In the 1960s, my father was a manufacturing engineer for BigTechFirm (this was back when BigTechFirms built actual stuff, rather than trafficking in webshit). On the shop floor, there were A, B, and C workers on a line in descending order of skill level required and roughly ascending order of available workers. It was a true assembly line model. I believe the A and B workers had more variety to their work but the C workers had precisely one job, like putting two parts together along a joint or tightening a specific set of screws. This introduced problems in the line when a C worker got sick: the line would be held up entirely while a substitute was trained and then the substitute would perform much more poorly than the sick worker.
My father's bright idea was to give each C worker a workbench and train them in several jobs, then have them perform all those jobs in one phase of the assembly. That way, if a C worker got sick, because all of their colleagues knew all the jobs that worker had to do, the line would be held up much less.
Upper management passed on my dad's idea back then -- but it became all the rage in the 1980s when it was rediscovered in the Toyota model, part of the massive fad for "Japanese management techniques" that prevailed back then.
I keep this story in mind when I have to deal with agileshit at a company whose management had apparently never heard of The Mythical Man-Month.
It wasn't just your father. A lot of American companies never felt the need to improve. It's kind of sad really.
In an industrial systems engineering class we learned of Deming who was trying to help American auto manufacturers with quality control and they wouldn't hear of it. He later was in Japan and influenced the ideas over there. Japan would go on to create the Deming Prize as one of their highest awards one could be given for quality
You should know that Toyota went full Agile last year. Not pure Agile but Agile in the Toyota Way -- where they produce 20x the documentation that the Waterfall Method produces. I'm not commenting on whether this is a good or a bad thing because my opinion doesn't matter but it enabled everyone to try something new. If the upper management in charge of tech had any free time, they'd might benefit from reading The Mythical Man-Month as you've brought up. Toyota has been about a year or three behind all of the car companies to adopt new tech like Alexa and Apple CarPlay. Regardless, Toyota has come a pretty long way since first being a loom company.
Cutting-edge tech stuff isn't really Toyota's thing - they excel at quality, reliability, and lifetime value, and thus have an incentive to delay new tech until they can perfect it.
What is webshit? It seems like you are trying to say that you don’t think web developers build anything worthwhile, but I’m hoping there’s a less insulting interpretation of your comment?
Television was developed with the intent of bringing culture, like Shakespeare to the masses -- but it was more profitable to present cheap-to-make, lowest-common-denominator entertainment and an increasing number of ads. Similarly, the Web was supposed to be a global information resource for scientific papers and other human knowledge, but the companies that dominate the Web today have turned it into television that watches back.
Somewhere there are Web developers adding real value. Sometimes I like to think I'm one of them. But that's not the LOB of the big players.
"The Machine That Changed the World" is a wonderful title on this. Kiichiro Toyoda invented the lean production model after coming to the states and studying the inefficiencies of the assembly lines of Ford. This was a process dependent on modularizing every manufacturing component due to a demand for the Toyota company to serve a market with a need for an immense variety of vehicles, and giving teams ownership of the entire production process rather than one error check at the end a lá Ford. Introducing a vehicle with a steering wheel on the opposite side might take a year to implement in lean production, while handling that kind of variation in the assembly line model could take years (generally double the amount of time); The net result of this being that Toyota could offer 2x the vehicles of GM at half GM's size. Toyota was able to make extremely reliable vehicles and modify them as consumer demands shifted. By 1990, the Japanese were making cars with 4 year product lives and 500k total units (125k per year) while the Western companies were building 2M over 10 year product lives.
As I’ve heard it, Deming was having trouble getting people to listen to him on this side of the pond, but the Japanese were all too happy to listen to his ideas.
There also seems to be a running disagreement about whether Mr Toyoda or Taiichi Ohno is responsible for the Toyota system.
> As I’ve heard it, Deming was having trouble getting people to listen to him
made me chuckle - its not like he did anything of value...
Deming has always been a reminder to think about counter tendencies. He might not have made sense to the Detroit execs in 1950-1975 but his relevance changed sharply after that.
Deming didn't do "anything of value"? Considering Kaizen and the concept of continuous improvement in Japan is mostly attributed to him. The prime minister awarded him the Order of the Sacred Treasure and recognizes him for their post-war rebirth as an industrial power. Detroit did everything wrong at the time (see GM's disaster in automation at their Hamtramck facility [0]). Even when American execs were posed with a simple question of why their own employees didn't buy their product they didn't understand the disconnect between quality, reliability and the awareness of the buyer.
> Even when American execs were posed with a simple question of why their own employees didn't buy their product they didn't understand the disconnect between quality, reliability and the awareness of the buyer.
Ironically Toyota now has longer product lives than many other mainstream manufacturers. The Camry and Corolla are on roughly 6 year product lifecycles. The 4Runner has barely changed in 10 years.
To be fair, that may be a purposeful design decision.
I consider the fact that the 4Runner can trace its way back to a 1980s Hilux that Top Gear dropped off a building (and still survived) to be nothing but good for its likely reliability.
Similarly, its primarily dial-based dashboard (as opposed to the touch-screen everywhere fad right now), truck-based suspension, and off-road performance (all things that could point to it being a rather much for a city car) to be its primary selling points.
Additionally, why change what sells so well? They sell ~140,000 4Runners a year, vs all of the Lexus models combined being ~40,000.
I can't comment on the Camry/Corolla as I've never owned one.
