Toyota

"To win over Panasonic, Straubel needed to convince Yamada that Tesla meant business. He had a plan. It harked back to how Tesla had cajoled early investors into taking a chance on a little startup. To stoke Daimler and Toyota for the Model S, years before it was ready, they had worked up mule cars—dummies that were close enough to the real thing to give their audience a taste of what was to come. Tesla needed something they could showcase, a mule factory. Blueprints for a factory, however, failed to capture the kind of excitement their prototype cars had. The Tesla team became convinced that they needed to demonstrate to Panasonic and other suppliers how serious they were about the project. Quietly, they forged a deal with landowners in Sparks and began preparing the site for construction. They called bulldozers and earth movers from around the state, erected massive lights, began moving tons of dirt. The bill was enormous, climbing to $2 million a day. Straubel wanted to have a site prepped for a demonstration to Tesla’s would-be partners. He had to make it convincing enough to suggest that Tesla was charging forward—with or without them."

"Consider that: •   According to its principle creator, Taiichi Ohno, it took 28 years (1945-1973) to create and install the Toyota Production System, which is maneuver conflict applied to manufacturing. •   It takes roughly 15 years of experience—and recognition as a leader in one’s technical field—to qualify as a susha (development manager) for a new Toyota vehicle.150 •   Studies of people regarded as the top experts in a number of fields suggest that they practice about four hours a day, virtually every day, for 10 years before they achieve a recognized level of mastery.151 •   It takes a minimum of 8 years beyond a bachelor’s degree to train a surgeon (4 years medical school and 4 or more years of residency.) •   It takes four to six years on the average beyond a bachelor’s degree to complete a Ph.D. •   It takes three years or so to earn a black belt (first degree) in the martial arts and four to six years beyond that to earn third degree, assuming you are in good physical condition to begin with. •   It takes a bare minimum of five years military service to qualify for the Special Forces “Green Beret” (minimum rank of corporal / captain with airborne qualification, then a 1-2 year highly rigorous and selective training program.) •   It takes three years to achieve proficiency as a first level leader in an infantry unit—a squad leader.152"

"There is a risk in all this. You are not the church or the Red Cross or even the government. Your purpose as a business is not to bring enlightenment to humanity but to, as Toyota puts it, “take our destiny into our own hands.” It is hypocritical to pretend otherwise, and any…"

"At Nissan and Toyota, project managers for new models enjoy total control over the car’s design and engineering. Senior managers, even the president of the corporation, are forbidden from interfering, once they have approved the project. As long ago as 1989, Nissan developed the Maxima in 30 months, roughly half the US industry’s average at the time and well below it even today, with such quality that the year it was introduced, it topped the J. D. Power initial quality survey."

"The trick is to expand our envelope of intuitive capabilities so that the vast majority of the time, we don’t need to utilize a slower explicit decision process. The focus of our effort lies in moving the percentage of time that we can use intuitive knowledge and quick mental simulations to as close to 100% as possible. This level of skill can be deceiving when seen by others (again, think of a stage magician), because people who have it often don’t look like they’re working harder or doing things faster. They just, as Musashi insisted, get to a useful result sooner.126 This is the whole idea behind the Toyota Production System: Create a system where activities become unnecessary—Toyota has a well-defined framework consisting of categories like muri, mura, and muda127—and the whole system operates more quickly, even though the people within it don’t appear to be working harder than their competitors anywhere else."

"Options mean more than new products and services. The creators of the Toyota Production System stress the importance of creating a company culture that constantly reduces costs, as a natural part of daily operations, while improving quality and shortening customer delivery span times. By keeping costs on a steady downward slope, they preserve pricing…"

"In fact, the period of greatest Japanese success was the following decade. During the 1980s, for example, General Motors’ US market share went from 52% to around 30%, with most of this lost to the Japanese. What happened? Ask anyone who bought a Honda, Toyota, or Datsun (as Nissan products were known until 1984) back then. They came expecting to get great gas mileage, which they did, but, “Surprise!” The things ran like a Swiss watch, fit together like a Rolls Royce, and seemed to last forever. In the language of strategy, the Japanese engaged with the expected (cheng)—gas mileage—but won with the unexpected (ch’i): fit and finish, driveability, longevity. Contrast this with GM’s economy offerings of the period, the Vega and Chevette. Their gas mileage was as good as the Japanese, but in all other aspects, they were pretty ordinary. All cheng; no ch’i. Market share cut by 40%."

