Toyota

Toyota coordinator are what we call knowledge

activist the third enabler , mobilizing knowledge
activist ,discuss what active organizational change
agents can do spark creation and sharing of
knowledge,
Knowledge ativism has six purposes
1,initiating and focusing creation and sharing
knowledge
2.reduce timeand cost necessary for creation and
sharing of knowledge
3.leveraging knowledge creation initiatives
through the corporation
4.improving the condition of those engaged in in
creation and sharing of knowledge by realting their
activitiestothe companie’s bigger picture
5. preparing participantsin knowledge creation for
new tasks in which their knowledge is needed and
6.examining whether unique corporate knowledge
need modification in different regions and
analyzing whether unique corporate knowledge
has become obsolete

Knowledge activist are the are proselytizers of the

company
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Toyota Motor Corporation
•Set Based Concurrent Engineering
• Parallel evaluation of multiple alternatives
• Impose minimal constraints on design requirements
• Efficient Documentation using 8.5” x 11” pages with standa

rd format

The case discusses the various Knowledge Management (KM) practices at Toyota Motors, the
world's most profitable automobile company.

It also describes how Toyota enables wide knowledge sharing not just within the organization but
also across its supply chain.

It details the practices that make Toyota a true learning organization. It further explores the role
of traditional organizational practices in the company's KM efforts.

The case concludes with a discussion on how KM has contributed to Toyota's exemplary
performance
Toyota does not have a separate Knowledge Management philosophy and strategy;
managing and sharing knowledge are a part of everyday life at Toyota."
"I believe Toyota has raised continuous improvement and employee involvement to a unique
level, creating one of the few examples of a genuine learning enterprise in human history - not a
small accomplishment."
In 2004 Toyota Motor Corporation (Toyota) was Japan's largest company and the world's second
largest automobile company with worldwide unit sales of 6.7 million.3 It was recognized as one
of the world's best knowledge enterprises, and was a three-time winner of the Global Most
Admired Knowledge Enterprises (MAKE) Survey 4, and a five-time winner of the MAKE Japan
Survey. This award recognizes best practices in the area of Knowledge Management. The survey
studied enterprises on criteria like knowledge-based culture and products; knowledge sharing
and collaboration; as well as organizational learning (Refer Exhibit I for details of the
performance dimensions).

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Most experts believed that successful Knowledge
Management (KM) had given Toyota a keen
competitive edge. Toyota's Production System
(TPS) manufactured a variety of high-quality
vehicles at very low cost. Toyota had been
extremely open about its TPS. Company sources
were quoted to have said, "Study us all you
want"5.

Still no other company was able to match

Toyota's production system despite decades of
effort. The world's largest automaker, General
Motors (GM), entered into an alliance with
Toyota to see its production systems in action
and learn the intricacies, but could not match
Toyota standards.
According to a study6, DaimlerChrysler, one of the "Big Three7" auto firms, acknowledged that
its KM initiatives had been actually inspired by Toyota's Yokoten8 system.

Background Note
Toyota was set up in 1897, when Sakichi Toyoda (Sakichi) diversified into the handloom
machinery business from his family's traditional business of carpentry. He founded Toyoda
Automatic Loom Works (TALW) in 1926 for manufacturing automatic looms...
Knowledge Management at Toyota
According to analysts, Toyota's success in both
the local and global markets was based on its
gaining a competitive advantage through
implementation of innovative and path-breaking
ideas on its production floors. TPS worked on the
basic idea of maintaining a continuous flow of
products in factories in order to adapt flexibly to
changes in demand. TPS linked all production
activities to real dealer demand through
implementation of Kanban, JIT and other quality
measures...
Delivering Value to the Customer
In 2003, Toyota retained its position as the largest seller of a luxury car model (Lexus) in the US,
for the fourth year in a row, beating BMW, Mercedes, Cadillac and Acura. Auto-analysts said it
overturned the commonly-held assumption that a luxury brand would need decades to establish
itself...

The Returns
In 2003, Toyota's profits of around $8 billion were more than the combined profits of General
Motors, Ford and Chrysler. Again in the year 2004, it was the most profitable automobile
company in the world with profits of $11 billion on revenues of $163.6 billion.