The first Lexus car ever was unveiled in the 1989 Detroit Auto Show, Toyota's first non-Japanese Lexus plant was in North America. In fact, Toyota stopped selling top-of-the-line cars after Lexus launched, they discontinued the Cressida and stretched the Camry into the Avalon just to have a full-sized Toyota in America.
Toyota didn't even sell Lexus cars in Japan until ~2006, the American Lexus vehicles were badged as Toyotas (e.g The LS400/LS430 was the 'Celsior'). Additionally, Japanese luxury tastes are different than American tastes - the Japanese Toyota Celsiors were available with a premium cloth interior and without sunroofs (which came standard on many American Lexus cars).
Now, Lexus may sell more in the Middle East than North America (by revenue if not units) but America was 100% the target market.
The Top Gear reference is powerful but in my opinion, meaningless. All it has done is coin the legend of the invincible Hilux. However, I did not see them or anyone try similar tricks with trucks of similar vintage, making this just a show trick.
> The Top Gear reference is powerful but in my opinion, meaningless. All it has done is coin the legend of the invincible Hilux. However, I did not see them or anyone try similar tricks with trucks of similar vintage, making this just a show trick.
The reputation existed before the show, that's where they got the idea.
I understand, but no one has referenced the less-shiny, real world, imperfect experience in this thread; they have quoted the shiny and superficial Top Gear shtick, which I must admit was the first time I started to develop a considerable distaste for that show. Their attempt has introduced an unfair halo effect for Toyota that has deflected from their more relevant and modern day failings.
Which makes a lot of sense when you consider how and where it's used. It's easier to have service and repair infrastructure for one car with identical mechanicals over a decade than 3 or 4.
With a couple of exceptions in the enthusiast sector, where they are well regarded. Or at least they did at one point. I am of course thinking of the cars with the 1JZ and 2JZ engines. I have an inkling that my heuristic might also correlate with Yamaha input, but on that I'm not certain (not knowing the whole engine lineup)
Nope; both are like that now. They used to make fun cars for people who love driving. Honda held out some five to ten years longer than Toyota, that's all.
Actually, I agree with you. The Supra seems to be an exception to the rule with regard to Toyota culture. It's fascinating and I'd like to test drive one.
The fact is each line setup would involve several modifications in supply chain. Processes, Assembly, Paint Shop and not to say the engineering required beneath it. Reliability engineering often takes six months to an year to emulate a decade worth of conditions. You don't want to rush something to market and break it and apparently cars are hazardous if it fails in operation which mayn't be applicable to mobile phones.
Deming was about quality control, which dovetails into lean: you can only do the latter if you know your parts bin is good, and that you can trust your supplier/s to deliver.
It's covered a little in the TAL episode on NUMMI[1]. There's also a bit of it involved with TWI[2][3]. I'd read some other interesting things about skill transfer post-WW2 with the Marshall Plan but having trouble finding the original source material.
>In the Foreword to Dinero's book "Training Within Industry", John Shook relates a story in which a Toyota trainer brought out an old copy of a TWI service manual to prove to him that American workers at NUMMI could be taught using the "Japanese" methods used at Toyota. Thus, TWI was the forerunner of what is today regarded as a Japanese creation.
Can't confirm or the reverse, but I do remember Taiichi Ohno's name being mentioned multiple times in the book (The Toyota Way), which I bought and read some years ago. Interesting book.
One of the things mentioned was the concepts of muri and muda, related to (not) wasting (stuff), IIRC [1]. Related to Kaizen [2].
I personally was driving a 2011 Toyota minivan in Thailand in 2013 when I suffered this firmware bug. Toyota refused to consider it was anything other than driver fault. I was only going 5kph when it happened so no damage, but damn scary as hell. No recall in that country, and unless dealers did a covert firmware upgrade during maintenance, the flaw still exists in similar model years.
I also remember reading another report that mentioned that software engineering was regarded as 2nd class discipline to hardware in many Japanese companies, and that resulted in sloppiness, lack of oversight and rigorous testing at that time. This problem was partially mitigated by placing SW R&D in other countries, where it was easier to attract talent.
Lean methodology is focused on quality on multiple layers, however, as you mentioned, the implementation may not fulfil the spec.
Mirai is a beachhead for applications that can’t tolerate charge times. Hydrogen can be transported and stored and is considered a viable alternative for industrial applications on an island nation that is currently dependent on the Middle East for oil. So of course the Japanese government created incentives for adoption and innovation. Also, until Tesla, Americans generally showed zero interest in non-hybrid electric vehicles. For all we know, fuel cells could have a brighter future than it appears they do right now.
Weirdest thing, a colleague had unintended acceleration in a Toyota 4WD of much older vintage, 80s or early 90s. Must have been something different entirely, those things were much more mechanical in nature.
Most cases of unintended acceleration, in all brands of cars, are due to the foot coming down on the wrong pedal. And then in a panic, your brain refuses to acknowledge the error and doubles down. Your memory gets based on what your brain thought, and not what actually happened.
US government estimates are that this happens an average of around 16k times per year in the USA. The press release that Wikipedia cites for that has disappeared but you can find it on the wayback machine: https://web.archive.org/web/20180423205652/https://www.nhtsa...
Toyota's acknowledged problem was a floor mat that could get jammed and cause the accelerator to stick. However most of their cases of unintended acceleration were still likely to be human error.
I'm sorry but you are wrong regarding the Toyota problem.
There was (is?) a firmware issue that caused the vehicle to attempt to speed up, regardless of if the accelerator was pressed, or even if the brake was pressed.