"How Long Will It Take? You can’t blame people for wanting instant results. Time is money, and quickness, especially quick OODA loops, is good. But when it comes to adopting maneuver conflict / Boyd’s principles to your business, there is a lot to be learned and a lot to be done. Consider that: •   According to its principle creator, Taiichi Ohno, it took 28 years (1945-1973) to create and install the Toyota Production System, which is maneuver conflict applied to manufacturing. •   It takes roughly 15 years of experience—and recognition as a leader in one’s technical field—to qualify as a susha (development manager) for a new Toyota vehicle.150 •   Studies of people regarded as the top experts in a number of fields suggest that they practice about four hours a day, virtually every day, for 10 years before they achieve a recognized level of mastery.151 •   It takes a minimum of 8 years beyond a bachelor’s degree to train a surgeon (4 years medical school and 4 or more years of residency.) •   It takes four to six years on the average beyond a bachelor’s degree to complete a Ph.D. •   It takes three years or so to earn a black belt (first degree) in the martial arts and four to six years beyond that to earn third degree, assuming you are in good physical condition to begin with. •   It takes a bare minimum of five years military service to qualify for the Special Forces “Green Beret” (minimum rank of corporal / captain with airborne qualification, then a 1-2 year highly rigorous and selective training program.) •   It takes three years to achieve proficiency as a first level leader in an infantry unit—a squad leader.152"

"Keep Your Focus on Shaping the Marketplace This means that you want to be the one who defines and continues to define what “new and desirable” means. You will extract the industry’s highest margins and often make money even when the market is bad. Because you won’t be so much at the mercy of lenders and the markets, you can preserve your capacity for independent action, survive on your own terms, and, as Toyota insisted, take control of your own destiny."

"My plan in this book is to introduce Boyd’s philosophy of conflict, for which I’ll use the term “maneuver conflict,” by examining how it works in the two primary areas where it has been applied: in armed conflict as maneuver warfare and in manufacturing as the Toyota Production System, or as it is more widely known, “lean production.”"

"Toyota Production System and the works of the creators of that system, particularly Shigeo Shingo and Taiichi Ohno,"

"there is a concept within both Toyota’s development and production systems known as “learning how to wait,” based on the notion that it takes less time to do something right than to do it over."

"Toyota’s overall guiding concept: The Toyota Production System, quite simply, is about shortening the time it takes to convert customer orders into vehicle deliveries.141 This is one of the best vision / focusing statements in the world of business. Instead of setting arbitrary goals, it tells everybody who works for Toyota that whenever they are in doubt about what to do, take the action that will reduce customer-to-delivery span time."

"The main emphasis of the Toyota Production System, for example, is on constantly reducing the order-to-delivery span. This concept is not, however, a suitable focus for Toyota as a company, since it doesn’t say anything about what car to deliver in a shorter time span. In other words, if shorter order-to-deliver were all, Toyota would still be building better and better 1976 Camrys, faster and faster."

"Consider that Honda and Toyota can bring out a new model in roughly 2 years, with superb quality, while it still takes Detroit at least a year longer."

"The trick is that your vision can be business oriented, as is Toyota’s, and still serve to rally the troops."

"It must contribute to an outward focus, towards the customer and the marketplace. The last thing you need is another device that drives your attention inward, which is the problem with so many “goals.” Always keep in mind: “We will crush, squash, butcher, slaughter, etc. Yamaha!” and “The length of time between when a customer orders a Toyota and when s/he receives it.”"

"Instead, put yourself at the Schwerpunkt of the transformation effort. Look people in the eyes when you’re preaching the new doctrine. Lead your company in studying Sun Tzu and Musashi, discussing Warfighting, and comparing your processes to those of Toyota. Start your own Crotonville and teach there yourself."

"Toyota claims that the idea for their amazing production system came from engineers who visited supermarkets in the United States after the war."

"As a result of the harmonized system, Toyota can deliver their expected high quality, cheng, and also try to infuse enough surprise, delight, enchantment, that is, sufficient ch’i, to sell the car in the first place. Having the cheng down pat, they can put their energy into finding and exploiting the ch’i."

"It’s not clear to me that it was part of Beijing’s grand strategy to rely on American companies to become a manufacturing leader. But in some cases, the state understood that’s what they were doing. Beijing did something unprecedented for Tesla in 2018: It allowed the company to fully own its plant in Shanghai. Previously, any automaker that wanted to produce in China had to partner with a domestic company. So Japanese, German, and American companies dutifully partnered with state-owned enterprises in order to access the enormous market. The state had hoped that these domestic companies would learn from the likes of Toyota and Mercedes-Benz and match their quality. In reality, Chinese automakers were sluggish from their research dependence on their foreign friends."

