Toyota Production System

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pages: 401 words: 119,488

Smarter Faster Better: The Secrets of Being Productive in Life and Business by Charles Duhigg


Air France Flight 447, Asperger Syndrome, Atul Gawande, Black Swan, cognitive dissonance, Daniel Kahneman / Amos Tversky, David Brooks, epigenetics, Erik Brynjolfsson, framing effect, hiring and firing, index card, John von Neumann, knowledge worker, Lean Startup, Malcom McLean invented shipping containers, meta analysis, meta-analysis, new economy, Saturday Night Live, Silicon Valley, Silicon Valley startup, statistical model, Steve Jobs, the scientific method, theory of mind, Toyota Production System, Yom Kippur War

They just wanted to get as many cars out as they could.” When Madrid showed up for this interview, however, he suspected things might be different this time. GM was partnering with the Japanese automaker Toyota to reopen the Fremont plant. For Toyota, this was a chance to build cars inside the United States and expand the company’s sales in America. For General Motors, it was an opportunity to learn about the famed “Toyota Production System,” which was producing cars of very high quality at very low costs in Japan. One hitch in the partnership was that GM’s agreement with the UAW dictated that the plant had to hire at least 80 percent of its workers from employees who had been laid off two years earlier. So Madrid and his friends were showing up, one by one, to interview with New United Motor Manufacturing, Inc., or NUMMI.

Nobody ever asked him his opinion or cared what he thought. He expressed all these frustrations to his interviewers and then kicked himself on the long drive home. He really needed this job. He should have kept his mouth shut. A few days later, Madrid got the call. The Japanese executives had appreciated his honesty and were offering him a job. First, though, he would have to go to Japan for two weeks and learn about the Toyota Production System. Sixteen days later, NUMMI flew Madrid and about two dozen other workers to the Takaoka auto plant outside Toyota City, Japan, the first in a series of trips nearly every employee at NUMMI would take. When Madrid walked into the Japanese factory, he saw familiar assembly lines and heard the recognizable sounds of pneumatic tools hissing and buzzing. Why had they bothered flying him across the world to train inside a factory just like the one at home?

One day he shadowed a worker who, midway through a shift, told a manager he had an idea for a new tool that would help him install struts. The manager walked to the machine shop and returned fifteen minutes later with a prototype. The worker and manager refined the design throughout the day. The next morning, everyone had their own versions of the tool waiting at their stations. Madrid’s trainers explained that the Toyota Production System—which in the United States would become known as “lean manufacturing”—relied on pushing decision making to the lowest possible level. Workers on the assembly line were the ones who saw problems first. They were closest to the glitches that were inevitable in any manufacturing process. So it only made sense to give them the greatest authority in finding solutions. “Every person in an organization has the right to be the company’s top expert at something,” John Shook, who trained Madrid as one of Toyota’s first Western employees, told me.


pages: 278 words: 83,468

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries


3D printing, barriers to entry, call centre, Clayton Christensen, clean water, cloud computing, continuous integration, corporate governance, experimental subject, Frederick Winslow Taylor, Lean Startup, Mark Zuckerberg, minimum viable product, Network effects, payday loans, Peter Thiel,, Ponzi scheme, pull request, risk tolerance, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, stealth mode startup, Steve Jobs, the scientific method, Toyota Production System, transaction costs

I struggled to explain the practices to new employees, investors, and the founders of other companies. We lacked a common language for describing them and concrete principles for understanding them. I began to search outside entrepreneurship for ideas that could help me make sense of my experience. I began to study other industries, especially manufacturing, from which most modern theories of management derive. I studied lean manufacturing, a process that originated in Japan with the Toyota Production System, a completely new way of thinking about the manufacturing of physical goods. I found that by applying ideas from lean manufacturing to my own entrepreneurial challenges—with a few tweaks and changes—I had the beginnings of a framework for making sense of them. This line of thought evolved into the Lean Startup: the application of lean thinking to the process of innovation. IMVU became a tremendous success.

A startup’s earliest strategic plans are likely to be hunch- or intuition-guided, and that is a good thing. To translate those instincts into data, entrepreneurs must, in Steve Blank’s famous phrase, “get out of the building” and start learning. GENCHI GEMBUTSU The importance of basing strategic decisions on firsthand understanding of customers is one of the core principles that underlies the Toyota Production System. At Toyota, this goes by the Japanese term genchi gembutsu, which is one of the most important phrases in the lean manufacturing vocabulary. In English, it is usually translated as a directive to “go and see for yourself” so that business decisions can be based on deep firsthand knowledge. Jeffrey Liker, who has extensively documented the “Toyota Way,” explains it this way: In my Toyota interviews, when I asked what distinguishes the Toyota Way from other management approaches, the most common first response was genchi gembutsu—whether I was in manufacturing, product development, sales, distribution, or public affairs.