In my case, I had the brake fully depressed with around 100kg of force, and the engine was revving to attempt to overcome the brake (VERY scary situation, believe me!). The system only recovered when I bumped a taxi in front of me.
Now you may say I was pushing the accelerator. If I did that I would have hit the car in front of me a lot faster than 5kph. If I was somehow pushing both the accelerator and the brake, the computer system should ignore the acceleration anyway (due to brake taking precedence).
But you don't have to take my word for it. Go read up on the Toyota firmware issue, starting with link I put in the prior post.
First, my main point remains. Most cases of unintended acceleration are human error, regardless of whether any specific case is. I am sorry that you experienced the contrary. But it doesn't change the overall figures.
Second, Toyota dragged its feet on the full variety of problems that they had. But the one that they first acknowledged was the floor mat. As https://abcnews.go.com/Blotter/toyota-pay-12b-hiding-deadly-... says, At the time of the first ABC News report, Toyota attempted to assure its drivers that the incidents of sudden acceleration without warning were solely caused by floor mats becoming stuck on the gas pedals or driver error.
>I had the brake fully depressed with around 100kg of force, and the engine was revving to attempt to overcome the brake
No, it wasn't. An engine's speed (RPM / "revs") is directly proportional to the drivetrain speed -- the RPMs literally cannot increase unless you are 1) accelerating (actual drivetrain speed going up), 2) shift to a lower gear then slip torque converter to rev match (I assume you're driving automatic), or 3) disengaged from the drivetrain (in neutral gear) and hitting the gas.
There's no way for an engine to be "revving" to overcome braking. Hop in a manual car, get up to a normal speed in any gear, then try hitting both the brake and gas.
This is just plain wrong. The poster didn't say they were at a standstill but that they had the brake pedal pressed. That means the engine could have downshifted into 1st gear and started to rev noticeably. The engine would also produce more power (and sound very different) when taking up load, even under the same RPM. Finally, as the other reply pointed out, the engine can spin a clutch or CVT.
The poster said that the brake was fully depressed with around 100kg of force. It won't take long for that to be in a standstill. And there's no way acceleration can overpower that kind of brake power. The sound might be scary but it won't change much about brake performance.
You are mistaken. In a car with an automatic transmission, the engine RPM is related to the drivetrain speed, but not directly proportional. The input and output shafts of the torque converter always spin at different speeds during acceleration.
You can try a similar experiment to the one you proposed in a car with an automatic transmission. Stand firmly on the brake (with the parking brake engaged and nothing in front of the car, for safety), put the car in drive, and give it some gas with your other foot. You can easily get the engine to more than twice the idle speed without the wheels turning at all! (Don't do this for extended periods. It makes the torque converter get hot.)
From a standstill yes -- the car is slipping the torque converter between disengaged (neutral, idle in a standstill) and first (to actually get going). Exactly the same as a manual, to get moving from a standstill you have to slip the clutch somewhat, and yes your RPMs will go up.
But that doesn't apply when the car is already in gear and in motion. In both an auto and a manual, if you're applying enough brake to prevent the car from accelerating, the engine will never be "revving" to fight your braking. It will only increase speed if your drivetrain speed increases.
I didn't explicitly state it in the above post because I don't want to crap on the parent too much, but the if he was hitting a pedal and the engine was "revving"... he was probably hitting the gas and accelerating.
> he was probably hitting the gas and accelerating.
...Or the car was actuating the throttle as if he was hitting the gas, a.k.a. unintended acceleration.
I see a lot of people like you in this thread and elsewhere dismissing unintended acceleration experiences.
Before you continue to do so, I would urge you to read the NASA report on the Toyota unintended acceleration case and related documents (https://www.nhtsa.gov/staticfiles/nvs/pdf/NASA-UA_report.pdf, https://users.ece.cmu.edu/~koopman/pubs/koopman14_toyota_ua_..., and the link in the top level comment, https://www.edn.com/design/automotive/4423428/Toyota-s-kille...). It lays out a damning indictment of Toyota's ECU hardware and firmware development culture, that flies directly counter to the happy picture promoted by the "Toyota Way" PR. Toyota never acknowledged the mistakes they made - instead they quietly sacked the head of that division and then most of the staff, and rebuilt it from the ground up. Today's Toyota ECUs appear to be designed quite differently.
Just to flag - the US Government (which operates NASA) was a major stakeholder in GM and Chrysler, major competitors of Toyota, when they investigated Toyota.
There is a long history of American automakers and their cohorts in the media and elsewhere who use these scandals to scare buyers away from Japanese makes. See what they did to Suzuki with the Jimny in the eighties for the most egregious example. I watched this “scandal” closely at the time, and it smelled like a rat all along. Fortunately, these tactics are ineffective, but there will always be anecdotal persistence on discussion threads like this. Nothing in any credible source materials proved this issue. Settling lawsuits is not an admission of guilt; it’s Japan Inc rolling their eyes, pulling out their pocket books, and making a pragmatic cost/benefit analysis. The lengths to which the case for the unintended acceleration flaw went is proof enough of what their aims were. If you want a counterpoint to the study you cited, here’s one from the National Highway Traffic Safety Administration when American media and automakers pulled the same stunt to slander German makers in the 1980s: https://www.autosafety.org/sites/default/files/1989%20NHTSA%...
