16 ms·

The Toyota Way

368 points by qin 7y ago

Someone1234 7y ago
How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the field of Customer Retentions. It used to be focused on satisfaction & delight which are both long term success strategies (both to grow and to retain), but in the last twenty years Customer Switching (i.e. making it harder/more costly/more time consuming/more stressful/etc to switch) has become the norm, this is a short term strategy since it improves short term retention metrics at the cost of long term returning customers and poor word of mouth (i.e. nobody returns or joins after they leave, if you made the switching process hellish). It is a great way to keep your quarterly and yearly churn low, but a poor way to run a business. It used to only be businesses with artificial monopolies that would do this (e.g. Verizon, Comcast, etc). But recently we've seen companies in fairly competitive spaces adopted a similar short term "suicide strategy" like LogMeIn (Remote Support Software), The New York Times (News Publication), SiriusXM (streaming audio), etc. All of which are likely chasing quarterly performance metrics tied to executive compensation.
- bluGill 7y ago
  While that is a common statement, it isn't really true. Most stock holders have figured out that long term profits are important as well. Companies that only focus short term go out of business quickly and so are worth less than companies who will be around longer. Most shareholders (37%) are retirement accounts which have long term goals.
  - radcon 7y ago
    > While that is a common statement, it isn't really true. "Companies exist to maximize shareholder value" is the myth that just won't die.
  - TeMPOraL 7y ago
    > Most stock holders have figured out that long term profits are important as well. Companies that only focus short term go out of business quickly and so are worth less than companies who will be around longer. Doesn't matter if the stock holders who pushed for the decisions managed to flip their stocks when they were still rising in value. Aren't most stock holders playing this game to flip stocks, without caring much about the particular company they're making money off?
    - icxa 7y ago
      Aren't most stocks are held in index funds and ETFs?
      - TeMPOraL 7y ago
        I don't know. Could someone who knows this for sure chime in here?
        nradov 7y ago
        Yahoo Finance will show you the top holders for any publicly traded company. https://finance.yahoo.com/quote/TM/holders?p=TM https://finance.yahoo.com/quote/TM/holders?p=TM
      - mrep 7y ago
        Yep, they recently crossed the 50% mark [0]. Discussion [1] [0]: https://qz.com/1623418/index-funds-now-account-for-half-the-us-stock-market/ https://qz.com/1623418/index-funds-now-account-for-half-the-... [1]: https://news.ycombinator.com/item?id=20020997 https://news.ycombinator.com/item?id=20020997
- magduf 7y ago
  >How do you maintain "Principle 1" while being a publicly traded company? >The way the stock market is designed... means they're going to put short term profits over long term viability. It's simple: be Japanese and not American. Japanese companies don't have this kind of problem, precisely because they aren't American and their society doesn't value enriching executives over all else, and instead values a stable and harmonious society.
  - davidrm 7y ago
    https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization#2019 https://en.wikipedia.org/wiki/List_of_public_corporations_by... Not a single Japanese company, while the lists are dominated by the US ones. What you're saying is nothing other than the ancient TV trope about the difference between Japanese and the Americans (east vs west). disclaimer: I have 0 ties whatsoever to the US.
- supergauntlet 7y ago
  Perhaps it's a culture thing? IIRC, you don't actually legally have to bring more value to shareholders every quarter at the cost of everything else. Maybe Toyota's execs and shareholders have some sort of "gentlemen's agreement" where they just agree to not prioritize the short term at all costs? Maybe that's naive and they're just saying one thing and doing another.
  - zebrafish 7y ago
    All publicly trade companies have a fiduciary responsibility to shareholders. That means different things to different companies and is not a hard and fast rule. Amazon did not prioritize short term profits for a long long time and Bezos famously told investors they were too shortsighted. Many large manufacturing companies adopt the Toyota principles here in the US as well. Principle 1 is up to interpretation about what brings the most long-term value to the company. No company ever tries to go out of business, ergo they optimize to exist forever or get acquired. Whether the board & management understands how best to achieve that long-term sustainability is another matter and one that shareholders get to vote on.
    - supergauntlet 7y ago
      Sure, I just meant the fiduciary responsibility doesn't necessarily always mean "short term profits at all costs." Why does it seem to always be that way, though? Most every company I see appears very shortsighted with no thought to the long game.
      - bumby 7y ago
        My current personal theory is that it's related to a cognitive bias. People tend to be biased towards the short-term. I.e. the short-term pain on my doorstep seems much worse than the (potentially larger) pain on the horizon.
      - rmah 7y ago
        It doesn't always appear that way -- it's really a glass half full/half empty thing. If I may be so bold, you are see what you want to see. Generally speaking, public companies do not prioritize the next quarter above all else. Why not? Because they are, generally speaking, not run by idiots. Of course, some do in certain situations. Because it makes sense in those situations. Owners (shareholders) and boards are not full of idiots either. They realize the temptation of short term pumps. Thus, executive compensation is typically shaped to encourage longer-term thinking (e.g. stock that does not fully vest for years, bonuses based on future company performance years out, etc). And if they do reward short-term metrics, it's for a specific reason. That said, japanese companies tend to have longer time horizons than american companies (decades vs years) and perhaps that's better. But then again, the further out you go, the less your planning will work out. So who knows for sure?
- EvanWinget 7y ago
  There's definitely a big problem with short termism and focus on quarterly performance over long-term value. Luckily there are a variety of solutions to this. One is to have dual class share structures where minority owners have majority of the voting shares (e.g. Facebook, Google). Another is to create a new type of stock exchange that incentivizes long-term ownership (e.g. LTSE long-term stock exchange).
- radcon 7y ago
  > How do you maintain "Principle 1" while being a publicly traded company? > The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Easy: Don't do that. Either 1.) Don't be a publicly traded company, or 2.) Don't let short-sighted shareholders dictate your management decisions.
- nabla9 7y ago
  Good ownership structure and corporate governance. Toyota group is keiretsu where Toyouta Motor Corp. has owners like Toyota Indutries, Denso and some big Japanese banks and insurance companies.
- rectang 7y ago
  > Many companies have been ruined and continue to be ruined You say "ruined", I say "fulfilled their ultimate purpose as disposable wealth-extraction machines enriching executives". I totally agree that the stock market's design encourages short-termism. But this is entirely appropriate in service of the idea that heroic individuals are chiefly responsible for company outcomes.
  - tim333 7y ago
    Though of course in traditional theory the company should be run for the shareholders rather than the executives. It's a bit of a flaw in the system if they can extract large bonuses while tanking the stock. Maybe the government could write some laws that bonuses have to be held in escrow for a while to check the company survives. (And in more modern views maybe you should worry about the other stakeholders too.)
    - rectang 7y ago
      I disagree that it's a "flaw". It is the natural consequence of an ideology, where we ascribe proportionate value to the contributions of executives and marginal value to the contributions of everyone else. Since we believe that executives are the ones creating the wealth, it is just that the wealth flows out of the company and towards them. Executives giveth and executives taketh away.
      - tim333 7y ago
        >Since we believe that executives are the ones creating the wealth I wonder how many people actually believe that.
    - nradov 7y ago
      Shareholders are free to impose deferred compensation schemes on executives. In fact many companies have done so. No new laws are needed.
      - mcguire 7y ago
- peterwwillis 7y ago
  It's just a different kind of business. Car companies have multi-year release cycles, deal with complex logistics chains, and sell expensive products, so they have to plan for the long term. If your company lives and dies on the release of your next car, you're screwed.
- TeMPOraL 7y ago
  After reading countless stories about companies big and small, I came to conclusion that if you want to build a company that has a mission and/or a moral compass, under no circumstances you should ever give any degree of control to people who are not in on the mission or do not share the same moral direction. From this follow at least two rules: 1) Never ever go public. 2) Never ever accept VC money. Problem is, you'll likely get outcompeted by companies that do either or both of these things.
  - tim333 7y ago
    There are public companies that are run for the long term. Berkshire Hathaway springs to mind and I'm sure there are many others. It's down to the CEO whether they do that or try to game the quarterly earnings.
- rb808 7y ago