Whenever that feature was ready to be tested with customers, they immediately would release a new version of the product, which would go live on our website for a relatively small number of people. The team would be able immediately to assess the impact of their work, evaluate its effect on customers, and decide what to do next. For tiny changes, the whole process might be repeated several times per day. In fact, in the aggregate, IMVU makes about fifty changes to its product (on average) every single day. Just as with the Toyota Production System, the key to being able to operate this quickly is to check for defects immediately, thus preventing bigger problems later. For example, we had an extensive set of automated tests that assured that after every change our product still worked as designed. Let’s say an engineer accidentally removed an important feature, such as the checkout button on one of our e-commerce pages. Without this button, customers no longer could buy anything from IMVU.


pages: 410 words: 114,005

Black Box Thinking: Why Most People Never Learn From Their Mistakes--But Some Do by Matthew Syed


Alfred Russel Wallace, Arthur Eddington, Atul Gawande, Black Swan, British Empire, call centre, Captain Sullenberger Hudson, Checklist Manifesto, cognitive bias, cognitive dissonance, conceptual framework, corporate governance, credit crunch, deliberate practice, double helix, epigenetics, fear of failure, fundamental attribution error, Henri Poincaré, hindsight bias, Isaac Newton, iterative process, James Dyson, James Hargreaves, James Watt: steam engine, Joseph Schumpeter, Lean Startup, meta analysis, meta-analysis, minimum viable product, quantitative easing, randomized controlled trial, Silicon Valley, six sigma, spinning jenny, Steve Jobs, the scientific method, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Toyota Production System, Wall-E, Yom Kippur War

Toyota has a rather unusual production process. If anybody on the production line is having a problem or observes an error, that person pulls a cord that halts production across the plant. Senior executives rush over to see what has gone wrong and, if an employee is having difficulty performing her job, she is helped as needed by executives. The error is then assessed, lessons learned, and the system adapted. It is called the Toyota Production System, or TPS, and is one of the most successful techniques in industrial history. “The system was about cars, which are very different from people,” Kaplan says when we meet for an interview. “But the underlying principle is transferable. If a culture is open and honest about mistakes, the entire system can learn from them. That is the way you gain improvements.” Kaplan has bright eyes and a restless curiosity.

Errors can be thought of as the gap between what we hoped would happen and what actually did happen. Cutting-edge organizations are always seeking to close this gap, but in order to do so they have to have a system geared up to take advantage of these learning opportunities. This system may itself change over time: most experts are already trialing methods that they hope will surpass the Toyota Production System. But each system has a basic structure at its heart: mechanisms that guide learning and self-correction. Yet an enlightened system on its own is sometimes not enough. Even the most beautifully constructed system will not work if professionals do not share the information that enables it to flourish. In the beginning at Virginia Mason, the staff did not file Patient Safety Alerts. They were so fearful of blame and reputational damage that they kept the information to themselves.

Great coaches are not interested in merely creating an environment where adaptation can take place, they are focused on the “meta” question of which training system is the most effective. They don’t just want players to improve, but to do so as fast and as profoundly as possible. In a similar way, in health care, there are debates about whether the Virginia Mason System creates the most effective method of reducing medical errors, just as there are discussions about whether the Toyota Production System is the best way of improving efficiency on a production line. But both models will eventually be superseded. We will learn to create more effective evolutionary systems, not just in health care and manufacturing, but in aviation, too.* How, then, to select between competing evolutionary systems? A good way is to run a trial. In the case of soccer, for example, you could randomly divide a squad of youngsters with similar ability into two groups, then train them for a few weeks using different drills, then bring them back together and measure who has improved faster.


pages: 624 words: 127,987

The Personal MBA: A World-Class Business Education in a Single Volume by Josh Kaufman


Albert Einstein, Atul Gawande, Black Swan, business process, buy low sell high, capital asset pricing model, Checklist Manifesto, cognitive bias, correlation does not imply causation, Credit Default Swap, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, discounted cash flows, double entry bookkeeping, Douglas Hofstadter,, Frederick Winslow Taylor, Gödel, Escher, Bach, high net worth, hindsight bias, index card, inventory management, iterative process, job satisfaction, Johann Wolfgang von Goethe, Kevin Kelly, Lao Tzu, loose coupling, loss aversion, market bubble, Network effects, Parkinson's law, Paul Buchheit, Paul Graham, place-making, premature optimization, Ralph Waldo Emerson, rent control, side project, statistical model, stealth mode startup, Steve Jobs, Steve Wozniak, subscription business, telemarketer, the scientific method, time value of money, Toyota Production System, tulip mania, Upton Sinclair, Walter Mischel, Y Combinator, Yogi Berra

SHARE THIS CONCEPT: Accumulation Sometimes when I consider what tremendous consequences come from little things, I am tempted to think: there are no little things. —BRUCE BARTON, ADVERTISING EXECUTIVE BEST KNOWN FOR CREATING THE BETTY CROCKER BRAND At this very moment, a Toyota engineer somewhere in the world is making a very small change to the Toyota Production System, one of the most efficient manufacturing Systems in the world. Alone, the change may not look like much—a small tweak, a slight restructure, a bit of material or effort saved. Taken together, however, the effects are huge—Toyota employees implement over 1 million improvements to the Toyota Production System every year. It’s little wonder that Toyota is now the world’s largest and most valuable automotive manufacturer.4 Small helpful or harmful behaviors and inputs tend to Accumulate over time, producing huge results. According to Lean Thinking by James P.

Understanding what your offer’s Value Stream looks like is critically important if you want to be able to deliver value to your customers quickly, reliably, and consistently. You can think of the Value Stream as a combination of your Value Creation and Value Delivery processes. Very often, your offer moves directly from the first into the second. Even though the purposes of these core processes are very different, treating them as one big process can help you improve your ability to deliver the value you create. The Toyota Production System (TPS) was the first large-scale manufacturing operation to systematically examine its entire Value Stream on a regular basis. Analyzing the production system in great detail paved the way for an ongoing series of small, incremental improvements: Toyota engineers make over 1 million improvements to the TPS each year. As a result, the company consistently reaps huge rewards in speed, consistency, and reliability, which has greatly improved Toyota’s Reputation as a company with very high-quality products—that is, until the Paradox of Automation (discussed later) destroyed that Reputation.

