The Toyota Way is a business efficiency classic. Its first edition, published in 2003, rode a wave of intense interest in Toyota’s highly efficient manufacturing processes, which became known as lean manufacturing. Author Jeffrey K. Liker’s goal was to clarify Toyota’s approach and rectify the mistakes he saw people making when they emulated the system. The Toyota Way reached a wide audience within and outside manufacturing.
The Toyota Way was the first of Liker’s 15 books on Toyota. In the book’s second edition, published in 2020, Liker reorganized the presentation of some of the principles, updated some of his examples, and explained how Toyota managed recent global crises. This guide is based on the second edition.
The book is organized according to 14 principles. In this guide, we condense and combine these principles according to the level of the company at which they apply. We begin with a brief history of Toyota and lean manufacturing (compiling this from information that’s woven throughout the book), and then discuss the relevant principles at three key levels:
Liker has been criticized for presenting an overly positive view of Toyota’s business practices—when the book came out, even the president of Toyota acknowledged to his staff that the book “is what we should be, but better than we are.” We temper Liker’s enthusiasm by pointing out instances in which Toyota’s behavior in practice doesn’t quite measure up to the polished image he presents. We also include information on the Japanese cultural background that helps to contextualize and explain some of Toyota’s practices.
LIker begins by recounting Toyota’s history. Toyota began as a family business. Inventor Sakichi Toyoda, inspired by a desire to save his mother and grandmother from the arduous work of spinning wool on manual looms, invented a steam-powered loom in the late 1800s. Over the following years, he continuously improved the loom’s design. One of these improvements was a mechanism that stopped the loom automatically when a thread broke (this later became jidoka, a central Toyota principle).
In 1937, Sakichi’s son Kiichiro sold the patent rights to an English weaving company and used the capital to found the Toyota Motor Corporation. While he was visiting the English company, Kiichiro noted the inefficient production processes. He made sketches of the plant layout, timed the stages, and even counted the workers’ footsteps, coming away with ideas that eventually became the Toyota Production System (TPS). He called his system just-in-time, another central Toyota principle.
Japan’s economic devastation following WWII meant that right from the beginning Toyota was contending with low demand, high inflation, cash flow problems, and meager factory space, all of which made efficiency and fast problem-solving a matter of survival. As conditions improved, this ingrained frugality persisted, eventually helping Toyota to become the world’s biggest automaker and the ninth-largest company in the world by revenue in 2020.
Toyota didn’t originally use the term “lean manufacturing”: This came from English-language analyses of Toyota’s practices. The original lean principles later evolved into field-specific versions such as agile software development and lean startup methodology.
Well-Told Corporate Histories Build Strong Cultures
Liker comments that working at Toyota means constantly hearing and repeating stories about Toyota’s history. This practice is probably one of the reasons that Toyota’s corporate culture is so strong and cohesive: Experts say that company histories help to create a shared identity, acting as maps that link the past of the company with its present and future. In Toyota’s case, sharing stories about the origins of concepts such as jidoka and just-in-time helps employees to see how they might do the same in their daily work.
Business historians John T. Seaman Jr. and George David Smith point out that company stories are excellent resources for leaders. Stories can unite employees and communicate the overarching purpose of an organization in a subtle yet meaningful way. Leaders can also deliberately use them to:
Smooth big transitions (for example, by revisiting past transitions that were difficult but ultimately beneficial)
Resolve conflicts (for example, by finding and emphasizing the things that the quarreling parties have in common)
Give employees hope (for example, by highlighting times in the past when the company has faced adverse situations and come out stronger)
They caution, however, that stories can also trap companies in the past and make adaptation to changing circumstances more difficult. The job of leaders, therefore, is to be careful in choosing which stories to tell and how to tell them.
At the heart of Toyota’s approach to efficiency is the concept of kaizen (continuous improvement). Liker describes kaizen as small, incremental improvements in speed and quality that over time add up to large gains. Many assembly line processes are repeated thousands of times a day, so a reduction of even a few seconds for each repetition adds up quickly.
Toyota’s approach to kaizen involves two stages:
In this section, we’ll introduce the theoretical tools that Toyota uses to model assembly line processes. We’ll then discuss how Toyota workers implement these processes and experiment with them on the shop floor.