Putting aside other aspects of your bias, it's ironic that you insinuate that a "slander" happened, because the opposite effect occurred (as described by slide 9 in my second link). The US Transportation Secretary claimed that Toyota was exonerated, even though the report given by NASA did not support that claim.
The “slander” (not a legally accurate use of the term) referred to the media campaign, which was effective around 2010-12 and has lingering effects, as seen here.
You're trying to dismiss a series of technical reports on Toyota's software engineering defects - reports that directly acknowledge that it's impossible to prove causality beyond reasonable doubt because of the software engineering defects - on the basis of their similarity to an unrelated report from 1989, and because you "smell a rat".
Again, no. Torque converters do not have gears or neutral. They are hydraulic couplings. The output shaft of the torque converter turns slower than the input shaft when the car is accelerating, and there is no fixed relation of the input shaft speed to the output shaft speed. The gears are all in the transmission after the output shaft of the torque converter.
I'm not a car guy, so maybe I am getting some technical terminology wrong.
But Toyota's software did cause acceleration even without pushing the accelerator, and even while pressing the brake. They were legally proven to be at fault for that.
You can speculate all you want if I was being an idiot and mis-remembering what I personally did, but these facts still stand regardless of my personal experience:
1) Toyota was legally at fault for software caused unintended acceleration in the USA
2) Toyota Thailand never issued a recall for similar makes/years
Now maybe the software of cars sold in Thailand is totally different from the software of cars sold in the USA, but the cynic in me thinks it's just that Thailand's lack of consumer protections, plus Toyota's indifference, is the real reason no action was taken.
That's not how it works. The brakes are more powerful than the engine, sure, but only at full braking power. Ask anyone who owns a rear-wheel-drive sports car what happens when you push both pedals at the same time and they will literally leave you in a cloud of smoke.
The RWD thing is definitely important here. Given that the majority of cars and a significant number of SUVs are now FWD, this doesn't hold water. Given it is the front brakes that are more powerful than the rears, and if your brakes are maybe a tad worn out, you might not be able to take your brakes from a dynamic friction situation to a static friction situation. In the mean time, your engine would just continue injecting heat into the brakes, which could easily overcome them. It might also be that he was not braking with the full force initially, meaning some degree of heat saturation may have already been present.
I could rev my engine while pressing the brake on a 2014 Honda Civic (helped with not going backwards when I needed to start moving from a standstill on a steep hill). Is that modern enough for you?
(On the other hand my 2017 Subaru Forester does not do the same; thankfully it has less of a tendency to roll backwards when releasing the brake on a steep hill.)
Often badly-placed floormats could also cause this issue. I remember a few automaker recalls in the prior decade that comprised of adding hooks to the floor boards to avoid floormat movement.
They should call this "The Deming Way" since most of it sounds identical to Deming's management philosophy and he taught Toyota back in the 1960s[1]. His system also had 14 points, which probably isn't a coincidence[2].
Pretty sure that Deming and Taiichi Ohno both are responsible for the creation of these ideas, and they both learned from each other and improved. Which is why eventually it looks very similar looking at it from either side.
I love the Toyota books, read almost any book that is somehow connected to TPS, Toyota, Lean and such.
There is a really fun to read a trilogy by Michael Ballé, the first book is called "The Gold Mine".
And from Goldratt, all of his books and videos and related material is also a favorite. Specifically, about Toyota, Eli Goldratt wrote an article that provides the historical context and what problems Toyota solved, and then continue to improve upon that solution to invent a new solution that is even more amazing. Highly recommended 10m read for free here https://www.goldrattconsulting.com/webfiles/fck/files/Standi...
>Principle 5
Build a culture of stopping to fix problems, to get quality right the first time.
Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue.
I heard culturally Japan and to an extent other Asian manufacturing nations would never actually press the button. Can anyone confirm this?
>I heard culturally Japan and to an extent other Asian manufacturing nations would never actually press the button. Can anyone confirm this?
Its a cord, not a button, and the cord gets pulled all the time. It is a bit brave of Toyota to admit this fact when today's "journalists" are always looking for an angle to take a quote out of context and clickbait the headline. "Toyota admits they have constant flaws in their manufacturing process"
"In our introductory discussions about Japanese culture, Brad talked about the importance of harmony (“Big Harmony”) in Japanese culture. Because of the overwhelming need for harmony, people often wouldn't naturally speak up. They might be more willing to cover up a problem than to really fix it. So, the andon cord is a mechanism that makes it easier for people to speak up."
If you can get your hands on the HBS case study of TPS it's a great read. Details how much emphasis is put on blaming any/all issues on process, rather than people. To the extent that if a clumsy worker drops a wrench, it is assumed to be a problem with process, not that worker, and addressed immediately. The case study also describes a couple of examples of assembly line workers pulling the stop levers and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown.
> The case study also describes a couple of examples of assembly line workers pulling the stop levers and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown.
More than that, when the manager approaches the employee who stopped the line, she is not supposed to ask, "why did you stop the line?" She instead asks, "how can I help?"
>and how management runs over asap (every minute of stoppage is much money lost) to ask the question "why" five times in order to understand the root issue of the process breakdown.
It's something that can be overcome with role-play training and consistent reinforcement. Examples are actually given in the book. One case study is a Korean airline that had a horrifying safety record in part because copilots and other staff didn't feel empowered to overrule the captain even if the captain was wrong. It was a cultural problem, but was overcome through training.
It's a an employee's duty to bring any abnormality to their superior, and then let them make a decision.
