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Companies must constantly innovate the products and services they offer as well as the systems on which they depend to design and deliver those products and services. If they do not, they get left behind by those that do.
But change is not enough. It has to occur ever more quickly. With every new advance in transportation and communication, people and products can move from one place to another more freely, and the more information that is easily available, the more intense competition becomes. Customers have access to ever more potential suppliers, and increased competition among them means, in turn, that companies have even less privileged access to the human, technological and material resources they need. Any one idea, even an insanely great one, will get a company only so far ahead and keep it there only so long.
The result is a relentless acceleration in the speed and certainty with which firms have to update their understanding of the market, innovate what they are offering and alter how they are delivering it.
Were that all, a company might get away with hiring a small number of smart, inventive people, giving them whatever time and resources they need, and letting them drive the company with an endless stream of great ideas. But there is more. Products, services and processes are becoming ever more complex and no dream team can come up with all the necessary ideas in anywhere near the allowable time at anywhere near a reasonable cost.
A car engine, for example, is no longer a kinetic sculpture of iron and steel. It includes aluminum, ceramics and a variety of plastics and rubbers. The necessary material science expertise alone is off the charts. Timing and fuel injection depend on electronic systems and software controls. For every part of the car, it is the same story. No small team of seasoned experts can be the company champions, with everyone else gasping “wow” and scurrying off to put the ideas to work. Competition today has to be a team sport with barely anyone riding the bench.
That sounds impossibly idealistic. In fact, it is quite realistic, and absolutely necessary. Winning companies do it and have been doing it for decades. It is difficult, but it is not impossible.
Employee InvestmentWhen Toyota emerged from World War II, the company was barely able to construct cars at all. It first made advances in manufacturing quality and productivity, gaining a solid foothold by the 1980s. It then built out its product line, adding new brands such as Lexus and later Scion. It steadily localized its design and production in its regional markets.
Once largely an importer, Toyota vies with Ford as the second largest auto manufacturer in North America. It introduced and scaled new technologies such as hybrid drive well in front of its rivals. The result is that Toyota went into the economic downturn well in advance of its rivals, had a far bigger cushion and seems to be recovering quicker.
What is striking is the investment Toyota and its suppliers make in developing their people-all their people-to contribute with their minds and not just their muscle. It is everyone’s job not only to perform this or that task, but also to improve the process by which that task is done. This is not a push or a special project; it is explicit company practice, all day, every day, in every Toyota facility. It is not the responsibility of a task force or team of consultants; it is the explicit responsibility of every Toyota manager at every level.
Consider what happens at Aisin, a flagship Toyota supplier. Junior employees hired for front-line work are first trained to do standard work with high fidelity. That looks like a case of experts prescribing a script for the nonexperts to follow, but it does not stop there. New hires also are then taught-explicitly and rigorously-how to see problems that compromise safety, quality or time. As they learn to see problems, they are taught how to conduct a root-cause analysis and then how to construct countermeasures, changes in the design of the work or the equipment so that more value can be created with less effort.
And this does not mean dropping a note in the suggestion box. Employees are trained in skilled trades such as electronics, plumping and carpentry so they can build prototypes and test their ideas; they also are taught how to conduct experiments correctly and how to draw valid conclusions from the results.
At NHK, another Toyota supplier, front-line teams were taught sophisticated experimental techniques, which they put to use improving the quality, cost and cycle time of a foam molding process.
At Taiheiyo, yet another Toyota supplier, front-line workers systematically identified and attacked problems with their welding operation. Over several months, they found ways to reduce and contain spatter, which simplified maintenance-a significant operational improvement-and reduced the risk of fire. They also learned to reduce and contain the fumes generated by their welding process, thereby reducing health and environmental risks. A work environment that had been dark and inhospitable became well lit, comfortable and more productive.
Yes, the engagement of the entire workforce in continual improvement can be accomplished. But it cannot be accomplished by the same management style that has already failed to accomplish it. A company’s management has to change.
Management AwakeningThe necessary change can be seen and understood by following the career of a Detroit automaker manager, whom we will call Bob Dallis. Dallis saw his own company downsizing, outsourcing and offshoring. At the same time he saw Toyota heading in the other direction, so he joined that company around 2000.