As Liker explains, Toyota models its production line as a “pull system”: a system in which customer demand for a product “pulls” the product through the assembly line. One example of a typical pull system is a restaurant: A customer order for a particular dish sets in motion the processes needed to produce the dish. This contrasts with more traditional “push systems,” in which a manufacturer produces a set number of products and sends them out to be sold, regardless of whether the retailer already has the item in stock.
(Shortform note: Price discounts in stores are often the result of push systems. Many retailers offer discounts to get rid of products quickly when they’ve received a new shipment of products but haven’t finished selling the last round.)
Toyota also uses pull systems to move work in progress from station to station. When workers involved in downstream processes are ready for more parts, they use signals (kanban) to communicate this to upstream workers. Kanban can be as complex as a digital signal or as simple as returning an empty bin to be filled.
The “value stream” is the sequence of actions in the assembly line that add value for the customer. Everything else is seen as waste. Liker explains that Toyota uses value stream mapping to identify which parts of the process add value and which can be minimized or eliminated. To map the value stream, team members draw a box for each workstation in the assembly line. They then go and look at what happens between each process and make notes regarding the transitions between workstations. Are parts transported long distances? Do they wait in queues? Are the workers moving efficiently? They record all of this information in the gaps between the boxes.
(Shortform note: While Liker goes into detail about value stream mapping, other experts argue that the tool is only useful in some circumstances. For example, processes that are linear and clearly part of the value stream benefit from value stream mapping. Processes that are parallel, unpredictable, or difficult to pin down—for example, administrative tasks, machine outages, and employee well-being initiatives—may be captured better by swimlane diagrams.)
One-piece flow is a depiction of the perfect value stream. In one-piece flow, products move through the plant undergoing only processes that add value, with no wasted time or materials. One-piece flow is the opposite of traditional “batch and queue” manufacturing practices, in which large quantities of parts are produced well ahead of time and then sit in queues waiting to be processed. One-piece flow is also called a “just-in-time” system, as each workstation receives the parts just in time to work on them.
(Shortform note: The idea of maximizing efficiency by reducing waste to zero wasn’t a unique Toyota invention. Its precursor was the concept of “scientific management,” introduced in 19th-century factories by Frederick Winslow Taylor. As General Stanley McChrystal describes in Team of Teams, Taylor closely examined the subprocesses in his steel factory and used the data to revolutionize his production line and increase its efficiency more than fivefold.)
Value stream mapping allows you to pinpoint wastes. Liker lists seven types of waste:
When you map the value stream, the goal is to identify all of the areas of waste and find ways to reduce them.
(Shortform note: In practice, these seven wastes overlap considerably—for example, excess production leads to excess inventory, which is wasteful in part because it delays the detection of defective parts. However, this method of classifying waste is the most common in value stream mapping. You can remember it using the DOWNTIME mnemonic, which includes an eighth type of waste: Failing to make the most of workers’ abilities.)
The three interlocking symptoms of an inefficient value stream are mura (variability), muri (overload), and muda (waste). Liker emphasizes that managing variability is extremely important: If the line isn’t operating at a constant speed, at busy times this causes overload, and at idle times it causes waste. Heijunka (leveling), meaning that the assembly line operates at a constant rate and the mix of products is consistent, is the key to minimizing variability.
So the production line should move at a constant pace. But how fast should it move? If the line moves too fast, you risk excess production; if it moves too slowly, you won’t meet customer demand. The right speed for the production line is exactly the rate of customer demand. (Exceeding the rate of customer demand means that parts and finished products sit around in inventory, tying up value and delaying the detection of defects.)
The rate of customer demand as applied to the production line is called takt time. To calculate takt time, work backward from customer demand. For example, let’s say that an assembly line needs to make 600 products per day and the production line operates for 10 hours per day. Dividing 600 by 10, we find that products should be moving through this production line at the rate of 60 products per hour (or one product per minute).
Distinguishing Between Takt Time, Cycle Time, and Lead Time
The rhythm of Toyota’s production line is governed by takt time, which in theory is the rate of customer demand. In practice, takt time refers to the rate at which workers receive new parts. It’s easy to confuse takt time with cycle time and lead time, but there are some nuances:
Cycle time is the time taken to generate the product. When referring to one part of the assembly line, cycle time is the time it takes to complete that particular step. For example, a worker might receive a part every five minutes (takt time) for a job that takes 4.5 minutes (cycle time) to finish. When referring to the finished product, cycle time is the time it takes to produce the whole item from start to finish.
Lead time is the time between when a customer (or retailer) places the order and when they receive the product.
