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The Tesla Way vs. The Toyota Way

by Mark Donovan & James P. Womack
June 2, 2016

The Tesla Way vs. The Toyota Way

by Mark Donovan & James P. Womack
June 2, 2016 | Comments (34)

Photo courtesy of Maurizio Pesce from Milan, Italia - Elon Musk, Tesla Factory, Fremont (CA, USA)

Given the ever-increasing barriers to entry in what Peter Drucker famously called the “industry of industries,” it’s a wonder that any automotive startups defy the long arc of consolidation by establishing themselves as viable competitors. And it’s even more notable when these newcomers present a model that just might challenge the incumbents to the core. Lean thinker Mark Donovan recently asked LEI founder Jim Womack whether the path taken by Tesla founder Elon Musk points to a new machine that can change the world. 


Mark Donovan: Is something seismic happening here?

Tesla, one of Elon Musk’s three major companies, just booked close to $14 billion in deposit-backed advance sales in under three weeks through the unprecedented direct-to-consumer launch of the $35,000 Model 3.

Many are calling this car the Model T of our time, a breakthrough new vehicle that will mark the start of a worldwide shift to clean and safe electric transportation. In the meantime his other company, SpaceX, landed the Falcon 9 stage-one rocket on a drone ship in the Atlantic Ocean as proof of concept that it can cut the cost of space travel by at least 30 percent with reusable rockets.

Then there is the Gigafactory in Nevada from Tesla’s energy division, which, once operational, will produce more lithium ion batteries than all other lithium ion battery factories in the world combined, at significantly lower cost and greater efficiency. Not only will these batteries power all of their amazing electric vehicles (EVs), but they will also revolutionize the energy industry with storage solutions that allow energy production to be truly level-loaded, among other things. As a not-so-small side note, SolarCity has become the leading installer of solar panels in the U.S. and is revolutionizing the way we generate power. Most of this is done in-house on U.S. soil at a time when more companies than not are choosing to outsource and offshore their production. Can we all agree that something seismic is happening that deserves close scrutiny?

At the recent Lean Transformation Summit I asked Jim Womack what he thought of my hero Elon Musk. Jim said that either we should be studying him much more closely or that he could be about to walk off a cliff.  This was prior to the two major events I mentioned above. I am now deeply convinced that it is the former, and that something truly amazing is taking place that is worthy of our close attention. 

Clearly Musk is a brilliant thinker and an exceptional executor; yet I think there is something much more profound happening than just a great leader driving three world-changing companies. I believe Musk is showing us a new way to be successful and sustainable in the 21st century. 

I see strong parallels to what Womack saw in Toyota in the 80s. The breakthrough results appeared before anybody really understood how they were being accomplished. Then, with close study, Womack and his team dissected and discerned a set of principles and behaviors driving these advances and delivered to the world a blueprint for success in the 20th century with The Machine that Changed the World, a call for action that we have all largely failed to execute. Sorry Jim, it is not for lack of trying, but most of us seem to be missing something, or more likely, a number of somethings. 

All of Musk’s companies are founded upon exceptionally inspirational purposes…

  • Tesla: To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.
  • SpaceX: To revolutionize space technology with the ultimate goal of enabling people to live on other planets.
  • SolarCity: To accelerate the mass adoption of clean energy.

Each creates a sense of great urgency and “ludicrously” high expectations. The earth is the burning platform, quite literally. Saving the planet and the human race is a pretty compelling call to action. 

Next, they innovate based upon first principles thinking. Musk states “I think it’s important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. [With analogy] we are doing this because it’s like something else that was done, or it is like what other people are doing. [With first principles] you boil things down to the most fundamental truths…and then reason up from there.” They have demonstrated this not just with their “product” innovation but also with functions such as their innovative approach to sales and marketing. 

Finally, they have engaged the entire planet to contribute to their mission by openly sharing all their patents freely (what a gift to society) and allowing customers to promote the brands.

