“Ladies and gentlemen, I would like to introduce our opening keynote presenter, Dr. Jeffrey Leiter. Dr. Jeffrey Leiter is a professor of Industrial Operations Engineering at the University of Michigan and serves as the President of Liker Advisors. However, I believe we know Dr. Jeffrey Liker best as the author of ‘The Toyota Way,’ 14 management principles from the world’s greatest manufacturer. Today, he will discuss his new book, co-authored with Gary Combs, titled ‘The Toyota Way to Lean Leadership,’ which is the theme of his presentation this morning.

Dr. Liker will share the Toyota leadership development model with us and provide some tips and advice on how to develop lean leaders. Please join me in welcoming Dr. Jeffrey Liker. Thank you. I’ve heard great things about the conference, the people attending, and the excitement. So, you’ll be as welcoming to me as the other speakers. Now, where’s the president?

I’ll discuss my new book, ‘The Toyota Way to Lean Leadership.’ If it’s not immediately apparent, how I’ve structured my work has evolved, moving from broad general principles to focusing on people, leadership, and culture, including some of the softer aspects of these topics.

I also had the opportunity to visit your city, and I took a pleasant trip down the river for those of you who are local. It was pretty hot but delightful, showcasing the natural beauty. And for those of you who are local, please don’t take offense, but I also visited a particular museum that seemed like an imposing structure—an Albatross of a museum, I might say. I believe it’s the Human Rights Museum, which is indeed an excellent concept. I’m sure it will be a fabulous museum when it’s completed.

One thing that struck me during my visit is whether this is a lean problem. We often associate lean with eliminating waste, using tools like value stream mapping and 5S. But here we have a significantly delayed museum and over budget, a project people have been eagerly anticipating for some time. Could a lean approach, with Post-it notes, paint, and 5S, solve this problem? Could we apply value stream mapping to it? The answer is likely no. However, we should still consider this a lean problem with a broader perspective.

For instance, did they start with a well-conceived plan for this museum? Given the message of human rights, did they make a sound decision regarding its size and grandeur? Did they have a robust execution plan? Did they establish good vendor relationships? Did they eliminate uncertainties during the planning and design stages? The answer is no. The museum was too superb and not appropriate for the message it aimed to convey. They likely didn’t plan things well.

My understanding of lean, particularly the Toyota Way, centers around Plan-Do-Check-Act (PDCA). Over 60% of the steps in any problem-solving process are about planning. You begin by identifying the problem, understanding the current situation, knowing your customer, exploring a broad range of alternatives before narrowing down, possibly creating models, gathering input, and making informed, low-risk decisions. Detailed planning is crucial, with continuous revisions as you implement. Properly executing PDCA could have led to an on-budget, on-time museum that people already enjoy. This is what I consider a lean project. While tools like value stream mapping may be helpful, various project planning methods could have been equally effective.

As I’ve delved deeper into lean, I’ve realized that many of us, particularly in leadership roles, have developed a narrow view of lean. The problem I want to address is that lean has evolved into a global movement, and as many of you have traveled abroad or worked in various countries and industries, you’ve witnessed this evolution.”

“I’ve worked in government and healthcare, and Lean principles are prevalent in these sectors. Lean seems to persist like a resilient insect; it has its successes and failures and goes through ups and downs. Some aspects of Lean have been in play since I started studying it in the early 1980s, and it has endured as a significant movement. It has become an essential toolset with standardized resources. Many institutions now offer Lean courses, and you can find comprehensive materials on the Lean Enterprises website. This standardized approach includes a common vocabulary and tools, such as the ones listed here. Additionally, there are methods of implementation, like the Kaizen event.

In my experience, we consistently made significant progress when we applied these tools to a suitable problem and gathered a team to work on it. Often, this progress was quite dramatic, leading to a change in mindset among the participants. People became excited, engaged, and thought differently about their work. Achieving this with a reasonable level of facilitation skill is entirely feasible. In essence, Lean works.

However, the changes implemented during these workshops rarely persist over the long term. If you were to return a year later, you’d likely find that many of the improvements have regressed. People tend to provide various excuses and reasons for not maintaining the improvements on the metric board or reverting to longer equipment changeover times, often due to being busy. To show up, I’d like to share a story from our work with the Navy.

We had an agreement with the heads of several shipyards, where they allowed us to conduct a demonstration Kaizen event in each shipyard. All these events were successful, but let me highlight one shipyard where we focused on the ball valve area. This area had more repetition, producing a few hundred valves a year. We completely transformed the shop in just one week, improving flow and reducing inventory. Everyone was thrilled with the results, which seemed like the ideal way of doing things.