See Systems improvement recommended reading second-order effects selection test slack stock uncertainty Systems analysis analytical honesty confidence interval context correlation and causation deconstruction garbage in, garbage out humanization key performance indicator mean, median, mode, midrange measurement norms proxy ratios recommended reading sampling segmentation Systems improvement automation cessation checklist critical few diminishing returns experimental mind-set fail-safe friction middle path optimization recommended reading refactoring resilience scenario planning standard operating procedure (SOP) stress testing Take the puppy home strategy Target monthly revenue (TMR) Taylor, Frederick W. Teamwork. See Working with others Tesco Testimonials Testing Tharp, Roland Third parties, as buffers Threat lockdown, mental Throughput Time, as universal currency Time value of money Tools, as force multipliers Toyota Production System (TPS) Trade-offs creating, example of incremental degradation as relative importance testing understanding, importance of between universal currencies in value creation Transactions, completing. See Sales Travel Web sites Trust background checks increasing, with damaging admission and sales transaction See also Reputation Tversky, Amos Ultradian rhythm Unbundling.


pages: 252 words: 70,424

The Self-Made Billionaire Effect: How Extreme Producers Create Massive Value by John Sviokla, Mitch Cohen


Cass Sunstein, Colonization of Mars, Daniel Kahneman / Amos Tversky, Elon Musk, Frederick Winslow Taylor, game design, global supply chain, James Dyson, Jeff Bezos, John Harrison: Longitude, Jony Ive, loss aversion, Mark Zuckerberg, market design, paper trading, RAND corporation, randomized controlled trial, Richard Thaler, risk tolerance, self-driving car, Silicon Valley, smart meter, Steve Ballmer, Steve Jobs, Steve Wozniak, Tony Hsieh, Toyota Production System, young professional

Most ideas will be small, but they can empower people to embrace changes that redirect the business and make people at all levels feel that their contributions mean something, a seemingly minute action that can embolden people to present even more radical ideas. Students of the “Lean” approach to change management will rightly see our encouragement for Lean-supported modes of thinking in these recommendations. Continuous improvement, one of the central tenets of the Toyota Production System from which Lean is derived, instills an organizational belief that processes and approaches can always get better, and that the people employed to do the work are in the best position to see opportunities in their zone of influence and act on them. In the realm of Empathetic Imagination, continuous improvement creates an environment in which small ideas have the potential to snowball into big ones, with the added benefit that it helps reveal the emergent Producers in your midst and gives them the opportunity to implement ideas.

., 71, 72, 120, 216 Student, 100 Summers, Larry, 213 SunAmerica, 200 Sun Life Insurance, 200 Sun Life Stadium, 213 Sun Microsystems, 183, 214 Suzuki, 64, 210 Sviokla, John, 10 Swensen, David, 102, 103 Sydney Opera House, 140 Sze Man Bok, 45–46, 204 Taiwan, 204 talent, 14 reshifting balance of, 21–24 Tampa Bay Buccaneers, 34 Target, 55 Taylor, Frederick Winslow, 77 Taylor, Glen, 37, 48–51, 52, 75, 216–17 Taylor Corporation, 48, 217 technology, 11–12 TechShop, 179 TED, 178 Telecom Italia, 210 Teleflora, 21, 152, 212 Tesla, 211 Tesla, Nikola, 178 Teva Pharmaceuticals, 203 Texas, University of, at Austin, 202 Thailand, 7 Thaler, Richard, 117 Third Wave, The (Toffler & Toffler), 68 time: duality of, 60–62 imagination and, 73–77 time management, individual, 80–81 Time Warner Center, 107, 123, 127, 213 timing, 25, 82–83 fast and slow, 62–63 lessons in, 63–71 Toffler, Alvin and Heidi, 68 Toyota, 53 Toyota Production System, 54 Trader Joe’s, 196 Trans International Airlines, 207 Treasury Department, U.S., 213 Tufts University, 211 Tversky, Amos, 115 Twain, Mark, 1 20th Century Fox, 211 Twitter, 63 Undercover Boss, 53, 225n Unilever, 209–10 Union Pacific Railroad, 196 Uniqlo, 65–66, 219 Unique Clothing Warehouse, 219 United Nations, 199 United States, 8, 65, 66 USAID, 174, 175 Vancouver, Canada, 38, 39, 217 Vatera Healthcare Partners, 85, 206 Vidal Sassoon, 144 Villette, Michel, 121–22 Virgin Group, Ltd., 114, 130, 199 Vuillermot, Catherine, 121–22 Vulcan Ventures, 196 Wagner, Todd, 154, 201 Wall Street, 103, 107–8, 124, 126, 198 Wall Street Journal, 34, 211 Walmart, 55 Warhol, Andy, 59 Warner Bros.


pages: 86 words: 27,453

Why We Work by Barry Schwartz


Atul Gawande, call centre, deskilling, Frederick Winslow Taylor, future of work, if you build it, they will come, invisible hand, job satisfaction, meta analysis, meta-analysis, Silicon Valley, The Wealth of Nations by Adam Smith, Toyota Production System