These things allow them to attract and inspire the best talent in the world and create virtuous cycles of success. Could it be a simple as all that? Probably not, but I think we should try to better understand what they are doing and how we can learn from it. I bet Musk would be very happy to share The Tesla Way with the world. Dr. Womack? _______________________________________________________________________________________

 Jim Womack: Is there a complete business system fueling The Tesla Way?

Let me take this from the other direction, asking how Toyota would have pursued Musk’s “first principles.” (Hence the "Tesla Way versus the Toyota Way" of the title.) They were also a start-up (from the late 1930s but not in volume production until the late 1940s due to the war), facing choices in pursuing its first principle of providing the best transportation possible for consumers of modest means in a war-ravaged country where hardly anyone had a car.

Toyota could have done this by copying foreign practices in product development, production, etc. and (like Nissan) even making foreign designs on license. That would have been the way to go fast, and Nissan jumped out to a big lead in market share in Japan by using this strategy. Instead Toyota decided to go slow and to innovate as a business enterprise before it innovated with products. (This really began in 1950 when they believed their sales forecast, built ahead of the market, ran out of cash, and fell into the hands of Japanese bankers who broke the company in two to create Toyota Motor Sales and Toyota Motors.)

By 1965 Toyota had fully elaborated its new production, product development, supplier partnership, sales and customer support, and general management systems, the latter focused on developing capability in every employee. They had also created an enterprise that was stable and that could tackle new challenges from solid base.(Taiichi Ohno’s production system is widely known in this regard but Kenya Nakamura (product development), Shotaro Kamiya (the sales system), and, above all, Eiji Toyoda (the management system) contributed much more.

In addition, by 1965 Toyota had learned how to compress lead times in product development and production so it could grow almost entirely with internally generated cash. This meant never having to rely on banks again and retaining more than 50 percent of the shares within the Toyota Group so that Wall Street raiders weren’t a concern either.)

By 1966, Toyota was ready to go as a volume player, one competing on much more than low wages. And the Corolla was launched then as Toyota’s first international product. What followed was rapid growth (facilitated by brilliant production-system design methods) across the world and in an ever-growing range of products.

By the mid-1990s (after Lexus was successfully launched) Toyota was finally ready to innovate with products. (After only 40 years!) The first was the Prius (when no one else believed this technology had promise), whose most interesting characteristic was that it was launched on time and actually worked exactly as promised with no quality or reliability problems. Only later did it turn out that Toyota could grow its market share and make money with Prius technology. (These objectives were not part of the original plan, which was to make a mass market vehicle that could dramatically reduce the consumption of carbon fuels and burnish Toyota’s image as a technology company without losing much money in the process.)

The next innovation was hardly what the world would call innovative: offer Prius-proven hybrid technology all the way across the Toyota product range while reducing the cost of the technology by 30 percent, so Toyota could also make a good margin. But the results are pretty impressive: eight million Toyota hybrids on the world’s roads to date as Toyota has made record profits.

Toyota’s next product innovation was the Mirai fuel cell vehicle, just launched after decades of development. Does this make any sense? Not according to Elon Musk, who coined the term “fool cells.” But, no one thought the hybrid technology had potential either (any more than they thought a high-performance, long-range electric vehicle made sense) and we are just at the start of the race to see who is right. (I have no odds to offer. Innovation is inherently risky and winners are hard to forecast.)

So, what’s my take on the Tesla Way, as an advocate of the Toyota Way? Like Mark, I love Musk’s first principles. But I worry about the business system supporting them. Tesla is in its 14th year as a car company, which is a long time in Musk years. Yet it’s hard to see how its product development system (always years late, with rework to do post-launch), the production system (with spotty quality and unknown amounts of rework and warranty claims), the supplier management system (with an inability to forecast demand to suppliers), the customer support system (which is still to be created for a mass market), and the general management system (which seems to wear people out at a remarkable rate, rather than build capability in every employee) have matured to a point where they equal to the challenge of marketing 500,000 vehicles in 2018 and one million in 2020. Wouldn’t it seem reasonable to expect some stability by this point?