Six months later, a new individual was appointed as the head of Lean in the shipyard, having worked there his entire life, including a stint as a supervisor in the ball valve area. Curious, he revisited the area and noticed it looked the same as 20 years ago. Perplexed, he reached out to me, expressing his desire to learn more about Lean. He had read books and was intrigued by the need for change in the ball valve area.

I responded that what happened in that area was typical of what often occurs. While physical changes were made, the underlying thinking of the people in that area had yet to shift genuinely, and that’s something that cannot happen in just a week. You can ignite excitement and engagement, have impressive report-outs, wear matching t-shirts, and have fun, but changing people’s thinking is a more extended process.

He proposed creating a model area, and the ball valve area was chosen for this experiment. This time, the transformation took six months, with everything we had done during that initial Kaizen event being implemented, but more importantly, it was owned by the people in that area. They eliminated overtime, doubled their productivity, and even became a model for the entire Navy, with Admirals and Senators visiting to witness their success.

The challenge with Lean, as I’ve seen it, is that there are gaps in the way of thinking. Interestingly, if you examine Toyota, they don’t necessarily implement Lean transformations like consultants. This realization led me to believe that the secret to Lean if there is one, lies in developing leaders who engage and empower people in problem-solving and process improvement.

This is why we wrote the book, ‘The Toyota Way to Lean Leadership.’ My co-author, Gary Convis, had a profound journey in Lean, transitioning from Ford to NUMMI and becoming the first American president of a Toyota plant in Kentucky. He experienced teaching moments that challenged his previous way of thinking. He believes the key to Lean success is developing leaders who can engage and empower others in problem-solving and continuous improvement.

To illustrate the difference between Lean consultants and Toyota’s approach, consider a Lean transformation at Toyota led by one of their own. This experience led me to conclude that the secret sauce, if any, is developing leaders who can engage and develop people in problem-solving or process improvement. In essence, that’s the essence of our book, ‘The Toyota Way to Lean Leadership.'”

“He didn’t talk about flow or teach him the problem-solving method. Gary struggled with the people in the area for a while, and they managed to improve the uptime to some reasonable level. Perhaps it was running at 50 percent uptime, and they boosted it to about 75 percent, which was better than the average for American car companies but still far from the Japanese standard of over 95 percent.

At this point, the question arose: How do you address all the little problems causing downtime once you’ve tackled the low-hanging fruit? Gary’s next ‘aha’ moment came when a new president, who had previously worked in finance at Toyota, arrived. This president needed a detailed knowledge of the body shop’s operations, leaving people wondering why he had been assigned the role.

He summoned Gary and expressed concern over the body shop’s lower uptime than Japan. Additionally, he observed that the manufacturing engineers spent their time at desks in the office rather than where the problems were occurring on the shop floor. His solution was simple: create a breakdown report. Every time a breakdown lasted more than an hour, one of the engineers should create this report, with guidance from Japanese trainers in the area.

Furthermore, every Friday, there would be a one-hour meeting where the engineers presented the weekly breakdown report. The finance president would scrutinize the reports, using a red pen to make marks, write notes, and ask questions. He dissected the engineers’ thinking despite having no technical background. Gary was amazed at how this finance president could identify the weaknesses in the engineers’ problem-solving approaches based on a one-page report. The engineers would then revise their A3 problem-solving reports and bring them back the following week with fewer red marks.

However, at some point, the president asked Gary to stay behind after the meetings. He commented that there was still a lot of red on these reports, and Gary acknowledged that while the engineers were doing better, there was room for improvement. Then, Gary realized he bore the responsibility for these engineers, not vice versa. As their leader, The president noticed that Gary needed to solve problems on the shop floor more effectively as a Toyota leader should. He needed to provide the proper guidance because he needed more training.

Notably, no A3 classes or step-by-step problem-solving methods were being taught. Instead, the emphasis was on ‘Go and see’ when a real problem occurred. This was not a theoretical exercise; it was a genuine problem. In this case, the welding part of the shop was causing plant shutdowns, and the president’s approach was to address it head-on.

This unique way of thinking about a company, business, and improving processes, as well as the role of leaders, originates with Sakichi Toyoda, the founder of Toyota. His motivation stemmed from observing the hardships faced by women, including his mother and grandmother, who toiled tirelessly to make clothes for their families and sale. Despite being the son of a carpenter, Sakichi Toyoda developed innovative wooden looms that reduced the labor required significantly.

His first invention involved using gravity to move the shuttle of thread back and forth instead of manual pushing and tightening. This simple innovation tripled the productivity of women working on the looms. It was a genuine Kaizen, driven by a real need, craft-based knowledge, and the ability to envision and implement solutions. Sakichi Toyoda continued to refine his inventions and eventually created the G-type loom, the world’s only fully automatic loom. The capital from selling this technology became the foundation for the Toyota Motor Company. Thus, the journey began, with Sakichi Toyoda setting the stage for a company that prioritized continuous improvement and innovation.”