For example, let’s say you order a coffee in a busy cafe. The cycle time (the time it takes the barista to make the coffee) will be quite short, but you may have to wait (lead time) in a queue while staff deal with orders that were placed before yours.
The most common approach to starting kaizen is the 5S cleanup process:
Liker comments that some lean consultants go into a business, do this cleanup, and declare kaizen complete—but this is just the starting point.
(Shortform note: The effectiveness of 5S isn’t limited to manufacturing. People have also applied 5S in contexts ranging from hospital operating rooms, in which it minimized the number of potentially life-threatening interruptions during surgery, to engineering projects, in which 5S “audits” improved the transparency and efficiency of the process. With a twist, you can even apply it to your personal belongings. In Algorithms to Live By, Brian Christian and Tom Griffiths recommend that you position the items you use most frequently in the most accessible places.)
At Toyota, it’s crucial to expose defects early. Liker explains that in traditional manufacturing processes, large piles of inventory can hide defects that aren’t discovered until much later, making it hard to trace the cause of the problem. Toyota roots out defects by deliberately keeping inventory levels low and through jidoka (intelligent error detection).
Sakichi Toyoda’s loom—designed to stop automatically when it detected a single broken thread—is the prototypical example of jidoka. When the loom stopped, this was a signal that something was wrong and a call to fix the problem.
(Shortform note: Other examples of jidoka include printers that automatically detect paper jams, washing machines that stop when they’re overloaded, and automatic emergency braking systems in cars.)
Applied to the assembly line, Liker calls this concept “in-station quality,” meaning that at each workstation, both people and machines inspect each newly received part and stop the line immediately if they detect a problem. Standard Toyota practices such as maintaining minimal inventory levels and a clear line of sight across the shop floor also help workers and supervisors to spot problems early. The signaling mechanisms that alert others that something is wrong (pushing a button, pulling a cord, automatic alarms) are called andon. When an andon is activated, other team members come running to help solve the problem.
Liker points out that in terms of efficiency, this practice seems counterintuitive: How can an assembly line be efficient if it stops every time someone spots a defect? He argues that in the short term, stopping the assembly isn’t efficient. However, stopping the production line adds urgency to the problem-solving process, so problems are solved much faster than they would be if the line hadn’t been stopped. And in the long term, quickly detecting and solving errors dramatically improves the efficiency of the whole line.
(Shortform note: Fast error detection is also the message of the “1-10-100 Rule,” or the “Rule of Ten,” a heuristic that describes how the costs of errors multiply as the errors work their way through the manufacturing and supply chains. According to this rule, if it costs $1 to prevent a particular error, the cost of fixing the error later in the process will be $10, and if the error reaches the customer, it’ll cost the company $100.)
At Toyota, no improvement is complete without intensive testing on the factory floor. This is called genchi genbutsu, or “go and see for yourself,” and it’s a cornerstone of Toyota practices. When a problem is detected and an andon system is activated, the assembly line stops. Team leaders and other team members run to the location of the problem. They then aim to determine the root cause of the problem and solve it at that same level.
To determine the source of the problem, Toyota employees use the “five whys” technique, continually asking “why?” until they’ve determined the underlying cause of any problems. If the solution is simple, says Liker, they implement it on the spot. To solve more complex problems, Toyota removes employees from the production line. Employees then generate a set of potential solutions and experiment with all of them to see which works best. The experimentation follows a Plan-Do-Check-Act (PDCA) cycle, which has workers generate ideas and continually return to the factory floor to check them.
The Relationship Between the TPS and the Six Sigma Approach to Manufacturing
Toyota’s “lean” problem-solving process differs from the “Six Sigma” approach to production, which began as a competitive production model from Motorola. (The two approaches later merged into “Lean Six Sigma” in the early 2000s.) In general, Toyota’s lean production methods focus on efficiency, while Six Sigma methods focus on quality. (The name “six sigma” refers to the ideal situation in which the proportion of defects is six standard deviations—sigmas—away from the mean. This means that, in theory, 99.99966% of the time the process will produce a defect-free part).
The Six Sigma Methodology has five stages: Define, Measure, Analyze, Improve, and Control. While there’s some overlap (for example, the “Improve” Six Sigma stage identifies root causes and the “Control” stage is mirrored in Toyota’s standardized processes), Six Sigma is data-driven where the TPS is practical and experiential.