The Tesla Way is to go fast (“Let’s try ludicrous mode!”) and hope that genius and adrenaline can compensate for the lack of planning and stability. But I would advise going slower and getting the job done right the first time in accord with the Toyota Way. We will see.
_______________________________________________________________________________________

 Mark: How about pairing Toyota execution with Tesla First Principles?

Jim, it seems we want the Toyota/Tesla Way...Toyota's world class execution with Musk's first principle innovation at a "ludicrous" pace. Am I completely off my rocker to think a Tesla/Toyota partnership is possible for this ramp? They don't need to get into bed together forever, however, they do each have something the other needs right now in order to achieve his stated mission. 

 Tesla has built an EV in a class of its own that fulfills Toyota's Global Vision and which the market is ready for TODAY. Toyota has the Toyota Production System, which in my opinion is the only production platform in the world capable of ramping this up at a Musk pace. It wouldn't be business as usual for Toyota or Tesla. They would each have to swallow a bit of pride and accept that the other offers something that would take them years, if not decades, to develop on their own.

Together, today they are stronger, faster and better. I don't imagine this would be so difficult for them to accept. The "burning platform" requires no less than the speed that Musk demands. Does it not justify a bit of extra urgency even at the cost of some burned-out people or disgruntled vendors? Better if this can be avoided but do we really have that luxury today? We are at war with climate change whether or not we admit it. If it is actually possible to get 500,000 Model 3s to market by the end of 2018 one might argue there are some ethical issues related to not doing it.

If there are two companies in the world that I would bet could rise to this challenge they are certainly Tesla and Toyota. How apropros that all of this is happening at NUMMI. Let's dream big just like Elon and get it done on time like Toyota!
_______________________________________________________________________________________

 Jim: Let's continue to show respect and learn from one another

The Toyota/Tesla Way sounds like a great idea. But...not in one company. Toyota and Tesla have already learned about each other from Toyota's brief investment in Tesla and their project to produce an all-electric Toyota RAV4. And they decided to admire each other from a distance. The most practical way forward is for Toyota to be bolder in pursuing first principles and for Tesla to be less ludicrous, showing respect for each other as they share the road. 

 

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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34 Comments | Post a Comment
Kerem Orhan June 02, 2016
2 People AGREE with this comment

Very inspiring discussion. I wondered if there is a way that Tesla produce people.  Or  is it just follow the genius leader if you are genuis. Than in the long term it can be troublesome.



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Mark Graban June 02, 2016
2 People AGREE with this reply

Interesting back and forth. There's much to admire about Elon Musk and Tesla... but he seems more from the mold of the Silicon Valley smart guy instead of being some sort of Lean thinker.

A few years back, he pooh-poohed process as somehow being a substitute for thinking:

http://www.leanblog.org/2012/10/elon-musk-on-process/

I think it's interesting that Tesla bought what had been the Toyota/NUMMI factory and then went down a path of glorifying automation instead of Lean.

I think they have tried to course correct, as I know a guy that Tesla hired in to be an internal Lean consultant... basically trying to move toward a Lean culture in a building that used to have one.

I hope Tesla can combine innovative thinking with good process and execution. If you look at the quality of the Model X, for example, it sounds like something from the "before" category of an old "before and after" comparison of GM back in the day.

 



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Mark Donovan June 02, 2016

Thanks for commenting Mark.  Imagine what their results will look like if they do course correct on their areas of weaknesses.  It would not be the first time a major rapid transformation has occured at NUMMI.  

Musk just announced at the shareholder meeting a new focus on the manufacturing processes and sees huge opportunities.  I anticipate that applying first principles in this area will yield some major advances.  A similar approach with people development must offer even greater opportunities.  



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Mark Graban June 03, 2016

The first rapid transformation at NUMMI wasn't just a near-death experience... it was a return from the dead. What's the burning platform at Tesla?



Mark Donovan June 04, 2016

Mark - I believe that Tesla sees the Earth as the burning platform.  We are experiencing month after month of record warm temperatures.  Tesla seems to be working at a pace that is consistent with the urgency of this crisis.  As a side note, I just paid $11 for your Practicing Lean online book (https://leanpub.com/practicinglean).  I like the payment model and am hopping to start a little competition for bragging rights as highest payer.  Thanks for everything you do to share best practices and help others to succeed!