  > The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. That's a myth. Yes CNBC loves short term stuff as it makes good TV. In the real world see Black Rock (biggest asset manager) CEO public urging long term focus https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter https://www.blackrock.com/corporate/investor-relations/larry... . See also Amazon and all the other profitless companies just listed as good examples that long term has value.
  - Someone1234 7y ago
    You call it a "myth" then use one example, that disproves the point (why urge to act against a "myth") and another that's a single data point, while ignoring the rest of the market. That's a pretty poorly explored position.
    - rb808 7y ago
      I would have though that the CEO of the world's largest investment company would count more than "one single data point". I know there are a few examples of short term investors ruining a company - but have you any examples of companies punished for choosing long term over short term?
      - Someone1234 7y ago
        > I would have though that the CEO of the world's largest investment company would count more than "one single data point". I said that CEO undercuts your point. You claimed short-term-ism was a "myth," then quoted a CEO saying that a lot of people focus on short term investing, rather than long term investing. Therefore making it not a myth, according to your own source.
        rb808 7y ago
        Maybe you should actually read it. He said companies might be tempted by maximizing short-term returns because we are late in the economic cycle.
- deleted 7y ago
  [deleted]
- gnode 7y ago
  I don't think the fundamental problem is being publicly traded, it's a question of how distributed the control of a company is. Some publicly traded companies are controlled by few people. When ownership is concentrated, decisions can be made based on long-term ideology. When ownership is highly distributed, and especially when indirect via indices, decisions are made in favour of widely accepted and broadly applicable metrics of performance, which tend to have only short term confidence.
- eries 7y ago
  This is literally the thought process that led to the creation of the LTSE. I was actually reading The Toyota Way while writing the draft manuscript for The Lean Startup
- rhino369 7y ago
  >The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. Short term stock prices aren't entirely controlled by short term results. Just look at PE ratios for growth companies. Short term results often change the price a lot because its an indicator for future results. Stuff like one time write offs don't really affect the price.
- opencl 7y ago
  Japanese corporate governance does not work quite like in the US, either legally or culturally. Shareholders actually generally have more decision making power than in the US but tend not to exercise it very often and basically trust the existing leadership. Toyota has been publicly traded for 70 years and their shareholders (which are primarily other large Japanese conglomerates) have never even tried to make these kinds of short-term-over-long-term pushes and keep electing Toyoda family members into the top leadership positions.
  - Ambele 7y ago
    Finally someone that understands the difference.
- Ambele 7y ago
  It's hard to say how Toyota is governed unless you know more about how the Tokyo Stock Exchange functions. Toyota shares are only available here in the form of ADRs (American Depository Receipts). Each ADR share represents two shares of common stock on the Tokyo Stock Exchange. Toyota might not have chase short term profits like many American companies choose to do. After two hours of googling it (and reading english web pages only, not japanese webpages), the only notable thing I discovered was that Toyota pays out 30% of its profits in the form of dividends and spends 20% of its profits on share buybacks for a total shareholder return of roughly 50% of earnings each year. This indicates that Toyota is shareholder friendly but it's not clear if this is an obligation or a choice. Instead of chasing short-term profits, I've observed that Toyota spends fair budget on advertising and showboating futuristic looking hype technology that is never intended to be released or used. Some investors primarily look at the daily news and are satisfied with this strategy. The technology Toyota intends on using isn't hyped up; it's kept a secret until it's actually released to drivers. Finally 90% of Toyota Corporate Employees in the Plano, TX US Headquarters are contractors from other companies. Those ones sure as hell aren't getting any quarterly performance bonuses or any executive compensation. At best, the executives bonuses are getting to keep your air-conditioned job for another 3 years.
thendrill 7y ago
That shit works only if you are Japanese.... Have Japanese mentality and work culture... Also your product is a car.. Or something tangable made on a production line.... Agile IS the Toyota way... Or at least tries to be
- martin_a 7y ago
  Nah. I see some of those points could very well be adapted to German companies. And focussing on long-term growth and stability is probably one of the main aspects of the German "Mittelstand" (medium companies, often led by families over generations) which usually has a strong focus on providing a sustainable place to work and therefore not optimizes its business for shareholder value.
  - magduf 7y ago
    His post would have been correct if he had omitted the word "only". As you've pointed out, it isn't only Japanese culture that values long-term stability and value to the society. The problem is that American culture absolutely does not value this stuff, and that's why our companies work the way they do.
    - deleted 7y ago
      [deleted]
- theothermkn 7y ago
  A sibling post mentioned Deming, the American who's WWII work on bomber production formed the basis for "The Toyota Way," and not in some indirect way, either. Deming went to Japan at the behest of the US to help them rebuild their economy after WWII.
  - kesor 7y ago
    I read somewhere that the context for this was all the men returning from WW II. While it was mostly women worked in the factories during the war and had to find ways to improve production, Deming ideas were solid. But as soon as the egoistic men came back from the frontlines after the war, he was kinda "pushed away" because no one in the US wanted to listen to him anymore. Which naturally was a big mistake as it turned out in the 70s when Japanese car manufacturing made American cars look like garbage.
radcon 7y ago
They should call this "The Deming Way" since most of it sounds identical to Deming's management philosophy and he taught Toyota back in the 1960s[1]. His system also had 14 points, which probably isn't a coincidence[2]. [1] https://blog.deming.org/2016/10/toyotas-management-history/ https://blog.deming.org/2016/10/toyotas-management-history/ [2] https://en.wikipedia.org/wiki/W._Edwards_Deming https://en.wikipedia.org/wiki/W._Edwards_Deming
- gotts 7y ago
  Thanks for sharing! Good read
  - radcon 7y ago
    Thanks for reading! I think Deming is extremely under-appreciated. It seems like Six Sigma is all anyone talks about in terms of management philosophy these days...
    - riffic 7y ago
      Deming's work has been highly influential within the DevOps community: https://itrevolution.com/deming-to-devops-part-1/ https://itrevolution.com/deming-to-devops-part-1/
    - curiouscats 7y ago
      I agree, you might enjoy the Deming subreddit https://www.reddit.com/r/Deming/ with links to applying his ideas on management.
- kesor 7y ago
  Pretty sure that Deming and Taiichi Ohno both are responsible for the creation of these ideas, and they both learned from each other and improved. Which is why eventually it looks very similar looking at it from either side.
- chrisan 7y ago
  Don't forget Japan even has an award named after Deming for quality! https://en.wikipedia.org/wiki/Deming_Prize https://en.wikipedia.org/wiki/Deming_Prize
seancoleman 7y ago
Ah, I see the HN has discovered the OG lean, the true innovation, commonly misinterpreted, that inspired Lean Startups.
wil421 7y ago
>Principle 5 Build a culture of stopping to fix problems, to get quality right the first time. Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue. I heard culturally Japan and to an extent other Asian manufacturing nations would never actually press the button. Can anyone confirm this?
- mnctvanj 7y ago
  If you can get your hands on the HBS case study of TPS it's a great read. Details how much emphasis is put on blaming any/all issues on process, rather than people. To the extent that if a clumsy worker drops a wrench, it is assumed to be a problem with process, not that worker, and addressed immediately. The case study also describes a couple of examples of assembly line workers pulling the stop levers and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown.
  - iooi 7y ago
    Previous discussion, 5 Whys: https://news.ycombinator.com/item?id=11656575 https://news.ycombinator.com/item?id=11656575
  - bityard 7y ago
    > The case study also describes a couple of examples of assembly line workers pulling the stop levers and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown. More than that, when the manager approaches the employee who stopped the line, she is not supposed to ask, "why did you stop the line?" She instead asks, "how can I help?"
  - vram22 7y ago
    >and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown. https://en.wikipedia.org/wiki/5_Whys https://en.wikipedia.org/wiki/5_Whys
Symmetry 7y ago
I initially misread that as "The Toyota War". Which was a real thing, named that because Chad used Toyota Land Cruisers to defeat Libya. https://en.wikipedia.org/wiki/Toyota_War https://en.wikipedia.org/wiki/Toyota_War
- jakejarvis 7y ago
  The entire decades-long overseas diversion saga surrounding American Toyota pickups has always fascinated me. Top Gear did an episode [0] trying to destroy a Toyota Hilux (similar to the Land Cruiser) and literally couldn't, which explains why it's so popular with terrorists. It's a worthwhile watch if you want to see truck survive after being drowned in water, fire, and the rubble of a demolished skyscraper. Say what you want about Toyotas, but that's quite the engineering feat in my opinion! [0] https://www.youtube.com/watch?v=xnWKz7Cthkk https://www.youtube.com/watch?v=xnWKz7Cthkk
