ERP, or Enterprise Resource Planning is nothing more than a big piece of software. It sits at the centre of big organisations, handling lots of important tasks.
More recently, smaller scale ERP applications have come onto the market. These allow new and small businesses to get the benefits of linked back office functions. This is due, in large part, to the availability of managed, cloud-based software.
Continuous improvement had been around for a long time. And that simply built on generations of work to improve the way businesses do things, going back to the Gilbreths and Taylor. But in 1990, a Harvard Business Review article exploded the idea of incremental change, with its provocative title: Reengineering Work: Don’t Automate, Obliterate. It was written by an MIT engineer called Michael Hammer.
And three years later, the revolution was well underway, with a book he wrote with top management consultant, James Champy. Reengineering the Corporation: A Manifesto for Business Revolution was as much a rallying cry for the consulting industry as anything else. But in the few years that followed, hundreds of companies employed thousands of consultants to reengineer their processes and, in so-doing, remove tens of thousands from their workforces.
Michael Hammer was born in 1948 and grew up in Maryland. He went to MIT to study maths, receiving his BS in 1968. He then took an MS in Electrical Engineering in 1970, followed by a PhD in Computer Science, that he was awarded in 1973.
He remained at MIT becoming a professor in the Computer Science department and also a lecturer at the MIT Sloane School of Management. From there, he formed links with a Boston-based consulting firm, Index, led by founder, James Champy.
In 1990, he authored one of the most influential Harvard Business Review articles, Reengineering Work: Don’t Automate, Obliterate. This called for a radical approach to creating competitive advantage. It built on thinking that was already around among consulting firms like Index and Boston Consulting Group.
It was so successful that Hammer and Champy collaborated on a follow-up book that was hailed as one of the most important business books of its time: Reengineering the Corporation: A Manifesto for Business Revolution.
Other books followed, along with his own consultancy, and a commentary on the reengineering story as it grew, reached its peak, and then diminished amidst a certain sense of distaste. Hammer confessed to having been naive about the impact his ideas would have on people’s lives, once in the hands of corporations motivated primarily by profit for their shareholders.
Michael Hammer died unexpectedly in 2008, from a brain haemorrhage.
James Champy was born in 1942 and studied Civil Engineering, also at MIT. He gained his BS in 1963 and his MS in 1965. He then went to Boston College Law School and received his JD in 1968. From there, he went on to found the consulting firm Index .
In 1988, Index was bought by computer systems giant Computer Sciences Corporation, and became known as CSC Index. Champy stayed on as Chairman and CEO until 1996. He then went to lead another giant IT consultancy, Perot Systems, until 2009, when it was acquired by Dell.
Champy currently has a wide range of corporate roles, is an independent consultant, and research fellow at the Harvard Advanced Leadership Institute.
A company can get competitive advantage if it can improve its customer service or reduce its operating costs. Continuous improvement methodologies like time and motion studies, and the Japanese Kaizen, had done this for years. But reengineering is a methodology for rebuilding the way a company does things – its business processes – from scratch.
In particular, it emphasises removing whole processes that do not deliver value. The result of this radicalism was obvious in hindsight, though not what Hammer and Champy intended. Companies not only reduced the scope of processes and found significant shortcuts; they removed whole cadres of staff who had previously carried out the tasks that were no longer needed.
The two principle effects of the 1990s’ obsession with reengineering were substantial layoffs and redundancies (described by the now-infamous euphemism ‘downsizing’) and a bean-feast of highly paid work for armies of recently graduated consulting analysts at all of the big consultancies.
By the end of the 1990s, the reengineering bubble had burst, to be replaced by a second wave of technology enhanced cost-saving under the guise of another three letter acronym (TLA): Enterprise Resource Planning, or ERP.
We can get a sense of some of the principles of Business Process Reengineering from Hammer’s original HBR article. There, he said:
‘At the heart of reengineering is the notion of discontinuous thinking—of recognizing and breaking away from the outdated rules and fundamental assumptions that underlie operations. Unless we change these rules, we are merely rearranging the deck chairs on the Titanic. We cannot achieve breakthroughs in performance by cutting fat or automating existing processes. Rather, we must challenge old assumptions and shed the old rules that made the business underperform in the first place.’