Mark Graban June 06, 2016

Thanks for buying the book, Mark!

I meant "What's Tesla's burning platform that makes them need and want a Lean culture?"



Mark Donovan June 06, 2016

I think Tesla sees the Earth as the burning platform.  Ultimately, I believe Musk will do whatever it takes to help the world transition to clean, safe mobility as fast as possible.  As people like Bob Rush create models of "lean" success within Telsa's operations I anticipate they will expand and develop these models further. 

I am eager to see what they do as they tackle applying first principle thinking to their manufacturing and robotics.  I'm wondering if John Shook could connect them with Tom Harada who might be of great assistance in this really important endeavor.  



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Bobby Gladd June 07, 2016

From Kevin Kelly's new book "The Inevitable"

"Change is inevitable. We now appreciate that everything is mutable and undergoing change, even though much of this alteration is imperceptible. The highest mountains are slowly wearing away under our feet, while every animal and plant species on the planet is morphing into something different in ultra slow motion. Even the eternal shining sun is fading on an astronomical schedule, though we will be long gone when it does. Human culture, and biology too, are part of this imperceptible slide toward something new.

At the center of every significant change in our lives today is a technology of some sort. Technology is humanity’s accelerant. Because of technology everything we make is always in the process of becoming. Every kind of thing is becoming something else, while it churns from “might” to “is.” All is flux. Nothing is finished. Nothing is done. This never-ending change is the pivotal axis of the modern world.

Constant flux means more than simply “things will be different.” It means processes— the engines of flux— are now more important than products. Our greatest invention in the past 200 years was not a particular gadget or tool but the invention of the scientific process itself. Once we invented the scientific method, we could immediately create thousands of other amazing things we could have never discovered any other way. This methodical process of constant change and improvement was a million times better than inventing any particular product, because the process generated a million new products over the centuries since we invented it. Get the ongoing process right and it will keep generating ongoing benefits. In our new era, processes trump products. [emphasis mine]

This shift toward processes also means ceaseless change is the fate for everything we make. We are moving away from the world of fixed nouns and toward a world of fluid verbs. In the next 30 years we will continue to take solid things— an automobile, a shoe— and turn them into intangible verbs. Products will become services and processes. Embedded with high doses of technology, an automobile becomes a transportation service, a continuously updated sequence of materials rapidly adapting to customer usage, feedback, competition, innovation, and wear. Whether it is a driverless car or one you drive, this transportation service is packed with flexibility, customization, upgrades, connections, and new benefits. A shoe, too, is no longer a finished product, but an endless process of reimagining our extended feet, perhaps with disposable covers, sandals that morph as you walk, treads that shift, or floors that act as shoes. “Shoeing” becomes a service and not a noun. In the intangible digital realm, nothing is static or fixed. Everything is becoming."

Kelly, Kevin (2016-06-07). The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future (pp. 5-7). Penguin Publishing Group. Kindle Edition.



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Mark Donovan June 08, 2016

Thanks for posting this great excerpt from Kelly's book!  Big changes seem to be on the way in every sector.  

Have you seen Jeremy Rifkin's talk on the "Zero Marginal Cost Society?"  https://www.youtube.com/watch?v=75yiRvi48RQ

Jim Womacks recent article "Lean Thinking for Mobility 2.0" also touches upon these topics... http://planet-lean.com/womack-lean-transformed-automotive-once-and-can-do-it-again

Time to reimagine everything!  



Daniel Jones June 02, 2016
4 People AGREE with this comment

One of the best pieces on the Lean Post. What Musk is doing is amazing and worth studying. But let`s not fall into the trap of Silicon Valley disrupters versus "lean guys". The lean movement has paid a lot of attention to building a robust production system but not enough understanding the purpose which ultimately is great products. Yes Musk will need the former but he will also need a robust development system that can continually learn how to improve every aspect of his products, including building in quality. Whether you can do this at his frantic pace required to challenge conventional thinking or whether you do it by building a system that captures and improves on reusable knowledge as Toyota is doing we will see. Apart from learning and respect I suspect there is more in common between Musk and Lean. 