"Instead it is those with the most productive systems, those who practice continuous improvement and build culture through actions and incentives, that sustain success. Those are the ones we characterize as having factory floor excellence at a differentiated level. These companies are almost always far along the Lean manufacturing journey, and they benchmark internally and externally to best-in-class organizations. The best of the best go beyond the factory floor. They apply systematic tools to all their functions, including R&D, sales, purchasing, distribution, and back office. Danaher, for example, customized the Toyota Production System and created (or borrowed) more than a dozen tools to focus its employees. Each function has its own toolkit and is empowered to lever that toolkit to its fullest. Increasingly, we see these best-in-class organizations also utilize metrics around employee engagement and turnover. They focus as much on filtering out bad managers as they do on elevating good ones. The same principle holds true for those providing services rather than physical goods, or even software, healthcare, and other high-margin-type offerings. The companies with continuous improvement cultures win out almost every single time. In the short term, “new economy” firms might neglect operations to maximize innovation or the customer base, but we see this as a mistake. The earlier a company can adopt Lean and embed a continuous improvement culture, the greater that company’s odds of long-term success."

"Barrier. The Barrier in Process Power is hysteresis: these process advances are difficult to replicate, and can only be achieved over a long time period of sustained evolutionary advance. This inherent speed limit in achieving the Benefit results from two factors: Complexity. Returning to our example: automobile production, combined with all the logistic chains which support it, entails enormous complexity. If process improvements touch many parts of these chains, as they did with Toyota, then achieving them quickly will prove challenging, if not impossible."

"Opacity. The development of TPS should tip us off to the long time constant inevitably faced by would-be imitators. The system was fashioned from the bottom up, over decades of trial and error. The fundamental tenets were never formally codified, and much of the organizational knowledge remained tacit, rather than explicit. It would not be an exaggeration to say that even Toyota did not have a full, top-down understanding of what they had created—it took fully fifteen years, for instance, before they were able to transfer TPS to their suppliers. GM’s experience with NUMMI also implies the tacit character of this knowledge: even when Toyota wanted to illuminate their work processes, they could not entirely do so."

"Benefit. A company with Process Power is able to improve product attributes and/or lower costs as a result of process improvements embedded within the organization. For example, Toyota has maintained the quality increases and cost reductions of the TPS over a span of decades; these assets do not disappear as new workers are brought in and older workers retire."

"“What’s curious is that few manufacturers have managed to imitate Toyota successfully even though the company has been extraordinarily open about its practices. Hundreds of thousands of executives from thousands of businesses have toured Toyota’s plants in Japan and the United"

"On August 2007, during the BYD F6 launch ceremony, Wang Chuanfu made a surprising statement: "The future belongs to hybrid and electric vehicles, not gasoline cars. BYD plans to become China's number one car manufacturer by 2015 and aims to exceed 10 million sales by 2025, surpassing Toyota to become the world's number one.""

"In fact, Wang Chuanfu himself admitted: “I don’t understand cars at all.” But after deciding to switch to the automotive field, Wang Chuanfu decided to start with technology to become a real automotive technology expert. During that period, Wang Chuanfu's only luxury hobby was owning Mercedes and Lexus cars. But he liked to dismantle them frequently to see how their engines worked. Once, when Wang Chuanfu went to the United States, a friend picked him up in a Toyota car. To understand how the Toyota seats worked, Wang Chuanfu almost dismantled his friend’s Toyota."

"Fifth, BYD achieved the peak of "Shanzhai prowess." The "Shanzhai path" can be said to have been taken by every domestic car brand, but BYD traveled it most successfully. The popular BYD F3, upon its release, faced criticism for its "obvious Shanzhai traces." BYD F3's parts could even be used interchangeably with those of the Toyota Corolla, to the extent that someone could remove BYD’s logo and replace it with a Corolla’s logo. Regarding this, Wang Chuanfu did not shy away, but rather described such imitation as "standing on the shoulders of giants." He stated, "We indeed referred to some excellent foreign brands, using their non-patented technologies and excluded the patented ones. The F3 sells so well because it is well-designed." Wang Chuanfu applied his "human wave tactic" and "Shanzhai tactic" from battery production to car manufacturing, which, using China's plentiful and cheap labor resources, greatly reduced production costs and thus strengthened his market competitiveness. From batteries to mobile phones to automobiles, Wang Chuanfu has always faced pressure. Nevertheless, he "persistently went his own way," even the electric car project, which came under criticism from top global investment banks, was pushed forward by his confidence and passion. His personality and experience have made him a dominant figure within the company. He once said, "I believe in this company, and I can't leave; I must be the one to manage it... Our company has only one voice." But even as a dominant figure, Wang Chuanfu is known for recognizing and utilizing talents. Many individuals, like Wang Chuanfu, refused to settle for the status quo and were recruited under his command, becoming key pillars in BYD's development, and Wang Chuanfu has generously rewarded them."