The principles Hammer and Champy articulated included:
What was clearly missing was a recognition that some changes were always going to be more impactful than others. If you fail to address the principal workflow constraints, or make too many changes, then the resulting corporate carnage can be detrimental. This is something Eli Goldratt had realised ten years earlier.
And whenever I think back to my times at a major international consultancy* in the late 1990s, I cannot help but be reminded of something another friend and colleague (Tony Quigley) used to say:
‘The alternative to incremental development is excremental development’
* I was involved in Programme Management, not BPR
In the modern world, we often wonder how we maximise our productivity, so we can have a successful work life and also a thriving family life. Two people who could have told us about that were Frank and Lillian Gilbreth. They did not just, together and separately, make significant contributions to management theory.
They also had (together) 12 children. Cheaper by the dozen, Frank Gilbreth was once reported to have said. But it was Lillian’s work that continued after Frank’s early death after only 20 years of marriage. And she continued as a researcher, as well as being a single mum!
Frank Gilbreth was born in Maine, in 1868. Passing up on the opportunity to study at MIT because he wanted to support his mum, he became a bricklayer. But his intelligence meant that, by the age of 27, he had his own engineering consultancy, Gilbreth Inc.
He had been watching how bricklayers laid bricks, observing as many as 18 independent movements. Gilbreth would later label these motions ‘therbligs’ (see below). By deploying unskilled labourers, Gilbreth radically reduced the number of motions and increased bricklaying rates from 1,000 per hour, to 2,700. It is the same principle that means surgeons no longer riffle through a tray to find the implement they need: now nurses find and pass the instruments.
In 1903, Gilbreth met Lillian Moller in Boston, and they married the following year. Gilbreth soon got his wife interested in the new ideas of Scientific Management and Taylorism – the scientific management principles set out by FW Taylor. They met Taylor in 1907 and were in Henry Gantt’s apartment when the term ‘scientific management’ was coined.
Gilbreth believed that companies which gained from his time-saving advice should share the benefits with employees, rather that use the gain only to increase profits. So he only contracted with companies that promised to increase wages where his methods brought results. Among his clients were Eastman Kodak, U.S. Rubber, and Pierce Arrow. When the United States entered the First World War, Gilbreth enlisted and was commissioned into the Engineers Officers Reserve Corps.
While his focus was on the time and motion aspects of work efficiency, Lillian would come to focus on the human aspect. They complemented one another well, and also adopted the Gantt Chart in the work, extending the idea to develop the first flow charts. They were convinced that there was a best way to do anything and in timing everything and tracking processes to reduce steps, they pre-empted the late 20th and early 21st century fashions for continuous improvement, process re-engineering, and lean management.
Frank Gilbreth died in 1924, of a heart attack.
Lillian Moller was born in 1878, in California. After a period of home schooling and then high school, Moller commuted to the University of California, Berkeley. There, she achieved her BA in English literature. after a short time at Columbia, where she first studied psychology, she returned to UC Berkeley to complete an MA in English Lit in 1902 and then studied there for her PhD. Denied it on a technicality, she went travelling and met Frank Gilbreth in Boston.
Continuing her travels, the Gilbreths were married in 1904, after she returned, and moved to Rhode Island in 1910. She resumed doctoral studies at Brown University, starting again, and achieving her PhD in psychology, in 1915. Her focus was far more on the human side of workplace efficiency.
After Frank Gilbreth died, Lillian continued their joint work, accepting consulting work through Gilbreth, Inc. In 1935, she became the first female professor in the engineering school at Purdue University, becoming known as ‘The First Lady of Management’. She was, without doubt, a pioneer of industrial psychology. Lilian Gilbreth died in 1972.
The Gilbreths took a rigorously scientific approach to understanding the way employees carried out work, sometimes measuring time and motion to 1/2000 of a second, using photography and a ‘microchronometer’ that they devised. With flow charts and therbligs, they analysed to a fine degree.
In many languages, the ‘th’ sound is one letter (theta in Greek, for example). Replace the th in Gilbreth with a single phoneme and reverse the word, and you get ‘therblig’. This is a coinage by Frank Gilbreth that never made it to the mainstream. But the idea is ingenious.