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Mark Donovan June 02, 2016
2 People AGREE with this reply

Thanks for adding your thoughts Dan.  I have seen little if anything about how they are developing their people or capturing and sharing knowledge across the organization.  I think this is fascinating and fertile territory to explore.  As I continue to dream big would I be asking too much for another "Lean Thinking" type collaboration between youself and Dr. Womack?  



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Michael Ballé June 03, 2016
7 People AGREE with this comment

I have to agree with Jim, we're looking at two very different beasts here.

As a driver of a Prius Plug-in and lean and green advocate, I have been following the Tesla/Toyota divorce with one key question in mind: why did Toyota pull out of full electric.

Drivers reports seem to be saying that the EV Rav 4 was as good a car as any other Toyota. Yet, people simply didn't buy them. The limited edition success of Tesla cars doesn't mean there is a mass market for them. Yet, the same was said about the first Prius models.

There is, however, a deep engineering strategy difference that militates for Jim's position.

As I understand it, Toyota's take on innovation is to solve existing problems with innovative solutions, not to propose solutions to as yet unmet needs.

The beauty of a hybrid is that it, in no ways, affect your lifetstyle, other than enjoying not spewing as many fumes in town for short range news.

The second beauty of the hybrid solution is that it allows battery technology to catch up gradually and safely, while technical problems are being cracked one by one. In the same way, sail made way to steam gradually, and a generation of ships were both steam and sail powered, until steam became a lifestyle solution.

Absolutely, Musk's projects are exciting, and inspiring. But, in lean terms, how much reusable knowledge to they produce?

Inspiring is one thing. Sustainable is quite another. I'm not sue trying to blend both modesl actually help, as opposed to recognizing that we're dealing with two very different intents, and two very different operational approaches, both with their merits, but possibly not reconcilable. Hence the Toyota/Telsa divorce.



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Jeff Liker June 03, 2016
3 People AGREE with this reply

Michael,

Great points.  Your point about the hybrid allowing battery technology to catch up is excellent.  And your point about no disruption of our lives with a hybrd is well taken.  Toyota does believe that customers, on the whole, will prefer technology that does not require a lifestyle change or extra work on their part which is why they prefer the quick refuel of hydrogen over electricity.  They saw the hybrid technology as transitional, though they did not know what they would transition to.  Their strategy was to develop vehicles in each of the main possible technology directions which turned out to be electric and hydrogen.

Toyota is one of the great learning organization so everything they do is an experiment to learn from.  That is why they rushed the Prius to market half baked and learned and send out generation 2 etc.  The Mirai is another test to expose the market and learn about hydrogen in the field.  One thing often missed is that the hybrid transitional technology was a transition to learning green technologies.  Toyota's hydrogen vehicles will be hybrids--they swapped out gas for hydrogen but otherwise it is a Prius.  They learned a great deal over many years about electric motors and switching circuits and batteries and engineer and make all the main components.  They are way up the learning curve on battery technology for example--both product and process.

We will see if slow and steady wins the race in the long run.  To me that is what deep learning is about.



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Jeff Liker June 03, 2016
2 People AGREE with this comment

This is great stuff all around. I love the "silicon valley disruptors versus lean guys" discussion."  I see Elon Musk as an exceptional "silicon valley disruptors."  "I built a whole industry around PayPal why not conquer space and power systems and automotive next?"  There seems to be a feeling of invincibility if you have a bold enough vision and the personal leadership skills to move an organization... and next the world.   Toyota is definitely a more humble and risk-averse culture.  The stock market loves the disruptors and those who can grow from a garage to a global enterprise, and why not--growth is increased stock price.  A stable giant like Toyota that churns out big selling reliable transportation over and over and is financially stable and refuses to go on shopping sprees buying up companies is boring.   Strength sustained is not growth and not big stock price increases.  

