Because of the intense competition among companies in the manufacturing sector, six-sigma and lean process were emerging tools applied to guarantee a firm's competitiveness on build quality, with minimum waste and fast products. Japanese had demonstrated superior performance when compared with their U.S. competitors on speed to market, design quality, product-design manufacturability, cost, and productivity. The key to Japanese success was the integration of its many business functions with product design and manufacturing process design. Typically, companies had attacked the problem with cookie-cutter approaches such as new tools for product development process aimed at quality deployment or Taguchi methods. Others more towards an organizational change and its ways of operating, e.g., favoring product-level organizational groups instead of functional-level divisions. The impact was dramatic on improvement on the marketplace but it also resulted in a systematic problem within those companies that have adopted these new solutions. Listed below are some of the common problems:
- Organizational learning had dropped.
- Standardization became difficult across products.
- Matrix organization were functional and projects leaders are constantly disputing resources.
The HBR article (Another Look at How Toyota Integrates Product Development - Harvard Business Review @HarvardBiz) explores the strategies to mitigate these problems by taking into account how Toyota had managed its product development process. One lesson learned was that Toyota had maintained its functional organization while executing an impressive degree of integration. The managerial practices are six divided into two groups.
- Social process: mutual adjustment; close supervision; integrative leadership.
- Standardization process: standard skills; standard work processes; and design standards.
Mutual Adjustment. A number one factor for success is face-to-face interactions but many meetings result in a limited value-added work per person. At Toyota, those meetings are only held once major disagreements happened. Toyota enforces short, crisp, written communication among project teams by using standardized forms.\r\n
Mentoring Supervisors. Creates a deep functional expertise in its new hires. At Toyota, managers are expected to continue honing their technical skills and to be deeply involved with the work of their subordinates.
Integrative Leadership. The goal is to have leaders with “big picture” mind-sets of the firm's mission. Their authority in these matrix organizations comes from their control over a particular project and from extensive technical expertise and prestige. The role of a chief engineer at Toyota is very important because they use its persuasive communication skills to push innovative designs and to create tension for balancing out functional leaders interests. At Toyota, the chief engineer provides the glue that binds the whole process together.
Standard Skills. Companies rely on its skilled workers to perform specialized tasks to bring products to market. At Toyota, training within the company is a key competency. We have learned from previous readings (The core competence of the corporation) how important is a company to clarify its competencies to the entire organization so that people can support activities that reinforces the firm's competencies. It also creates competitive advantage for the firm in the marketplace that is very hard to copy by the competition. Toyota also had an approach to rotate people only within its core function. This resulted on less time and little coordination among functions because it enforces standard work from each function. The twist is to rotate broadly senior people among functions and encourage them to see the needs of the product as a whole.
Flexible work standards. The real world is messy... and people will resist to intensive planning and inflexibility. Instead, Toyota employed a highly consistent goal-based process with regular milestones (I really like this one!) that is consistent from model-to-model. At Toyota, “standardized work plans are kept to a minimum”, it generally fits on a single sheet of paper. Toyota's on-the-job training creates a culture of deep understanding and learning across the entire firm. Another twist is the work procedures are owned and maintained by their users and departments, and not by a centralized staff.
Living Design Standards. The use of engineering checklists during design review meetings is a major tool for improving these face-to-face meetings and new products. But again these checklists represent current capabilities owned by the responsible designers, and not one imposed by a central staff. These checklists are living documents. At Toyota, its rapid product cycles reinforces the frequent use of checklists and it also creates opportunities to learn and develop new skills. Overall, Toyota manages its product development as a tightly integrate system where each part reinforces one another. As seen in the article Competing on resources, Toyota's strategy on product development is to build a learning organization with unique set of resources and capabilities that is hard to be imitated by competitors.
They together reinforce one another and alone would accomplish very little. The managerial practices allow Toyota to achieve cross-functional coordination and build functional expertise. Surprisingly, Toyota bets on limiting cross-functional teams but added a number of twists to ensure flexibility needed in projects and the exchanges of ideas among them thus encouraging learning across the firm.