In what has become a famous example of the benefits of organizing production in a way that engages employees, Toyota, whose system of production gives workers a great deal more autonomy and variety in what they do than a typical assembly line, took over a failed General Motors plant in California in 1984. They didn’t change the workforce. They didn’t change the equipment. All they changed was the production system. The result was a dramatic improvement in both productivity and quality. When you create an environment in which workers are respected, they want to be there and they want to work. The labor costs associated with the production of vehicles dropped almost 50 percent under the Toyota production system. There is little reason to believe that we as a society have learned Toyota’s lesson. Indeed, we seem to have moved in the opposite direction, turning jobs that demand judgment, flexibility, challenge, and engagement into the white-collar equivalent of factory work. Consider education. There is much hand wringing about the failures of American education, which seem to be pervasive.


pages: 309 words: 114,984

The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age by Robert Wachter


Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Clayton Christensen, collapse of Lehman Brothers, computer age, crowdsourcing, deskilling,, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Google Glasses, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, knowledge worker, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, personalized medicine,, Productivity paradox, Ralph Nader, RAND corporation, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, the payments system, The Wisdom of Crowds, Toyota Production System, Uber for X, Watson beat the top human players on Jeopardy!, Yogi Berra

Studies have found that one important cause of errors is interruptions, so clinicians at UCSF and elsewhere have been counseled to avoid them, particularly when their colleagues are performing critical and exacting tasks like giving children potentially dangerous medications. In some hospitals, nurses now mix or collect their medications wearing vests that say “Don’t Interrupt Me,” or stand inside a “Do Not Interrupt” zone marked off with red tape. But there was probably something else—more subtle and more cultural—at play. Today, many healthcare organizations study the Toyota Production System, which is widely admired as a model for safe and defect-free manufacturing. One element of the TPS is known as “Stop the Line.” On Toyota’s busy assembly line, it is every frontline worker’s right—responsibility, really—to stop the line if he thinks something may be amiss. The assembly line worker does this by pulling a red rope that runs alongside the entire line. When a Toyota worker pulls the cord for a missing bolt or a misaligned part, a senior manager scrambles to determine what might be wrong and how to fix it.

Coiera, “A Systematic Review of the Psychological Literature on Interruption and Its Patient Safety Implications,” Journal of the American Medical Informatics Association 19:6–12 (2012); and J. Craig, F. Clanton, and M. Demeter, “Reducing Interruptions During Medication Administration: The White Vest Study,” Journal of Research in Nursing 19: 248–261 (2014). 161 One element of the TPS is known as “Stop the Line” See C. Furman and R. Caplan, “Applying the Toyota Production System: Using a Patient Safety Alert System to Reduce Error,” Joint Commission Journal on Quality and Patient Safety 33:376–386 (2007). 162 In a seminal 1983 article, Lisanne Bainbridge L. Bainbridge, “Ironies of Automation,” Automatica 19:775–779 (1983). 162 In a famous 1995 case, the cruise ship Royal Majesty National Transportation Safety Board, Grounding of the Panamanian Passenger Ship Royal Majesty on Rose and Crown Shoal Near Nantucket, Massachusetts, June 10, 1995 (Washington DC: National Transportation Safety Board, 1997). 162 In a dramatic study illustrating the hazards K.

See regional health information exchanges (RHIOs) Rock Health, 237–240 Röntgen, Wilhelm, 50 Rothman, David, 30 Royal Majesty, 162 satisficing, 161 Schiff, Gordon, 87–88 Schmidt, Eric, 185 Schumpeter, Joseph, 250–251 Schwab, Robert, 65–66 scribes, 75, 82 The Second Machine Age (Brynjolfsson and McAfee), 94, 244 Semmelweis, Ignaz, 23 Septra, 128, 136–137 See also Pablo Garcia medical error case Shenkin, Budd, 174 Shorter, Edward, 30 Shortliffe, Ted, 102 shovel ready, 14–15 Siegler, Eugenia, 39 simple transforms, 5, 113 Sinsky, Christine, 75, 78–79, 83–86, 87, 210 Sixth International Conference on AIDS, 195 Slack, Warner, 93, 276 Slack’s Law, 276 Smart Patients, 179–180, 196–200 Smarter than You Think (Thompson), 276 Smith, Mark, 108, 113, 122–123, 183–185, 188 SOAP note, 46 social media, 177–178 Stack, Steve, 73 stacking, 53 standardization, 41–42, 244 hospital standardization, 36 standards, 13 See also Meaningful Use Sterile Cockpit, 83 stethoscopes, 32, 33 Stoller, James, 77 Stop the Line, 161 Strangers at the Bedside (Rothman), 30 Sullenberger, Chesley “Sully”, 147, 270 supervised learning, 112 Swiss cheese model, 131–132 Sydenham, Thomas, 31 Szolovits, Peter, 100–101, 110, 112 Tecco, Halle, 238–239 teleradiology, 60–61 See also radiology televisits, 261 tethered personal health records, 185 See also PHRs third-party payers, and medical records, 37–39 Thompson, Clive, 276 Tillack, Allison, 55, 56–57, 58 Top 100 lists, 40 Toyota Production System, 161 trimethoprim-sulfamethoxazole. See Septra Tsoukas, Hari, 56 UCSF Medical Center Benioff Children’s Hospital, 127–130 computer systems, 132–134 Epic Systems, 224–225 MyChart portal, 133 universal patient identifiers, 190 upcoding of diagnoses, 81–83 See also kwashiorkor usability, 74, 214–215, 249 user-centered design, 269 lack of, 76–77 vendor lock, 217 vendors, and Meaningful Use, 212–213 Verghese, Abraham, 27–28, 45, 77, 93, 113, 273 Vioxx, 183 Wah, Robert, 17, 246 Walker, Jan, 175, 176 Warner, David, 174 Watson supercomputer, 94, 108–109 in healthcare, 103–104, 105–106, 118 on Jeopardy, 95, 102 therapies, 111–113 Weed, Larry, 45–46 Weiner, Michael, 105 WellPoint, 17 work flow, 243–244 See also productivity paradox x-rays, 32 See also radiology Zeiger, Roni, 76, 179–181, 186, 196, 199–200 About the Author Robert Wachter is professor and associate chair of the Department of Medicine at the University of California, San Francisco, where he directs the 60-physician Division of Hospital Medicine.