I agree with Dan that one thing the success of Tesla illustrates is the strength of good design and the Tesla designs are remarkable.  Execution not so much.  But great design and a bold image seems to sell.  We should not forget that Toyota disrupted the industry with the Prius and has now sold 8 million of them and that is just one car model in Toyota's vast portfolio.  They repeatedly turn out innovative vehicles even if the innovation is hidden--like a Corolla lighter weight, higher MPG, with features that rival luxury cars not long ago.  Toyota's hydrogen vehicle is another potential disruptor and we will not know the success of it for 10-20 years--but Toyota really thinks long term and is very patient.

Tesla is a little baby and has a long way to go.  Eventually we would expect they will not be able to get away with launches that are 1-2 years late and quality problems and a factory full of more inventory than anything else.



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Mark Donovan June 04, 2016

Jeff - Thanks for your great points.  I agree that Toyota is the proven, steady, stable leader.  We've been studying them for decades and yet somehow we have collectively only tapped into a very small percentage of what is possible.  I'm wondering is there something going on inside Tesla that could in some way help us all to improve faster.  You, Michael, Dan, Jim and Mark are some of the preeminent thinkers in this field.  I'm hoping that you will collectively take a closer look under the Tesla hood and help us all to understand the lessons to be learned and the pitfalls to be avoided.  Your writing in particular has been extremely influential in my becoming so committed to lean thinking and practice.  Thank you!



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Michael Ballé June 05, 2016

Hey guys,

Here's a fantastic TED talk that shines a different light on the topic. We're looking a two different things here, one is Elon Musk (or Jobs, or Bezos, or Gates, or Edison) and the other is building excellent cars with regular folks:

https://www.ted.com/talks/adam_grant_the_surprising_habits_of_original_thinkers?language=en

What do you think?



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Mark Donovan June 05, 2016

Michael - Thank you for all of your great input in this discussion.  One of Adam's points that I really connected with was that creative ideas need time to percolate.  Could strategic procrastination somehow be built into learning/PDCA cycles in a way that might enhance the quality and the creativity of the ideas being generated?  Timing matters.  How do we actualize this concept?  I wonder if Mike Rother has seen examples of this playing out with his Improvement Kata.  How do we find the right balance between using aggressive deadlines to drive performance vs. allowing space for delays that enhance creativity? 



Mark Donovan June 05, 2016

Sheryl Sandberg did a great interview of Adam Grant on Feb 23 that digs even further into this concept of "originals."  https://www.youtube.com/watch?v=GkTlzWs_2Zs

I'd love to hear their thoughts on these topics!



Michael Ballé June 05, 2016

Hey Mark - I guess that if we're interested in originals, we definitely have an original lineup in Jim, Dan, Jeff, Mike and John.

On the other hand, I've come across some clear originals in Toyota in product development - a couple of Chief Engineers come to mind, but most other Toyota people I know don't come across as very original (no offence met). 

TPS, on the other hand, encourages them to think all the time. What strikes me with the youtube interview it's the Silicon Valley/ Business School look 'n feel. Toyota definitely procrastinates on really new idea, but they don't let them go either, and eventually move fast with determination.

Nonetheless I suspect we're looking at two different sources of creativity. One is probably originals. The other is kaizen if far more staid, routine situations. It'd be interesting to try to follow this up!



Renee Smith Nyberg June 07, 2016
1 Person AGREES with this reply

Enjoying the different angles of this discussion. I'll add this one... The Tesla/Elon Musk story is undeniably inspiring. And I'm curious about Musk's back-story, in light of the research of Ernesto Sirolli:

https://www.youtube.com/watch?v=CNPWF6gIMjc

Sirolli found that none of the iconic business leaders we hold as examples made it on their own. In fact, no body possesses all the leadership and core business skills needed.

Tesla's leadership likely comes from a team of people with complementary and crucial skills that Musk alone does not possess...because no one does! Those with the product passion have to be supported by experts with financial and marketing know-how.

I wonder what leadership inside Tesla really looks and feels like on a day to day basis?