  - flamtap 7y ago
    Gotta say, that's a damn talented mechanic they had on that episode.
  - sprafa 7y ago
    It’s not really limited to terrorists, is it? I mean in the popular imagination but essentially technicals are actually great for a lot of rough terrain variable condition combat. But yeah I understand it’s a big deal in the popular imagination.
    - jakejarvis 7y ago
      Not quite sure what you mean by imagination... Of course Toyotas aren't limited to terrorist groups, but it's definitely been a long-standing trend – so much so that the US Treasury Department asked Toyota to open an inquiry internally regarding ISIS and the dozens of Tacomas and Land Cruisers their propaganda videos: https://abcnews.go.com/International/us-officials-isis-toyota-trucks/story?id=34266539 https://abcnews.go.com/International/us-officials-isis-toyot...
chiefalchemist 7y ago
Isn't this based on a "philosophy" published by Bell Labs a couple of decades prior?
- Jtsummers 7y ago
  Can you point to a source or resource on that?
  - chiefalchemist 7y ago
    I've read it mentioned a number of places - as it's somewhat mythical - but the source that comes to mind at the moment - but perhaps I'm getting it wrong? - was the book "Creativity Inc." https://en.wikipedia.org/wiki/Creativity%2C_Inc https://en.wikipedia.org/wiki/Creativity%2C_Inc.
- csours 7y ago
  Toyota took all of the good ideas they found in American companies (most specifically Ford) in the 1950s and added continuous improvement. Then they actually iterated with continuous improvement. So I don't think it's fair to say that any of the ideas are outright stolen (I know you didn't say that either), because Toyota took them well past the starting point.
mattjbak 7y ago
I enjoyed this fiction book that covers a story of a business professional learning the Toyota business system from a mentor. It's a quick worthwhile read. Non-affiliate Amazon link here: https://www.amazon.com/Andy-Me-Crisis-Transformation-Journey/dp/1439825386 https://www.amazon.com/Andy-Me-Crisis-Transformation-Journey...
richman777 7y ago
A lot of this was covered in "The Phoenix Project". A good read but a bit idealistic in the expected outcome. The fake company was essentially able to right the sinking ship after the band had already stopped playing, in 2 quarters no less. However, the core tenets were valid from a general approach. My fear when reading was the potential to go overboard. We have all met over-zealous scrum masters. Same could be applied to a lot of the stuff they were essentially transferring from manufacturing to development and more specifically devops.
- tvanantwerp 7y ago
  I really enjoyed The Phoenix Project. I agree that things come together a bit too nicely at the end--seemed unrealistic. The first half though, when everything is going wrong, seemed very realistic. I couldn't read it before bed, or else I'd get too worked up to sleep.
  - richman777 7y ago
    It made a rough transition for me because all of the things going wrong were all too familiar. Then when it wrapped up very nicely I felt like I was bad at my job. "Wait, how did they fix it so fast!?!" (hyperbole here but it was sort of a gut punch)
- Jtsummers 7y ago
  It's worth reading The Goal as The Phoenix Project is somewhat based on it. The Goal introduces the idea of Theory of Constraints in a similar novelized form, and The Phoenix Project takes ToC and applies it to information systems/software work. There's overlap between ToC and the Toyota Way (Toyota Production System, Lean, etc.) as all are based on taking a systems view of things, and place a great deal of emphasis on identifying problems with the process, not the people (that is, no individual blame).
  - kesor 7y ago
    There are also a bunch of very nice books about TLS, which stands for "Theory of Constraints + Lean + Six Sigma". For example books by Bob Sproull and books by Bruce Nelson.
0898 7y ago
"Work like the tortoise, not the hare." I knew I was onto something.
- pier25 7y ago
  Completely unrelated but... I was listening to the "The Rocky Road to Dublin" when reading your comment during the "hunt the hare" part. Funny coincidence.
  - favorited 7y ago
    Which version? The Dubliners recording (with Luke Kelly singing) is one of my favorite songs of all time.
    - pier25 7y ago
      This one: https://www.youtube.com/watch?v=jxBKgOyMzSc https://www.youtube.com/watch?v=jxBKgOyMzSc Edit: Although this one is pretty good too! https://www.youtube.com/watch?v=0QdbeM2JWYE https://www.youtube.com/watch?v=0QdbeM2JWYE
lemax 7y ago
"The Machine That Changed the World" is a wonderful title on this. Kiichiro Toyoda invented the lean production model after coming to the states and studying the inefficiencies of the assembly lines of Ford. This was a process dependent on modularizing every manufacturing component due to a demand for the Toyota company to serve a market with a need for an immense variety of vehicles, and giving teams ownership of the entire production process rather than one error check at the end a lá Ford. Introducing a vehicle with a steering wheel on the opposite side might take a year to implement in lean production, while handling that kind of variation in the assembly line model could take years (generally double the amount of time); The net result of this being that Toyota could offer 2x the vehicles of GM at half GM's size. Toyota was able to make extremely reliable vehicles and modify them as consumer demands shifted. By 1990, the Japanese were making cars with 4 year product lives and 500k total units (125k per year) while the Western companies were building 2M over 10 year product lives.
- sebtoast 7y ago
  I've never seen Toyoda mentioned as the inventor of the lean model, I usually seen Taiichi Ohno credited for it. https://en.wikipedia.org/wiki/Taiichi_Ohno https://en.wikipedia.org/wiki/Taiichi_Ohno
  - vvanders 7y ago
    W. Deming also played a pretty large role too[1]. The whole history around Lean/Kaizen/etc is pretty fascinating. [1] https://en.wikipedia.org/wiki/W._Edwards_Deming https://en.wikipedia.org/wiki/W._Edwards_Deming
    - throw0101a 7y ago
      Deming was about quality control, which dovetails into lean: you can only do the latter if you know your parts bin is good, and that you can trust your supplier/s to deliver.
      - ethbro 7y ago
curiouscats 7y ago
Those interested might also find these worth reading: Deming and Software Development https://management.curiouscatblog.net/2014/03/17/deming-and-software-development/ What’s Deming Got to Do With Agile Software Development and Kanban https://blog.deming.org/2013/07/whats-deming-got-to-do-with-agile-software-development-and-kanban/
- 1123581321 7y ago
  Please just put links on a normal line of text — code formatting prevents them from being rendered as clickable links. It also makes them harder to read on mobile.
akeck 7y ago
My favorite book in this topic is "The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition: Second Edition" by Steven J. Spear (Formerly "Chasing The Rabbit") Also really good: Deming wrote his perspective in "Out of Crisis" and Toyota's Taiichi Ohno wrote about his experience in "Toyota Production System: Beyond Large-Scale Production". As others have mentioned, Deming laid the ground work for this type of thinking in post-war Japan. Taiichi Ohno led the initial development of the Toyota Production System.
mindcrime 7y ago
This Toyota stuff gets a little bit of a bad rap in some circles, because of the infamous "TPS report" thing - some people believe it's a reference to "Toyota Production System." My understanding is that the Office Space reference was actually meant to be to Testing Procedure Specification documents, but it's hard to be sure. In any case, Toyota / Lean / etc. is a mindset that has a lot of really good ideas embedded in it. I'm sure you can take it and distort it and come up with a monstrosity (like people do with "Agile") but the core stuff is really good. As noted by lemax, The Machine That Changed The World is a really good book on this topic. It's also interesting to note that a lot of the "Toyota" system was inspired by the teachings of an American, W. Edwards Deming. If I recall the story correctly, Deming was pushing these ideas on statistical process control, and nobody in America would listen to him, so he want to Japan and they embraced his stuff, ran with it, and it helped them become a manufacturing juggernaut.
- Retra 7y ago
  I'm pretty sure the writers of Office Space have gone on record saying "TPS report" is a meaningless term used simply to evoke a sense of wasteful bureaucratic nonsense.
  - mindcrime 7y ago
    Hmm... this article[1] cites an interview with Mike Judge where he says it mean "Test Program Set" when he was an engineer. Anyway, I've seen more than a few people jump to the conclusion that it stands for something to do with the "Toyota Production System" which is unfortunate. [1]: http://mentalfloss.com/article/57338/what-tps-report http://mentalfloss.com/article/57338/what-tps-report
    - Ambele 7y ago
      That's too bad. It's quite funny thinking Toyota Production System is where TPS reports come from because it's so believable. Even though Toyota switched to Agile-ish methodologies, they still produce 20x the documentation and paperwork that the Waterfall method produces!
kesor 7y ago
I love the Toyota books, read almost any book that is somehow connected to TPS, Toyota, Lean and such. There is a really fun to read a trilogy by Michael Ballé, the first book is called "The Gold Mine". And from Goldratt, all of his books and videos and related material is also a favorite. Specifically, about Toyota, Eli Goldratt wrote an article that provides the historical context and what problems Toyota solved, and then continue to improve upon that solution to invent a new solution that is even more amazing. Highly recommended 10m read for free here https://www.goldrattconsulting.com/webfiles/fck/files/Standing-on-the-Shoulders-of-Giants.pdf https://www.goldrattconsulting.com/webfiles/fck/files/Standi...
bitwize 7y ago