To make sure that problems stay solved permanently, Toyota standardizes all processes and makes sure they’re robust through poka-yoke (idiot-proofing).
Standardizing processes means that every task at Toyota, no matter how simple or quick, has a detailed set procedure (down to the number of steps you should take when walking from one place to another). Liker comments that when he spent time on a Toyota assembly line, there was a chart by the workstation describing his 45-second job that spelled out 28 separate steps in detail, including photos of each step. These charts and descriptions represent interim steps to be further streamlined through kaizen (continuous improvement).
(Shortform note: Liker argues that standardized processes free workers up to spend more time relaxing and connecting with one another. In practice, however, assembly line workers often feel significant pressure to complete repetitions of a task as rapidly as possible. As one assembly line worker commented in an interview, “workers do not even have a second to wipe the sweat off their faces.” While not a lot of analysis has been dedicated to easing workers’ stress on the assembly line, one study found that operators feel less burdened when they’re adequately staffed and have the opportunity to inspect and calibrate their own machines before beginning.)
Poka-yoke devices automatically detect potential or probable mistakes in the execution of a task. For example, one poka-yoke device might shine a light on one bin of parts to make sure the worker selects the correct part. Another device might use a light curtain to detect whether the worker’s hand has moved to the correct bin. If a poka-yoke device detects an error, an alarm sounds, prompting the worker to correct the error.
(Shortform note: Poka-yoke has developed into a whole field of its own, and there are now multiple ways of classifying poka-yoke devices. One of the classification systems focuses on whether the device prevents or detects errors, while another differentiates “control” from “warning” poka-yoke. Control poka-yoke structure the task so that it’s impossible to do it wrong—for example, microwaves are designed so that you can’t use them while the door is open. Warning poka-yoke alert you if you’re making a mistake—for example, car seat belt alarms beep when someone's seatbelt isn’t properly fastened, but they don’t prevent the car from starting.)
In this section, we’ll examine the second level of Toyota’s approach: how Toyota manages its people. We’ll cover how Toyota shows respect for its employees, promotes leaders from the inside, prioritizes teamwork and consensus, and extends relationship-building outside the organization to the whole supply chain.
According to Liker, Toyota shows respect to its employees by protecting their jobs, challenging them, and supporting them in their efforts to improve.
Protecting workers’ jobs. Toyota prioritizes job security for its employees, even through significant internal and external challenges. For example, during the Great Recession of 2008-09, while other car manufacturers were letting thousands of people go, Toyota didn’t lay off any members of its regular workforce. Instead, team members worked intensively on kaizen when they weren’t needed on the factory floor. Managers also privately agreed to salary reductions so no team members would be laid off. In the course of normal business, employees whose roles are no longer needed as a result of routine kaizen are redeployed to other assembly lines.
Challenging employees. At Toyota, respecting employees means challenging them. The TPS, with its lack of time buffers and inventory to hide behind, compels employees to think on their feet. Liker says that workers participate in voluntary “quality circles” outside of working hours in which employees work on complex problems together.
Supporting employees. Toyota uses a flipped org chart in which workers on the factory floor are at the top (the highest priority), says Liker. The primary role of a team leader is to support his or her team. Team leaders step in for workers who are sick or on vacation, coach team members in a hands-on way, and routinely watch their team work to prevent problems and improve processes.
Respecting Employees: Theory vs. Practice
Critics argue that Toyota doesn’t always practice what it preaches when it comes to caring for its employees. Engineer Darius Mehri, who worked as an engineer at a Toyota supplier and interviewed Toyota workers, argues that Toyota endangers its employees with unrealistically fast line speeds, with up to 50% of its current workers battling work-related health problems. Many have lost fingers or have suffered burn or crush injuries due to attempts to save space in and around their workstations. Mehri also argues that Toyota under-reports injuries (a common practice in Japan).
Protecting jobs. Liker concedes the distinction between the “regular workforce,” whose jobs are protected at all costs, and the “variable workforce,” which consists of temporary employees who can be (and often are) let go quickly. He doesn’t, however, go into detail about temporary employees. Temporary workers constitute over 30% of the assembly line in most Toyota factories in Japan. They make 60% less than the regular employees, don’t receive benefits, and may feel like outcasts or second-class citizens.
