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 / Summer 2008 / Issue 51(originally published by Booz & Company)


Jeffrey Liker: The Thought Leader Interview

A Western “expert” is capable of believing that if you get enough people in a room with some knowledge of the Toyota production system and they just use their imaginations, they’re going to come up with something better than what Toyota has designed and refined over six decades. But that just isn’t accurate. The Toyota way is in­grained in its people’s attitudes; they are not just trained, but habituated to tackle problems through obser­vation and experimentation. They know how to grasp the current situation, come up with a vision, and plot a step-by-step course to that vision, recognizing the need for ad­justment along the way. The Toyota system, in other words, is a mind-set rooted in practicality and realism.

Maturity and Equity

S+B: In the last few years, though, more companies have been trying to take on the adaptive mind-set. In your books, you talk about the complex, diligent, painstaking steps re­quired to implement a Toyota-like system — and you’ve introduced those steps in a number of organizations. How well are these companies doing in catching up to Toyota?
LIKER: That’s not easy to determine for any company in a short period of time, even in a couple of years. Because it takes many years of continuous effort to create a lean orga­nization, it also takes a long time to be certain that lean manufacturing as a concept has really gotten into the company’s DNA.

Many companies that have started on the lean journey recently have done very well. But my skepticism arises when you compare them to Toyota. And it’s really partly a question of maturity and stages. I’ve been to at least 20 companies in 2007 where the leaders say the same thing: “We began a lean project and we got incredible returns, like a 90 percent reduction in inventory. We reduced overall costs by 20 percent, and we doubled productivity.” Those sorts of stories, I find, are very common.

And it’s a real wake-up call, because part of the implication of improving from point A to point B is you realize how bad point A was: how bad things were for much of the history of the company and how rapidly they have moved forward. So people begin to ask themselves, How could we have let that happen for 40 years — and then turned it around so suddenly?

The next logical step would be for company executives to ask, What else are we missing? What else should we improve? At that point, I don’t think it’s appropriate to ask the question, Have they gotten to Toyota’s level? Toyota has been at this for 60 years. And these companies may have been at it for five years. The more interesting question is, Are they on a path of continued progress? Or are they in danger of falling backward or giving up altogether?

And in many cases, they are in danger. For example, a company called Wiremold [a maker of racks and duct strips to protect cabling] was, a half dozen years ago, held up extensively as a lean exemplar. There is a book by Bob Emiliani, Better Thinking, Better Results (Center for Lean Business Management, 2003), that details how Wiremold started implementing lean on the shop floor, eventually bringing it all the way to the enterprise level, the supply chain, and even information technology. What he describes happened over about a 10-year period. It completely transformed this company to a high level of excellence, higher than many people would have ever expected. The Wiremold executives who led this effort were Americans who had been to Japan, learned from Toyota, and gotten passionate about lean. Before long, Wiremold was buying other companies, turning them around, converting them to lean, and transforming them from money losers to profitable enterprises.

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