Each therblig is a distinct motion that a worker makes. it is a fundamental element of work and there are 18 of these basic motions. Today we’d no doubt add moving a mouse and hitting return. Ever since I heard the ugly word and looked it up, I’ve loved the concept and the list of movements. Look up therblig on Wikipedia to see the list of 18, and their symbols.
Hirotaka Takeuchi and Ikujiro Nonaka have featured in an earlier Pocketblog, which was focused on Nonaka and the work he led on how knowledge can transform organisations.
Arguably, it is how Nonaka and Takeuchi took some of their thinking forward that has led to a far bigger transformation. In 1985, they co-wrote an article for the January 1986 edition of Harvard Business Review. Called ‘The New New Product Development Game’, this article was instrumental in revolutionising the discipline of Project Management.
Takeuchi and Nonaka gave us a new way of thinking about how to develop products and deliver projects. And they coined an evocative sporting metaphor for their process, which has stuck: Scrum.
Born in 1935, Ikujiro Nonaka gained a BS in political science at Waseda University, then started work at Fuji Electric, where he created their management programme. Nonaka left Fuji in 1967, to study at the University of California, Berkeley. He was awarded his MBA in 1968, and his PhD in Business Administration, in 1972. He took posts at US universities, before returning to Japan, as a professor at the Graduate School of International Corporate Strategy, Hitotsubashi University.
Born in 1946, Hirotaka Takeuchi got his BA from the International Christian University, Tokyo. After a short spell working at McCann-Erickson, he went to the University of California, Berkeley, where he got his MBA in 1971, and his PhD in 1977. During his time at Berkeley, he also worked summers for McKinsey & Company in Tokyo and, more important, met Nonaka.
Takeushi took a lectureship at Harvard in 1976 until 1983, when he joined Hitotsubashi University School of Commerce, where he became a full professor and Dean of the Graduate School of International Corporate Strategy. He stayed until 2010, when he returned to Harvard, as Professor of Management Practice, where he is now.
In January 1986, Harvard Business Review published ‘The New New Product Development Game‘ by Takeuchi and Nonaka. This was about a new way to do New Product Development, or NPD. They drew on the idea of ‘ba’ – a Japanese coinage of Nonaka’s, meaning a meeting place for minds and the energy that draws out knowledge and creates new ideas.
They also took a look at the Toyota idea of teams coming together to solve problems. They introduced a sporting metaphor from the game of Rugby; that of the scrum. They used scrum to denote the way teams work together intensively when the ball goes out of play. In a work environment that demands creativity and innovative problem solving, this is just what is needed.
They followed this article up with a 1995 book, ‘The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation‘. This looks at the way Japan became a major economic power, especially in the automotive and electronics industries. they argue that Japanese firms are successful because they create new knowledge to produce successful products and technologies.
The model they created for Scrum Teams is of a cross functional group that can work autonomously to resolve its own problems. Their organisation is ’emergent’ meaning there is no assigned leadership or structure; it just emerges from the effective collaboration of its members.
To work best, a Scrum Team needs to be co-located, and work together full-time. This allows a high level of cross-fertilisation of ideas, and a dedication to working on their shared problems, tasks, and initiatives.
Agile project management seeks to avoid the all-or-nothing approach to projects that used to characterise traditional approaches – especially when done in a way that slavishly follows a set of ‘rules’. Although good project managers have always incorporated a lot of plan-do-review (the Deming Cycle), the growth of software development projects demanded an increase focus on agility and incrementalism.
This was the basis of the Agile movement and today the single most widely used Agile methodology takes its name and guiding principles from Takeuchi and Nonaka’s metaphor: Scrum.
In Scrum projects, a Product Owner is responsible for detailing the business requirements and ensuring that the business gets a good return on its product development investment (RoI). The Scrum Team, led by a Scrum Master, selects one subset of functionality from a product backlog of undeveloped functions, divides it into tasks, and works intensively on developing the outputs for a fixed time, known as a Sprint, which is usually 30 days.
Each day, the team gets together for a daily Scrum Meeting to share learning, report progress, discuss challenges, and solve problems. At the end of the sprint, the team should produce a working product that is stable and useful. After a reflection and learning process, the team then works with the product owner to define the subset of functionality it will work on in the next sprint.