Sometimes something anomalous to a newer employee is actually normal, and an experienced superior knows about.
But sometimes letting an anomaly by doesn't get caught to later, since people further down the line/process aren't looking for or see them. And it's not until the product/process reaches final testing that they become aware. Thus it being cheaper to have stopped the line sooner. And 'punishment' being more severe than simply reporting a mistake or anomaly in the first place.
My favorite book in this topic is "The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition: Second Edition" by Steven J. Spear (Formerly "Chasing The Rabbit")
Also really good: Deming wrote his perspective in "Out of Crisis" and Toyota's Taiichi Ohno wrote about his experience in "Toyota Production System: Beyond Large-Scale Production". As others have mentioned, Deming laid the ground work for this type of thinking in post-war Japan. Taiichi Ohno led the initial development of the Toyota Production System.
How do you maintain "Principle 1" while being a publicly traded company?
The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits.
For example look at the field of Customer Retentions. It used to be focused on satisfaction & delight which are both long term success strategies (both to grow and to retain), but in the last twenty years Customer Switching (i.e. making it harder/more costly/more time consuming/more stressful/etc to switch) has become the norm, this is a short term strategy since it improves short term retention metrics at the cost of long term returning customers and poor word of mouth (i.e. nobody returns or joins after they leave, if you made the switching process hellish). It is a great way to keep your quarterly and yearly churn low, but a poor way to run a business.
It used to only be businesses with artificial monopolies that would do this (e.g. Verizon, Comcast, etc). But recently we've seen companies in fairly competitive spaces adopted a similar short term "suicide strategy" like LogMeIn (Remote Support Software), The New York Times (News Publication), SiriusXM (streaming audio), etc. All of which are likely chasing quarterly performance metrics tied to executive compensation.
> The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits.
That's a myth. Yes CNBC loves short term stuff as it makes good TV. In the real world see Black Rock (biggest asset manager) CEO public urging long term focus
https://www.blackrock.com/corporate/investor-relations/larry...
. See also Amazon and all the other profitless companies just listed as good examples that long term has value.
You call it a "myth" then use one example, that disproves the point (why urge to act against a "myth") and another that's a single data point, while ignoring the rest of the market.
I would have though that the CEO of the world's largest investment company would count more than "one single data point". I know there are a few examples of short term investors ruining a company - but have you any examples of companies punished for choosing long term over short term?
> I would have though that the CEO of the world's largest investment company would count more than "one single data point".
I said that CEO undercuts your point. You claimed short-term-ism was a "myth," then quoted a CEO saying that a lot of people focus on short term investing, rather than long term investing. Therefore making it not a myth, according to your own source.
While that is a common statement, it isn't really true. Most stock holders have figured out that long term profits are important as well. Companies that only focus short term go out of business quickly and so are worth less than companies who will be around longer.
Most shareholders (37%) are retirement accounts which have long term goals.
> Most stock holders have figured out that long term profits are important as well. Companies that only focus short term go out of business quickly and so are worth less than companies who will be around longer.
Doesn't matter if the stock holders who pushed for the decisions managed to flip their stocks when they were still rising in value. Aren't most stock holders playing this game to flip stocks, without caring much about the particular company they're making money off?
After reading countless stories about companies big and small, I came to conclusion that if you want to build a company that has a mission and/or a moral compass, under no circumstances you should ever give any degree of control to people who are not in on the mission or do not share the same moral direction. From this follow at least two rules:
1) Never ever go public.
2) Never ever accept VC money.
Problem is, you'll likely get outcompeted by companies that do either or both of these things.
There are public companies that are run for the long term. Berkshire Hathaway springs to mind and I'm sure there are many others. It's down to the CEO whether they do that or try to game the quarterly earnings.
> Many companies have been ruined and continue to be ruined
You say "ruined", I say "fulfilled their ultimate purpose as disposable wealth-extraction machines enriching executives".
I totally agree that the stock market's design encourages short-termism. But this is entirely appropriate in service of the idea that heroic individuals are chiefly responsible for company outcomes.
Though of course in traditional theory the company should be run for the shareholders rather than the executives. It's a bit of a flaw in the system if they can extract large bonuses while tanking the stock. Maybe the government could write some laws that bonuses have to be held in escrow for a while to check the company survives.
(And in more modern views maybe you should worry about the other stakeholders too.)
Most shares in most companies I've seen have been owned or controlled by executives or by institutional investors (mutual funds, insurance cos., pensions) that tend to vote with executives' recommendations. Without high-level executive support, shareholders are free to do whatever they want, but the important ones typically don't want.
I disagree that it's a "flaw". It is the natural consequence of an ideology, where we ascribe proportionate value to the contributions of executives and marginal value to the contributions of everyone else.
Since we believe that executives are the ones creating the wealth, it is just that the wealth flows out of the company and towards them. Executives giveth and executives taketh away.
This is literally the thought process that led to the creation of the LTSE. I was actually reading The Toyota Way while writing the draft manuscript for The Lean Startup
>The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability. Many companies have been ruined and continue to be ruined by this short-term-ism chase for quarterly and yearly profits.
Short term stock prices aren't entirely controlled by short term results. Just look at PE ratios for growth companies. Short term results often change the price a lot because its an indicator for future results. Stuff like one time write offs don't really affect the price.
There's definitely a big problem with short termism and focus on quarterly performance over long-term value. Luckily there are a variety of solutions to this.
