Management And Accounting Web

Spear, S. J. 2004. Learning to lead at Toyota. Harvard Business Review (May): 78-86.

Summary by Alberto Gonzalez
Master of Accountancy Program
University of South Florida, Fall 2004

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Note: To better understand this summary, read the Spear & Bowen summary first.

The purpose of this article is to explain what makes Toyota one of the most successful companies in the world. Many companies have studied Toyota’s management principles in an attempt to replicate the Toyota Production System (TPS). However, very few companies have been able to match Toyota’s performance. The author states the reason for Toyota’s success is not just their “tools and tactics” but rather the use of continuous experiments to solve problems by workers and managers alike to create a system that is constantly improving the company.

Lesson 1: No Substitute for Direct Observation

All too often, managers attempt to solve problems using only indirect investigating methods. Such methods include reports, interviews, surveys, narratives, aggregate data, and statistics. While such information is useful in dealing with the overall perspective, indirect methods alone cannot solve problems. For example, reports indicate a process is not being performed in an efficient manner. A manager may attempt to solve the problem in their office solely based on indirect observation and as a result will not be able to find an adequate solution. To solve the problem the manager should get out of the office and directly observe the problem as it happens. What Spear ultimately states is that “Direct observation is essential, and no combination of indirect methods, however clever, can possibly take its place” (p. 84).

Lesson 2: Proposed Changes Should be Structured as Experiments

Once the specific cause of a problem is discovered, the next logical step is to find a solution. Most managers tend to arrive at a solution in a haphazard manner. In the above example, it was discovered (by direct observation) that the efficiency problem was caused by improper placement of newly installed equipment that affected worker productivity. The typical solution would be to move the equipment to a different location. According to the author, Toyota teaches their managers to look at the problem using a systemic approach that allows them to understand both the problem and solution. First, the anticipated result of the solution is quantified. Rather than saying the equipment movement will improve efficiency, a Toyota manager will predict that production time will be lowered by 1 minute. The next step would be to implement and study the proposed solution by observing if production time was reduced by one minute. The manager would then compare actual vs. estimated results. In the example, suppose production time was reduced by 45 seconds. The manager would then try to identify the reason for this variance between actual and expected values. It may be discovered after careful evaluation that the problem was not only equipment placement affecting efficiency but also that the equipment changed workers’ process routines. The manager would then use this problem solving process over again.

Lesson 3: Experiment Frequently

Toyota encourages small, simple, and frequent experiments to solve problems and achieve ever-improving productivity. Large complex changes make it difficult for managers to apply the problem solving techniques discussed in Lessons 1 and 2.

Lesson 4: Managers Should Coach, Not Fix

The preceding Lessons discussed how managers should solve problems. However, Toyota encourages not just managers but all employees to constantly experiment to solve problems. In fact the author states “The more senior the manager, the less likely he was to be solving problems himself” (p. 85). Toyota managers act as coaches, enablers and teachers. The reason is that lower-level workers are better able to observe and experiment since they deal with actual production. This approach is in direct contrast with most other companies where only managers (and not workers) solve problems.

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