pages: 327 words: 103,336

Everything Is Obvious: *Once You Know the Answer by Duncan J. Watts


affirmative action, Albert Einstein, Amazon Mechanical Turk, Black Swan, butterfly effect, Carmen Reinhart, Cass Sunstein, clockwork universe, cognitive dissonance, collapse of Lehman Brothers, complexity theory, correlation does not imply causation, crowdsourcing, death of newspapers, discovery of DNA, East Village, easy for humans, difficult for computers, edge city,, Erik Brynjolfsson, framing effect, Geoffrey West, Santa Fe Institute, happiness index / gross national happiness, high batting average, hindsight bias, illegal immigration, interest rate swap, invention of the printing press, invention of the telescope, invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, lake wobegon effect, Long Term Capital Management, loss aversion, medical malpractice, meta analysis, meta-analysis, Milgram experiment, natural language processing, Netflix Prize, Network effects, oil shock, packet switching, pattern recognition, performance metric, phenotype, planetary scale, prediction markets, pre–internet, RAND corporation, random walk, RFID, school choice, Silicon Valley, statistical model, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, The Death and Life of Great American Cities, the scientific method, The Wisdom of Crowds, too big to fail, Toyota Production System, ultimatum game, urban planning, Vincenzo Peruggia: Mona Lisa, Watson beat the top human players on Jeopardy!, X Prize

Subsequently, the bright-spot approach has been used successfully in developing nations, and even in the United States where certain hand-washing practices in a small number of hospitals are being replicated in order to help reduce bacterial infections—the leading cause of preventable hospital deaths—throughout the medical system.28 The bright-spot approach is also similar to what political scientist Charles Sabel calls bootstrapping, a philosophy that has begun to gain popularity in the world of economic development. Bootstrapping is modeled on the famous Toyota Production System, which has been embraced not only across the Japanese automotive firms but also more broadly across industries and cultures. The basic idea is that production systems should be engineered along “just in time” principles, which assure that if one part of the system fails, the whole system must stop until the problem is fixed. At first, this sounds like a bad idea (and it has led Toyota to the brink of disaster at least once), but its advantage is that it forces organizations to address problems quickly and aggressively.

Gawande cautions that it is still uncertain how well the initial results will last, or whether they will generalize to other hospitals; however, a recent controlled experiment (Marra et al. 2010) suggests that they might. 29. See Sabel (2007) for a description of bootstrapping. See Watts (2003, Chapter 9) for an account of Toyota’s near catastrophe with “just in time” manufacturing, and also their remarkable recovery. See Nishiguchi and Beaudet (2000) for the original account. See Helper, MacDuffie, and Sabel (2000) for a discussion of how the principles of the Toyota production system have been adopted by American firms. 30. See Sabel (2007) for more details on what makes for successful industrial clusters, and Giuliani, Rabellotti, and van Dijk (2005) for a range of case studies. See Lerner (2009) for cautionary lessons in government attempts to stimulate innovation. 31. Of course in attempting to generalize local solutions, one must remain sensitive to the context in which they are used.


pages: 326 words: 106,053

The Wisdom of Crowds by James Surowiecki


AltaVista, Andrei Shleifer, asset allocation, Cass Sunstein, Daniel Kahneman / Amos Tversky, experimental economics, Frederick Winslow Taylor, George Akerlof, Howard Rheingold, I think there is a world market for maybe five computers, interchangeable parts, Jeff Bezos, Joseph Schumpeter, knowledge economy, lone genius, Long Term Capital Management, market bubble, market clearing, market design, moral hazard, new economy, offshore financial centre, Picturephone, prediction markets, profit maximization, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Toyota Production System, transaction costs, ultimatum game, Yogi Berra

Similar results from both experimental and empirical studies show that allowing people to make decisions about their own working conditions often makes a material difference in how they perform. The second thing decentralization makes easier is coordination. Instead of having to make constant resort to orders and threats, companies can rely on workers to find new, more efficient ways of getting things done. That reduces the need for supervision, cuts transaction costs, and allows managers to concentrate on other things. The supreme example of this kind of approach is the Toyota Production System, Toyota’s legendarily efficient system for making cars. At the core of TPS is the idea that frontline workers should be trained to have a wide range of skills and that they have to understand how the production process works from the bottom up if they are to take best advantage of it. At the same time, Toyota has eliminated the classic assembly line, in which each worker was isolated from those around him and, often, worked on a single piece of a vehicle, and substituted for it teams of workers who are effectively put in charge of their own production process.