Challenging employees. Liker notes that quality circles in Japan are held outside of working hours and are theoretically voluntary, but all employees are expected to attend. Some critics argue that “challenge” crosses the line into exploitation, potentially endangering the health and even the lives of employees. For example, 30-year-old Kenichi Uchino collapsed and died after working 155 hours of overtime (110 unpaid) in the month leading up to his death, and a Camry chief engineer died of a heart attack after clocking over 80 hours of overtime the previous month. Multiple workers have also committed suicide due to stress.
Supporting employees. Some argue that Toyota doesn’t support its employees, instead enmeshing them in a net of strict rules that govern what they do both inside and outside work. At work, employees follow “rigid military-style rules” that govern minute details of their behavior inside the factory. Outside of work, employees must report to their managers on details such as their commutes and vacation rest stops.
Instead of hiring CEOs from outside the company, Toyota maintains a stable culture by promoting leaders from within. Current leaders are charged with preparing new leaders.
Liker points out that this practice:
(Shortform note: Promoting leaders from within also helps to keep lower-level employees happy. Employees who feel they’ve been overlooked in favor of an external hire are more likely to quit or consider quitting, while employees in companies that manage promotions well are more motivated to put in extra work and less likely to leave the company.)
Liker comments that Toyota teams function as extremely cohesive units. He speculates that this is because Japanese children learn teamwork at school from an early age. When making decisions, all group members offer their views and all of these views are considered in reaching the final decision. Liker comments that for big decisions, there’s usually a long consensus-building process in the leadup to the formal meeting (a process known as nemawashi (literally “digging around the roots”)), so that by the time the formal meeting is held everyone is already in agreement.
(Shortform note: This is consistent with The Culture Map author Erin Meyer’s depiction of Japanese culture as heavily consensus-driven despite its hierarchical corporate structures. Meyer also comments elsewhere that consensus decision-making cultures are a perfect fit for car manufacturers, an industry with lengthy development processes and extremely high product standards.)
While Toyota is slow to accept new suppliers, first making them “audition” with a series of small orders, once a supplier is in the chain Toyota is loyal and slow to replace them. Toyota shows respect for its supply chain partners by challenging them to engage in intensive kaizen. This helps the supplier increase its own efficiency. Suppliers are incentivized to engage in kaizen through the “target cost system”: Toyota calculates how much the part should cost in the first year and asks for price reductions each subsequent year (on the basis that the supplier’s kaizen practices should be reducing the cost on their end). Liker comments that Toyota is most suppliers’ favorite customer, despite its exacting standards.
Toyota also supports supply chain partners as needed, for example by making advance payments to suppliers that are struggling or offering financial assistance to dealers during the COVID-19 pandemic.
Toyota’s Relationships With Suppliers
Are Toyota’s relationships with its suppliers as healthy as Liker claims? There’s evidence to suggest they might not be. Some suppliers have stated publicly that the target cost system is unrealistic and cruel, especially given inflation and the increasing costs of raw materials. As the manager of one supplier commented in 2010: “Toyota just squeezes us, like it’s trying to wring water from a dry towel.” This approach is especially hard to swallow for suppliers when Toyota continues to post record profits.
Some supply chain workers believe that Toyota’s “just-in-time” system isn’t designed to solve problems but to push them back onto suppliers, which in turn struggle to cope. To reduce costs, some suppliers allegedly hire foreign guest workers, some of whom are victims of human trafficking, and pay them a fraction of the minimum wage, threatening them with deportation if they complain.
Unusually, Toyota also helps its competitors, believing that competition makes everyone stronger. For example, Toyota shared hybrid technology with other automakers and opened its hybrid patents in 2019. (Shortform note: A more cynical take on this is that opening the patents was intended to discourage competitors from leaping over hybrid technology and going straight to fully electric vehicles, an area in which Toyota can’t compete well.)
In this section, we’ll cover aspects of Toyota’s approach to business that operate at the level of the whole organization. We’ll cover why Toyota is cautious when introducing new technology, how it ensures that goals are consistent throughout the company, and how long-term systems thinking governs high-level decision-making.
Liker writes that Toyota sees large investments in technology, for example specialized robots, as risky. The company learned this lesson in 1991, when a new, highly automated Lexus plant had to be shut down due to an economic downturn. This mistake taught Toyota that technology should support people, not replace them, and the company is now much more selective in using new technology. Simpler tasks that need limited space can be delegated to robots, but for more complicated tasks, people are a more flexible resource.
(Shortform note: Some commentators have suggested that Tesla made the same miscalculation, relying too much on automation and failing to appreciate the advantages of human workers in responding flexibly to unexpected situations.)
