Toyota Lean Leadership and Hoshin Kanri

Part 1: Toyota History & Kaizen
Part 2: Toyota Leadership
Part 2: Hoshin Kanri
2

3
Part 0:
I. Yoshino’s Timeline

✭
Sakichi Toyoda invented
a weaving machine.
‘24
Kiichiro Toyoda founded
Toyota Motor Corporation.
✭‘37
Toyoda Auto Loom Machine
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
Toyoda Model AASakichi Toyoda Kiichiro Toyoda
“Open the window and look outside. It’s a
big world waiting for you.” (Sakichi Toyoda)
4

5
TO YO DA
トヨダ
10 strokes
TO YO TA
トヨタ
8 strokes
Why did they switch
from TOYO-DA to TOYO-TA???
2-1. Kaizen Mindset is Fundamental to Toyota Culture

6
Cost-consciousness is deeply ingrained in the mind of employees
➣ “Selling price －Cost ＝ Profit”, not “Cost ＋ Profit ＝ Selling price”
➣ The blank sides of used documents are made to serve as memo-pads/
Shortened pencils are jointed on both ends …….
These cost-saving measures have been practiced since the start of the
company

“Being content with one’s current situation
could be the first step towards corruption”
(Eiji Toyoda)
7

✭
a weaving machine.
‘24
✭
‘37
PREVIOUS CONCEPT of “Inspection”
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
“TQC” was introduced
companywide in Toyota
‘61
Stringent inspection
can improve quality
NEW CONCEPT of “Inspection”
Good quality should be
built in at each process
Big change
in concept !!!
- Quality problems
- Lack of training (workers)
- Lack of managing ability (managers)
- Lack of horizontal communication
Issues observed
8

9
3 Heroes in Feudal Times
“Owari”
“Mikawa”
Nobunaga ODA (1534 – 1582)
- Born a son of a local feudal lord in Owari
- Straightforward, mighty force, ruthless
Hideyoshi TOYOTOMI (1537 – 1598)
- Born a son of a poor farmer in Owari
- Strong ambition to rise in society
- Self-confidence, witty talented tactics
Ieyasu TOKUGAWA (1543 - 1616)
- Born a son of a local feudal lord in Mikawa
- Taken as hostage at the age of 8 (12 yrs)
- “Perseverance”, “prudence2, “certainty”
◎
❋
◯
“◎,❋,◯” shows their birthplaces
△ Toyota HQs
4-1. What Influenced Toyota’s Corporate Culture?

10
If you don’t sing, Little Cuckoo,
I’ll kill you.
I’ll make you sing.
I’ll wait till you sing.
Famous metaphor of 3 samurai leaders

11
Ieyasu’s precept, Mikawa climate, and Toyota’s corporate culture
◯
Ieyasu TOKUGAWA’s Precept:
➢ Life is like a long journey with a heavy
burden. Don’t hurry.
➢ One who regards inconvenience as natural will never
be discontented. When you want more than you have,
remember the days when you were in need.
➢ Patience is the base of being safe forever. Regard
anger as your enemy.
➢ If you only know what it is to conquer and don’t know
what it is to be defeated, it will be harmful to you.
➢ Blame yourself, not others. Not being enough is
better than being too much.
Mikawa Climate:
➢ Mountainous with soil underproductive.
➢ A sense of “fellowship, diligence,
perseverance and loyalty to lord” was
developed.
Steadiness
Learn from failure
Diligence
Humbleness
Patience

✭
a weaving machine.
‘24
✭
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘63-’64
“Cross-functional Management” &
companywide “Hoshin-Kanri” was introduced
< Cross-functional Management > < Hoshin-Kanri >
Corporate
Philosophy
Mid/Long-term Managerial Plan
Top Management Annual Policy
Division’s Annual Policy
Department’s Annual Policy
Implementation (Do) Evaluation (Check)
Feedback(Action)
(Plan)
4 Issues pointed out
at internal audit in 1962
1. Poor understanding on “Hoshin” concept.
2. Insufficient Long-term Plan
3. Weak viewpoint “based on facts”
4. Incomplete Horizontal communication
‘61
12

a weaving machine.
‘24
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘ 61
‘63-’64
“Cross-functional Management” & companywide
“Hoshin-Kanri” was introduced
QC Circle Presentation
“TQC” takes root across
Toyota’s shop floor
‘64-’65
✭
✭
Good Results of “QC Circle Activity”
1) “Quality should be built in at each process”
2) Product quality improved.
3) Quality/Cost awareness prevails
4) Managers learned “how to manage”
5) Appreciation & understanding of “QC Circle” strengthened
13