For a defense of the bottom-up model see Joseph Blasi and Eric Kruse, In the Company of Owners (New York: Basic Books, 2003); and for a critique of it see James Hoopes, False Prophets (Cambridge: Perseus Publishing, 2003). See also William Joyce, Nitin Nohria, and Bruce Roberson, What Really Works: The 4 + 2 Formula for Sustained Business Success (New York: HarperCollins, 2003). Alfred P. Sloan, My Years with General Motors (New York: Doubleday, 1964). The definitive Western account of the Toyota Production System can be found in James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine That Changed the World: The Story of Lean Production (New York: HarperCollins, 1991). Keller, Rude Awakening: 101. Frederick Winslow Taylor is cited in Stephan H. Haeckel, Adaptive Enterprise (Boston: Harvard Business School Press, 1999): 30. Rakesh Khurana, Searching for a Corporate Savior (Princeton: Princeton University Press, 2002).


pages: 379 words: 113,656

Six Degrees: The Science of a Connected Age by Duncan J. Watts


Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, Frank Gehry, Geoffrey West, Santa Fe Institute, invisible hand, Long Term Capital Management, market bubble, Milgram experiment, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, Paul Erdős, rolodex, Ronald Coase, Silicon Valley, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, Toyota Production System, transaction costs, transcontinental railway, Y2K

Churning out many of the world’s best-engineered cars at prices that made even their European competitors wince, year after year Toyota was making Detroit look like an eight-hundred-pound gorilla trying to do aerobics. It might come as a surprise then that the industrial behemoth that produces Toyota cars and trucks is much more than a single company. In actuality, it is a group of roughly two hundred companies integrated by their common interest in supplying the Toyota company itself with everything from electronic components to seat covers, and also by what is known as the Toyota Production System. TPS is a collection of the same kinds of manufacturing and design protocols that have been adopted by most Japanese (and these days American) industrial firms, so in a way it’s nothing special. What makes it unique is the almost religious zeal with which it is implemented inside the Toyota group. Companies in the group, even those companies that compete with each other for Toyota’s business, cooperate to an extent that almost seems counter to their interests.

And finally, in the whirlwind of the crisis, Aisin became extremely difficult to contact. Even after installing thousands of additional phone lines, so much information was flowing in and out in the form of queries, suggestions, solutions, and new problems, that the company was often unreachable, leaving the cavalry largely to its own devices. This, however, is where all the training kicked in. After years of experience with the Toyota Production System, all the companies involved possessed a common understanding of how problems should be approached and solved. To them, simultaneous design and engineering was an everyday activity, and because Aisin knew this, they were able to specify their requirements to a minimum level of detail, allowing potential suppliers the greatest possible latitude in deciding how to proceed. Even more important, while the particular situation was unfamiliar, the idea of cooperating was not.


pages: 199 words: 43,653

Hooked: How to Build Habit-Forming Products by Nir Eyal


Airbnb, AltaVista, Cass Sunstein, choice architecture, cognitive bias, cognitive dissonance,, framing effect, game design, Google Glasses, Inbox Zero, invention of the telephone, iterative process, Jeff Bezos, Lean Startup, Mahatma Gandhi, Mark Zuckerberg, meta analysis, meta-analysis, Oculus Rift, Paul Buchheit, Paul Graham, Peter Thiel, QWERTY keyboard, Silicon Valley, Silicon Valley startup, Snapchat, TaskRabbit, telemarketer, Toyota Production System, Y Combinator

Dorsey believes a clear description of users — their desires, emotions, the context with which they use the product — is paramount to building the right solution. In addition to Dorsey's user narratives, tools like customer development, [li] usability studies, and empathy maps [lii] are examples of methods for learning about potential users. One method is to try asking the question "why" as many times as it takes to get to an emotion. Usually this will happen by the fifth “why.” This is a technique adapted from the Toyota Production System described by Taiichi Ohno as the “5 Whys Method.” Ohno wrote that it was "the basis of Toyota's scientific approach ... by repeating ‘why?’ five times, the nature of the problem as well as its solution becomes clear." [liii] When it comes to figuring out why people use habit-forming products, internal triggers are the root cause, and “why?” is a question that can help drill right to the core.


pages: 249 words: 73,731

Car Guys vs. Bean Counters: The Battle for the Soul of American Business by Bob Lutz


corporate governance, currency manipulation / currency intervention, flex fuel, medical malpractice, Ponzi scheme, profit maximization, Ralph Nader, shareholder value, Steve Jobs, Toyota Production System, transfer pricing, Unsafe at Any Speed, upwardly mobile

Lingering in the minds of the general public are outdated images of dark, rundown, smoky Detroit factories, peopled by lazy, alcoholic, or even drug-abusing workers who, rather than pursuing quality, would actually sabotage the product in order to hurt their employer. (We’ve all heard tales of Coke bottles being deliberately left in doors to produce a severe rattle later on.) I suppose some of this existed in the bad old days many decades ago, but today’s reality is the exact opposite: gleaming buildings, well-landscaped grounds, brilliantly lit inside, with a level of cleanliness that would rival many hospitals.All of the fabled “Toyota Production System” methods were learned and incorporated over the years. Modern equipment, a positive change in union-management working relationships, a union-shared focus on quality, a massive investment in ongoing training, and a relentless drive for greater efficiency had made GM manufacturing in the United States as good as, and often better than, the best of the Japanese automotive manufacturing facilities.