"Fourth, cost-saving is the key to victory. At the onset of BYD's venture to cut costs, Wang Chuanfu broke down the battery production process and independently developed some key equipment, completing production through a combination of semi-automatic and manual labor. This approach reduced battery production costs by 40% compared to Japanese manufacturers. Through disassembling, learning, transforming, and innovating, Wang Chuanfu eventually became known as China's "Battery King." After entering the automotive industry in 2003, Wang Chuanfu, who had never been involved in this field, still relied on BYD's "semi-automated plus manual" production model. From battery production lines to subsequent car molds, Wang Chuanfu could be said to have utilized human resources to the utmost. Additionally, many of BYD's production facilities are self-sufficient. For example, the BYD F3 now sells over 20,000 units a month; it is said that Toyota once purchased it to study and was at one point surprised at how closely BYD could mimic their car, yet offer it at a much cheaper price than the Corolla."

"TESLA: 7 FOR 7 Tesla is one of the few cleantech companies started last decade to be thriving today. They rode the social buzz of cleantech better than anyone, but they got the seven questions right, so their success is instructive: TECHNOLOGY. Tesla’s technology is so good that other car companies rely on it: Daimler uses Tesla’s battery packs; Mercedes-Benz uses a Tesla powertrain; Toyota uses a Tesla motor. General Motors has even created a task force to track Tesla’s next moves. But Tesla’s greatest technological achievement isn’t any single part or component, but rather its ability to integrate many components into one superior product. The Tesla Model S sedan, elegantly designed from end to end, is more than the sum of its parts: Consumer Reports rated it higher than any other car ever reviewed, and both Motor Trend and Automobile magazines named it their 2013 Car of the Year. TIMING. In 2009, it was easy to think that the government would continue to support cleantech: “green jobs” were a political priority, federal funds were already earmarked, and Congress even seemed likely to pass cap-and-trade legislation. But where others saw generous subsidies that could flow indefinitely, Tesla CEO Elon Musk rightly saw a one-time-only opportunity. In January 2010—about a year and a half before Solyndra imploded under the Obama administration and politicized the subsidy question—Tesla secured a $465 million loan from the U.S. Department of Energy. A half-billion-dollar subsidy was unthinkable in the mid-2000s. It’s unthinkable today. There was only one moment where that was possible, and Tesla played it perfectly. MONOPOLY. Tesla started with a tiny submarket that it could dominate: the market for high-end electric sports cars. Since the first Roadster rolled off the production line in 2008, Tesla’s sold only about 3,000 of them, but at $109,000 apiece that’s not trivial. Starting small allowed Tesla to undertake the necessary R&D to build the slightly less expensive Model S, and now Tesla owns the luxury electric sedan market, too. They sold more than 20,000 sedans in 2013 and now Tesla is in prime position to expand to broader markets in the future. TEAM. Tesla’s CEO is the consummate engineer and salesman, so it’s not surprising that he’s assembled a team that’s very good at both. Elon describes his staff this way: “If you’re at Tesla, you’re choosing to be at the equivalent of Special Forces. There’s the regular army, and that’s fine, but if you are working at Tesla, you’re choosing to step up your game.” DISTRIBUTION. Most companies underestimate distribution, but Tesla took it so seriously that it decided to own the entire distribution chain. Other car companies are beholden to independent dealerships: Ford and Hyundai make cars, but they rely on other people to sell them. Tesla sells and services its vehicles in its own stores. The up-front costs of Tesla’s approach are much higher than traditional dealership distribution, but it affords…"

"Obviously, every company started as a small venture. This applies to even the major corporations like Toyota and Panasonic today. What commonalities exist among the leaders who grew small ventures into massive corporate groups? It is the ability to read the trends and swiftly act to capture burgeoning industries. Allow me to provide some examples."

"◆ Identify changes in “trends” early and act swiftly This is where the second character “流” [to go with the flow of the times, not against the tide] comes into play. Obviously, every company started as a small venture. This applies to even the major corporations like Toyota and Panasonic today. What commonalities exist among the leaders who grew small ventures into massive corporate groups? It is the ability to read the trends and swiftly"