In the 1960s, my father was a manufacturing engineer for BigTechFirm (this was back when BigTechFirms built actual stuff, rather than trafficking in webshit). On the shop floor, there were A, B, and C workers on a line in descending order of skill level required and roughly ascending order of available workers. It was a true assembly line model. I believe the A and B workers had more variety to their work but the C workers had precisely one job, like putting two parts together along a joint or tightening a specific set of screws. This introduced problems in the line when a C worker got sick: the line would be held up entirely while a substitute was trained and then the substitute would perform much more poorly than the sick worker. My father's bright idea was to give each C worker a workbench and train them in several jobs, then have them perform all those jobs in one phase of the assembly. That way, if a C worker got sick, because all of their colleagues knew all the jobs that worker had to do, the line would be held up much less. Upper management passed on my dad's idea back then -- but it became all the rage in the 1980s when it was rediscovered in the Toyota model, part of the massive fad for "Japanese management techniques" that prevailed back then. I keep this story in mind when I have to deal with agileshit at a company whose management had apparently never heard of The Mythical Man-Month.
- chrisan 7y ago
  It wasn't just your father. A lot of American companies never felt the need to improve. It's kind of sad really. In an industrial systems engineering class we learned of Deming who was trying to help American auto manufacturers with quality control and they wouldn't hear of it. He later was in Japan and influenced the ideas over there. Japan would go on to create the Deming Prize as one of their highest awards one could be given for quality https://en.wikipedia.org/wiki/Deming_Prize https://en.wikipedia.org/wiki/Deming_Prize
- erikpukinskis 7y ago
  What is webshit? It seems like you are trying to say that you don’t think web developers build anything worthwhile, but I’m hoping there’s a less insulting interpretation of your comment?
  - 7y ago
johnnycab 7y ago
A resonably good read: https://www.thedrive.com/tech/26955/inside-toyotas-takaoka-2-line-the-most-flexible-line-in-the-world https://www.thedrive.com/tech/26955/inside-toyotas-takaoka-2... How do you double output to 500,000 cars a year? “Easy,” you say, “just make that line run faster.”
artsyca 7y ago
Why don't software professionals defer more to the likes of Nintendo, Konami, and other Japanese software companies rather than this manufacturing process?
- Jtsummers 7y ago
  Are those companies known for their speed and quality of code delivery? Have they published studies and popularised their approaches? Have they, or anyone else, generalized their approaches to things other than specific software categories? The thing about the manufacturing processes that have come out of Toyota (and others), or the ideas from Deming, Goldratt, and others, is that they're more about general systems theory. What is the flow through the system? How do we know when is an appropriate time to do X? How do we know the focus should be on improving the sales team and not the development team or vice versa? It may seem like a focus on a manufacturing is misplaced, but many of the ideas transfers over to services as well. Within your business, you have processes which are repeated regularly, information flows with bottlenecks. Which of those should you focus on improving? How do you determine that? How do you measure the improvement efforts? How do you choose how to improve something (top-down directive, or bottom-up participatory effort)? Study Lean, Theory of Constraints, and systems theory and you'll get some answers and ideas.
  - artsyca 7y ago
    Nintendo releases more software than Toyota
    - deleted 7y ago
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      - deleted 7y ago
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    - Jtsummers 7y ago
      Maybe don’t edit your post next time? Especially after people have replied. That’s a very dishonest mode of discussion.
novaleaf 7y ago
Whenever I see articles like this, I like to remind people that a great production system doesn't make a company more honest or accountable. Unintended acceleration flaw in Toyota models around 2005 to 2011, due to firmware bugs: http://www.safetyresearch.net/blog/articles/toyota-unintended-acceleration-and-big-bowl-%E2%80%9Cspaghetti%E2%80%9D-code http://www.safetyresearch.net/blog/articles/toyota-unintende... Great for USA customers. They were made whole. I personally was driving a 2011 Toyota minivan in Thailand in 2013 when I suffered this firmware bug. Toyota refused to consider it was anything other than driver fault. I was only going 5kph when it happened so no damage, but damn scary as hell. No recall in that country, and unless dealers did a covert firmware upgrade during maintenance, the flaw still exists in similar model years.
- jacobush 7y ago
  Weirdest thing, a colleague had unintended acceleration in a Toyota 4WD of much older vintage, 80s or early 90s. Must have been something different entirely, those things were much more mechanical in nature.
  - btilly 7y ago
    Most cases of unintended acceleration, in all brands of cars, are due to the foot coming down on the wrong pedal. And then in a panic, your brain refuses to acknowledge the error and doubles down. Your memory gets based on what your brain thought, and not what actually happened. US government estimates are that this happens an average of around 16k times per year in the USA. The press release that Wikipedia cites for that has disappeared but you can find it on the wayback machine: https://web.archive.org/web/20180423205652/https://www.nhtsa.gov/press-releases/nhtsa-safety-advisory-reducing-crashes-caused-pedal-error https://web.archive.org/web/20180423205652/https://www.nhtsa... Toyota's acknowledged problem was a floor mat that could get jammed and cause the accelerator to stick. However most of their cases of unintended acceleration were still likely to be human error.
    - novaleaf 7y ago
      I'm sorry but you are wrong regarding the Toyota problem. There was (is?) a firmware issue that caused the vehicle to attempt to speed up, regardless of if the accelerator was pressed, or even if the brake was pressed. In my case, I had the brake fully depressed with around 100kg of force, and the engine was revving to attempt to overcome the brake (VERY scary situation, believe me!). The system only recovered when I bumped a taxi in front of me. Now you may say I was pushing the accelerator. If I did that I would have hit the car in front of me a lot faster than 5kph. If I was somehow pushing both the accelerator and the brake, the computer system should ignore the acceleration anyway (due to brake taking precedence). But you don't have to take my word for it. Go read up on the Toyota firmware issue, starting with link I put in the prior post. EDIT: here's another article, summarizing the faults as determined by court: https://www.edn.com/design/automotive/4423428/Toyota-s-killer-firmware--Bad-design-and-its-consequences https://www.edn.com/design/automotive/4423428/Toyota-s-kille... - Toyota’s electronic throttle control system (ETCS) source code is of unreasonable quality. - Toyota’s source code is defective and contains bugs, including bugs that can cause unintended acceleration (UA). - Code-quality metrics predict presence of additional bugs. - Toyota’s fail safes are defective and inadequate (referring to them as a “house of cards” safety architecture). - Misbehaviors of Toyota’s ETCS are a cause of UA.
frostyj 7y ago
FYI, practice of Kanban also comes from Toyota: https://en.wikipedia.org/wiki/Kanban https://en.wikipedia.org/wiki/Kanban
sixdimensional 7y ago
And what I have seen (working in a similarly famous Japanese company) is that while these management models are quite powerful, they lack interpretation in the modern age - that is to say, how they apply to systems, data, software, etc. For example, if data quality is not respected holistically (an extension of the focus on "quality"), the organization and its constituents (customers, employees, stakeholders) suffer.
mti27 7y ago
When US and Japan car makers join forces: https://www.youtube.com/watch?v=7trB7i2xpfc https://www.youtube.com/watch?v=7trB7i2xpfc
kaycebasques 7y ago
They list “motion” as a form of waste. What does this mean?
- Jtsummers 7y ago
  In manufacturing its unneeded movement. If I have to get a part that’s at the other side of the facility or even 30’ away, that’s a lot of effort in roundtrips. The component or part should be brought to me. Or my work should be brought to the component or part. Or the movement could be made useful by having me (or the movement mechanism) carry something both ways.
- bluedino 7y ago
  Copy/paste: Unnecessary movement of people in the plant or in the general work area, such as looking for parts and tools, leaving the work area for any reason, and physically moving products and parts. Motion is probably the second most common waste.
fblp 7y ago
Curious would anyone like to learn about Toyota production system (lean manufacturing) implementation at Zenbooth factory in Berkeley, CA? We've thought about doing tours.
- jimnotgym 7y ago
  If I was in the USA, in a heartbeat. I have got so much buy-in in the past by taking senior people on tours and showing them the things I am trying to get them to buy. Seeing things in action is much more powerful for many people than dry documents.
khalvin 7y ago
This is no longer the case. Toyota quality is been slipping lately. I got a brand new Toyota the dealer had to replace transmission after 3k.
- kevin_thibedeau 7y ago
  Where was it made? Anything outside of Japan won't benefit from the culturally pervasive perfectionism.
- tdxcbkif 7y ago
  What model of car did you buy?
atulatul 7y ago
This American Life had an interesting episode. A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons—until it was too late. https://www.thisamericanlife.org/561/nummi-2015 https://www.thisamericanlife.org/561/nummi-2015

