Tracey and Ernie have captured the je ne sais quoi of how Toyota develops its people and manages its business in a literal page turner. You’ll never view learning, leading, and achieving the same way again. Even better—this isn’t merely a book for thinkers. This is a book for people who want to do and do well.”
—Karen Martin, author of The Outstanding
Organization and Clarity First
“ This is undoubtedly the best book about Lean management that I’ve ever read. The experiences and situations that Ernie and Tracey share are key to understanding what’s behind the Toyota DNA equation. This masterpiece allows readers to become immersed within the walls of Toyota, putting them in the shoes of Toyota’s members and leaders.”
—Jonathan Escobar Marin, Director, Global Head
of Lean Management at HARTMANN GROUP, Partner at
HPO Global Alliance, and Cofounder and CEO at Inn-Be
THE TOYOTA
ENGAGEMENT
EQUATION
HOW TO UNDERSTAND AND IMPLEMENT
CONTINUOUS IMPROVEMENT THINKING
IN ANY ORGANIZATION
TRACEY RICHARDSON
ERNIE RICHARDSON
Copyright © 2017 by Teaching Lean Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.
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This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, securities trading, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
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To all the thinkers, learners, and influencers out there we have worked with over the years, thank you for evolving us
to be the coaches we are today and will be tomorrow as we
continue to learn and grow on our journey together!
~~ Go Thinking ~~
Contents
■
■
■
Foreword
vii
Acknowledgments
xv
Introduction
1
P A R T 1
Leading and Learning in
Georgetown, Kentucky
1. The Phone Cal
11
2. Early Days at Toyota
25
3. Becoming a Leader
51
P A R T 2
Elements of a Thinking System
4. Discipline and Accountability: The Key to Continuous
Improvement Thinking
73
5. Go to See
93
6. Grasp the Situation
107
v
vi
ConTEnTS
7. Get to Solution
135
8. Get to Standardization
163
9. Get to Sustainability
175
10. Get to Stretch
185
P A R T 3
Everybody Everyday Engaged
11. Management That Puts People First
197
12. Aligning People and Purpose
217
13. Reflections
237
Index
247
Foreword
■
■
■
My personal journey with Toyota’s unique approach to
management began in 1987 when I signed on as the
292nd hire at Toyota Motor Manufacturing of Kentucky
(TMMK), the company’s first wholly owned North American
operation.
The Georgetown facility was still under construction and
more than a year away from producing cars, so my earliest les-
sons came through participation in a thorough preparation
process working at Toyota.
Building a manufacturing base in North America was a
big leap for Toyota, and its leaders were determined to get it
right. Consequently, they put their best people behind the proj-
ect—individuals who continued to advance up through the
ranks after they returned to Japan. This talented group was
like a handpicked all- star team sent on a big mission, and they
spent nearly a year preparing for the plant launch before they
left Japan.
Prior to joining Toyota, I had been in quality management
for 10 years and had risen to the role of division quality manager of an automotive supplier for three plants in North America.
When I was offered the job at Toyota, my Toyota superiors had
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different ideas—they wanted me to walk back to the special-
ist (engineering) position so I could really learn the business
from the basement floor all the way up through the organiza-
tion. Taking two steps back like this seemed like a hard pill to
swallow back in those young days in my career, but it was the
best decision I ever made.
There was good reason for Toyota’s approach. As I soon dis-
covered, we were expected to spend a significant portion of our
time developing people, so it was critical for us to have a deep
understanding of the work we would be asking our people to
do. Toyota’s hiring strategy assured that there was a good mix of individuals with and without manufacturing experience. However, all members followed a common development path based
on the principles and values that comprise Toyota’s unique way
of doing business.
We spent long days with our Japanese leaders in an atmo-
sphere of discovery and experimentation, and many of the
methods that we would use were under construction just like
the factory. Training materials and textbooks were typically
typed or handwritten, and provided only a basic overview—the
real learning took place when our trainers walked us through
the concepts on the actual production floor.
Concepts and methods, however, were only part of the
story—there was also enormous emphasis on making sure that
we fully appreciated the cultural foundation that was essential
to the methods we were learning. This continued throughout
my career at Toyota and often involved trips to Japan to see
these concepts in action. The Toyota expression for such visits
is “going to gemba,” that is, going to the source to understand the facts through your own eyes. Many times we had to acquire
an understanding of the concepts and then adapt them to work
successfully in North America.
Toyota’s culture has many elements, and these had a long
history even then. For example, Toyota faced a financial crisis
in 1949 resulting in severe restrictions on its ability to borrow
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ix
money. Toyota’s leaders concluded that the only path to growth
was through their people. Consequently, they doubled down
on the basics of respecting their team members and ensur-
ing that the company, through its long- term success, would be
able to provide sustainable employment. This led to a series of
best practices, later known as the Toyota Production System,
for assuring quality while minimizing waste in a Lean envi-
ronment. The Toyota Way was then developed to ensure that
every employee understood Toyota’s unique way of doing
business.