One is to have dual class share structures where minority owners have majority of the voting shares (e.g. Facebook, Google). Another is to create a new type of stock exchange that incentivizes long-term ownership (e.g. LTSE long-term stock exchange).
It's hard to say how Toyota is governed unless you know more about how the Tokyo Stock Exchange functions. Toyota shares are only available here in the form of ADRs (American Depository Receipts). Each ADR share represents two shares of common stock on the Tokyo Stock Exchange.
Toyota might not have chase short term profits like many American companies choose to do. After two hours of googling it (and reading english web pages only, not japanese webpages), the only notable thing I discovered was that Toyota pays out 30% of its profits in the form of dividends and spends 20% of its profits on share buybacks for a total shareholder return of roughly 50% of earnings each year. This indicates that Toyota is shareholder friendly but it's not clear if this is an obligation or a choice.
Instead of chasing short-term profits, I've observed that Toyota spends fair budget on advertising and showboating futuristic looking hype technology that is never intended to be released or used. Some investors primarily look at the daily news and are satisfied with this strategy. The technology Toyota intends on using isn't hyped up; it's kept a secret until it's actually released to drivers.
Finally 90% of Toyota Corporate Employees in the Plano, TX US Headquarters are contractors from other companies. Those ones sure as hell aren't getting any quarterly performance bonuses or any executive compensation. At best, the executives bonuses are getting to keep your air-conditioned job for another 3 years.
Japanese corporate governance does not work quite like in the US, either legally or culturally. Shareholders actually generally have more decision making power than in the US but tend not to exercise it very often and basically trust the existing leadership.
Toyota has been publicly traded for 70 years and their shareholders (which are primarily other large Japanese conglomerates) have never even tried to make these kinds of short-term-over-long-term pushes and keep electing Toyoda family members into the top leadership positions.
I don't think the fundamental problem is being publicly traded, it's a question of how distributed the control of a company is. Some publicly traded companies are controlled by few people.
When ownership is concentrated, decisions can be made based on long-term ideology. When ownership is highly distributed, and especially when indirect via indices, decisions are made in favour of widely accepted and broadly applicable metrics of performance, which tend to have only short term confidence.
>How do you maintain "Principle 1" while being a publicly traded company?
>The way the stock market is designed... means they're going to put short term profits over long term viability.
It's simple: be Japanese and not American. Japanese companies don't have this kind of problem, precisely because they aren't American and their society doesn't value enriching executives over all else, and instead values a stable and harmonious society.
Not a single Japanese company, while the lists are dominated by the US ones. What you're saying is nothing other than the ancient TV trope about the difference between Japanese and the Americans (east vs west).
Perhaps it's a culture thing? IIRC, you don't actually legally have to bring more value to shareholders every quarter at the cost of everything else. Maybe Toyota's execs and shareholders have some sort of "gentlemen's agreement" where they just agree to not prioritize the short term at all costs?
Maybe that's naive and they're just saying one thing and doing another.
All publicly trade companies have a fiduciary responsibility to shareholders. That means different things to different companies and is not a hard and fast rule. Amazon did not prioritize short term profits for a long long time and Bezos famously told investors they were too shortsighted. Many large manufacturing companies adopt the Toyota principles here in the US as well. Principle 1 is up to interpretation about what brings the most long-term value to the company.
No company ever tries to go out of business, ergo they optimize to exist forever or get acquired. Whether the board & management understands how best to achieve that long-term sustainability is another matter and one that shareholders get to vote on.
It doesn't always appear that way -- it's really a glass half full/half empty thing. If I may be so bold, you are see what you want to see. Generally speaking, public companies do not prioritize the next quarter above all else. Why not? Because they are, generally speaking, not run by idiots. Of course, some do in certain situations. Because it makes sense in those situations.
Owners (shareholders) and boards are not full of idiots either. They realize the temptation of short term pumps. Thus, executive compensation is typically shaped to encourage longer-term thinking (e.g. stock that does not fully vest for years, bonuses based on future company performance years out, etc). And if they do reward short-term metrics, it's for a specific reason.
That said, japanese companies tend to have longer time horizons than american companies (decades vs years) and perhaps that's better. But then again, the further out you go, the less your planning will work out. So who knows for sure?
Sure, I just meant the fiduciary responsibility doesn't necessarily always mean "short term profits at all costs."
Yep. Arguably an over-fixation on "short term profits at all costs" would be a gross violation of one's fiduciary duty if it puts the long-term viability of the enterprise at risk.
My current personal theory is that it's related to a cognitive bias. People tend to be biased towards the short-term. I.e. the short-term pain on my doorstep seems much worse than the (potentially larger) pain on the horizon.
A lot of times (speaking generally, not specifically about Toyota) CEO compensation is tied to share price targets, which aligns CEO & management behavior to whatever will make the Wall Street analysts happy, which is often quarterly earnings
many other things are tied to share price too. Enron would still be around if the share price hadn't dipped and started the domino fall ending in the scandal that killed the whole company.
It's just a different kind of business. Car companies have multi-year release cycles, deal with complex logistics chains, and sell expensive products, so they have to plan for the long term. If your company lives and dies on the release of your next car, you're screwed.
> How do you maintain "Principle 1" while being a publicly traded company?
> The way the stock market is designed (and the fact that stockholders often get to appoint the board who gets to appoint the CEO) means they're going to put short term profits over long term viability.
Easy: Don't do that. Either 1.) Don't be a publicly traded company, or 2.) Don't let short-sighted shareholders dictate your management decisions.
