Continuous Improvement and Change Management: Lessons from Toyota's TPS

Imagine a factory floor where every single step, every movement, and every process is designed to create perfection. Now, picture this happening in a country devastated by war, with scarce resources and productivity levels falling far behind global leaders. This was Japan after World War II, and out of this challenging environment emerged a revolutionary production system that would change the world. What we know today as "Lean" has its heritage deeply rooted in Toyota's pioneering production system. Welcome to the story of the Toyota Production System (TPS), the very foundation of Lean manufacturing.

In the ruins of post-war Japan, Toyota faced the daunting task of producing high-quality, affordable vehicles for a population that could barely afford to buy them. With the economy in shambles, Toyota couldn’t rely on the scale economies that American manufacturers enjoyed. Instead, they needed innovation and efficiency, which led to the creation of TPS.

The Dual Pillars: Just-In-Time and Jidoka

At the heart of TPS are two fundamental principles: Just-In-Time (JIT) and Jidoka.

I personally think that many companies nowadays have much to learn from these two principles, and failing to apply them is leading to numerous problems and inefficiencies.

• Just-In-Time (JIT) it’s about producing only what is needed, in the exact quantity needed, and at the precise time it is needed. By minimizing excess inventory and avoiding overproduction, JIT turns efficiency into an art form. But lean doesn’t mean zero inventory. Toyota takes a strategic approach to inventory planning, operationally standing on three legs: strategically sized inventories in the right locations to act as a buffer to meet changing demands, safety stock that factors in the risk of disruption, and a nuanced view of lead times. It has been pointed out that the company learned a great deal from the Tōhoku earthquake and tsunami of 2011, after which it identified parts vulnerable to disruption and, as a result, were candidates to be stockpiled.
• Jidoka: Often described as "automation with a human touch," jidoka ensures that production issues are immediately visible and addressed on the spot. This principle allows the production line to stop automatically when problems occur, enabling workers to fix defects right then and there, ensuring that only top-quality products move forward. This element represents a strong corporate culture, counter to some companies that foster a culture of "punishment" or negativity towards individuals who highlight issues, perceiving these as complaints rather than opportunities for improvement. "Do not come with problems" managerial attitude discourages employees from reporting problems, ultimately hindering overall performance, quality and efficiency.

But how can we implement this principles at life? Companies must facilitate tools to bring their principles to real scenarios, reinforcing the corporative vision and culture. Toyota developed several key methodologies to achieve this, such as heijunka (production leveling that ensures a constant, balanced output, preventing bottlenecks and inefficiencies), or andon (real-time alert system that prompts immediate corrective action when problems arise).

Application in uncertain and volatile scenarios

One of the most remarkable aspects of TPS is its emphasis on human resources. Toyota’s motto, "Good Thinking, Good Products," reflects their belief in empowering employees, for instance, promoting the identification and solving process of problems through methods like the "Five Whys" - an iterative interrogative technique used to explore the cause-and-effect relationships underlying a particular problem. The primary goal of the technique is to determine the root cause of a defect or problem by repeating the question "why?" five times, each time directing the current "why" to the answer of the previous "why". The method asserts that the answer to the fifth "why" asked in this manner should reveal the root cause of the problem.

In a world where rapid change and uncertainty is the norm, the principles of TPS and kaizen are more relevant than ever. Companies that invest in their people, promote continuous learning, and encourage a proactive approach to problem-solving are better equipped to navigate uncertainties and thrive.

Modern companies face significant challenges when implementing Lean principles, and the success of these transformations often hinges on effective change management. Among the various change management models, I find John Kotter’s change model to be a simple and universal approach to achieving successful organizational change. By following Kotter’s eight-step process, companies can effectively guide their teams through the complexities of Lean transformations, ensuring sustainable improvements and long-term success.

1. Create a Sense of Urgency: Just as Toyota responded urgently to post-war challenges, companies must highlight the need for change to motivate action.
2. Build a Guiding Coalition: TPS’s success relied on collective effort and leadership at all levels, similar to Kotter’s emphasis on forming a powerful coalition.
3. Form a Strategic Vision and Initiatives: Toyota’s clear vision of quality and efficiency parallels the need for a strategic vision in Kotter’s model.
4. Enlist a Volunteer Army: Engaging employees, much like Toyota’s emphasis on empowering workers, is crucial for widespread buy-in.
5. Enable Action by Removing Barriers: TPS tools like kanban and andon are designed to remove production barriers, echoing Kotter’s focus on eliminating obstacles.
6. Generate Short-Term Wins: Toyota’s incremental improvements mirror Kotter’s emphasis on short-term wins to build momentum.
7. Sustain Acceleration: Continuous improvement, or kaizen, is fundamental to TPS and aligns with maintaining acceleration in Kotter’s model.
8. Institute Change: Embedding Lean practices into the company culture ensures long-term success, much like institutionalizing change in Kotter’s framework.

If you've read this far, I encourage each of you to closely examine your own processes and consider how the principles of TPS and Lean can be applied to drive improvement and resilience within your organizations.