“And he invented many things; each invention was a solution to a specific problem, all achieved through trial and error. He progressed from nothing to creating the world’s best fully automated loom. How did he achieve this? It wasn’t through a dream in which he envisioned the G-type loom magically. Instead, it was through solving hundreds of problems, working with a team of people, and taking incremental steps.

Besides creating a loom, Sakichi Toyoda left an indelible imprint on what is now Toyota Motor Company. He is the core reason the company’s values persist today: contributing to society (the company’s purpose), putting the customer first, and respecting people. These values are still integral to the company’s culture.

Sakichi Toyoda’s vision expanded as he aged. Initially, it was about helping women in the community; later, it became about contributing to Japan’s industrialization, and eventually, it evolved to benefit society globally—his core values, purpose, and vision influenced Toyota’s culture.

The Toyota Production System (TPS), which later became Lean, started with a vision, much like Sakichi Toyoda’s vision of the automatic loom. However, this vision seemed impossible, and there needed to be a roadmap to achieve it. The person who brought this vision to life was Taiichi Ohno, a manufacturing genius. Toyota Production System didn’t start as a fully-formed concept; it evolved as problems were solved.

Toyota Production System is a continuously evolving approach to manufacturing. It wasn’t invented but developed by solving one problem at a time. Even today, nobody in Toyota claims to be a TPS expert, and the company is still learning after 60 years.

To illustrate the Total Way, a model with four P’s was introduced: Philosophy (the company’s purpose), Processes, People, and Problem-Solving. All these elements revolve around the company’s vision and purpose.

Sakichi Toyoda had a clear vision that drove him to solve problems individually, even though he had no roadmap. Similarly, Taiichi Ohno and his team solved problems one at a time, which eventually led to the development of the Toyota Production System. The critical insight was that disconnected processes hide problems, but connected processes reveal them. This concept, which evolved into Lean, emphasizes solving problems at their root rather than merely eliminating waste. When tightly linked processes expose problems quickly, they can be addressed individually, leading to continuous improvement.”

“I emphasize the importance of one-piece flow in problem-solving. When we rely on Six Sigma Black Belts to analyze vast amounts of data in various ways, it becomes a form of batch problem-solving. This approach may identify a few common significant problems to solve while overlooking the rest. You need to gain a deeper understanding of any specific problem to identify its root cause.

In Japan, the method of teaching skills is heavily influenced by the master-apprentice relationship. In this traditional setup, the master is the expert, and the apprentice is the humble, eager learner. The apprentice is expected to do whatever the master asks, understanding that there is a lesson to be learned in every task. This culture of learning by doing with a mentor is deeply ingrained in Toyota’s approach to leadership development.

However, it’s essential to recognize that Toyota is made up of people, and people could be better. With hundreds of thousands of employees, the organization has a wide range of variations in behavior and practices. While the master-apprentice model is ideal, it may only be consistently applied in some places. Still, the underlying principle of learning by doing with guidance remains integral to Toyota’s culture.

Leadership development at Toyota revolves around two fundamental principles: commitment to self-development and striving for perfection. Commitment to self-development means that leaders must be willing to improve themselves through their work continuously. They must actively seek opportunities for growth and learning. In essence, they must live the company’s values and philosophy.

Striving for perfection involves aspiring to perfect oneself through work. Much like the Japanese tea ceremony, where every movement is choreographed to achieve perfection, Toyota leaders continually aim to refine their skills and behaviors. They seek to embody the company’s values and principles so profoundly that they become second nature. Just as the tea server’s performance becomes a tightly scripted show, Toyota’s leaders strive to live the values so they don’t have to think about them consciously.

Leadership development begins by identifying individuals who are committed to self-development and have the potential to embrace Toyota’s values. These individuals are willing to learn and genuinely desire to improve themselves. The journey starts with basic training in fundamental behaviors, gradually progressing to more intricate and precise practices aligned with the company’s values.

Teaching individuals to think and behave the Toyota way is a step-by-step process. As they develop, they must teach others, creating a culture of continuous learning and improvement. Toyota’s commitment to teaching and learning extends globally, reflecting its mission to contribute to society.

Coaching and developing others require a deep understanding of each individual’s passions, strengths, weaknesses, current role, and future aspirations. Effective coaching involves helping individuals set a vision for their personal growth and identifying concrete steps they can take to progress toward that vision. The process involves self-development learning cycles, where each learning experience leads to applying newfound knowledge and skills.

In summary, leadership development at Toyota is rooted in commitment to self-development and striving for perfection. It is built on the foundation of learning by doing with a mentor, emphasizing continuous improvement and teaching others. This approach aligns leaders with the company’s values, creating a culture of excellence and continuous learning.”