The team continues like this until the Product Owner concludes that the next sprint would not create enough additional value to justify the incremental cost.
We tend to think of leading management theorists as coming from the United States. This seems especially so of Scientific Management. But when the privilege of naming things for the world’s largest audience goes to those who write in English, history creates a bias. And because that audience largely reads only one language, that bias gets amplified.
One of many losers from the Anglo-centric nature of management and business thinking was Karol Adamiecki. He was a Polish engineer, turned economist and management thinker, who can claim to have invented the Gantt Chart before Henry Gantt, PERT before the US Navy, the Theory of Constraints before Eliyahu Goldratt, and much of Scientific Management before FW Taylor.
Karol Adamiecki was born in southern Poland, in 1866. He studied engineering at the Institute of Technology in St Petersburg, graduating in 1891. He then returned to his home town, where he took charge of a steel mill. He stayed for nearly 30 years, during which time, he formed his ideas about management.
In 1919, he left the mill, and became a lecturer at the Warsaw Polytechnic, becoming a professor in 1922. There, he further codified and published his ideas. In 1925, he founded the Institute of Scientific Management in Warsaw, becoming its Director and remaining until his death in 1933.
While running the steel rolling mill, Karol Adamiecki developed sophisticated thinking around management that was, from our perspective, ahead of its time. The three principal components were:
Adamiecki started to publish in 1898, several years before Taylor did so.
In 1896, Adamiecki solved the problem of sequencing and scheduling in production and published, in1903, his solution. He called it a Harmonograf. And it looks very much like what we now call a Gantt Chart. However, Henry Gantt did not publish until 1910. There is no evidence to suggest Gantt copied Adamiecki’s idea.
In constructing the Harmonograf, however, Adamiecki describes a process that is pretty similar to the PERT and CPM methods. He certainly is able to include critical path and float. These are two concepts Gantt did not consider at all.
As Adamiecki described his methods, he was able to optimise production schedules by sliding paper tabs and arranging paper strips. In a very real sense, he developed an analog scheduling computer.
Without a doubt, Adamiecki’s thinking was of its time, but way ahead of its rediscovery. He possibly failed to realise just how valuable it was. But more likely, he simply suffered from an Anglophone bias in scholarship and manufacturing. Publishing in Polish simply did not get him recognition far beyond the borders of his home country. Even now, it is only in the Karol Adamiecki University of Economics in Katowice, that his name is celebrated.
And I have to ask, could this happen again? Yes. I think it can, will and probably is happening now. Last week, we met Vlatka Hlupic. Arguably, her work is known despite her Croatian origin, because she lives and works in London. With the US and the UK increasingly looking to close their borders for differing but related reasons, the next Karol Adamiecki’s work could well lay undiscovered for just as long as that of the first.
Robert Owen is often referred to as a social reformer. So what is he doing in a blog about management?
In fact, in his espousal of management over pure command and control, we can see in Owen the first shining of the light of humanistic management, that was not to become the norm in his home country of the UK for nearly two centuries.
Robert Owen was born in 1771, in Newtown, in Wales. After working in several drapery businesses around England, in 1790, he became the joint owner of a textile factory in Manchester. Because he had little experience of manufacturing, he started off wth a rigorous regime of intense observation of how his employees worked. Through this, he said, ‘I maintained order and regularity throughout the establishment’. Could this be an early variant on ‘Management by Walking About’: Management by Observation?
Along with other investors, Owen bought a Mill in New Lanark in 1799. The realities of what was then regarded as enlightened mill ownership were that he inherited a workforce where 5 and 6 year olds were expected to work up to 15 hours a day. His first act was to stop taking children from the local poorhouse, to raise the minimum age of children he employed to 10, and to ban the use of corporal punishment.
This was the start of a series of reforms that led to Owen being labelled variously as a social reformer, a socialist, an educational reformer, and a utopian (by Marx and Engels!) But at this time, certainly, Owen justified all of his changes on purely economic grounds. He used profits to fund social improvements for his workers and found that productivity subsequently increased. Eventually, the New Lanark Mill showed a 50% Return on Investment (ROI).
