Book Review: Toyota Kata

Toyota Kata: Managing People for Improvement, Adaptiveness and Superior Results

A few months ago I exchanged a few tweets with Alan Shalloway about Agile retrospectives and how they can become stale, and he was kind enough to point me to this book as a way to drive learning. He couldn’t have been more right! Alan has written about The Difference Between "Inspect and Adapt" and Plan-Do-Check-Act (PDCA), but this book really brought the point home for me.

The real secret of Toyota’s success, as author Mike Rother points out in Toyota Kata,is that Toyota is dedicated to continuous improvement. Toyota Katais a very practical guide in systems thinking applied to organizational learning and continuous improvement, and Mike reveals how Toyota lives and breathes continuous improvement in its management practices. And as Mike Rother explores Toyota's management practices, it is revealed that Toyota's approach to management is very different than accepted management practices in use in most organizations today.

How does Toyota manage differently? To use a simple example from the book, consider the use of a Cost-Benefit Analysis that many organizations use to decide whether something should be done. Toyota has a different take: it uses CBA “…less for deciding whether something should be done, and more for deciding how to do it.” A CBA can become a challenge to Toyota to determine how to achieve a difficult goal, to consider how it must change and adapt to create a competitive and profitable outcome.

Mike Rother further argues that an ROI approach that an organization like General Motors uses “…is more about making choices than about improving and adapting.” The problem is that, “GM’s formula-based rate-of-return decision-making approach is effective enough in a growing market when there are business opportunities from which to choose, but it becomes less so in the crowded or low-growth marketplaces we have today.”

Mike tells us that this changes the equation for an organization. “…in a lower-growth market with many competitors, the immediately profitable opportunities— the low hanging fruit—will have been picked. In this situation, management’s task becomes more one of nurturing promising processes, products, and situations into profitability than selecting ones that would be directly profitable.”

This doesn’t mean that we should discard numerical outcome targets, but to focus more on the means that we use “…to achieve ambitious target conditions, which at first pass may not make it through a rate-of-return calculation.” To accomplish this, Toyota focuses its attention on “…getting people to work systematically and creatively at the detail level to do what is necessary to achieve ambitious target conditions.”

The Toyota way isn't just tools and techniques; you have to look deeper than that. Simply put, the Toyota way “…is characterized less by its tools or principles than by sets of procedural sequences—thinking and behavior patterns—that when repeated over and over in daily work lead to the desired outcome.”

This thinking and behavior must be expressed in the approach to work, which leads to another important distinction that Toyota Katamakes: The primary task of Toyota’s managers and leaders is not to focus exclusively on improvement, but on increasing the improvement capability of people. “At Toyota, improving and managing are one and the same. [This] puts considerable emphasis on how people tackle the details of a process, which is what generates the outcomes.”

Mike sums this up: “As far back as 1992, I learned from President Fujio Cho and members of his management team at Georgetown that Toyota steadfastly believes that organizational routines for improvement and adaptation, not quantitative/financial targets, define the pathway to competitive advantage and long-term organizational survival.”

What does continuous improvement at Toyota look like?

The Toyota Katastates that, “Toyota wants its people to see and understand cause and effect, which helps to develop a deeper understanding of the work processes. Toyota teaches people to try to change only one thing at a time, and then to check the result against the expected result.”

This is Plan-Do-Check-Act (PDCA), which provides “a practical means of attaining a challenging target condition—it is the means for getting through the gray zone and characterizes a learning organization.”

1. Plan. Define what you expect to do and to happen. This is the hypothesis or prediction.
2. Do (try out). Test the hypothesis, that is, try to run the process according to plan. Observe closely.
3. Check (study). Compare the actual outcome with the expected outcome.
4. Act (What’s next?). Standardize and stabilize what works, or begin the PDCA cycle again.

If you are thinking that changing only one thing at a time is a slow approach, consider that Toyota improves faster than most other companies. The key is to check the results of change as soon as possible. As Mike points out, “We cannot wait for the next scheduled weekly or biweekly review cycle to come around. If we wait that long to check, then our progress will be too slow. By the time we do check the process, the parameters may have shifted.”

Toyota also has a different mindset when it comes to problems and failures. Toyota feels that problems are jewels because, “They show us the way forward to a target condition.” And failures are learning opportunities because, “They reveal boundaries in our system’s current capability and horizons in our minds.”

In summary, there are three keys to Toyota’s success:

1. Toyota’s success is about behavior routines.
2. If you want to emulate Toyota, then changing people’s behavior patterns is the task.
3. This is a different undertaking than trying to implement tools, techniques, or introduce a series of principles.

If you are interested in continuous improvement and want to understand why it should be more of a mindset-driven, behavioral approach for your entire organization versus an inspect-and-adapt event or something for “process improvement experts,” I highly recommend Toyota Kata.

And thank you, Alan Shalloway, for recommending this book to me.