✭
a weaving machine.
‘24
✭
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘ 61
‘63-’64
“Cross-functional Management” & “Hoshin-Kanri”
was introduced companywide in Toyota
‘64-’65
✭
Toyota won the
”Deming Prize”
‘ 65
Action plans after “the Deming Prize” winning:
1) Implement TQC activity to parts suppliers & car dealers
2) Focus on CHECK & ACTION process
3) Closer coordination among each administrative system
14

✭
a weaving machine.
‘24
✭
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘ 61
‘63-’64
Background of “Kanri-Noryoku Program (Kan-Pro)”
‘64-’65
✭
Toyota won the
”Deming Prize”
‘ 65
‘79-’80
“Kanri-Noryoku
Program”
1) In ‘70s, managers’ “management capabilities & TQC awareness” decreased
2) In 1978, Nemoto formed a task force to promote a 2-year program (⇒ “Kan-Pro”)
3) Managers made presentations to top management in A3 based Hoshin-Kanri
15

✭
a weaving machine.
‘24
✭
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘ 61
‘63-’64
‘64-’65
✭
Toyota won the
”Deming Prize”
‘ 65
79-’80
“Kanri-Noryoku
Program”
✭
NUMMI (J/V)
Production started
< Toyota’s plants in the US >
‘ 84
16

We were young !
Now we are old…….
IY
JS
17
1st group of Japan Training (6.1984)

➢ “On-the-job” Training to NUMMI employees
◈ 600 group/team leaders sent to Toyota for “on-the-job” training.
◈ Training Program: Class (1w), Actual training at plant (2w).
◈ Comments from NUMMI trainees：
▶ “We didn’t practice KAIZEN at GM, but WE DO IT EVERY
DAY HERE At TOYOTA”
▶ “When a defect is found on site, we PULL A STRING TO
STOP THE PRODUCTION LINE to fix it. It’s amazing that
WE CAN CORRECT THE TROUBLE on the spot.
▶ “Toyota managers FREQUENTLY COME TO SHOP FLOOR.”
▶ “People are TREATED GOOD at Toyota. Now I realize WHAT ‘RESPECT’ MEANS.”
➢ Changes that happened to NUMMI employees
◈ AWOL: improved to 2%. Assembly cost: almost equal to Japanese plant average.
Productivity: 2 times better than GM average. Quality: top level in overall GM
◈ Employees became responsible for their work and proud of what they do.
11. Changes That Happened to NUMMI Employees
18

✭
a weaving machine.
‘24
✭
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘ 61
‘63-’64
Need for “TQC” to evolve into “TQM”
‘64-’65
✭
Toyota won the
”Deming Prize”
‘ 65
79-’80
“Kanri-Noryoku
Program”
✭
NUMMI (J/V)
Production started
‘ 84
‘’95 -
“TQC” evolves
into “TQM”
1) In 20 years after ‘65 Deming Prize, enthusiasm
for TQC is decreasing.
2) In 1995, Toyota has more employees in overseas.
Sharing the same “TQC Concept” is crucial.
3) Toyota strengthens its focus on “people”,
Customer
first
TQM
Continuous
Kaizen
Total
participation
< QC-based Perspective >
Improving the vitality
of Individuals &
organizations
19

✭
a weaving machine.
‘24
✭
‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭
in Toyota
‘ 61
‘63-’64
‘64-’65
✭
Toyota won the
”Deming Prize”
‘ 65
79-’80
“Kanri-Noryoku
Program”
✭
NUMMI (J/V)
Production started
‘ 84
‘’95 -
“TQC” evolves
into “TQM”
Toyota Way 2001
“Toyota Way”
(basic principles & behaviors)
20

21

➣ Subordinates tend to report only what their boss wants to hear.
➣ “Bad news” is a great tool to find the root cause of the problems.
➣ A good boss will find out WHAT to blame, not WHO to blame.
1. Bad News First
22