Eventually, his reforms were to include taking no children into the mill, creating the first night school in the world, for his workers, starting what became the basis of the British Co-operative movement, and founding the Grand National Consolidated Trades Union in 1834 – sadly, it did not survive the year. He also tried in 1815 and failed to introduce new legislation to improve working conditions nationally.
It may shock us now that his aim of increasing the minimum working age to 10, reducing the maximum daily working hours to 10½, and requiring a minimum of half an hour a day of education for all children was seen as a serious risk to the wellbeing of business. Lesser legislation was passed in 1819 and we still hear the same arguments about potential legislation around worker’s rights today.
If you want to learn more about his social reforms, educational work, or attempts to create trades unions and co-operatives, there is plenty of good material. I would like to focus on the things Owen did in management, that were almost a century ahead of his time, to only really be formalised by the likes of Mary Parker Follett and George Eastman, and the later humanistic management leaders, like Elton Mayo and Douglas McGregor.
Humanistic Management
Owen recognised that, in his rapidly mechanising industry, machines would never attain a greater importance than the people who worked them
Abandoning Command and Control
Owen preferred to manage his workers, rather than issue commands. And to help him, he started selecting his managers on merit and giving them training.
Empowerment
Okay, so he would never have used this modern buzzword, but he firmly believed in the value of giving his managers real autonomy.
Change Management
Not only did Owen understand the value of winning trust from his workers before trying to impose change; he actively sought out influential individuals among them to help build and disseminate his case: what we call ‘change champions’.
Performance Monitoring
Every day, supervisors would assess the work of their workers, and award a colour code (from poor, black to blue to yellow to white – best), which would be displayed on a wooden block (his ‘silent monitor’) for all to see. Peer pressure and pride are powerful motivators!
Work-Life Balance has been a buzz-phrase that I have been aware of since the mid-1990s. And we no longer (in the West) think of work as somehow ‘walled-off’ from the rest of life. But this wasn’t always so. At the forefront of charting the shifts in the relationship of working life and home life through the twentieth and into the twenty first century, has been Lotte Bailyn.
Lotte Lazersfeld was born in Vienna, in 1930, into a Jewish family. In 1937, as a young child, she travelled to the US with her father, to flee Nazi persecution. Her mother, Marie Jahoda, went to England. Lotte studied Maths at Swarthmore College and then entered Harvard in 1951, where she studied Social Psychology, earning an MA and PhD. She married historian Bernard Bailyn.
She spent many years struggling to gain a full time academic post before being appointed, in 1972, to the faculty of the MIT Sloan School of Management. Between 1997 and 1999, she chaired the faculty T Wilson (1953) Professor of Management, Emerita.
Bailyn’s research interest is the intersection of work and home lives. This necessarily involves her in the issue of gender at work, because of the disproportionate role that women play in care-giving. She is therefore interested in the impact this has on women’s careers.
Her first book, however, focused on the way male engineers who put more time into their families and communities were under-valued by their companies, despite enhanced people and relationship skills. Living with Technology: Issues at Mid-career was published in 1980.
But her more important book, Breaking the Mold: Redesigning Work for Productive and Satisfying Lives (1993), had a wider perspective, looking at the impact on modern workforces of equating time at work measures with commitment and competence. The book was way ahead of its time.
Bailyn’s research consistently shows that long hours actually hinder productivity and creativity. Employers can maximise their success by encouraging maximum flexibility of work scheduling, by creating motivated employees. She argues that senior leaders need to recognise that their path to the top will not be the right path in the future: the ideal worker is no longer one who will put in long hours, attend meetings at the drop of a hat, and put their family and community in a clear second place.
Instead, organisations need to shed what Joan Williams has called ‘flexibility stigma’ and embrace what Bailyn calls the ‘dual agenda’: that we thrive best when we are able to meet our personal and business needs at the same time. This is particularly important for low wage workers whose shift scheduling can be changed at short notice, creating havoc with care arrangements. Unsurprisingly, this results in low morale, reduced productivity, and absenteeism. Bailyn finds that predictability of working hours is highly valued. Unpredictability is a more significant factor than long hours.
Her conclusion is that the presence of flexible working policies is nowhere near enough. It is the extent to which organisations see them as a positive asset to be exploited, rather than a burden to be managed. We all need to recognise that our lives outside work are intimately intermingled with our working lives. They influence our attitudes, capabilities and, ultimately, our productivity.
