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The Parallels of the Toyota Production System and Sustainability

| Friday December 4th, 2009 | 10 Comments

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By Jonathan Mariano
The Toyota Production System has garnered praise and accolades not only in the realm of automobile manufacturing, but in the realm of operational efficiency. Similar to how individuals interested in sustainable business focus on the the 3P’s, the triple or integrative bottom line of People, Planet, and Profits, the underlying elements of the Toyota Production System can be summarized in the 4P’s: Philosophy, Process, People & Partners, and Problem Solving. The 4P’s are at the heart of what Toyota wants to be culturally. Furthermore, there is much crossover in the fundamental framework of the Toyota Production System and Sustainability. On another note, the visible actions of Toyota are not the core of the Toyota Production System. As Stevens and Kent state, “Toyota does not consider any of the tools or practices – such as kanbans or andon cords, which so many outsiders have observed and copied – as fundamental to the Toyota Production System.” Rather, it’s the underlying cultural framework of the Toyota Production System that enables Toyota to outperform western production methods.

Philosophy: Think and Act for the Long-Term

Toyota’s philosophy encourages thinking and acting for the long-term. Management decisions are based on the long-term philosophy, even at the expense of short-term financial gains. This philosophy is the essence of sustainability – causal thinking and action today, for the benefit of generations to come. When Toyota first launched Lexus, there were only 2 complaints over defective wiring and an overheating brake light. Rather than resolving just the 2 complaints, Toyota took the initiative, not to mention the short term financial hit, of recalling all 8000 Lexus LS400s. In turn for the long-term, Toyota built a reputation of standing behind the quality of their product. For Toyota, the production line goes beyond the confines of the factory today, but to the satisfaction of the customer tomorrow.

Process: Focus on the Process, and the Results will Follow

Process, process, process. Process orientation is an essential piece to Toyota’s success. Western culture is very results oriented: do whatever is necessary to get to the result. The goal is set on completion of results. However, the Toyota Production System takes another approach, it is process oriented: continually and scientifically refining the value stream process will prompt the right results. These process goals are minimizing waste (muda), not overburdening people or the equipment (muri), and not creating uneven production levels (mura). One analogy to this is to be more like the tortoise and less the hare. In other words, create a process of high quality that is slow yet continually moving, rather than high quantity that is quick with many halts. This is the idea of continuous flow. The value stream of sustainability is similar, understanding and refining the process not from cradle to grave, but from cradle to cradle. Running an LCA brings insight into making the process more sustainable. Focusing on process is vital to both the success of Toyota and Sustainability.

People and Partners: Develop and Trust your People

Another key component of Toyota’s success is the focus on people, or as Professor Dwight Collins, of the Presidio Graduate School puts it, “acknowledging the role of humans and human dignity in the production process.” People are living, breathing, thinking beings. The spark of innovation is within the human mind. Toyota seeks to use human ingenuity in its operation. Frontline workers are entrusted to make decisions on quality issues along the production line and value chain rather than supervisors behind a desk. Supervisors may guide and teach, but frontline workers have the unique perspective of seeing the value chain in action first hand and are the best suited to spot and solve predicaments. Compare the Toyota Production System culture to western culture, where frontline decisions need approval from organizational hierarchies. Value chain decisions cannot be made by frontline employees, but by someone higher up the chain of command. Lost is that sense of empowerment. Gone is that feeling of volition. With Toyota, frontline personal contribution is cherished and continually sought.

Problem Solving: Continually Improve & Solve for the Root Cause

The culminating piece to Toyota’s success is problem solving. Kaizen (改善) is a Japanese business philosophy that roughly translates to continuous improvement. The term derives from “kai” (改) meaning change, and “zen” (善) meaning good or virtuous. Toyota’s incremental and iterative improvement approach differs from western cultures approach of “if it ain’t broke, don’t fix it.” Furthermore, problem solving encompasses not just identifying the problems, but continually seeking the root cause. This is exemplified with 5Y, continually asking “why” to discover the root of the problem chain. Systems thinking from sustainability comes to mind, understanding how each piece of the system contributes to the functioning of the system. Where western culture focuses on alleviating symptoms, both the Toyota Production System and systems thinking seek to understand and ameliorate the root cause.

Building a unique culture of thinking and acting for the long term, focusing on the process, developing and trusting people, and continually improving & solving for the root cause, allows Toyota to outperform the automotive business of western culture. But more so, it’s amazing how much overlap in principles and practices there is between the Toyota Production System and Sustainability. The two go hand in hand, whether it be from Philosophy, Process, and Problem Solving, or considering People and Partners, Planet and Profits. With that common cultural framework, perhaps sustainable business will be able to outperform traditional business in the long term as well. In the spirit of kaizen, the Toyota Production System and Sustainability can encourage the other to continuously improve for this generation and the next.