368 points by qin 7y ago

How do you maintain "Principle 1" while being a publicly traded company? The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. For example look at the field of Customer Retentions. It used to be focused on satisfaction & delight which are both long term success strategies (both to grow and to retain), but in the last twenty years Customer Switching (i.e. making it harder/more costly/more time consuming/more stressful/etc to switch) has become the norm, this is a short term strategy since it improves short term retention metrics at the cost of long term returning customers and poor word of mouth (i.e. nobody returns or joins after they leave, if you made the switching process hellish). It is a great way to keep your quarterly and yearly churn low, but a poor way to run a business. It used to only be businesses with artificial monopolies that would do this (e.g. Verizon, Comcast, etc). But recently we've seen companies in fairly competitive spaces adopted a similar short term "suicide strategy" like LogMeIn (Remote Support Software), The New York Times (News Publication), SiriusXM (streaming audio), etc. All of which are likely chasing quarterly performance metrics tied to executive compensation.

bluGill 7y ago
While that is a common statement, it isn't really true. Most stock holders have figured out that long term profits are important as well. Companies that only focus short term go out of business quickly and so are worth less than companies who will be around longer. Most shareholders (37%) are retirement accounts which have long term goals.
- radcon 7y ago
  > While that is a common statement, it isn't really true. "Companies exist to maximize shareholder value" is the myth that just won't die.
- TeMPOraL 7y ago
  > Most stock holders have figured out that long term profits are important as well. Companies that only focus short term go out of business quickly and so are worth less than companies who will be around longer. Doesn't matter if the stock holders who pushed for the decisions managed to flip their stocks when they were still rising in value. Aren't most stock holders playing this game to flip stocks, without caring much about the particular company they're making money off?
  - icxa 7y ago
    Aren't most stocks are held in index funds and ETFs?
    - TeMPOraL 7y ago
      I don't know. Could someone who knows this for sure chime in here?
      - nradov 7y ago
        Yahoo Finance will show you the top holders for any publicly traded company. https://finance.yahoo.com/quote/TM/holders?p=TM https://finance.yahoo.com/quote/TM/holders?p=TM
    - mrep 7y ago
      Yep, they recently crossed the 50% mark [0]. Discussion [1] [0]: https://qz.com/1623418/index-funds-now-account-for-half-the-us-stock-market/ https://qz.com/1623418/index-funds-now-account-for-half-the-... [1]: https://news.ycombinator.com/item?id=20020997 https://news.ycombinator.com/item?id=20020997
magduf 7y ago
>How do you maintain "Principle 1" while being a publicly traded company? >The way the stock market is designed... means they're going to put short term profits over long term viability. It's simple: be Japanese and not American. Japanese companies don't have this kind of problem, precisely because they aren't American and their society doesn't value enriching executives over all else, and instead values a stable and harmonious society.
- davidrm 7y ago
  https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization#2019 https://en.wikipedia.org/wiki/List_of_public_corporations_by... Not a single Japanese company, while the lists are dominated by the US ones. What you're saying is nothing other than the ancient TV trope about the difference between Japanese and the Americans (east vs west). disclaimer: I have 0 ties whatsoever to the US.
supergauntlet 7y ago
Perhaps it's a culture thing? IIRC, you don't actually legally have to bring more value to shareholders every quarter at the cost of everything else. Maybe Toyota's execs and shareholders have some sort of "gentlemen's agreement" where they just agree to not prioritize the short term at all costs? Maybe that's naive and they're just saying one thing and doing another.
- zebrafish 7y ago
  All publicly trade companies have a fiduciary responsibility to shareholders. That means different things to different companies and is not a hard and fast rule. Amazon did not prioritize short term profits for a long long time and Bezos famously told investors they were too shortsighted. Many large manufacturing companies adopt the Toyota principles here in the US as well. Principle 1 is up to interpretation about what brings the most long-term value to the company. No company ever tries to go out of business, ergo they optimize to exist forever or get acquired. Whether the board & management understands how best to achieve that long-term sustainability is another matter and one that shareholders get to vote on.
  - supergauntlet 7y ago
    Sure, I just meant the fiduciary responsibility doesn't necessarily always mean "short term profits at all costs." Why does it seem to always be that way, though? Most every company I see appears very shortsighted with no thought to the long game.
    - bumby 7y ago
      My current personal theory is that it's related to a cognitive bias. People tend to be biased towards the short-term. I.e. the short-term pain on my doorstep seems much worse than the (potentially larger) pain on the horizon.
    - rmah 7y ago
      It doesn't always appear that way -- it's really a glass half full/half empty thing. If I may be so bold, you are see what you want to see. Generally speaking, public companies do not prioritize the next quarter above all else. Why not? Because they are, generally speaking, not run by idiots. Of course, some do in certain situations. Because it makes sense in those situations. Owners (shareholders) and boards are not full of idiots either. They realize the temptation of short term pumps. Thus, executive compensation is typically shaped to encourage longer-term thinking (e.g. stock that does not fully vest for years, bonuses based on future company performance years out, etc). And if they do reward short-term metrics, it's for a specific reason. That said, japanese companies tend to have longer time horizons than american companies (decades vs years) and perhaps that's better. But then again, the further out you go, the less your planning will work out. So who knows for sure?
EvanWinget 7y ago
There's definitely a big problem with short termism and focus on quarterly performance over long-term value. Luckily there are a variety of solutions to this. One is to have dual class share structures where minority owners have majority of the voting shares (e.g. Facebook, Google). Another is to create a new type of stock exchange that incentivizes long-term ownership (e.g. LTSE long-term stock exchange).
radcon 7y ago
> How do you maintain "Principle 1" while being a publicly traded company? > The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Easy: Don't do that. Either 1.) Don't be a publicly traded company, or 2.) Don't let short-sighted shareholders dictate your management decisions.
nabla9 7y ago
Good ownership structure and corporate governance. Toyota group is keiretsu where Toyouta Motor Corp. has owners like Toyota Indutries, Denso and some big Japanese banks and insurance companies.
rectang 7y ago
> Many companies have been ruined and continue to be ruined You say "ruined", I say "fulfilled their ultimate purpose as disposable wealth-extraction machines enriching executives". I totally agree that the stock market's design encourages short-termism. But this is entirely appropriate in service of the idea that heroic individuals are chiefly responsible for company outcomes.
- tim333 7y ago
  Though of course in traditional theory the company should be run for the shareholders rather than the executives. It's a bit of a flaw in the system if they can extract large bonuses while tanking the stock. Maybe the government could write some laws that bonuses have to be held in escrow for a while to check the company survives. (And in more modern views maybe you should worry about the other stakeholders too.)
  - rectang 7y ago
    I disagree that it's a "flaw". It is the natural consequence of an ideology, where we ascribe proportionate value to the contributions of executives and marginal value to the contributions of everyone else. Since we believe that executives are the ones creating the wealth, it is just that the wealth flows out of the company and towards them. Executives giveth and executives taketh away.
    - tim333 7y ago
      >Since we believe that executives are the ones creating the wealth I wonder how many people actually believe that.
  - nradov 7y ago
    Shareholders are free to impose deferred compensation schemes on executives. In fact many companies have done so. No new laws are needed.
    - mcguire 7y ago
peterwwillis 7y ago
It's just a different kind of business. Car companies have multi-year release cycles, deal with complex logistics chains, and sell expensive products, so they have to plan for the long term. If your company lives and dies on the release of your next car, you're screwed.
TeMPOraL 7y ago
After reading countless stories about companies big and small, I came to conclusion that if you want to build a company that has a mission and/or a moral compass, under no circumstances you should ever give any degree of control to people who are not in on the mission or do not share the same moral direction. From this follow at least two rules: 1) Never ever go public. 2) Never ever accept VC money. Problem is, you'll likely get outcompeted by companies that do either or both of these things.
- tim333 7y ago
  There are public companies that are run for the long term. Berkshire Hathaway springs to mind and I'm sure there are many others. It's down to the CEO whether they do that or try to game the quarterly earnings.
rb808 7y ago
> The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. That's a myth. Yes CNBC loves short term stuff as it makes good TV. In the real world see Black Rock (biggest asset manager) CEO public urging long term focus https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter https://www.blackrock.com/corporate/investor-relations/larry... . See also Amazon and all the other profitless companies just listed as good examples that long term has value.
- Someone1234 7y ago
  You call it a "myth" then use one example, that disproves the point (why urge to act against a "myth") and another that's a single data point, while ignoring the rest of the market. That's a pretty poorly explored position.
  - rb808 7y ago
    I would have though that the CEO of the world's largest investment company would count more than "one single data point". I know there are a few examples of short term investors ruining a company - but have you any examples of companies punished for choosing long term over short term?
    - Someone1234 7y ago
      > I would have though that the CEO of the world's largest investment company would count more than "one single data point". I said that CEO undercuts your point. You claimed short-term-ism was a "myth," then quoted a CEO saying that a lot of people focus on short term investing, rather than long term investing. Therefore making it not a myth, according to your own source.
      - rb808 7y ago
        Maybe you should actually read it. He said companies might be tempted by maximizing short-term returns because we are late in the economic cycle.
deleted 7y ago
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gnode 7y ago
I don't think the fundamental problem is being publicly traded, it's a question of how distributed the control of a company is. Some publicly traded companies are controlled by few people. When ownership is concentrated, decisions can be made based on long-term ideology. When ownership is highly distributed, and especially when indirect via indices, decisions are made in favour of widely accepted and broadly applicable metrics of performance, which tend to have only short term confidence.
eries 7y ago
This is literally the thought process that led to the creation of the LTSE. I was actually reading The Toyota Way while writing the draft manuscript for The Lean Startup
rhino369 7y ago
>The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits. Short term stock prices aren't entirely controlled by short term results. Just look at PE ratios for growth companies. Short term results often change the price a lot because its an indicator for future results. Stuff like one time write offs don't really affect the price.
opencl 7y ago
Japanese corporate governance does not work quite like in the US, either legally or culturally. Shareholders actually generally have more decision making power than in the US but tend not to exercise it very often and basically trust the existing leadership. Toyota has been publicly traded for 70 years and their shareholders (which are primarily other large Japanese conglomerates) have never even tried to make these kinds of short-term-over-long-term pushes and keep electing Toyoda family members into the top leadership positions.
- Ambele 7y ago
  Finally someone that understands the difference.
Ambele 7y ago
It's hard to say how Toyota is governed unless you know more about how the Tokyo Stock Exchange functions. Toyota shares are only available here in the form of ADRs (American Depository Receipts). Each ADR share represents two shares of common stock on the Tokyo Stock Exchange. Toyota might not have chase short term profits like many American companies choose to do. After two hours of googling it (and reading english web pages only, not japanese webpages), the only notable thing I discovered was that Toyota pays out 30% of its profits in the form of dividends and spends 20% of its profits on share buybacks for a total shareholder return of roughly 50% of earnings each year. This indicates that Toyota is shareholder friendly but it's not clear if this is an obligation or a choice. Instead of chasing short-term profits, I've observed that Toyota spends fair budget on advertising and showboating futuristic looking hype technology that is never intended to be released or used. Some investors primarily look at the daily news and are satisfied with this strategy. The technology Toyota intends on using isn't hyped up; it's kept a secret until it's actually released to drivers. Finally 90% of Toyota Corporate Employees in the Plano, TX US Headquarters are contractors from other companies. Those ones sure as hell aren't getting any quarterly performance bonuses or any executive compensation. At best, the executives bonuses are getting to keep your air-conditioned job for another 3 years.