The engineer behind many aspects of the Toyota Production System (TPS) can justly be described as instrumental in creating one of the world’s great manufacturing businesses. But his influence goes far wider, with many of the management ideas that we take for granted originating as a part of the TPS. I promised you we’d look at him when we examined the lessons from his boss, Eiji Toyoda, so let’s see what we can learn from Taiichi Ohno.
Taiichi Ohno was born in China, where his father was working on the Manchuria Railway, in 1912, and grew up in the Aichi prefecture of Japan, attending the Nagoya technical High School. In 1932, he joined the Toyoda Automatic Loom Works, which had been established by Sakichi Toyoda, who was highly innovative in the looms he designed and built. When Toyoda sold off the loom business to a British company, he determined to invest the money in an automobile business, to be headed by his son, Kiichiro Toyoda.
Kiichiro Toyoda set out to learn from US motor manufacturers, and started manufacturing vehicles in 1936 and it was he who first introduced the idea of ‘Just in Time’. However, it was when Taiichi Ohno was tasked with increasing productivity that the company started to make the breakthroughs which would later form the groundwork for Toyota’s great commercial achievements of the 1960s onwards, under Eiji Toyoda.
In looking at Toyota’s productivity levels shortly after the war, Ohno realised that the gap in performance between Toyota and the top US manufacturers of a factor ten could not be due solely to a poor Japanese workforce. He considered that the significant factor was waste; ‘Muda’. As he experimented, and took on board Kiichiro Toyoda’s ideas of Just in Time production, he gradually, over the years from 1945 to the mid-1970s, built up a coherent set of principles and practices that has come to be known as the ‘Toyota Production System’.
Towards the end of his life, Ohno spoke and wrote extensively (most notably: ‘Toyota Production System: Beyond Large-Scale Production‘) about the TPS – perhaps more than his superiors really felt comfortable with. In doing so, he frequently used the metaphor of a supermarket to describe how Just in Time principles work. He had first seen, and been captivated by, supermarkets on a visit to the United States in 1956. Ohno died of heart failure in May 1990.
The three principles at the heart of the the Toyota Production System are easy to state:
As if the phrase Just in Time has not become well-enough known, it is supported by an idea and a practical tool that have each become central to manufacturing processes world-wide… and, indeed, to other business and organisational processes.
The first of these – and Ohno’s starting point for his reforms – is the idea of waste, or ‘Muda’. Ohno waged a systematic campaign to eliminate all possible forms of waste. In so doing, he identified the seven categories that are often known as the ‘Seven Wastes’.
Some people add other wastes to Ohno’s original seven, most commonly placing Non-used employee talent (wasting skills) between number 3 and 4 in my ordering, so create the mnemonic acronym: DOWNTIME.
Ohno also developed a system of signboards that track progress of goods through the manufacturing process, which are called ‘Kanbans’. The kanban board is now widely used to track progress in projects throughout commerce, especially in managing software projects under agile project management methodologies.
Ohno examined every part of the manufacturing process and looked for ways to reduce errors, increase safety, and improve reliability. When he found them, he instituted rigorous staff training. The principle of building quality into everything is ‘Jidoka’. And, although he did not originate the idea of continuous improvement, known as ‘Kaizen’, Ohno’s concept of Jidoka involved daily improvement in a cycle of detecting problems, stopping production, removing the cause of the problem, and then incorporating the improvements into the standard workflow.
Another of Ohno’s greatest innovations is his problem solving methodology, the Five Whys, a way of getting at the root cause of a problem. This intelligent approach to stopping a machine when a fault arises and injecting human problem solving is Ohno’s idea of intelligent automation, or ‘autonomation’; ‘ninben no tsuita jidoka’.
Instead of seeing a factory as a series of inter-connected processes as Henry Ford had done, Ohno saw it as one continuous connected process. And ensuring that its efficiency is optimised is the idea of work levelling; ‘Heijunka’. This is central to eliminating waste, or Muda and is about rearranging (dynamically) the allocation of work to ensure that every resource is fully utilised at all times.