➣ In many companies, bosses often say, “Don’t bring me problems. I want
answers.” People just bury them and move on with problems left
unsolved.
➣ At Toyota, managers say, “No problem is problem.” They know there
will be problems. It is managers’ job to see problems. Managers create
an environment where people are encouraged to surface problems.
23
2. “No problem” is a Problem

➢ People tend to bring reports that their boss wants to hear
➣ Go to the Gemba & see things with your own eyes
➣ Use your 6th sense to figure out what is happening there
vs.
3. Go To Gemba Yourself
24
Judge things
at his desk
Judge things
at the Gemba

Seemingly impossible target:
➣ “10% cost reduction” could be attained by the traditional approach.
➣ “50% cost reduction” requires drastic measures.
➣ It helps to develop a totally new idea.
Seemingly impossible target
Unconventional idea Target ①
Max speed:250km/h
Target ①
Max speed:250km/h
Shinkansen (Bullet Train) Project
Target ②
Tokyo - Osaka
in 3 hours
Target ②
Tokyo - Osaka
in 3 hours
Target ③
Development period: 5 years
(1959 - 1964 )
At first, these targets
seemed impossible!!!
“The impossible” was made “possible”!
4. Establish A “Seemingly Impossible” Target
25

➣ Assign your subordinates core items (objective, target date, etc.)
➣ Don’t issue too detailed instructions.
➣ Encourage subordinates to think how to accomplish the task
➣ Stop to listen and discuss when they come for help.
➣ Check the progress at the right time and give necessary advice/help
Don’t instruct everything
from A to Z
Don’t advise your subordinates to do
what you have tried and succeeded.
Show your subordinates that you are
always ready to help when needed
5. Develop People To Attain A Target
26

“Failure is the mother of success.”
➣ “The spirit of challenge” is as important as the result itself at Toyota.
➣ “The spirit of challenge and effort” eventually becomes “know-how”.
➣ You can learn valuable lessons from failure. Always encourage
subordinates to challenge.
➣ At Toyota, an employee is honored by the number of challenges s/he
takes on.
6. Never Be Afraid of Failure
“I challenged and failed the
Water-ski Boat Project…...” I.Y.
27

➣ Purpose of Mieru-ka (visualization) is to “reveal the root of the problem”
- by making the invisible visible
- by making things easy-to-understand to everybody.
➢ Benefit of visualization is to “vitalize the worksite”
- by helping people to detect problems early and take actions early
- by enhancing improvement awareness among members
28
7. Purpose/Benefit of Mieru-ka (Visualization)

➣Maryann Keller, a former auto analyst, notes that, historically, GM hasn’t invested
in root-cause analysis. (…) American car companies, she says, have tolerated
high warranty claims based, in part, on an attitude that “if something happens along
the way, so be it. It’s not my job.” (Harvard Business Review, Aug.2014)
29
8. Root out the problem instead of fixing
superficially

➣ Major purpose of A3 document is to help people clearly understand and
share the current situation at a glance.
➣ Key points to create an effective A3:
- determine the purpose of A3 (problem solving? status report? proposal?)
- check how familiar the person you report to is with the topic
- visualize your A3 (use graph/chart and illustration, compact/simple expression)
- ensure the facts in A3 are all based on “Genchi-Genbutsu-Shugi” approach
30
9. A3 document (Hoshin Kanri, Problem Solving,
New Proposals)

➣ “If the worker hasn’t learned, the teacher hasn’t taught.”
➣ Finding strong points in your subordinates is more important than finding their
flaws.
➣ Bosses who nurture excellent subordinates are more highly valued at Toyota.
31
VS.
10. A Good boss develops subordinates, while a
bad boss hinders them

32

➢ “Hoshin” = “compass needle” or “direction”.
“Kanri” = “management” or “control”.
➢ “Hoshin-Kanri” :
• Planning & checking process developed in Japan in the 60s.
• Basic concept came from the US techniques of MBO
(Management by Objectives) and the Deming Plan-Do-
Check-Action cycle.
• Major difference is that “Managers’ targets are aligned
with the corporate goals in Hoshin Kanri”, while
individual initiatives are the focus of MBO
33

▶ Identify key business issues facing the
organization
▶ Develop measurable goals that address
these issues
▶ Create action plans to pursue the goals
▶ Implement action plans at every business
process
▶ Measure/Check the result (at mid-term &
year-end)
▶ Feed-forward the analysis to next year’s plan
P
D
C
A
2. Key Structure of “Hoshin-Kanri”
34