__________
References:
• Gwynne, S., Kanise, S., & Zagorin, A. (1990, September 17). New Kid on The Dock. Time.com. Retrieved November 7, 2009, from http://www.time.com/time/magazine/article/0,9171,971153-1,00.html
• Liker, J. K. (2004). The Toyota Way: 14 management principles from the world’s greatest manufacturer. New York: McGraw-Hill.
• Spear, S. & Bowen, B. (1999). Decoding the DNA of the Toyota Production System. Harvard Business Review, 77(5), 96-106.

Portrait_Mariano_JonathanJonathan Mariano is an MBA candidate with the Presidio Graduate School in San Francisco, CA. His background ranges the spectrum from co-founding a start up, Utorials.com, to leading technological change for an established nationwide home builder. His interests include the convergence between lean & green and pursuing free-market based sustainable solutions.


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  • illocanoking

    Great written article!

  • illocanoking

    Great article!

  • Bryant

    This article includes some very interesting parallels between sustainability and the Toyota Production System. This framework is a great outline for achieving long-term, positive results. Combine this with biomimicry and you might have a winner. Check out Nissan's new Eporo car and its built in biomimetics: http://www.nissan-global.com/EN/NEWS/2009/_STOR

  • Jonathan Mariano

    Bryant, I think you may be on to something there. It makes me wonder what the connections between biomimicry and TPS may be, as the principles seem aligned? Just off the top of my head, the connection with TPS “waste elimination/reduction” and Biomimicry's “Use minimal energy & materials” to hand in hand.

  • Miriam_Kronberg

    Jonathan, great article. Care to comment on Toyota's financial troubles? They're facing their second straight loss in the current fiscal year (see link). What do you think that says about sustainable business being able to weather economic downturns?

    http://online.wsj.com/article/BT-CO-20091204-70

  • Jonathan Mariano

    Hi Miriam, Thanks:)! That is a tough question. It seems as though many car manufacturers were hit hard during the recession. If other car makers were doing stellar in comparison, I would be worried, but less so if the whole industry is down.

    IMHO, the commitment to the long term will help Toyota and Sustainable Businesses weather the storm. By the same token, Toyota is keen to adapting, innovating, and being first mover in its business (think Prius) in the present. Although it thinks for the long term, it acts in the now. With long term thinking, but present actions, I think Sustainable Businesses will be able to hold their own against any other.

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  • wilson1234

    I think the stress on long-term result is definitely something all businesses should emulate. I'm not sure how easy it will be for western businesses to adopt that kind of thinking.

  • http://www.facebook.com/lennysan Lenny Rachitsky

    Great article Jonathan, the parallels are much closer than I would have expected. Another interesting example is Amazon.com. Jeff Bezos (CEO) has said a number of times that when they launch a new product or try out an idea (e.g. Kinde, AWS, Prime) they don't expect to see any results for 3-5 years. They also focus on long term growth over short term profit (exactly as you described above), which initially scared a lot of people (back in the .com days when profit was a bad thing), but now is obviously working every well for them. It's also why they're willing to lose $2 on each ebook they sell, to build a platform that one day reapts rewards.

    The big question is how to convince companies that focusing on the long term, especially when it comes to the environment, is a good idea, when all of the incentives they have tell them to think for the next quarter. I think the only answer is to create the right incentives.

  • wilson1234

    I think the stress on long-term result is definitely something all businesses should emulate. I'm not sure how easy it will be for western businesses to adopt that kind of thinking.

  • http://www.facebook.com/lennysan Lenny Rachitsky

    Great article Jonathan, the parallels are much closer than I would have expected. Another interesting example is Amazon.com. Jeff Bezos (CEO) has said a number of times that when they launch a new product or try out an idea (e.g. Kinde, AWS, Prime) they don't expect to see any results for 3-5 years. They also focus on long term growth over short term profit (exactly as you described above), which initially scared a lot of people (back in the .com days when profit was a bad thing), but now is obviously working every well for them. It's also why they're willing to lose $2 on each ebook they sell, to build a platform that one day reapts rewards.

    The big question is how to convince companies that focusing on the long term, especially when it comes to the environment, is a good idea, when all of the incentives they have tell them to think for the next quarter. I think the only answer is to create the right incentives.

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