Many of Ohno’s ideas seem obvious to us now but they did not at the time. And, inevitably, he encountered much resistance from the Toyota workforce. He employed one principal strategy to deal with this, that had two simple components: patience and persistence. Evolving the Toyota Production System took thirty years and, no doubt, it is ongoing today.
Outside of Japan, Ohno’s ideas have been widely adopted and modified. The TPS is now more generally known as ‘lean manufacturing’ and the principles of lean thinking are increasingly being applied throughout the economy in sectors like retailing, services, telecommunications and even government service.
There does seem to be a difference, however, between Ohno’s and the two Toyodas’ philosophy and that of modern western businesses with which I am familiar. Here, we see organisations seeking to use lean principles to ‘sweat their assets’ to cut staff numbers and compel them to work harder to achieve greater productivity with fewer resources. Toyota instead thought that by making its process more efficient, its workforce could produce more without significant increases in the cost base, and so exploit new markets to create more profit.
At the heart of this is a different approach to pricing. The Western approach is to lower your cost base as low as you can, to determine a profit level, and then to sell at the price that these dictate.
Toyota’s success was build on a different philosophy: that the market fixes the price it will pay, and you optimise your processes to set your unit costs. Your profit is the difference.
Toyota describes the Toyota Production System on their website, at: http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/
Ellen Langer was researching and promoting the idea of mindfulness long before the avalanche of books and articles about it started a few years ago. Her research into what it is and what benefits it offers provides real insights for business managers and leaders, especially in the domains of innovation, charisma, and reductions in stress.
Ellen Langer was born in the Bronx area of New York in 1947 and grew up in neighbouring Yonkers. She attended New York University, initially studying chemistry, but after attending a psychology course with Philip Zimbardo, she swapped courses. They remain friends. She earned her BA in 1970 and went on to gain her PhD in social and clinical psychology at Yale in 1974. Her research focused on ‘the illusion of control’ – our belief that we are able to influence certain events that are really outside of our control. After a period teaching at the Graduate Center of the City University of New York, she was appointed the first tenured professor in the Psychology Department of Harvard University, where she continues to teach and research. In parallel, she also runs the Langer Mindfulness Institute, a research and consulting venture.
Her research also included a notable experiment transporting older people to an immersive environment much like that of their young adulthood and observing physiological changes consistent with reduced age. This is documented in her popular book. ‘Counterclockwise: A Proven Way to Think Yourself Younger and Healthier‘. The bulk of her research has touched in one way or another on the topic of mindfulness and her original book on the subject, ‘Mindfulness‘ has recently been re-released in a 25th anniversary edition. She recently co-edited the massive academic tome, ‘The Wiley-Blackwell Handbook of Mindfulness‘.
Langer has offered a number of definitions of the term ‘mindfulness’, which are wholly consistent, but together build a rich picture of how we can understand the term. Fundamentally, we become mindful when we turn off our auto-pilot and start to pay attention to our situation. It is a conscious awareness of our context and of the content of our thoughts, in which we link context and thought patterns together.
A deeper understanding of the meaning of mindfulness can be gained from examining the dimensions of Langer’s psychometric measure, ‘the Langer Mindfulness Scale’. The four dimensions are:
Novelty Seeking
The extent to which we see every situation as a chance to learn something new.
Novelty Producing
The degree to which we tend to produce new information, to understand our situation.
Engagement
The extent to which we notice details about our environment and how we relate to it.
Flexibility
The degree to which we embrace change, as opposed to resisting it.
Importantly, Langer’s definitions do not require meditation as a means of achieving mindfulness. Meditation, she says, is a tool. You can use it to become mindful, but you can also become mindful without meditation.
Langer asserts that most leadership problems are a result of inattention, and that organisations which create an environment that fosters mindfulness also become more effective and more innovative. This comes from her study of how people handle mistakes, which has found that a greater level of awareness of the potential for error leads to better and more flexible solutions to problems. Mindfulness reduces accidents and errors, and it also seems to reduce stress levels. Perhaps less surprising, mindfulness and attention to the people around us results in our being rated as more charismatic.