thendrill 7y ago

That shit works only if you are Japanese.... Have Japanese mentality and work culture... Also your product is a car.. Or something tangable made on a production line.... Agile IS the Toyota way... Or at least tries to be

martin_a 7y ago
Nah. I see some of those points could very well be adapted to German companies. And focussing on long-term growth and stability is probably one of the main aspects of the German "Mittelstand" (medium companies, often led by families over generations) which usually has a strong focus on providing a sustainable place to work and therefore not optimizes its business for shareholder value.
- magduf 7y ago
  His post would have been correct if he had omitted the word "only". As you've pointed out, it isn't only Japanese culture that values long-term stability and value to the society. The problem is that American culture absolutely does not value this stuff, and that's why our companies work the way they do.
  - deleted 7y ago
    [deleted]
theothermkn 7y ago
A sibling post mentioned Deming, the American who's WWII work on bomber production formed the basis for "The Toyota Way," and not in some indirect way, either. Deming went to Japan at the behest of the US to help them rebuild their economy after WWII.
- kesor 7y ago
  I read somewhere that the context for this was all the men returning from WW II. While it was mostly women worked in the factories during the war and had to find ways to improve production, Deming ideas were solid. But as soon as the egoistic men came back from the frontlines after the war, he was kinda "pushed away" because no one in the US wanted to listen to him anymore. Which naturally was a big mistake as it turned out in the 70s when Japanese car manufacturing made American cars look like garbage.

radcon 7y ago

They should call this "The Deming Way" since most of it sounds identical to Deming's management philosophy and he taught Toyota back in the 1960s[1]. His system also had 14 points, which probably isn't a coincidence[2]. [1] https://blog.deming.org/2016/10/toyotas-management-history/ https://blog.deming.org/2016/10/toyotas-management-history/ [2] https://en.wikipedia.org/wiki/W._Edwards_Deming https://en.wikipedia.org/wiki/W._Edwards_Deming

gotts 7y ago
Thanks for sharing! Good read
- radcon 7y ago
  Thanks for reading! I think Deming is extremely under-appreciated. It seems like Six Sigma is all anyone talks about in terms of management philosophy these days...
  - riffic 7y ago
    Deming's work has been highly influential within the DevOps community: https://itrevolution.com/deming-to-devops-part-1/ https://itrevolution.com/deming-to-devops-part-1/
  - curiouscats 7y ago
    I agree, you might enjoy the Deming subreddit https://www.reddit.com/r/Deming/ with links to applying his ideas on management.
kesor 7y ago
Pretty sure that Deming and Taiichi Ohno both are responsible for the creation of these ideas, and they both learned from each other and improved. Which is why eventually it looks very similar looking at it from either side.
chrisan 7y ago
Don't forget Japan even has an award named after Deming for quality! https://en.wikipedia.org/wiki/Deming_Prize https://en.wikipedia.org/wiki/Deming_Prize

seancoleman 7y ago

Ah, I see the HN has discovered the OG lean, the true innovation, commonly misinterpreted, that inspired Lean Startups.

wil421 7y ago

>Principle 5 Build a culture of stopping to fix problems, to get quality right the first time. Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue. I heard culturally Japan and to an extent other Asian manufacturing nations would never actually press the button. Can anyone confirm this?

mnctvanj 7y ago
If you can get your hands on the HBS case study of TPS it's a great read. Details how much emphasis is put on blaming any/all issues on process, rather than people. To the extent that if a clumsy worker drops a wrench, it is assumed to be a problem with process, not that worker, and addressed immediately. The case study also describes a couple of examples of assembly line workers pulling the stop levers and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown.
- iooi 7y ago
  Previous discussion, 5 Whys: https://news.ycombinator.com/item?id=11656575 https://news.ycombinator.com/item?id=11656575
- bityard 7y ago
  > The case study also describes a couple of examples of assembly line workers pulling the stop levers and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown. More than that, when the manager approaches the employee who stopped the line, she is not supposed to ask, "why did you stop the line?" She instead asks, "how can I help?"
- vram22 7y ago
  >and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown. https://en.wikipedia.org/wiki/5_Whys https://en.wikipedia.org/wiki/5_Whys

Symmetry 7y ago

I initially misread that as "The Toyota War". Which was a real thing, named that because Chad used Toyota Land Cruisers to defeat Libya. https://en.wikipedia.org/wiki/Toyota_War https://en.wikipedia.org/wiki/Toyota_War

jakejarvis 7y ago
The entire decades-long overseas diversion saga surrounding American Toyota pickups has always fascinated me. Top Gear did an episode [0] trying to destroy a Toyota Hilux (similar to the Land Cruiser) and literally couldn't, which explains why it's so popular with terrorists. It's a worthwhile watch if you want to see truck survive after being drowned in water, fire, and the rubble of a demolished skyscraper. Say what you want about Toyotas, but that's quite the engineering feat in my opinion! [0] https://www.youtube.com/watch?v=xnWKz7Cthkk https://www.youtube.com/watch?v=xnWKz7Cthkk
- flamtap 7y ago
  Gotta say, that's a damn talented mechanic they had on that episode.
- sprafa 7y ago
  It’s not really limited to terrorists, is it? I mean in the popular imagination but essentially technicals are actually great for a lot of rough terrain variable condition combat. But yeah I understand it’s a big deal in the popular imagination.
  - jakejarvis 7y ago
    Not quite sure what you mean by imagination... Of course Toyotas aren't limited to terrorist groups, but it's definitely been a long-standing trend – so much so that the US Treasury Department asked Toyota to open an inquiry internally regarding ISIS and the dozens of Tacomas and Land Cruisers their propaganda videos: https://abcnews.go.com/International/us-officials-isis-toyota-trucks/story?id=34266539 https://abcnews.go.com/International/us-officials-isis-toyot...

chiefalchemist 7y ago

Isn't this based on a "philosophy" published by Bell Labs a couple of decades prior?

