The Toyota Way: 14 Management Principles From the World’s Greatest Manufacturer, 2nd Edition PDF by Jeffrey K Liker


The Toyota Way: 14 Management Principles From the World’s Greatest Manufacturer, 2nd Edition

By Jeffrey K Liker

The Toyota Way: 14 Management Principles From the World’s Greatest Manufacturer, 2nd Edition


Foreword (to the First Edition) by Gary



Preface: The Wonderful Wacky World of Lean

INTRODUCTION The Toyota Way: Using Operational

Excellence as a Strategic Weapon

A Storied History: How Toyota Became the

World’s Best Manufacturer



PRINCIPLE 1 Base Your Management Decisions on Long-Term

Systems Thinking, Even at the Expense of

Short-Term Financial Goals



PRINCIPLE 2 Connect People and Processes Through

Continuous Process Flow to Bring Problems

to the Surface

PRINCIPLE 3 Use “Pull” Systems to Avoid Overproduction

PRINCIPLE 4 Level Out the Workload, Like the Tortoise, Not

the Hare (Heijunka)

PRINCIPLE 5 Work to Establish Standardized Processes as

the Foundation for Continuous Improvement

PRINCIPLE 6 Build a Culture of Stopping to Identify Out-of-

Standard Conditions and Build in Quality

PRINCIPLE 7 Use Visual Control to Support People in Decision-Making and Problem Solving

PRINCIPLE 8 Adopt and Adapt Technology That Supports Your

People and Processes



PRINCIPLE 9 Grow Leaders Who Thoroughly Understand the

Work, Live the Philosophy, and Teach It to


PRINCIPLE 10 Develop Exceptional People and Teams Who

Follow Your Company’s Philosophy

PRINCIPLE 11 Respect Your Value Chain Partners by

Challenging Them and Helping Them




PRINCIPLE 12 Observe Deeply and Learn Iteratively (PDCA)

to Meet Each Challenge

PRINCIPLE 13 Focus the Improvement Energy of Your People

Through Aligned Goals at All Levels

PRINCIPLE 14 Learn Your Way to the Future Through Bold

Strategy Some Large Leaps, and Many Small




Grow Your Own Lean Learning Enterprise—

Getting Ideas and Inspiration from the

Toyota Way

APPENDIX An Executive Summary and Assessment of the 14



For Further Reading



The Wonderful Wacky World of Lean

We want organizations to be adaptive, flexible, selfrenewing, resilient, learning, intelligent—attributes found only in living systems. The tension of our times is that we want our organizations to behave as living systems, but we only know how to treat them as machines.

—Margaret J. Wheatley, author of Finding Our Way: Leadership for an Uncertain Time


Nobody can reasonably question the global impact of Toyota’s system of management and manufacturing on the world today. The Toyota Production System (TPS) is the framework for what is often call “lean” management and has been embraced in mining, retail, defense, healthcare, construction, government, finance, or name your sector.

While we might assume that senior TPS experts, called “sensei,” or teachers, are delighted to see the system they are passionate about used in so many different industries, the reality is they are often disappointed and frustrated by how lean programs have turned a beautiful living system into a lifeless tool kit.

The problem is that so many have the view described by Margaret J. Wheatley in the opening quote and think that their organization is like a machine. Too many business executives are driven by the desire for certainty and control, and by the assumption that decisions made at the top of the organization will be carried out in a planned and orderly way. Anyone who has been on the shop floor guiding a “lean conversion” knows this is far from the truth. What happens is disorderly and surprising. A good consultant understands how to take positive advantage of unintended consequences for learning.

I have consulted to and taught leaders of companies all over the world who have the mistaken belief that lean transformation can be planned and controlled, just like updating your computer software (and even that may not go as planned). I consulted with a nuclear energy company whose vice president of continuous improvement believed his lean program was going gangbusters for the last three years. He proudly described a lengthy “lean assessment” that was tied to plant managers’ bonuses and his attempts to quickly deploy lean tools across the enterprise.

The VP was a bit concerned when his CEO requested Toyota’s help and Toyota loaned the organization one of its most senior TPS sensei, a student of the famed Taichii Ohno, father of the Toyota Production System. In Japan “sensei” suggests honored teacher, and it’s expected that students listen respectfully and follow the sensei’s lead. After the VP described the company’s lean program to the TPS master, he expected praise and congratulations. Instead, the sensei said, “Please stop doing that”—meaning stop doing assessments, stop value stream mapping all the processes, stop connecting implementation to bonuses, and stop trying to rapidly deploy the company’s version of lean across all manufacturing and service departments. Instead, the sensei said to start a “model line” example of TPS in a single department on a nuclear fuel production line and stop everything else. This would be a pilot led by the sensei to demonstrate TPS as a system and learn from it. I spent two hours with the frustrated and confused vice president, who bemoaned: “Why did he want us to stop our good progress? Why did he want us to go slow like a snail when we have hundreds of thousands of people to train? How does he think he is going to get managers on board without any financial incentive?” I tried to explain the thinking of the Japanese sensei. In a nutshell, I said, the Toyota Production System is a total “living system.” The goal is to produce a continual flow of value to the customer, without interruptions known as wastes. Toyota often uses the analogy of a free-flowing river, without stagnant pools and without big rocks or other obstacles slowing the flow. To accomplish this type of free flow in a business setting requires a system of people, equipment, and processes that operate at peak performance. And since the world is constantly changing, variability has to be addressed through continuous improvement by the people closest to the “gemba” (or properly spelled “genba”),* which means where the work is performed.