At Toyota, managers ensure that people’s goals are aligned through hoshin kanri (policy deployment), which means that managers and workers are in continuous dialogue about the shifting priorities of the organization. Unlike most other Toyota processes, hoshin kanri operates in a top-down manner. The author explains that high-level management determines strategic priorities on a yearly basis at the start of the fourth quarter, communicates them to the whole organization, and then trusts managers to cascade them down into on-the-ground realities.
(Shortform note: Toyota’s combination of bottom-up consensus decision-making and top-down hierarchical decision-making is one of its strengths. Some Japanese companies rely too heavily on consensus decision-making, which makes them slow to adapt to changing circumstances. Some experts even argue that it was Japanese electronics company Sharp’s top-down decision-making style that caused the company to fail.)
At Toyota, kaizen applies everywhere, not just at the genba. All Toyota workers are charged with experimenting and continuously improving systems using Plan-Do-Check-Act cycles, meaning that learning occurs at the level of the whole company. Liker argues that hansei (“critical reflection”), a Japanese cultural practice, supports the drive toward constant improvement. When Japanese children behave badly, they’re told to “do hansei,” which means they should feel very sorry about what they did and think hard about how they can improve. (Liker notes that Japanese Toyota managers had considerable difficulty in teaching hansei to US managers.) Toyota holds hansei meetings after trying out new ways of doing things, even if the innovation was a success, to identify ways in which it could have been done even better.
(Shortform note: According to Liker, Toyota is an exceptional example of a “learning organization,” a term introduced by Peter Senge in The Fifth Discipline. However, Toyota’s razor-sharp focus on incremental improvement at the practical level may explain why its employees tend to be poor at creative thinking and deep innovation, skills that flourish when time is allowed for unfocused thinking.)
Underpinning all of the practical measures in the TPS is Toyota’s overall approach to doing business. Toyota, Liker argues, is successful because: (1) It focuses on adding value in the long term, and (2) it favors holistic or systems thinking.
1. A long-term focus on the goal of adding value. Toyota focuses on the greater good: Its main aim is to create value for its customers and for society in general. Protecting workers’ jobs and halting the production line for minor defects aren’t quick fixes, nor are they directly profit-focused. Liker asserts that the company is focused on long-term success: Retaining employees during downturns means fewer new employees to train when the situation improves, and detecting defects quickly saves time and money later on. Toyota’s practice of building massive cash reserves instead of sharing profits with workers or shareholders is also part of its long-term strategy.
(Shortform note: Toyota may be slightly more profit-focused and slightly less principled than the image Liker constructs. For example, the company’s noble environmental goals aren’t consistent with some of its public statements, which have criticized the attempts of several countries to tighten emissions standards, improve fuel efficiency, and focus on electric vehicles. Toyota also opposed California’s Clean Air Act and eventually paid a $180 million fine for failing to report defective exhaust pipes under the same Act. A 2021 report named Toyota as the third-worst offender in the world—behind only Exxon Mobil and Chevron—in lobbying to obstruct climate-friendly policies.)
2. Systems thinking. Also called holistic thinking, it means looking at the “big picture”: how the parts of a system work together. (Shortform note: Holistic thinking contrasts with analytic thinking, which focuses on the details of the parts.)
Liker suggests that this type of thinking has cultural roots. He points to the Zen Buddhist cultural environment and cites arguments that rice farming promotes teamwork. (Shortform note: This is the “rice theory” of cooperation, which proposes that the farming method for staple crops in a particular community affects the interpersonal dynamics in that community. Rice farming requires teamwork and large-scale coordination to consistently irrigate large areas, which arguably promotes cooperation. Wheat can be farmed by small family groups, which promotes independence.)
Japanese Cultural Influences on Toyota’s Practices
Liker suggests that the tendency of Toyota workers to think holistically is cultural, citing research showing that people living in Asian communities tend to pay more attention to context than people in Western communities. Studies have found, for example, that North Americans notice big, fast-moving objects in the foreground of a video, while Japanese people are drawn to the background and to the relationships between the objects.
What explains this difference? Erin Meyer argues in The Culture Map that Asian people tend to think holistically because of the philosophies that shaped their cultures. For example, Taoism (which went on to deeply influence Japanese philosophies) emphasizes harmony and balance in both natural and social relationships.