The largest automobile company, GM, generated a mere $3.7 billion in profits on revenues of
$193.5 billion. Between July 2004 to January 2005, GM's share price fell while Toyota's rose
(Refer Exhibit VII for the share price chart)...
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How Toyota Turns Workers Into Problem

Solvers
Why study Toyota? With all the books and articles on Toyota, lean manufacturing, just-in-time, kanban systems,

quality systems, etc. that came out in the 1980s and 90s, hasn't the topic been exhausted?

Steven Spear: Well, this has been a much-researched area. When Kent Bowen and I first did a literature search,

we found nearly 3,000 articles and books had been published on some of the topics you just mentioned.

However, there was an apparent discrepancy. There had been this wide, long-standing recognition of Toyota as the

premier automobile manufacturer in terms of the unmatched combination of high quality, low cost, short lead-time

and flexible production. And Toyota's operating system—the Toyota Production System—had been widely credited

for Toyota's sustained leadership in manufacturing performance. Furthermore, Toyota had been remarkably open in

letting outsiders study its operations. The American Big Three and many other auto companies had done major

benchmarking studies, and they and other companies had tried to implement their own forms of the Toyota
Production System. There is the Ford Production System, the Chrysler Operating System, and General Motors went

so far as to establish a joint venture with Toyota called NUMMI, approximately fifteen years ago.

However, despite Toyota's openness and the genuinely honest efforts by other companies over many years to

emulate Toyota, no one had yet matched Toyota in terms of having simultaneously high-quality, low-cost, short

lead-time, flexible production over time and broadly based across the system.

It was from observations such as these that Kent and I started to form the impression that despite all the attention

that had already been paid to Toyota, something critical was being missed. Therefore, we approached people at

Toyota to ask what they did that others might have missed.

Q: What did they say?

A: To paraphrase one of our contacts, he said, "It's not that we don't want to tell you what TPS is, it's that we

can't. We don't have adequate words for it. But, we can show you what TPS is."

Over about a four-year period, they showed us how work was actually done in practice in dozens of plants. Kent

and I went to Toyota plants and those of suppliers here in the U.S. and in Japan and directly watched literally

hundreds of people in a wide variety of roles, functional specialties, and hierarchical levels. I personally was in the

field for at least 180 working days during that time and even spent one week at a non-Toyota plant doing assembly

work and spent another five months as part of a Toyota team that was trying to teach TPS at a first-tier supplier in

Kentucky.

Q: What did you discover?

A: We concluded that Toyota has come up with a powerful, broadly applicable answer to a fundamental managerial

problem. The products we consume and the services we use are typically not the result of a single person's effort.

Rather, they come to us through the collective effort of many people each doing a small part of the larger whole. To

a certain extent, this is because of the advantages of specialization that Adam Smith identified in pin

manufacturing as long ago as 1776 in The Wealth of Nations. However, it goes beyond the economies of scale that

accrue to the specialist, such as skill and equipment focus, setup minimization, etc.
The products and services characteristic of our modern economy are far too complex for any one person to

understand how they work. It is cognitively overwhelming. Therefore, organizations must have some mechanism

for decomposing the whole system into sub-system and component parts, each "cognitively" small or simple

enough for individual people to do meaningful work. However, decomposing the complex whole into simpler parts is

only part of the challenge. The decomposition must occur in concert with complimentary mechanisms that

reintegrate the parts into a meaningful, harmonious whole.

This common yet nevertheless challenging problem is obviously evident when we talk about the design of complex

technical devices. Automobiles have tens of thousands of mechanical and electronic parts. Software has millions

and millions of lines of code. Each system can require scores if not hundreds of person-work-years to be designed.

No one person can be responsible for the design of a whole system. No one is either smart enough or long-lived

enough to do the design work single handedly.

Furthermore, we observe that technical systems are tested repeatedly in prototype forms before being released.

Why? Because designers know that no matter how good their initial efforts, they will miss the mark on the first try.

There will be something about the design of the overall system structure or architecture, the interfaces that

connect components, or the individual components themselves that need redesign. In other words, to some extent

the first try will be wrong, and the organization designing a complex system needs to design, test, and improve the

system in a way that allows iterative congruence to an acceptable outcome.