With that came the firm conviction that the company could
never let its guard down. When things are going well in most
companies, management and its employees will say, “Okay,
we’re making all kinds of money. We can relax.” At Toyota,
however, that’s the point where people really hunker down and
ask, “What can we do better in the future to improve quality,
improve efficiency, or reduce costs?”
Embedding this thinking in the culture from day one was
critical because the responsibility for solving problems and
making improvements didn’t just rest with process engineers or
time study professionals. At Toyota, everybody must become a
problem- solving expert at his or her level. Team members solve
problems that are appropriate for team members to solve, team
leaders solve team leader problems, and the pattern continues
for supervisor problems, engineering problems, or senior man-
ager problems. The result is a continuous chain of improvement
activities that pervades the entire organization.
To maintain this, problems must be defined appropriately
and simplified for all people to be able to solve them. For exam-
ple, when accountants talk about cost per vehicle, they tend to
refer to generalized cost categories such as consumables, raw
materials, scrap, or energy. But it’s very difficult for team members or team leaders on the floor to wrap their hands around
that and support that improvement, and we want everyone to
work on reducing costs.
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The costs our team members can relate to are items like the
gloves they use every day. If you are working on the interior of a vehicle, it’s very important that you don’t stain the surfaces with oily handprints or fingerprints, so gloves are necessary. Those
gloves have a cost, and that cost is part of the cost of a vehicle.
The cost that the gloves add to each vehicle depends on
how many vehicles we can build before we change our gloves.
Let’s say it’s 100 vehicles. But if team members can find a way
to increase that to 125 vehicles, maybe by not touching a dirty,
oily part that goes into the suspension, or by separating the job where the interior people don’t get their gloves dirty, they can
extend the life of those gloves and reduce the cost. Maybe that’s only 25 cents a car, but in an assembly plant where you may
have 300 people working on the line building 200,000 cars per
year, it adds up pretty quickly. This is just one simple exam-
ple that illustrates how everyone in the organization can be
involved.
In Toyota’s culture, every employee is tuned into this kind
of thinking, and understands how his or her role supports the
entire organization, right up to the CEO. As leaders, it was our
job to engage everybody in that way of thinking.
Respect for people was central to this, and that included
an understanding that humans make mistakes. I learned about
the significance of this early on when I made a poor judgment
trying to understand a quality problem. This was understood
to be part of the learning experience, and we were encouraged
to take these opportunities to reflect on how to improve in the
future. However, this time my reflection had to be reported to
our president, Fujio Cho. I thought for sure that I was going to
get terminated or at least reprimanded.
Based on the Toyota Way, I used Toyota’s A3 format (which
you’ll learn all about in this book), which summarizes the
problem- solving steps on a single 11 × 17 sheet of paper. I spent three days preparing my report, and when I arrived in Mr. Cho’s
office, my hands were wringing wet.
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xi
I sat in front of Mr. Cho and explained, “This is what hap-
pened, this is what I did, this is the gap, this is the problem I had, and this is what I plan to do next time.” He listened patiently,
and then folded the paper in half, sat back and folded his hands
together, and said, “So what did you really learn from this event?”
And that was it. Clearly, I had learned quite a lot from the
incident, but the respect that Mr. Cho showed me had a pro-
found effect.
Years later, I was senior vice president, and we were in the
start- up phase of the new plant in San Antonio, Texas. As the
paint shop preparation was nearing completion, we were doing
the initial fill of our paint system with chemicals and electro
deposit (ED) paint in large metal tanks. We were just getting
ready to run the process when I got a call on my radio, which
was how we were communicating since the plant was under
construction.
“Don, you have to visit this process,” said the caller.
“What’s going on?” I asked.
“You won’t believe it when you see it,” he said.
I came running to the process, and there were maybe 10
people circled around a team leader. I looked up in the air, and
if you can imagine, it was like a bathtub, three stories tall, filled with green paint and overflowing at the top. It was dripping
paint everywhere, all over the equipment.
As I approached the team leader, all the other employees
took off, and this one team leader was left standing there. He
had green paint all over his paint suit and hard hat.
Now, my first reaction was to think about the enormous
costs and repercussions this was going to have. But then, all of
a sudden, I had a flashback of my meeting with Mr. Cho years
earlier.
So I walked up to the team leader and I said, “What
happened?”
He said, “Well, I asked the paint supplier to support me in
turning off the fill valve, but he forgot and went home.”
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I paused for a moment, and then I asked, “What did you
learn today?”
He shared some of the lessons he had learned. For exam-
ple, never transfer your job responsibilities to somebody else.