Jtsummers 7y ago
Can you point to a source or resource on that?
- chiefalchemist 7y ago
  I've read it mentioned a number of places - as it's somewhat mythical - but the source that comes to mind at the moment - but perhaps I'm getting it wrong? - was the book "Creativity Inc." https://en.wikipedia.org/wiki/Creativity%2C_Inc https://en.wikipedia.org/wiki/Creativity%2C_Inc.
csours 7y ago
Toyota took all of the good ideas they found in American companies (most specifically Ford) in the 1950s and added continuous improvement. Then they actually iterated with continuous improvement. So I don't think it's fair to say that any of the ideas are outright stolen (I know you didn't say that either), because Toyota took them well past the starting point.

mattjbak 7y ago

I enjoyed this fiction book that covers a story of a business professional learning the Toyota business system from a mentor. It's a quick worthwhile read. Non-affiliate Amazon link here: https://www.amazon.com/Andy-Me-Crisis-Transformation-Journey/dp/1439825386 https://www.amazon.com/Andy-Me-Crisis-Transformation-Journey...

richman777 7y ago

A lot of this was covered in "The Phoenix Project". A good read but a bit idealistic in the expected outcome. The fake company was essentially able to right the sinking ship after the band had already stopped playing, in 2 quarters no less. However, the core tenets were valid from a general approach. My fear when reading was the potential to go overboard. We have all met over-zealous scrum masters. Same could be applied to a lot of the stuff they were essentially transferring from manufacturing to development and more specifically devops.

tvanantwerp 7y ago
I really enjoyed The Phoenix Project. I agree that things come together a bit too nicely at the end--seemed unrealistic. The first half though, when everything is going wrong, seemed very realistic. I couldn't read it before bed, or else I'd get too worked up to sleep.
- richman777 7y ago
  It made a rough transition for me because all of the things going wrong were all too familiar. Then when it wrapped up very nicely I felt like I was bad at my job. "Wait, how did they fix it so fast!?!" (hyperbole here but it was sort of a gut punch)
Jtsummers 7y ago
It's worth reading The Goal as The Phoenix Project is somewhat based on it. The Goal introduces the idea of Theory of Constraints in a similar novelized form, and The Phoenix Project takes ToC and applies it to information systems/software work. There's overlap between ToC and the Toyota Way (Toyota Production System, Lean, etc.) as all are based on taking a systems view of things, and place a great deal of emphasis on identifying problems with the process, not the people (that is, no individual blame).
- kesor 7y ago
  There are also a bunch of very nice books about TLS, which stands for "Theory of Constraints + Lean + Six Sigma". For example books by Bob Sproull and books by Bruce Nelson.

0898 7y ago

"Work like the tortoise, not the hare." I knew I was onto something.

pier25 7y ago
Completely unrelated but... I was listening to the "The Rocky Road to Dublin" when reading your comment during the "hunt the hare" part. Funny coincidence.
- favorited 7y ago
  Which version? The Dubliners recording (with Luke Kelly singing) is one of my favorite songs of all time.
  - pier25 7y ago
    This one: https://www.youtube.com/watch?v=jxBKgOyMzSc https://www.youtube.com/watch?v=jxBKgOyMzSc Edit: Although this one is pretty good too! https://www.youtube.com/watch?v=0QdbeM2JWYE https://www.youtube.com/watch?v=0QdbeM2JWYE

lemax 7y ago

"The Machine That Changed the World" is a wonderful title on this. Kiichiro Toyoda invented the lean production model after coming to the states and studying the inefficiencies of the assembly lines of Ford. This was a process dependent on modularizing every manufacturing component due to a demand for the Toyota company to serve a market with a need for an immense variety of vehicles, and giving teams ownership of the entire production process rather than one error check at the end a lá Ford. Introducing a vehicle with a steering wheel on the opposite side might take a year to implement in lean production, while handling that kind of variation in the assembly line model could take years (generally double the amount of time); The net result of this being that Toyota could offer 2x the vehicles of GM at half GM's size. Toyota was able to make extremely reliable vehicles and modify them as consumer demands shifted. By 1990, the Japanese were making cars with 4 year product lives and 500k total units (125k per year) while the Western companies were building 2M over 10 year product lives.

sebtoast 7y ago
I've never seen Toyoda mentioned as the inventor of the lean model, I usually seen Taiichi Ohno credited for it. https://en.wikipedia.org/wiki/Taiichi_Ohno https://en.wikipedia.org/wiki/Taiichi_Ohno
- vvanders 7y ago
  W. Deming also played a pretty large role too[1]. The whole history around Lean/Kaizen/etc is pretty fascinating. [1] https://en.wikipedia.org/wiki/W._Edwards_Deming https://en.wikipedia.org/wiki/W._Edwards_Deming
  - throw0101a 7y ago
    Deming was about quality control, which dovetails into lean: you can only do the latter if you know your parts bin is good, and that you can trust your supplier/s to deliver.
    - ethbro 7y ago

curiouscats 7y ago

Those interested might also find these worth reading: Deming and Software Development https://management.curiouscatblog.net/2014/03/17/deming-and-software-development/ What’s Deming Got to Do With Agile Software Development and Kanban https://blog.deming.org/2013/07/whats-deming-got-to-do-with-agile-software-development-and-kanban/

1123581321 7y ago
Please just put links on a normal line of text — code formatting prevents them from being rendered as clickable links. It also makes them harder to read on mobile.

akeck 7y ago

My favorite book in this topic is "The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition: Second Edition" by Steven J. Spear (Formerly "Chasing The Rabbit") Also really good: Deming wrote his perspective in "Out of Crisis" and Toyota's Taiichi Ohno wrote about his experience in "Toyota Production System: Beyond Large-Scale Production". As others have mentioned, Deming laid the ground work for this type of thinking in post-war Japan. Taiichi Ohno led the initial development of the Toyota Production System.

mindcrime 7y ago

This Toyota stuff gets a little bit of a bad rap in some circles, because of the infamous "TPS report" thing - some people believe it's a reference to "Toyota Production System." My understanding is that the Office Space reference was actually meant to be to Testing Procedure Specification documents, but it's hard to be sure. In any case, Toyota / Lean / etc. is a mindset that has a lot of really good ideas embedded in it. I'm sure you can take it and distort it and come up with a monstrosity (like people do with "Agile") but the core stuff is really good. As noted by lemax, The Machine That Changed The World is a really good book on this topic. It's also interesting to note that a lot of the "Toyota" system was inspired by the teachings of an American, W. Edwards Deming. If I recall the story correctly, Deming was pushing these ideas on statistical process control, and nobody in America would listen to him, so he want to Japan and they embraced his stuff, ran with it, and it helped them become a manufacturing juggernaut.

Retra 7y ago
I'm pretty sure the writers of Office Space have gone on record saying "TPS report" is a meaningless term used simply to evoke a sense of wasteful bureaucratic nonsense.
- mindcrime 7y ago
  Hmm... this article[1] cites an interview with Mike Judge where he says it mean "Test Program Set" when he was an engineer. Anyway, I've seen more than a few people jump to the conclusion that it stands for something to do with the "Toyota Production System" which is unfortunate. [1]: http://mentalfloss.com/article/57338/what-tps-report http://mentalfloss.com/article/57338/what-tps-report
  - Ambele 7y ago
    That's too bad. It's quite funny thinking Toyota Production System is where TPS reports come from because it's so believable. Even though Toyota switched to Agile-ish methodologies, they still produce 20x the documentation and paperwork that the Waterfall method produces!

kesor 7y ago

I love the Toyota books, read almost any book that is somehow connected to TPS, Toyota, Lean and such. There is a really fun to read a trilogy by Michael Ballé, the first book is called "The Gold Mine". And from Goldratt, all of his books and videos and related material is also a favorite. Specifically, about Toyota, Eli Goldratt wrote an article that provides the historical context and what problems Toyota solved, and then continue to improve upon that solution to invent a new solution that is even more amazing. Highly recommended 10m read for free here https://www.goldrattconsulting.com/webfiles/fck/files/Standing-on-the-Shoulders-of-Giants.pdf https://www.goldrattconsulting.com/webfiles/fck/files/Standi...