The same set of conditions that affect groups of people engaged in collaborative product design affect groups of

people engaged in the collaborative production and delivery of goods and services. As with complex technical

systems, there would be cognitive overload for one person to design, test-in-use, and improve the work systems of

factories, hotels, hospitals, or agencies as reflected in (a) the structure of who gets what good, service, or

information from whom, (b) the coordinative connections among people so that they can express reliably what they

need to do their work and learn what others need from them, and (c) the individual work activities that create

intermediate products, services, and information. In essence then, the people who work in an organization that

produces something are simultaneously engaged in collaborative production and delivery and are also engaged in a

collaborative process of self-reflective design, "prototype testing," and improvement of their own work systems

amidst changes in market needs, products, technical processes, and so forth.

It is our conclusion that Toyota has developed a set of principles, Rules-in-Use we've called them, that allow

organizations to engage in this (self-reflective) design, testing, and improvement so that (nearly) everyone can

contribute at or near his or her potential, and when the parts come together the whole is much, much greater than

the sum of the parts.

Q: What are these rules?

A:We've seen that consistently—across functional roles, products, processes (assembly, equipment maintenance

and repair, materials logistics, training, system redesign, administration, etc.), and hierarchical levels (from shop

floor to plant manager and above) that in TPS managed organizations the design of nearly all work activities,

connections among people, and pathways of connected activities over which products, services, and information

take form are specified-in-their-design, tested-with-their-every-use, and improved close in time, place, and person

to the occurrence of every problem.

Q: That sounds pretty rigorous.

A:It is, but consider what the Toyota people are attempting to accomplish. They are saying before you (or you all)

do work, make clear what you expect to happen (by specifying the design), each time you do work, see that what

you expected has actually occurred (by testing with each use), and when there is a difference between what had

actually happened and what was predicted, solve problems while the information is still fresh.

Q: That reminds me of what my high school lab science teacher required.

A: Exactly! This is a system designed for broad based, frequent, rapid, low-cost learning. The "Rules" imply a belief

that we may not get the right solution (to work system design) on the first try, but that if we design everything we

do as a bona fide experiment, we can more rapidly converge, iteratively, and at lower cost, on the right answer,

and, in the process, learn a heck of lot more about the system we are operating.

Q: You say in your article that the Toyota system involves a rigorous and methodical problem-solving approach

that is made part of everyone's work and is done under the guidance of a teacher. How difficult would it be for

companies to develop their own program based on the Toyota model?

A: Your question cuts right to a critical issue. We discussed earlier the basic problem that for complex systems,

responsibility for design, testing, and improvement must be distributed broadly. We've observed that Toyota, its

best suppliers, and other companies that have learned well from Toyota can confidently distribute a tremendous

amount of responsibility to the people who actually do the work, from the most senior, expeirenced member of the

organization to the most junior. This is accomplished because of the tremendous emphasis on teaching everyone

how to be a skillful problem solver.

Q: How do they do this?

A: They do this by teaching people to solve problems by solving problems. For instance, in our paper we describe a

team at a Toyota supplier, Aisin. The team members, when they were first hired, were inexperienced with at best

an average high school education. In the first phase of their employment, the hurdle was merely learning how to

do the routine work for which they were responsible. Soon thereafter though, they learned how to immediately

identify problems that occurred as they did their work. Then they learned how to do sophisticated root-cause

analysis to find the underlying conditions that created the symptoms that they had experienced. Then they

regularly practiced developing counter-measures—changes in work, tool, product, or process design—that would

remove the underlying root causes.

Q: Sounds impressive.

A: Yes, but frustrating. They complained that when they started, they were "blissful in their ignorance." But after

this sustained development, they could now see problems, root down to their probable cause, design solutions, but

the team members couldn't actually implement these solutions. Therefore, as a final round, the team members

received training in various technical crafts—one became a licensed electrician, another a machinist, another

learned some carpentry skills.

Q: Was this unique?

A: Absolutely not. We saw the similar approach repeated elsewhere. At Taiheiyo, another supplier, team members

made sophisticated improvements in robotic welding equipment that reduced cost, increased quality, and won

recognition with an award from the Ministry of Environment. At NHK (Nippon Spring) another team conducted a

series of experiments that increased quality, productivity, and efficiency in a seat production line.
Q: What is the role of the manager in this process?