Though Dallis had always considered himself involved with his workforce and supportive of process innovation, he was in for an awakening when he joined Toyota. He already knew something about the horizontal flow of work and materials from receiving to shipping; value-stream maps and continuous flows; and pull systems, standard work and production cells. After all, these were all well-documented hallmarks of lean manufacturing. It was the undocumented stuff that knocked his socks off.
What Dallis came to appreciate after he got to Toyota were the top-down, center-out vertical flows of training, coaching and support which those with greater expertise and authority were required-not just expected-to provide for those with less expertise and authority.
Dallis had always felt that when problems occur, it was his job to solve them. But after an intense apprenticeship as a Toyota manager, he knew that his real successes would take place only after he had taught his own people to be great problem solvers in their own right. Learning to teach other, less senior managers to teach their people how to be great problems solvers-another skill he had to learn as a senior Toyota manager-was an even bigger multiplier of talent and accelerator of innovation.
Not only is this possible at Toyota, within the greater auto industry and in manufacturing in general, these ideas can be applied much more broadly.
Companywide ImprovementFrom the 1950s to the late 1980s, the jet engine maker Pratt and Whitney enjoyed a fairly peaceful pace, more like that of a think tank than that of a manufacturer facing fierce competition. Cold War defense spending was plentiful and the regulation of commercial aviation meant that if equipment suppliers such as Pratt had trouble controlling costs, the airlines petitioned for an appropriate adjustment to the rates they charged passengers.
At Pratt, the best engineers had plenty of freedom to bang away until they achieved a great design, while junior engineers learned their craft, like old-fashioned apprentices to master craftsmen.
The demise of the Soviet Union brought a rude expulsion from this technical Eden. There was a desperate rush to capture a “peace dividend.” Defense spending shrank. Deregulation and a host of related changes put Pratt under much more intense time and cost pressure. Meanwhile, a necessary consolidation cost the company many of the most experienced engineers who would have mentored the younger engineers. The old ways that had worked so well were now too slow and too expensive to keep Pratt in the running.
Pratt’s response was something called “engineering standard work,” a way to convert the company’s vast but fragile store of tribal knowledge into a well- articulated process for bringing new technology to life. Workflow maps, coordinated design criteria and codification of proven tools and approaches all played important roles in bringing Pratt back into fighting trim, but they would not have done the job without a steady stream of contributions from the less experienced engineers who had previously played much more of a supporting role.
To draw forth these widespread contributions, Pratt had to define the skills engineers needed within various disciplines and develop training to teach those skills and validate that they had been mastered. With this management change accomplished, it took much less time for junior people to become competent in design, capable of training others and begin contributing to the continuous improvement of the company’s work. For Pratt, this contributed to substantial compressions in the time and cost of bringing new engines to market. In a high-stakes game, the ante went down and the certainty of success went up.
These are only several examples of companies that have achieved and maintained industry-leading performance by drafting an entire workforce into the company’s brain trust. There are many others that span high-tech and heavy industry, services and software. There are some fantastic examples in healthcare, and the military is loaded with fantastic examples of leaders generating incredible performance by developing and then harnessing the creative potential of their troops rather than through a martinet command and control approach.
Rather than taking a negative approach-be it by trying to cut costs line item by line item or outsourcing the tasks they had not figured out how to do well enough themselves-these companies and their noncommercial counterparts took the most positive approach possible: improving their own ability to keep improving.
They realized that privileged positions and barriers to entry were too fleeting; the only advantage that will really last is a companywide ability to keep improving products and services and the processes by which they are designed, produced and delivered. And to maintain an advantage that only exists so long as the organization keeps charging forward, leadership succeeds only to the extent that it can relentlessly increase the capacity of those in their charge to see and solve problems, improve, innovate and invent tirelessly. Q
Quality OnlineFor more information on employee training, visit www.qualitymag.com to read these articles:
“Don’t Punish Employees with Training”
“The Inside Track on Six Sigma Training”
“Invest in Training”