“To continually improve, you need to engage in repeated learning cycles. When you receive feedback and adjust your behavior or thinking accordingly, you are essentially going through a PDCA (Plan-Do-Check-Act) learning cycle. Through these iterative learning cycles, you enhance your capabilities and become a more valuable contributor to your company and the world. Moreover, you learn how to learn, making subsequent PDCA loops more manageable.

Once your leadership team understands their roles, problem-solving methods, and people development, it’s time to focus on one of the core values: “Idle Operations.” The initial goal is to establish a reliable, stable, and self-sufficient process on the shop floor, running at a high level of performance and constantly improving. This stage requires a different kind of leadership, primarily from supervisors and team leaders who are hands-on with the daily operations. Their ability to react to minute-by-minute challenges is crucial.

At this point, you’re building local capabilities so individual team members can think and solve problems independently. The objective is to distribute thinking and decision-making throughout the organization. Instead of the leader being responsible for all problem-solving, everyone participates in a routine problem-solving process. This instills a natural rhythm of daily problem-solving and continuous improvement, aligning with the company’s values and philosophy.

Once the organization has cultivated values, philosophy, and some level of capability across different levels (top, middle, and bottom), the real magic happens. You can align goals and improvement activities to impact the company substantially. This process is known as “hoshin kanri,” which involves setting a clear vision, determining short-term goals, ensuring alignment between personal and organizational goals, and outlining the approach for achieving these objectives.

For example, Toyota faced challenges in Japan due to a strong yen and high taxes. While one approach would be to move production overseas, they committed to preserving jobs in Japan, thus finding an alternative solution. Through hoshin kanri, they aimed to reduce manufacturing costs by 30% over three years, a daunting task for an already highly efficient company. However, Toyota’s leaders embraced the challenge and committed to continuous improvement.

The key to success lies in the continuous PDCA loops – always learning, teaching, and improving. Toyota mentors emphasize core values, starting with a spirit of challenge, and leaders learn that problem-solving, Kaizen (continuous improvement), teamwork, and respect for people are the means to achieve results. If leaders fail to live these values, the results will suffer. The journey is an ongoing cycle of self-development, teaching others, and refining the process.

Hoshin Kanri has gained popularity among senior executives, as it promises to meet all goals and objectives. However, many organizations attempt to implement it without first building the necessary capabilities in the organization. Toyota’s workgroups, consisting of group leaders and team leaders, form the company’s heart. These groups are essential in driving improvement throughout the organization. Each group has a visual meeting area where performance data is displayed, allowing quick identification of problems.”

“To maintain continuous improvement and stay on track, promptly identifying problems is essential. These problems can hinder us from achieving our weekly objectives in quality improvement, safety enhancement, and cost reduction. When issues arise, coaching and support are needed. Leaders from the top levels come down to observe, discuss, and ask challenging questions to assist in resolving these problems. These boards are aligned, meaning that the goals set at each level correspond to the higher-level objectives. For instance, Trim Group One, a part of the assembly, has its top-level objectives aligned with its boss’s hosting objectives. They break down these objectives into key performance indicators (KPIs) and metrics relevant to their processes. All of this information flows up to the plant level, where a comprehensive meeting room displays metrics from all shops in the plant, ensuring alignment from top to bottom. While the data is also accessible electronically, the real value comes from physically visiting the boards, observing the situation, and directly addressing issues when red indicators appear.

Gary implemented a similar system when he became CEO of Dana, a turnaround story where operational excellence was crucial for survival. They started with key performance indicators and frequent reporting. Knowledgeable coaches were brought in to assist plant managers who had weekly phone conversations with their coaches, discussing their activities, successes, and challenges. Even at the shop level, simple visual boards were used, requiring hourly updates on production targets, good parts, and discrepancies. This practice led to daily problem-solving and process stabilization.

Leaders are increasingly focusing on “sterilized work” for managers. Sterilized work involves repetitive tasks to check, provide feedback, and coach employees. These repetitive elements help leaders raise their team members’ capabilities, ensuring everyone adheres to the desired standards. The higher you are in the organizational hierarchy, the more distractions you face. Repetitive activities become habits, making it easier to maintain a routine.

The visual boards are a daily tool for identifying abnormal situations, particularly during Gemba walks. Toyota’s plant managers make daily rounds, changing the area of focus each day. Visual cues help them ask the right questions and challenge people’s thinking. While these practices are necessary, the goal is for leaders to naturally become lean leaders who no longer need such tools and routines, transitioning from training wheels to riding bicycles independently.

Lean leaders evolve, and their development is an ongoing process that takes years. They must manage from the Gemba, develop themselves and others to live by core values and philosophy, become role models for disciplined problem-solving, and act as teachers and coaches for their teams. Ultimately, lean leadership requires patience, a focus on the long term over short-term gains, reinvestment in people, products, and plants, and an unwavering commitment to quality.”