pages: 548 words: 174,644

Boyd: The Fighter Pilot Who Changed the Art of War by Robert Coram


desegregation, inventory management, Iridium satellite, Joseph Schumpeter, Mason jar, RAND corporation, Ronald Reagan, Thomas Kuhn: the structure of scientific revolutions, Toyota Production System, traveling salesman

During his last years, Boyd’s two great professional delights were the work of Chet Richards and a book being researched by Dr. Grant Hammond at the Air War College. Richards was the mathematical whiz who came to the Pentagon in 1973, the man whom Christie assigned the job of finding a place for happy hour. Richards had reviewed all of Boyd’s briefings. He later went to work for Lockheed and began studying the fabled Toyota production system, which he found “frighteningly familiar” from his study of maneuver conflict. But the Toyota production system began in the 1950s, about two decades before Boyd began work on “Patterns of Conflict.” The underlying ideas of mutual trust, mission orders, and individual responsibility, and the concepts of “harmony” and “flow” and—most of all—the manipulation of time as a production tool were central ideas in both the Toyota system and the strategy of maneuver conflict.


pages: 377 words: 110,427

The Boy Who Could Change the World: The Writings of Aaron Swartz by Aaron Swartz, Lawrence Lessig


affirmative action, Alfred Russel Wallace, Benjamin Mako Hill, bitcoin, Bonfire of the Vanities, Brewster Kahle, Cass Sunstein, deliberate practice, Donald Trump, failed state, fear of failure, Firefox, full employment, Howard Zinn, index card, invisible hand, John Gruber, Lean Startup, More Guns, Less Crime, post scarcity, Richard Feynman, Richard Feynman, Richard Stallman, Ronald Reagan, school vouchers, semantic web, single-payer health, SpamAssassin, SPARQL, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, Toyota Production System, unbiased observer, wage slave, Washington Consensus, web application, WikiLeaks, working poor

Rick Perry and his Eggheads by Sasha Issenberg Sasha Issenberg is a miracle worker. This book (really an excerpt from his forthcoming book) is so very, very good that it just blows me away. Issenberg tells the tale of everything I’ve been trying to say to everyone in politics, but he does it in a real-life three-act morality play that’s so good it could be a model on how to tell a story. The Lean Startup by Eric Ries Ries presents a translation of the Toyota Production System to start-ups—and it’s so clearly the right way to run a start-up that it’s hard to imagine how we got along before it. Unfortunately, the book has become so trendy that I find many people claiming to swear allegiance to it who clearly missed the point entirely. Read it with an open mind and let it challenge you, so you can start to understand how transformative it really is. CODE: The Hidden Language of Computer Hardware and Software by Charles Petzold A magnificent achievement.


pages: 323 words: 92,135

Running Money by Andy Kessler


Andy Kessler, Apple II, bioinformatics, British Empire, business intelligence, buy low sell high, call centre, Corn Laws, family office, full employment, George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, knowledge worker, Long Term Capital Management, mail merge, margin call, market bubble, Maui Hawaii, Menlo Park, Network effects, packet switching, pattern recognition,, railway mania, risk tolerance, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Toyota Production System

From what I could gather, General Motors had built this factory years ago and was losing its shirt keeping it open, shipping thousanddollar bills out with every car it made. It tried to close down but couldn’t. Smelled like the United Auto Workers union had a veto, but somehow our guide skipped the reason. In 1984, Toyota, looking for a U.S. presence, cut a deal with GM to co-own the factory, but only if it was operated under the rules of the Toyota Production System and their culture of a “teamwork-based working environment.” Phil leaned over and whispered, “Are we going to have to do calisthenics before the tour?” Our guide had been promoted off the floor and was singing the benefits of TPS. “It used to be thought that the biggest problem for an assembly line was when the line came to a stop. It’s a problem, to be sure, but in Detroit the culture was ingrained in workers’ minds; ‘Don’t stop the line at all costs.’


pages: 374 words: 89,725

A More Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas by Warren Berger


3D printing, Airbnb, carbon footprint, Clayton Christensen, clean water, fear of failure, Google X / Alphabet X, Isaac Newton, Jeff Bezos, jimmy wales, Kickstarter, late fees, Lean Startup, Mark Zuckerberg, minimum viable product, new economy, Paul Graham, Peter Thiel, Ray Kurzweil, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, Stephen Hawking, Steve Jobs, Steven Levy, Thomas L Friedman, Toyota Production System, Watson beat the top human players on Jeopardy!, Y Combinator, Zipcar

Jessica Salter, “Airbnb: The Story behind the $1.3bn Room-letting Website,” Telegraph, September 7, 2012. 25 “it creates dissonance,” notes Paul Bottino . . . From my interview with Bottino. 26 Why can’t India have 911 emergency service? . . . From my interview with Jacqueline Novogratz of the Acumen Fund; plus, Shaffi Mather’s November 2009 TED Talk, “A New Way to Fight Corruption.” 27 The five whys methodology originated . . . Taiichi Ohno, Toyota Production System: Beyond Large-Scale Production (Portland, OR: Productivity Press, 1988). Also, Eric Ries, The Lean Startup (New York: Crown Business, 2011). 28 IDEO example of five whys . . . From the company’s “Method Cards,” published by William Stout, November 2003. 29 character actor and author Stephen Tobolowsky . . . From my interview with Tobolowsky, February 17, 2013. 30 Why isn’t the water reaching the people who need it?


