Thinking “Better than Toyota” and “Beyond lean”

It is interesting to consider what the nature will be of the generation of corporations beyond Toyota’s current “lean” model – the Toyota Production System.

Some might ask why that question should be asked, since most of the US is still playing catch-up with Toyota. One reason is that maybe the shape beyond “lean” is easier to get to than Lean. Lacking that, maybe it can give us some insight into what really matters.

I’ll approach this over multiple posts, but to get that ball rolling, there are two features that strike me as absolutely required regardless of local implementation.

A “vertical” feedback loop that brings together workers and management, and
A “horizontal” feedback loop that brings together the company and the customers.

The horizontal loop is reflected in the customer “pull” mantra of Toyota, and just plain common sense. If the company is out of touch with its own customers, it will have a hard time optimizing how much it satisfies them, and how much it learns from them. If this loop is missing, we have a company disconnected from external reality, unlikely to be “adapative” and makes poor use of external resources.

The vertical loop is reflected in much of the Toyota Way, bringing together labor and management, ensuring that the “eyes and boots on the ground” can be heard at “the top”, and vice versa. A breakdown in this loop is reflected in an unhealthy and dysfunctional organization, making poor use of its own internal resources.

Finally, there is a need for the company to be value-driven, long-term oriented even though most or all the people in the company are short-sighted and focused on local problems as perceived in local perspectives. In fact, the company has to succeed at every level, not just short term, and not just long –term. The easiest way I can imaging doing that is to have completely symmetric tools and thinking, so that long-term and middle-term and short-term issues are addressed in a way that hits every base for every decision. A breakdown in that coherence could expose the company to having short-term victories that interfere with long-term objectives, etc. If a solution can be found that is “win-win”, I’m thinking that’s probably the one to pick. (This can be argued, but it’s a good place to start.)

So, the coherences we seek are between management and labor, between the company’s interests and the customer’s interests, and between the short-term and the long-term interests of everyone. If those issues can be resolved at a reasonable cost, it would certanly remove many of the obstacles that cause companies to fail, and put it on a reasonable path for long-term vitality.

In fact, if a reasonably efficient company is converting external resources (cash) into external value (product or service) and in touch with its own people and the customers, just about the only remaining question is whether internal or external enemies could bring it down despite its otherwise strong operation.

One such hazard is that the company could still make flawed and short-sighted decisions. Generally I think this can be traced to top management that is failing to consult with its own staff and customers, but it could be that top management is just dense, or has an agenda different than the best interests of the company in mind.

Since companies in general do not “belong” to the CEO, but to the stockholders, they may not want the company to be stripped of value to pad the pocket of the current CEO – it’s their dollars that are leaking out. One way to address this internal corruption pitfall is to have very distributed decision making that cannot be thwarted by any small group of people, whether they are “at the top” or not. If the collective decisions can be at least as good as and as fast as those of solitary individuals (I say “if”) then this distributed model might be of interest. It’s a big “if” but one we’ll consider. Regardless, some function must be in place to prevent corruption at the top from developing and destroying the company. Often transparency will help there.

But, still, the CEO and the management team might simply be dense and not able to manage well. What will protect the company from that? Again, if (big if) we can find a solution involving distributed decision making that is demonstrably better and as fast as a single expert at the top, then we can make a design that is robust against individual components, even the CEO, failing.

Now, collective consciousness seems to work for Toyota, but according to Liker, Toyota has a reputation for being “conservative” and evolving slowly with a great emphasis on sustaining the past unless expliclitly addressed.

Aside from legal questions, the real question in “management by committee” (at its worst) is whether a team can “fly an airplane” or whether a team will simply defeat any coherent rapid action.

So, those are the two big research questions that determine this next-generation company design:
Can a team producce, reliably, better decisions than even a very good individual, and
Can a team produce such decisions as fast as a very good individual?

In other words, can we synthesize intelligence and sufficient speed to “pilot” the aircraft. And can that intelligence work with the CEO so the legal commitments the CEO signs remain aligned with the team?

Probably, this is going to require a CEO who is there for the good of the company and is willing to learn from the company about even better goals and objectives than the ones they arrived with. This is a hard type of leadership for the US to fathom. It requires combining assertiveness and submission in an unusual blend.

Still, if those problems could be addressed, a company run by a meta-person collective consciousness could, potentially, have all the advantages of “lean” and more on top of that.

Or, maybe, this concept is already carried within the true Lean concept held by Toyota. The question of how to manage distributed “command and control” is the pivotal one. So, maybe the next question to ask is if there’s any theoretical work or literature that supports the concept that this might even be possible.

And, again, I think immediately of my own body. Here I have ten trillion cells, or so, and there is no “boss cell” who the others “report to.” So, yes, in at least one working model of adpative learning systems, there is a solution to the emergent collective decision making –
and we’re it.

What would make that solution happen, instead of the downside alternative modes of collapsing – such as one very strong leader taking over, or the social culture becoming “the borg” and totally stifling innovation?

Good questions for tomorrow.

Meanwhile, I recall that Marquardt's "Leading with Questions" approach separates the role of authority from the role of "know-it-all", and frees managers from having to "know everything" in order to remain managers. This is a hard transition to those raised that saying "I don't know" is a sign of weakness and will trigger the attack dogs being loosed. Still, these days, it is impossible to understand all the complexities of any large, complex, adaptive system -- so it is totally unrealistic to expect anyone, including a CEO, to grasp either the external world or the internal world. As with "lean" - when this transition is over, they will still have a job, but it will be a different job.

The same transition is already part of the FM22-100, U.S. Army Leadership Field Manual that I refer to repeatedly in this weblog. In short

Being IN authority does not require being AN authority.

That is just a crucial distinction if we are going to ever get CEO's and managers to be willing to listen to their staff, and free organizations from being hostage to mental models in their leader's brains that just aren't getting updated with fresh information.