A lot of this was covered in "The Phoenix Project". A good read but a bit idealistic in the expected outcome. The fake company was essentially able to right the sinking ship after the band had already stopped playing, in 2 quarters no less.
However, the core tenets were valid from a general approach. My fear when reading was the potential to go overboard. We have all met over-zealous scrum masters. Same could be applied to a lot of the stuff they were essentially transferring from manufacturing to development and more specifically devops.
It's worth reading The Goal as The Phoenix Project is somewhat based on it. The Goal introduces the idea of Theory of Constraints in a similar novelized form, and The Phoenix Project takes ToC and applies it to information systems/software work. There's overlap between ToC and the Toyota Way (Toyota Production System, Lean, etc.) as all are based on taking a systems view of things, and place a great deal of emphasis on identifying problems with the process, not the people (that is, no individual blame).
I had a CTO loan me "The Goal" after I came back from USENIX in Boston (2011) talking about devops and shite... Its a good read and gave context to the Phoenix project without being a spoiler...
I really enjoyed The Phoenix Project. I agree that things come together a bit too nicely at the end--seemed unrealistic. The first half though, when everything is going wrong, seemed very realistic. I couldn't read it before bed, or else I'd get too worked up to sleep.
It made a rough transition for me because all of the things going wrong were all too familiar.
Then when it wrapped up very nicely I felt like I was bad at my job. "Wait, how did they fix it so fast!?!" (hyperbole here but it was sort of a gut punch)
I read The Phoenix Project several times, but compared with The Goal it has very little to teach you. It is a nice story, easy to relate, but extremely hard to understand what is it that needs to be done at an organization to move it through this kind of change. IMHO it is much easier to follow and learn a process of improvement in Goldratt's books.
Actually, the full title of "The Goal" is "The Goal: A Process of ongoing Improvement". Goldratt used to call it POOGI.
And what I have seen (working in a similarly famous Japanese company) is that while these management models are quite powerful, they lack interpretation in the modern age - that is to say, how they apply to systems, data, software, etc. For example, if data quality is not respected holistically (an extension of the focus on "quality"), the organization and its constituents (customers, employees, stakeholders) suffer.
Why don't software professionals defer more to the likes of Nintendo, Konami, and other Japanese software companies rather than this manufacturing process?
Are those companies known for their speed and quality of code delivery? Have they published studies and popularised their approaches? Have they, or anyone else, generalized their approaches to things other than specific software categories?
The thing about the manufacturing processes that have come out of Toyota (and others), or the ideas from Deming, Goldratt, and others, is that they're more about general systems theory. What is the flow through the system? How do we know when is an appropriate time to do X? How do we know the focus should be on improving the sales team and not the development team or vice versa?
It may seem like a focus on a manufacturing is misplaced, but many of the ideas transfers over to services as well. Within your business, you have processes which are repeated regularly, information flows with bottlenecks. Which of those should you focus on improving? How do you determine that? How do you measure the improvement efforts? How do you choose how to improve something (top-down directive, or bottom-up participatory effort)? Study Lean, Theory of Constraints, and systems theory and you'll get some answers and ideas.
The point is dear friends and colleagues, that none of us signed up to be computer professionals only to have our craft usurped by a bunch of management types trying to make a name for themselves by spouting eastern philosophies and wearing ragged golf shirts
I am tired of having a textbook thrown at me every time I ask a human question and treated like a factory floor worker by human automata and recent grads suffering from impostor syndrome
I know there is more to software than bottlenecks and efficiencies and all that tripe it seems quality and quantity are the only measures may as well go back to East Germany where all this bullshit emanates from in the first place
Even the damned ranking system on hacker news is an echo to the system used in North Korea. Software has become a breeding ground of groupthink and it's this kind of crap that fuels it
Are you seriously telling me Toyota is a better software company than Nintendo?
I'm alluding to the fact that a whole generation of software developers who grew up idolizing Japanese video game companies got bait and switched to pursue the manic automation principles of a car company rather than enjoying the joy de vivre of our heroes at Nintendo -- the respondent didn't get that my question was rhetorical to begin with and gave an essay-length diatribe on what I consider wholly misguided literature so I switched gears into troll mode and the whole thread blew up
The “Nintendo releases more software than Toyota” comment wasn’t the original. My response made no sense so I removed it and asked why they thought they needed to change their response.
Please just put links on a normal line of text — code formatting prevents them from being rendered as clickable links. It also makes them harder to read on mobile.
This Toyota stuff gets a little bit of a bad rap in some circles, because of the infamous "TPS report" thing - some people believe it's a reference to "Toyota Production System." My understanding is that the Office Space reference was actually meant to be to Testing Procedure Specification documents, but it's hard to be sure.
In any case, Toyota / Lean / etc. is a mindset that has a lot of really good ideas embedded in it. I'm sure you can take it and distort it and come up with a monstrosity (like people do with "Agile") but the core stuff is really good.
As noted by lemax, The Machine That Changed The World is a really good book on this topic.
It's also interesting to note that a lot of the "Toyota" system was inspired by the teachings of an American, W. Edwards Deming. If I recall the story correctly, Deming was pushing these ideas on statistical process control, and nobody in America would listen to him, so he want to Japan and they embraced his stuff, ran with it, and it helped them become a manufacturing juggernaut.
I'm pretty sure the writers of Office Space have gone on record saying "TPS report" is a meaningless term used simply to evoke a sense of wasteful bureaucratic nonsense.
