Lean Enterprise Institute Founder Warns About Toyota's Future
On the heels of reissuing the best-selling Machine That Changed the World, which explains Toyota's recent success in passing General Motors, author James P. Womack warned that the automaker will lose its momentum if it fails to sustain the business system that has made it the world's most consistently successful industrial enterprise.
"Toyota's great risk -- in fact, the way it can lose -- is if the many new managers being hired and its many new suppliers fail to embrace Toyota's lean management system," said Womack, the founder and chairman of the Lean Enterprise Institute, a non-profit education, publishing, conferencing, and research center founded in 1997.
"If this happens," continued Womack, "and its new managers and suppliers revert to the old, mass-production mentality they learned in school and from working with mass-production firms, Toyota's management performance will regress toward the mean. Instead of moving the whole world to embrace lean management, Toyota will become just another company. And that will be a tragic failure for all of us."
The term "lean management" is widely used today in manufacturing industries. It refers to the revolutionary business system pioneered by Toyota to create a wide variety of goods in lower volumes with less human effort, capital investment, space, and development time, and with fewer product defects and injuries to employees. Recently Womack, in his book Lean Solutions, has extended the concept of lean management to service industries ranging from healthcare to retail to air travel to finance.
Lean management calls for firms to make managers responsible for the horizontal flow of products or services across departments to customers. This balances the traditional tendency of enterprises to focus on vertical "silos" such as departments or divisions, which are good for organizing knowledge and career paths but mediocre at delivering true customer needs.
Womack first formulated these ideas in The Machine That Changed the World in 1990, with co-authors Daniel Jones and Daniel Roos. Their massive multi- year study of the auto industry conducted at MIT described for the first time the product development, supplier management, customer support, and production elements of the lean system as organized by lean management. The book, now reissued by Simon & Schuster, includes a new foreword and afterword by the authors to bring the story up to date at the point when Toyota has just passed General Motors (in the first quarter of 2007) as the world's largest and most profitable producer of motor vehicles.
"The book's most important contribution is to describe the complete lean business system, which is a new way of managing multi-function organizations that is relevant to any organization creating any type of value," said Womack.
"The heart of lean management is to focus relentlessly on improving value- creating processes as they run across functions and technologies toward the customer. The lean manager's most important methods are strategy deployment at the top of the organization to define the organization's purpose, problem solving based on the scientific method by line managers in the middle of the organization, and standardized work by managers and primary workers at operational levels," said Womack.
"Together, these methods, when employed by managers with clear responsibility for perfecting the flow of value, will permit any organization in any industry or activity to thrive in the 21st century. They constitute the next leap in the long evolution of management methods," he said.
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