I went on, “The Toyota master trainer looks at your operations and sees assorted tools of TPS mechanistically scattered around. But nowhere is lean operating as an organic system of people using tools for continuous improvement. He wants you to see and experience real TPS and the results that are possible, at least once in one part of your company, before you start broadly trying to spread something nobody really understands. Trying to do it right one time in one area does not seem to him like a lot to ask.”

I could see the lightbulbs going on for the vice president as he listened and asked more questions. It seemed he was getting it. He lamented that the Toyota sensei had not explained TPS in this way before. He also explained that when he told the Toyota advisor that he was bringing me in to teach people about lean product development, the sensei responded that it would be a “waste of time.” I explained that the sensei was saying you are not ready to move beyond manufacturing since you had not a single example of a lean system. It is like asking beginning piano students to learn a Bach sonata before they can even put their fingers on the right keys and play a scale. As I was feeling proud of myself for enlightening this struggling soul, I saw the lightbulbs go dark again.

Finally, the VP confessed that he had not stopped anything—not the lean assessments tied to plant manager bonuses and not the rapid deployment of lean tools across the enterprise. In fact, he had brought me in to help “deploy” lean product development despite the sensei’s warning. He said the Toyota sensei did not understand that the nuclear energy company was very large and it was vital to spread lean as rapidly as possible. Such are my triumphs . . . and failures . . . as a consultant trying to persuade people. The sensei was right—even my best attempts to try to teach lean product development to this organization were a “waste of time.”

Lean, along with variations such as six sigma, theory of constraints, lean startup, lean six sigma, and agile development, is a global movement. As in any management movement, there are true believers, resisters, and those who get on the bandwagon but do not care a lot one way or the other. There is a plethora of service providers through universities, consulting firms of various sizes, not-for-profit organizations, and a book industry promoting the movement. For zealots like me, this is in a sense a good thing—they are building consumers of my message. But there is also a downside. As the message spreads and is passed through many people, companies, and cultures, it changes from the original, like the game of telephone in which the message whispered to the first person bears little resemblance to the message the tenth person hears.

Meanwhile, well-meaning organizations that want to solve their problems are searching for answers. What is lean and how does it relate to six sigma and agile? How do we get started? How do these tools that were developed in Toyota for making cars apply to our organization that has a completely different product or service? Can lean work in our culture, which is very different from Japanese culture? Can we upgrade lean methods using the latest digital technology? Do the tools have to be used exactly as they are in Toyota, or can they be adapted to our circumstances? And how does Toyota reward people for using these tools to improve?

These are all reasonable questions, and there are lines of people ready to answer them, often in very different ways. But the starting point should be the questions themselves. Are these the right questions? As reasonable as they seem, I believe they are the wrong questions. The underlying assumption in each case is that lean is a mechanistic toolbased process to be implemented as you would install a hardware or software upgrade. Specifically, the assumptions can be summarized as:

  1. There is one clear and simple approach to lean that is very different from alternative methodologies.
  1. There is one clear and best way to get started.
  2. Toyota is a simple organization that does one thing— builds cars—and uses a core set of the same tools in the same way everyplace.
  1. The tools are the essence of lean and therefore must be adapted to specific types of processes.
  1. There may be something peculiar about lean, as it was developed in Japan, that has to be modified to fit cultures outside Japan.
  1. Toyota has a precise method of applying the tools in the same way everyplace that others need to copy.
  1. The formal reward system is the reason why people in

Toyota are engaged in continuous improvement and motivated to support the company. In fact, none of these assumptions are true, and that is the problem—there is a huge gap between common views of lean and the reality of how Toyota evolved this powerful management system for over one century and how it can help your organization accomplish its goals.

My goal in this book is to give you a very clear understanding of what “lean,” or “lean six sigma,” or whatever you want to call it, really is: a philosophy and a system of interconnected processes and people who are working to continuously improve how they work and deliver value to customers. We will start by dismissing the common and simplistic notion that it is a program of using tools to remove waste from processes. If this is your organization’s view, you are doomed to mediocre results, and you likely will embrace the next management fad with similar mediocre results. I have seen this happen time and time again.

To help break through this cycle, I will demonstrate the real meaning of what Toyota discovered through discussions of the origin of the Toyota Way, the 14 principles I have distilled (summarized in the Appendix), and actual examples of organizations in manufacturing and services that have made progress on the challenging road to becoming a lean enterprise.

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