Throughout the book, Liker shares practical advice on implementing lean systems that he’s gleaned from many years working with Toyota and serving as a TPS consultant. We’ve compiled and summarized this advice here, along with additional tips for applying lean principles outside the manufacturing sector.
To implement lean systems in a business for the first time, Liker recommends the following:
Applying Lean Ideas Outside Manufacturing
While Liker gives some examples of businesses that have applied lean ideas outside the manufacturing sector, these are still broadly in the area of producing goods: software systems and assembling gift baskets. What about more complex work that doesn’t culminate in a tangible product?
An increasing number of hospitals are applying lean ideas to both administrative processes and patient care, with some proponents arguing that lean principles can save lives. The lean approach has also helped nonprofit organizations streamline their processes.
Some lean principles seem to work better than others in different sectors. For example, while Liker argues that the “just-in-time” principle can apply to information flows in knowledge work, there may be frustrating mismatches between the amount of information a manager wants to share and the amount of information an employee needs. The best solution may be to balance lean “just-in-time” learning with more traditional “just-in-case” learning.
In an office environment, you can apply TPS principles to both the physical layout of the office and the knowledge work itself. In knowledge work contexts, employees can learn to:
Eliminate waste
Record, standardize, and improve the parts of their job that they repeat often
Improve communication throughout the organization
Solve problems quickly at their root
Encourage a “coach” mentality in leaders.
Note, however, that if the knowledge work is primarily based on creativity and innovation, implement lean principles with caution—applying these principles too enthusiastically can eliminate as “waste” the unstructured time that’s necessary to experiment with new ideas. As Liker advises, make changes gradually.
Liker also warns against common mistakes. When implementing lean systems, don’t:
1. Make sudden, sweeping changes throughout the whole organization. This is the most common mistake people make when implementing lean systems, and it usually ends in disaster. Experiment in depth with a small one-piece flow cell first, then gradually extend these practices to other parts of the organization.
2. Focus too much on superficial changes. Lean production is about more than just mechanistic processes. Implementing it superficially or in piecemeal fashion might lead to immediate gains, but these won’t be stable. Make sure your treatment of people changes alongside the physical processes.
3. Believe that lean will “fix” things. Lean processes are designed to “break” and reveal problems. Don’t be surprised if there seem to be more problems, not fewer, when lean systems are first introduced.
4. Get rid of middle management. Some organizations flatten their org chart when implementing lean systems. This is a mistake because it overburdens high-level leaders with direct reports, meaning that daily contact (which preserves efficiency gains and affords intensive coaching) is lost.
5. Declare it finished. Implementing lean systems is an ongoing activity throughout the life of the organization. As long as you’re still problem-solving and improving, you’re implementing lean systems.
Also Pay Attention to Leadership Involvement and Employee Morale
While the five common mistakes Liker cites stem from management overreach, some companies make the opposite mistake: too little top management involvement. According to Lean Factories, a manufacturing blog, top management sometimes takes a hands-off approach to implementing lean systems, which sends employees the message that lean programs aren’t that important. Further, when top leaders are disengaged, they can’t properly assess funding requests for lean efforts.
Also, while Liker’s “mistakes to avoid” touch on employee morale, he doesn’t explore it in depth. If you’re planning to implement lean systems in your organization, Lean Factories recommends you also keep these morale-related tips in mind:
Don’t implement lean systems for the sole purpose of cutting costs. Some companies create lean systems so they can spend less on overheard—in this case, the message you’re sending to your employees is that the more efficiently they work, the less job security they have. This can lead to low morale at best and sabotage at worst. Instead, use lean processes as a way to facilitate learning, growth, and expansion.
Don’t place the lean burden on one department. When employees on the shop floor are working hard to create products and there are a select few who tell them how to work faster, or better, this breeds resentment. Rather than having management impose lean systems on the factory workers, the systems should be applied to every department in the company.
Liker calls one-time kaizen (continuous improvement) bursts “spot kaizen.” Try “spot kaizen” on a process in your life.
Write down a task that you do often that you’d like to make more efficient. (For example: making a coffee; taking a shower; writing an email; getting ready for work.)
Value map this process. How many stages are there? List (or use paper to draw boxes for) the key stages. Then draw arrows between the stages and indicate how you make the transitions between them. (For example, do you move things from one place to another? Do you move from one place to another? Do you get out or put away particular tools?)
How might you reduce these wastes? Generate as many different ideas as you can.