Mid/Long-term Managerial Plan
Top Management Hoshin for the year
Division’s Hoshin for the year
Department’s Hoshin for the year
Section’s Hoshin for the year
Implementation
(Do)
Corporate
Philosophy
Evaluation (Check) Hoshin Revision (Action)
+ +
Feedback(Action)
(mid-term & year-end)
(Plan)
35

4. Example Of Hoshin Format Used At Toyota
36

① Employee Involvement
▶ All employees participate
from the top down and
from the bottom up.
② Focus on “The Biggest Issue”
▶ If you run after two hares, you will
catch neither. Prioritize action plans.
③ Set “Clear Target” and “Expectation”
▶ Numerical target or concrete milestone
should be established and shared with
all involved.
NumberofDefect
Cumulative%
Auto Part Defects
Factor
A
Factor
B
Factor
C
Factor
D
37

④ Process-oriented
▸ Process to attain
your goals is as
important as its
result.
Result-oriented Process-oriented
Plan - Set a target to producer a result - Select a process to achieve the target
Do - Take actions and measure the result - Learn all steps of the process
- Take actions according to the process
Check - Check if the result matches the target - Measure process performance
- Assess the cause of the defect in process
Action - Take actions to the result that failed to
attain the target
-Take actions to the process that failed &
succeeded to bring in good result
38

⑥ “Regular Review” on
the result & process
▶ Periodic review helps you
to take quick actions.
⑦ People development
▶ Hoshin-Kanri helps to clarify people’s
own goals and strengthens a sense of
ownership
< Maslow’s Hierarchy of needs >
⑤ “Facts” vs. “Assumption”
▶ “Facts” are “facts”.
▸ Genchi-Genbutsu-Shugi (Gemba-oriented)
▸ Data/Information-oriented attitude
▸ 5W1H (when, Where, Who, What, Why, How)
▸ Mieru-ka (visualization)
▸ 5S - prioritize & sort the information
▸ Bad news first!
39

✭‘24
✭‘37
1920 ‘30 ‘40 ‘50 ‘60 ‘70 ‘80 ‘90 2000 ‘10
✭‘ 61
‘63-’64
‘64-’65
✭
‘ 65
‘79-’80
“Kanri-Noryoku Program”
implemented
Purpose: nurture Management Capabilities of Managers:
► Capabilities to be acquired:
Planning& judging capability, Broad knowledge, experience & perspectives,
driving force to get job done, leadership, kaizen capability, presentation ability
(in A3-based on Hoshin-Kanri), persuasion & negotiation capability
► Reviews: Review sessions held 4 times in 2 years with top officers attending
* Kanri-Noryoku Program
40

1. All the managers in HQs area learned
the importance of Hoshin-Kanri.
2. “A3 culture” prevailed across Toyota.
People learned how to use A3 & to tell
what is important from what is not.
3. Reinforced Toyota’s culture of not
hesitating to report bad news.
4. Strengthened the management
foundation and understanding of the
role of managers.
< “Kan-Pro” Review Session >
41

2014 Version
Toyota Kyushu’s Top Management Hoshin for 2014
• Aim at “A Role Model Plant for the World” through enhancing
• Gemba Capabilities, Technical Capabilities and Humanity of
each employee, and also through our globally-recognized car-
manufacturing method
Prioritized Implementation Items
1. Develop People: nurture self-sustained professionals with
high aspirations and always ready to take on a challenge
2. Engage with local community: gain trust from the local
people by fulfilling our role as a member of the community
3. Create good products: manufacture high-quality &
low-cost made-in-Kyushu cars which can move the people
around the world
Department
Hoshin
on the next page
42