bitwize 7y ago

In the 1960s, my father was a manufacturing engineer for BigTechFirm (this was back when BigTechFirms built actual stuff, rather than trafficking in webshit). On the shop floor, there were A, B, and C workers on a line in descending order of skill level required and roughly ascending order of available workers. It was a true assembly line model. I believe the A and B workers had more variety to their work but the C workers had precisely one job, like putting two parts together along a joint or tightening a specific set of screws. This introduced problems in the line when a C worker got sick: the line would be held up entirely while a substitute was trained and then the substitute would perform much more poorly than the sick worker. My father's bright idea was to give each C worker a workbench and train them in several jobs, then have them perform all those jobs in one phase of the assembly. That way, if a C worker got sick, because all of their colleagues knew all the jobs that worker had to do, the line would be held up much less. Upper management passed on my dad's idea back then -- but it became all the rage in the 1980s when it was rediscovered in the Toyota model, part of the massive fad for "Japanese management techniques" that prevailed back then. I keep this story in mind when I have to deal with agileshit at a company whose management had apparently never heard of The Mythical Man-Month.

chrisan 7y ago
It wasn't just your father. A lot of American companies never felt the need to improve. It's kind of sad really. In an industrial systems engineering class we learned of Deming who was trying to help American auto manufacturers with quality control and they wouldn't hear of it. He later was in Japan and influenced the ideas over there. Japan would go on to create the Deming Prize as one of their highest awards one could be given for quality https://en.wikipedia.org/wiki/Deming_Prize https://en.wikipedia.org/wiki/Deming_Prize
erikpukinskis 7y ago
What is webshit? It seems like you are trying to say that you don’t think web developers build anything worthwhile, but I’m hoping there’s a less insulting interpretation of your comment?
- 7y ago

johnnycab 7y ago

A resonably good read: https://www.thedrive.com/tech/26955/inside-toyotas-takaoka-2-line-the-most-flexible-line-in-the-world https://www.thedrive.com/tech/26955/inside-toyotas-takaoka-2... How do you double output to 500,000 cars a year? “Easy,” you say, “just make that line run faster.”

artsyca 7y ago

Why don't software professionals defer more to the likes of Nintendo, Konami, and other Japanese software companies rather than this manufacturing process?

Jtsummers 7y ago
Are those companies known for their speed and quality of code delivery? Have they published studies and popularised their approaches? Have they, or anyone else, generalized their approaches to things other than specific software categories? The thing about the manufacturing processes that have come out of Toyota (and others), or the ideas from Deming, Goldratt, and others, is that they're more about general systems theory. What is the flow through the system? How do we know when is an appropriate time to do X? How do we know the focus should be on improving the sales team and not the development team or vice versa? It may seem like a focus on a manufacturing is misplaced, but many of the ideas transfers over to services as well. Within your business, you have processes which are repeated regularly, information flows with bottlenecks. Which of those should you focus on improving? How do you determine that? How do you measure the improvement efforts? How do you choose how to improve something (top-down directive, or bottom-up participatory effort)? Study Lean, Theory of Constraints, and systems theory and you'll get some answers and ideas.
- artsyca 7y ago
  Nintendo releases more software than Toyota
  - deleted 7y ago
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  - Jtsummers 7y ago
    Maybe don’t edit your post next time? Especially after people have replied. That’s a very dishonest mode of discussion.

novaleaf 7y ago

Whenever I see articles like this, I like to remind people that a great production system doesn't make a company more honest or accountable. Unintended acceleration flaw in Toyota models around 2005 to 2011, due to firmware bugs: http://www.safetyresearch.net/blog/articles/toyota-unintended-acceleration-and-big-bowl-%E2%80%9Cspaghetti%E2%80%9D-code http://www.safetyresearch.net/blog/articles/toyota-unintende... Great for USA customers. They were made whole. I personally was driving a 2011 Toyota minivan in Thailand in 2013 when I suffered this firmware bug. Toyota refused to consider it was anything other than driver fault. I was only going 5kph when it happened so no damage, but damn scary as hell. No recall in that country, and unless dealers did a covert firmware upgrade during maintenance, the flaw still exists in similar model years.

jacobush 7y ago
Weirdest thing, a colleague had unintended acceleration in a Toyota 4WD of much older vintage, 80s or early 90s. Must have been something different entirely, those things were much more mechanical in nature.
- btilly 7y ago
  Most cases of unintended acceleration, in all brands of cars, are due to the foot coming down on the wrong pedal. And then in a panic, your brain refuses to acknowledge the error and doubles down. Your memory gets based on what your brain thought, and not what actually happened. US government estimates are that this happens an average of around 16k times per year in the USA. The press release that Wikipedia cites for that has disappeared but you can find it on the wayback machine: https://web.archive.org/web/20180423205652/https://www.nhtsa.gov/press-releases/nhtsa-safety-advisory-reducing-crashes-caused-pedal-error https://web.archive.org/web/20180423205652/https://www.nhtsa... Toyota's acknowledged problem was a floor mat that could get jammed and cause the accelerator to stick. However most of their cases of unintended acceleration were still likely to be human error.
  - novaleaf 7y ago
    I'm sorry but you are wrong regarding the Toyota problem. There was (is?) a firmware issue that caused the vehicle to attempt to speed up, regardless of if the accelerator was pressed, or even if the brake was pressed. In my case, I had the brake fully depressed with around 100kg of force, and the engine was revving to attempt to overcome the brake (VERY scary situation, believe me!). The system only recovered when I bumped a taxi in front of me. Now you may say I was pushing the accelerator. If I did that I would have hit the car in front of me a lot faster than 5kph. If I was somehow pushing both the accelerator and the brake, the computer system should ignore the acceleration anyway (due to brake taking precedence). But you don't have to take my word for it. Go read up on the Toyota firmware issue, starting with link I put in the prior post. EDIT: here's another article, summarizing the faults as determined by court: https://www.edn.com/design/automotive/4423428/Toyota-s-killer-firmware--Bad-design-and-its-consequences https://www.edn.com/design/automotive/4423428/Toyota-s-kille... - Toyota’s electronic throttle control system (ETCS) source code is of unreasonable quality. - Toyota’s source code is defective and contains bugs, including bugs that can cause unintended acceleration (UA). - Code-quality metrics predict presence of additional bugs. - Toyota’s fail safes are defective and inadequate (referring to them as a “house of cards” safety architecture). - Misbehaviors of Toyota’s ETCS are a cause of UA.

frostyj 7y ago

FYI, practice of Kanban also comes from Toyota: https://en.wikipedia.org/wiki/Kanban https://en.wikipedia.org/wiki/Kanban

sixdimensional 7y ago

And what I have seen (working in a similarly famous Japanese company) is that while these management models are quite powerful, they lack interpretation in the modern age - that is to say, how they apply to systems, data, software, etc. For example, if data quality is not respected holistically (an extension of the focus on "quality"), the organization and its constituents (customers, employees, stakeholders) suffer.

mti27 7y ago

When US and Japan car makers join forces: https://www.youtube.com/watch?v=7trB7i2xpfc https://www.youtube.com/watch?v=7trB7i2xpfc

kaycebasques 7y ago

They list “motion” as a form of waste. What does this mean?

Jtsummers 7y ago
In manufacturing its unneeded movement. If I have to get a part that’s at the other side of the facility or even 30’ away, that’s a lot of effort in roundtrips. The component or part should be brought to me. Or my work should be brought to the component or part. Or the movement could be made useful by having me (or the movement mechanism) carry something both ways.
bluedino 7y ago
Copy/paste: Unnecessary movement of people in the plant or in the general work area, such as looking for parts and tools, leaving the work area for any reason, and physically moving products and parts. Motion is probably the second most common waste.

fblp 7y ago

Curious would anyone like to learn about Toyota production system (lean manufacturing) implementation at Zenbooth factory in Berkeley, CA? We've thought about doing tours.

jimnotgym 7y ago
If I was in the USA, in a heartbeat. I have got so much buy-in in the past by taking senior people on tours and showing them the things I am trying to get them to buy. Seeing things in action is much more powerful for many people than dry documents.

khalvin 7y ago

This is no longer the case. Toyota quality is been slipping lately. I got a brand new Toyota the dealer had to replace transmission after 3k.

kevin_thibedeau 7y ago
Where was it made? Anything outside of Japan won't benefit from the culturally pervasive perfectionism.
tdxcbkif 7y ago
What model of car did you buy?

atulatul 7y ago

This American Life had an interesting episode. A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons—until it was too late. https://www.thisamericanlife.org/561/nummi-2015 https://www.thisamericanlife.org/561/nummi-2015