Most important of all, start noticing things: be wholly present in the moment. When you find yourself worrying, examine the thoughts going through your head.If you need to make a decision, look ahead and consider how you will make it work. This way, you can notice events that are unexpected, rather than letting your cruise control run your life and therefore fail to notice small deviations. Become curious: when you do notice something, don’t just let it go past, but enquire into it. And finally, learn to savour experiences and small pleasures.
‘Most of us are mindless virtually all the time’
Why we are ‘frequently in error, but rarely in doubt’
Eiji was not a management theorist and neither did he found a business. His genius lies in his absolute determination to take on a huge challenge and do difficult things… and he did it twice.
Eiji Toyoda was born in 1913 and grew up near Japan’s third city, Nagoya. There, his father had a textile mill, so Toyoda grew up surrounded by the potent combination of engineering and business that was to define his life. He studied engineering at Tokyo Imperial University and, upon graduating in 1936, he joined his cousin’s Toyoda Automatic Loom Works business, where they set up an automobile works and soon changed the name to Toyota.
Toyoda took on a number of roles in setting up research and production planning, but the steady growth of the business was interrupted in 1941, when Japan entered the war. The General Motors car parts they needed were no longer available, and besides; the country now needed trucks. So Toyota became a truck manufacturer. In the early years after the war, trading was tough and Toyoda was heavily involved in the inevitable lay-offs. But he also decided to diversify the company’s future by establishing Toyota Motor Sales.
But there was still precious little to sell. In 1950, Toyoda visited a Ford plant in Dearborn, Michigan. In the time since Toyota had produced their first car in 1936, they had built around 2,500. What Toyoda saw was a plant producing 8,000 every day. He saw immediately that this was the future and determined to revolutionise Toyota’s manufacturing.
Toyoda – like many of his Japanese contemporaries – was often described as under-stated, or taciturn. This was characterised by his outward response to his experience in Michigan. He wrote back to Toyota headquarters that he ‘thought there were some possibilities to improve the production system.’ He brought a manual of Ford’s quality-control methods, which he had translated into Japanese, changing all references to Ford to ‘Toyota’.
This was the start of his first big challenge.
In 1955, Toyoda led the introduction of Toyota’s first mass production car, the Crown. It was a huge success in Japan, but in serving the Japanese market, it was poorly suited to the US Market, where it failed to gain a foothold. That came in 1960, when Toyota launched two new models, the Corona and the Corolla. Both sold massively in the US and, by 1975, Toyota overtook Volkswagen as the largest car importer into the US.
By then, Toyoda had been appointed president of Toyota, serving for longer than anyone to date, from 1967 to 1981, when he stepped into the newly created role of Chairman. It was as Chairman that he really took on and equalled the US, forming a joint venture with General Motors in 1984 to manufacture Toyota cars in the US.
But it was a year earlier, in 1983, that he kicked off his second big challenge: to create a luxury car to challenge the best.
This was to become the Lexus, which later grew into a new brand, to create a clear marketing distinction between the mass-market Toyota cars and the elite Lexus vehicles. His success was complete. Lexus regularly competes with prestige German marques Audi, BMW and Mercedes.
In 1984, Toyoda resigned from the Chairmanship although he continued to go into the office (where all three of his sons are executives) into his nineties. He died, shortly after his 100th birthday, in 2013.
Toyoda set out to take US mass-production ideas and fine tune them to the point where he could out-compete the US auto giants. He worked with a veteran loom engineer, Taiichi Ohno (who deserves, and will doubtless get, his own Pocketblog one day). They created together the ‘Toyota Production System (TPS)’ which is now more generically known as ‘Lean Production’. It rested on three core tenets:
From a top secret meeting to a world class luxury marque, Toyoda created a new brand from nothing but determination and around $2 billion of investment. Well, you can do a lot with $2 billion (I think – I’d love to try). But who, in 1983, would have thought that a Japanese car maker would out-engineer the German luxury brands? To do this, Toyoda’s engineers had an eye for detail that today reminds me of Apple. They tested the Lexus on Japanese roads, but knew that Japan would not be their primary market if they were to succeed. So they built new roads in Japan, mimicking roads in the US, UK, and Germany, and tested the Lexus on these. In the process of building the first Lexus, Toyota innovated and experimented like never before.
And what did Toyota get for their 200 patents and 450 prototypes? The Lexus LS400 and the start of a whole new world class business.