44
3.29.2017
Nagoya Gakuin University Isao Yoshino
1. IY’s Personal Vision for 2017 (Apr.2017 – Mar.2018)
1) Bring my students ’ English proficiency level to a higher level than that of last year . (⇚ Many students started enjoying studying English after 1-year practical sessions in 2016)
2) Build “a firm bridge” between NGU and the Universty of Memphis (U of M). (⇚ Same as last year. I would like to see more students visit each other, starting in 2017. )
3) Explore new Lean Session opportunities in Eur ope, besides the US. (⇚ ① Success of “Japan Lean Tour”, ② Explore session opportunities in Europe; France, Spain, Netherlands and more )
4) Maintain good physical & mental health. ( ⇚ watch what I eat & what time I go to bed & when I need to take a rest, Mor e patience and open-mindedness)
2. IY’s Personal “Hoshin” for 2017 (Apr.2017 – Mar.2018)
Feedback from 2016 Target to attain for 2017 Key Hoshin for 2017 Detailed Action Plans for 2017 Timing
(✳1) NGU: Nagoya Gakuin University ( ✳2) U of M: University of Memphis, Japanese Languag e Class (✳3) 9/’17 Spain, 11/’17 the Netherlands, 3/’18 France
2017 Hoshin Plan (Apr.2017 – Mar.2018)
< IY’s Personal Hoshin Plan for 2017 (Apr.2017 – Mar.2018) >
NGU
➣ Make my English classes more
Intriguing & practical
➣ 70% of students get proactive and
feel “it’s FUN to study English
and learn other cultures”
➣ 90% of students know more about
themselves and express their
own opinions explicitly
➣ Focus on 2-way communication (more Q&A)
➣ Encourage students to “think deeper” and “ask questions”
➣ Use visual materials (You-tube, videos, movies, etc.)
➣ Students have great interest
in foreign cultures/people
(* 1)
➣ Conduct self-analyzing practices 4 times each semester
➣ All students will make a presentati on about themselves at the
end
of the semester
➣ Many students started
enjoying studying English
➣ Help students understand other
cultures
➣ invite English native spea kers (Ryugakusei) to the class regularly
➣ invite business people and talk about the “real world”
➣ Provide chances to analyze
themselves and know their
strength & weakness
➣ Students enjoyed analyzing &
knowing themselves and are
eager to explore more
UofM
➣ Send 3 NGU students to U of M
In early 2018
➣ Strengthen relations with UofM
(⇒ send NGU students to UofM)
➣ invite U of M students to NGU
for 2-3 weeks In 2019
➣ 3 NGU students will visit U of M to Japanese Language class
in 2018 (as the 3rd
-year trial)
➣ Develop a plan to get this
new plan approved by 2/2018
➣ Develop a strategy & time schedule (mid/2017)
➣ Meet related parties & obtain support ( for 5 months)
➣ Propose the plan to top management ( before end of ’17 term)(* 2)
➣ NGU students’ joining U of M
class in 2/2017 was a success
(becme “self-assertive” &
proactive”)
LEAN
➣ Tour date: 3/2018 (1 week)
➣ Participants:13-15
➣ Preparations should be on
schedule
➣ “2017 Japan Lean Tour” was
postponed to 3/2018 (due to
dis-organized preparations)
➣ Requests for Lean sessions
newly came up from European
countries (Spain, France, the
Netherlands)
➣ Make “Japan Lean Tour” happen
and become a success: 70% of
participants say “target attained”
➣ Make European Lean Sessions for
2017 a success ⇒ 70% of session
participants say “satisfied”
➣ Sessions: 9/’17, 11/’17, 3/’18
➣ All the preparations should
be finished as scheduled
➣ Strictly follow & apply the lessons learned from US project
► develop detailed time schedule and strictly follow it
► keep communication with Lean partners (skype once a month)
(* 3)
➣ Comply with the lessons learned from the last failure
► re-develop a new Tour scheme and strictly follow it
► keep frequent communication with partners
► prepare an “exit plan” in the worst case
➣ Maintain good physical & mental
health all the year around
(no major sick-leave from work)
Health
➣ I got sick 4 times in 2016
(due to less attention to my
health condition & overwork)
➣ Keep me weigh less than 70kg
➣ Manage negative emotions
➣ Watch what I eat, (follow doctor ’s advice)s
➣ Watch how many km I walk daily (4km/day)
➣ Watch how long I work (leave office at 7pm)
➣ Be patient and open -minded to the things around m e
at every class
May & Oct.’17
every month
Jul.& Dec.’17
Feb.’18
Jun.’17
Jul to Dec.’17
Dec.’17 or Jan.’18
Apr. – Oct.’17
Apr. – Oct.’17
check daily

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Toyota Lean Leadership and Hoshin Kanri