Toyota’s Guiding Principles, Guidance for the Custodian to CEO
Dictates Desired Behavior
Firstly, driving your system to excellence requires vision and concrete steps forward. Building actionable Guiding Principles takes dedication, careful thought, and a vision for your system. This guidance should be long-lasting, easily understood, and measurable. I will go through the Guiding Principles that took Toyota from a poor manufacturer to consequently the best manufacturer. These guiding principles will work for anybody that runs a system.
Toyota has Updated Their Guiding Principals
Toyota has recently changed its Guiding Principles. Their new Guiding Principles aren’t nearly as detailed and have less guidance. Toyota is one of the most studied companies in the world and its original Guiding Principles are what took them to exceed 6+ Sigma. I find it suspicious that Toyota has made a massive change to its current Guiding Principles. I believe their current Guiding Principles are as detailed as their original Guiding Principles but hidden from public view.
Toyota’s Guiding Principles
- Long Term Philosophy – Toyota believes that it will achieve its system goals by looking into the future. Toyota is not the only company that does this. Apple also uses a Long Term Philosophy at the expense of focusing on the short-term. An anomaly exists between these two companies. By focusing on long-term goals, you will also meet short-term goals.
- Create Continuous Process Flow – Firstly, this will surface process issues. Flow refers to the movement of a product or service from an upstream process to a downstream process. Flow means that when the downstream process completes its task the upstream process completes its task. Ideally, there would be a minimum wait time between the two processes. This is the ideal condition but is not possible in all cases. You may be able to attain Continuous Process Flow by actively managing the activities in each process.
- Use the Pull Method – Subsequently Pull refers to the downstream process requesting a product or service from the upstream process. Pull is based on the concept of building a product or service based on a customer order contrasted with Push. Push is a pretty standard department-based movement of a product or service between two processes. In a push environment, each department goes as fast as possible to generate as much product or service throughput. There are three major problems with push. 1) Push is slower than Pull, 2) Push creates more inventory which is fat or waste, and 3) Push is a departmental view rather than a system view which makes system improvement more difficult.
- Level Out the Workload – This is not just for manufacturers. Your system operates more effectively if there is a constant throughput of products or services. This can be difficult to attain since it is based on customer requests however, it makes a lot of sense, no matter what business you’re in, to work to attain a near-constant workload.
- Build a Culture of Stopping to Fix Problems – This makes sense for three reasons. 1) Rely on the individuals working on the product or service to detect defects in the product or service, and 2) Defects are captured early rather than maybe captured later, 3) If everyone acts as a Quality Control Inspector then you will produce products or services with the best quality, and A winning culture is established as individuals own the responsibility of solving problems.
- Standardize Tasks – By standardizing your tasks everybody is processing the same activities in the same way and as your quality goes up your inconsistency goes down. But also importantly, Standardized Tasks are where you start when you go to improve a process. This is extremely important for Toyota’s highly effective Continuous Improvement program.
- Visual Control – This concept allows you to very quickly, verify something important. As an example, an anesthesiologist comes to an operation with a tray full of materials. Visual Control would put a shadow drawing behind each material. This allows you to visually determine if you have all the right tools and aren’t missing any. Another very important example is a pilot looking at all of their control gauges quickly to determine if anything is not operating correctly. Visual Control surfaces problems.
- Use only reliable, tested technology – The concept here is that you don’t want to Beta test vendors’ technology. Technology should be a good fit for people and processes. An example of this was when I was working with a bank. They were evaluating technology to solve a problem. The best technology was a new technology. They rejected the new technology because they considered it at higher risk and went with an older technology solution.
- Grow Leaders who: 1) Understand the work, 2) embrace the philosophy, and 3) are able to teach it – It is important that a leader not only see what people are doing but feel what people are doing. This predisposes you to have a systematic philosophy. It is a leader’s job to mentor their knowledge others.
- Develop excellent people, and put together phenomenal teams, that align with your system philosophy – People are a system’s most valuable device. People have an exceptional range of capabilities that a successful system will utilize. Systems are comprised of teams and the teams must align with the corporate philosophy along with the people. This is very important and if you run a system, developing its capabilities is paramount.
- Respect your suppliers and partners by challenging them and helping them – Above all, this may be a unique attribute of Toyota. Toyota will send their employees into a strategic supplier to improve their capabilities to Toyota standards. The result of this is a supplier or partner that delivers ever-increasing quality parts at an ever-decreasing cost. This is a win for Toyota and its suppliers and partners. It is a two-way street.
- Go and See for Yourself – This philosophy is one where system leaders go to the source of the problem to understand it. Understanding may require verifying data and analyzing a process. Instead of relying upon others to do this work leaders should do this work for themselves.
- Make Decisions Slowly, Implement Decisions Rapidly – Decisions are arrived at slowly, through consensus. This helps you consider all options and multiple possible solution directions. This decreases implementation risk and increases solution viability. Once a decision is decided upon, implement quickly.
- Become a Learning Organization That Continually Improves – For example once a process is stabilized, then improve it. Improving requires learning. Toyota’s Continuous Improvement program is so powerful because process owners are continually learning to look at their processes in different ways. This is a key part of Continuous Improvement.
Toyota designed these 14 Guiding Principles to move them to greatness. Every system should have Guiding Principles but the differences in systems could very well lead to differences in Guiding Principles. Toyota’s Guiding Principles are a good place to start for any system.