A: Your question about the role of the manager gets right to the heart of the difficulty of managing this way. For

many people, it requires a profound shift in mind-set in terms of how the manager envisions his or her role. For the

team at Aisin to become so skilled as problem solvers, they had to be led through their training by a capable team

leader and group leader. The team leader and group leader were capable of teaching these skills in a directed,

learn-by-doing fashion, because they too were consistently trained in a similar fashion by their immediate senior.

We found that in the best TPS-managed plants, there was a pathway of learning and teaching that cascaded from

the most senior levels to the most junior. In effect, the needs of people directly touching the work determined the

assistance, problem solving, and training activities of those more senior. This is a sharp contrast, in fact a near

inversion, in terms of who works for whom when compared with the more traditional, centralized command and

control system characterized by a downward diffusion of work orders and an upward reporting of work status.

Q: And if you are hiring a manager to help run this system, what are the attributes of the ideal candidate?

A: We observed that the best managers in these TPS managed organizations, and the managers in organizations

that seem to adopt the Rules-in-Use approach most rapidly are humble but also self-confident enough to be great

learners and terrific teachers. Furthermore, they are willing to subscribe to a consistent set of values.

Q: How do you mean?

A: Again, it is what is implied in the guideline of specifying every design, testing with every use, and improving

close in time, place, and person to the occurrence of every problem. If we do this consistently, we are saying

through our action that when people come to work, they are entitled to expect that they will succeed in doing

something of value for another person. If they don't succeed, they are entitled to know immediately that they have

not. And when they have not succeeded, they have the right to expect that they will be involved in creating a

solution that makes success more likely on the next try. People who cannot subscribe to these ideas—neither in

their words nor in their actions—are not likely to manage effectively in this system.

Q: That sounds somewhat high-minded and esoteric.

A: I agree with you that it strikes the ear as sounding high principled but perhaps not practical. However, I'm

fundamentally an empiricist, so I have to go back to what we have observed. In organizations in which managers

really live by these Rules, either in the Toyota system or at sites that have successfully transformed themselves,

there is a palpable, positive difference in the attitude of people that is coupled with exceptional performance along

critical business measures such as quality, cost, safety, and cycle time.

Q: Have any other research projects evolved from your findings?

A: We titled the results of our initial research "Decoding the DNA of the Toyota Production System." Kent and I are

reasonably confident that the Rules-in-Use about which we have written are a successful decoding. Now, we are

trying to "replicate the DNA" at a variety of sites. We want to know where and when these Rules create great

value, and where they do, how they can be implemented most effectively.

Since we are empiricists, we are conducting experiments through our field research. We are part of a fairly

ambitious effort at Alcoa to develop and deploy the Alcoa Business System, ABS. This is a fusion of Alcoa's long

standing value system, which has helped make Alcoa the safest employer in the country, with the Rules in Use.

That effort has been going on for a number of years, first with the enthusiastic support of Alcoa's former CEO, Paul

O'Neill, now Secretary of the Treasury (not your typical retirement, eh?) and now with the backing of Alain Belda,

the company's current head. There have been some really inspirational early results in places as disparate as

Hernando, Mississippi and Poces de Caldas, Brazil and with processes as disparate as smelting, extrusion, die

design, and finance.

We also started creating pilot sites in the health care industry. We started our work with a "learning unit" at

Deaconess-Glover Hospital in Needham, not far from campus. We've got a series of case studies that captures

some of the learnings from that effort. More recently, we've established pilot sites at Presbyterian and South Side

Hospitals, both part of the University of Pittsburgh Medical Center. This work is part of a larger, comprehensive

effort being made under the auspices of the Pittsburgh Regional Healthcare Initiative, with broad community

support, with cooperation from the Centers for Disease Control, and with backing from the Robert Wood Johnson

Foundation.

Also, we've been testing these ideas with our students: Kent in the first year Technology and Operations

Management class for which he is course head, me in a second year elective called Running and Growing the Small
Company, and both of us in an Executive Education course in which we participate called Building Competitive

Advantage Through Operations.