Hmm... this article[1] cites an interview with Mike Judge where he says it mean "Test Program Set" when he was an engineer.
Anyway, I've seen more than a few people jump to the conclusion that it stands for something to do with the "Toyota Production System" which is unfortunate.
That's too bad. It's quite funny thinking Toyota Production System is where TPS reports come from because it's so believable. Even though Toyota switched to Agile-ish methodologies, they still produce 20x the documentation and paperwork that the Waterfall method produces!
A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons—until it was too late.
Curious would anyone like to learn about Toyota production system (lean manufacturing) implementation at Zenbooth factory in Berkeley, CA? We've thought about doing tours.
If I was in the USA, in a heartbeat. I have got so much buy-in in the past by taking senior people on tours and showing them the things I am trying to get them to buy. Seeing things in action is much more powerful for many people than dry documents.
Toyota took all of the good ideas they found in American companies (most specifically Ford) in the 1950s and added continuous improvement. Then they actually iterated with continuous improvement.
So I don't think it's fair to say that any of the ideas are outright stolen (I know you didn't say that either), because Toyota took them well past the starting point.
I've read it mentioned a number of places - as it's somewhat mythical - but the source that comes to mind at the moment - but perhaps I'm getting it wrong? - was the book "Creativity Inc."
In manufacturing its unneeded movement. If I have to get a part that’s at the other side of the facility or even 30’ away, that’s a lot of effort in roundtrips. The component or part should be brought to me. Or my work should be brought to the component or part.
Or the movement could be made useful by having me (or the movement mechanism) carry something both ways.
Copy/paste: Unnecessary movement of people in the plant or in the general work area, such as looking for parts and tools, leaving the work area for any reason, and physically moving products and parts. Motion is probably the second most common waste.
The entire decades-long overseas diversion saga surrounding American Toyota pickups has always fascinated me.
Top Gear did an episode [0] trying to destroy a Toyota Hilux (similar to the Land Cruiser) and literally couldn't, which explains why it's so popular with terrorists. It's a worthwhile watch if you want to see truck survive after being drowned in water, fire, and the rubble of a demolished skyscraper. Say what you want about Toyotas, but that's quite the engineering feat in my opinion!
While I don't doubt the Hilux is likely a reliable vehicle, let's not forget it would have made for terrible television if it hadn't survived these seemingly impossible challenges. Top Gear hasn't exactly developed a reputation for being a factually accurate documentary series with many of the challenges being staged etc, so I'd take "literally couldn't" with the large pinch of salt it deserves.
I'd also applaud the efforts of the mechanics who worked on this episode, it was great entertainment if nothing else!
It’s not really limited to terrorists, is it? I mean in the popular imagination but essentially technicals are actually great for a lot of rough terrain variable condition combat. But yeah I understand it’s a big deal in the popular imagination.
Not quite sure what you mean by imagination... Of course Toyotas aren't limited to terrorist groups, but it's definitely been a long-standing trend – so much so that the US Treasury Department asked Toyota to open an inquiry internally regarding ISIS and the dozens of Tacomas and Land Cruisers their propaganda videos:
That shit works only if you are Japanese.... Have Japanese mentality and work culture... Also your product is a car.. Or something tangable made on a production line....
Agile IS the Toyota way... Or at least tries to be
A sibling post mentioned Deming, the American who's WWII work on bomber production formed the basis for "The Toyota Way," and not in some indirect way, either. Deming went to Japan at the behest of the US to help them rebuild their economy after WWII.
I read somewhere that the context for this was all the men returning from WW II. While it was mostly women worked in the factories during the war and had to find ways to improve production, Deming ideas were solid. But as soon as the egoistic men came back from the frontlines after the war, he was kinda "pushed away" because no one in the US wanted to listen to him anymore. Which naturally was a big mistake as it turned out in the 70s when Japanese car manufacturing made American cars look like garbage.
Nah. I see some of those points could very well be adapted to German companies.
And focussing on long-term growth and stability is probably one of the main aspects of the German "Mittelstand" (medium companies, often led by families over generations) which usually has a strong focus on providing a sustainable place to work and therefore not optimizes its business for shareholder value.
His post would have been correct if he had omitted the word "only". As you've pointed out, it isn't only Japanese culture that values long-term stability and value to the society. The problem is that American culture absolutely does not value this stuff, and that's why our companies work the way they do.
While it don’t think it was ever applied to GM as a whole, the NUMMI plant in Fremont was able to use many of the Toyota principles when it was run as joint GM-Toyota venture, using UAW workers. The tragedy was that GM executives didn’t understand or care about transferring lessons learned there to other parts of the organization, until it was too late.
Of course, you can’t minimize the different financial environments Japan and US have for manufacturers...
This story about NUMMI (where Tesla factory resides) shows that it is not just Japanese who can enjoy improvement, same goes for Americans whose managers are a bit more open minded. https://www.thisamericanlife.org/561/nummi-2015
My father's bright idea was to give each C worker a workbench and train them in several jobs, then have them perform all those jobs in one phase of the assembly. That way, if a C worker got sick, because all of their colleagues knew all the jobs that worker had to do, the line would be held up much less.
Upper management passed on my dad's idea back then -- but it became all the rage in the 1980s when it was rediscovered in the Toyota model, part of the massive fad for "Japanese management techniques" that prevailed back then.
I keep this story in mind when I have to deal with agileshit at a company whose management had apparently never heard of The Mythical Man-Month.