pages: 372 words: 89,876

The Connected Company by Dave Gray, Thomas Vander Wal


A Pattern Language, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, Atul Gawande, Berlin Wall, business process, call centre, Clayton Christensen, complexity theory,, factory automation, Googley, index card, interchangeable parts, inventory management, Jeff Bezos, Kevin Kelly, loose coupling, market design, minimum viable product, more computing power than Apollo, profit maximization, Richard Florida, self-driving car, shareholder value, side project, Silicon Valley, skunkworks, software as a service, South of Market, San Francisco, Steve Jobs, Steven Levy, Stewart Brand, The Wealth of Nations by Adam Smith, Tony Hsieh, Toyota Production System, Vanguard fund, web application, WikiLeaks, Zipcar

Earl Sasser, and Leonard A. Schlesinger, Free Press, 1997. The Seven-Day Weekend: Changing the Way Work Works By Ricardo Semler, Portfolio Hardcover, 2004. Simply Complexity: A Clear Guide to Complexity Theory By Neil Johnson, Oneworld, 2009. Steve Jobs By Walter Isaacson, Simon and Schuster, 2011. Structural Holes: The Social Structure of Competition By Ronald S. Burt, Harvard University Press, 1995. Toyota Production System: Beyond Large-Scale Production By Taiichi Ohno and Norman Bodek, Productivity Press, 1988. The Ultimate Question: How Net-Promoter Companies Thrive in a Customer-Driven World By Fred Reichheld, Harvard Business School Press, 2006. A Vision So Noble: John Boyd, the OODA Loop, and America’s War on Terror By Daniel Ford, CreateSpace, 2010. What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation By Gary Hamel, Jossey-Bass, 2012.


pages: 372 words: 152

The End of Work by Jeremy Rifkin


banking crisis, Bertrand Russell: In Praise of Idleness, blue-collar work, cashless society, collective bargaining, computer age, deskilling, Dissolution of the Soviet Union, employer provided health coverage, Erik Brynjolfsson, full employment, future of work, general-purpose programming language, George Gilder, global village, hiring and firing, informal economy, interchangeable parts, invention of the telegraph, Jacques de Vaucanson, job automation, John Maynard Keynes: technological unemployment, knowledge economy, knowledge worker, land reform, low skilled workers, means of production, new economy, New Urbanism, pink-collar, post-industrial society, Productivity paradox, Richard Florida, Ronald Reagan, Silicon Valley, speech recognition, strikebreaker, technoutopianism, Thorstein Veblen, Toyota Production System, trade route, trickle-down economics, women in the workforce, working poor, working-age population, Works Progress Administration

/japan Comparison of Strategy and Organization (New York: North-Holland, 1985), pp. 112-113. 21. Lincoln, James, Hanada, Mitsuyo, and McBride, Kerry, "Organizational Structures in Japanese and U.S. Manufacturing." Administrative Science Quarterly, voL 31, 1986, pp. 338-364; Kenney, Martin, and Florida, Richard, Beyond Mass Production: The Japanese System and Its Transfer to the US. (New York: Oxford University Press, 1993), pp. 42, 105, 107. 22. Ohno, Taiichi, Toyota Production System (Cambridge, MA: Productivity Press, 1988), pp. 25-26. 23. Womack et aL, pp. 71-103. 24. Cited in Davidow and Malone, p. 126. 25. Kenney and Florida, p. 54. 26. Womack et aL, p. 12; also cited in Technology and Organizational Innovations, Production and Employment (Geneva, Switzerland: International Labor Office, July 1992), p. 33. 27. Interview, March 21, 1994. Like others, Loveman's studies indicate "an increasing bifurcation of the labor market" with "highly skilled, highly educated people doing rather well, while those in lower skill occupations [including middle management] are getting trounced."


pages: 455 words: 116,578

The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg


Atul Gawande, Checklist Manifesto, corporate governance, cuban missile crisis, delayed gratification, desegregation, game design, haute couture, impulse control, index card, meta analysis, meta-analysis, patient HM, pattern recognition, randomized controlled trial, rolodex, Rosa Parks, Silicon Valley, telemarketer, Tenerife airport disaster, Toyota Production System, transaction costs, Walter Mischel

We emphasized, however, that when that happens, the actual routine that emerges, as opposed to the nominal one that was deliberately designed, is influenced, again, by a lot of choices at the individual level, as well as other considerations (see book [Evolutionary Theory of Economic Change] p. 108).” 6.17 These organizational habits—or “routines” For more on the fascinating topic of how organizational routines emerge and work, see Paul S. Adler, Barbara Goldoftas, and David I. Levine, “Flexibility Versus Efficiency? A Case Study of Model Changeovers in the Toyota Production System,” Organization Science 10 (1999): 43–67; B. E. Ashforth and Y. Fried, “The Mindlessness of Organisational Behaviors,” Human Relations 41 (1988): 305–29; Donde P. Ashmos, Dennis Duchon, and Reuben R. McDaniel, “Participation in Strategic Decision Making: The Role of Organisational Predisposition and Issue Interpretation,” Decision Sciences 29 (1998): 25–51; M. C. Becker, “The Influence of Positive and Negative Normative Feedback on the Development and Persistence of Group Routines,” doctoral thesis, Purdue University, 2001; M.