 



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Mark Donovan June 07, 2016

Renee, thank you for adding this great angle.  The Ernesto Sirolli link is fantastic.  "The people who can help you are different from you.  Form a team of passionate people who see the world differently..."  We know from the subsequent successes of the "Paypal mafia" that Musk is very good at surrounding himself with effective leaders.  How does he do this?  I too wonder what leadership looks like on the inside.  I'm hoping that Musk will see sharing all of this with the world, like he has done with his patents, as another means of advancing his goals.  



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Bob Rush June 03, 2016
2 People AGREE with this comment

Speaking as an individual and not in any capacity for Tesla I can say the two companies didn't get a divorce they just came to a parting of the ways. Toyota has ICE cars, Hybrids, Hydorgen fuel cell vehicles, and they dabbled in EV's. Tesla is all in on EV's. Toyota wants to follow multiple paths and Tesla has chosen thier path, that's the plain and simple explanation. Elon Musk is visionary and focused as no other CEO I have seen in my (long) career and he chose this path for Tesla.

 

There are NUMMI people at Tesla that are bringing the voice of the people to the front, and they are being heard. Tesla will never be Toyota and Toyota will never be Tesla, and that's not bad, it's just the way it is.



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Mark Donovan June 04, 2016

Bob - Thanks for your comments.  It is great to know that you are out there actively spreading lean thinking and practice.  I am eager to learn how Elon Musk's unique style of leadership can compliment lean leadership and perhaps result in something much more powerful.  I'd love to see you write about this in your LinkedIN "Lean observations of an old guy" blog.  What can Musk teach us about applying first principles thinking to the sustainable development of leaders and team members?  I know he is always up for a big challenge.  How about revolutionizing the speed at which companies around the world are able to sustainably deliver real value to their customers!  He must have a few spare minutes in his schedule. 



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Greg Lane June 05, 2016
2 People AGREE with this comment

My only reflection on this interesting topic would be if Tesla is to seriously consider the "Toyota Way" in operating its business(s), one must consider the characteristics and behaviors that need to be developed in its leadership for sustainment of the Toyota system.

This would include senior leadership going to the Gemba, reflecting, coaching, having empathy, being humble, asking open ended questions to understand the thinking, etc..............

Not sure if that's in the cards for some of the personalities involved? 



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Mark Donovan June 07, 2016

Greg - Thanks for your comments!  Your perspective on organizational culture is really relevant here.  Do you think it is possible the urgency of countering climate change could be creating a "need" for speed that simply will not be met with a Toyota Way slow and steady approach, at least in the short term?  I go back and forth on this.  I know we need to go slow in order to go fast but what if we really need to transition to 100% clean energy across all sectors in ten years in order to save the planet from a lot of suffering?  How do we quickly determine the optimal organizational strategy to meet this challenge? 



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Mike Rother June 06, 2016
2 People AGREE with this comment

I think that in differentiating Tesla and Toyota's approaches by comparing the size of their goals and the speed at which they are pursued is focusing on surface issues. I agree with Mark Donovan that there may be strong parallels between the two, perhaps an underlying creative/scientific 'striving' mindset pattern like the one we found at Toyota in the TK research. It doesn't matter how big or small your goal is or what kind of problem you are dealing with, the underlying thinking pattern is pretty much the same. That makes sense too, since humans cannot readily change their unconscious mindset to suit a current problem.

There are far fewer core principals for human creativity or scientific thinking than there are different approaches. Grasp the underlying patterns of mind, practice them in some way, and then you can develop your own approach. Arguing about different approaches, about the artifacts, may be fun but is probably fruitless.

 



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Mark Donovan June 07, 2016

Thanks Mike for your great work helping guide all of us on how to achieve this creative/scientific 'striving' mindset.  I wonder if we can convince Musk to let you come in and study their particular kata.  In the meantime for those of you not familiar with Mike's work please check out the following links...

https://www.youtube.com/watch?v=_es3hYCMMmc

http://www-personal.umich.edu/~mrother/KATA_Files/Research.pdf

http://www-personal.umich.edu/~mrother/Homepage.html



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Calvin L Williams June 06, 2016

Great post Mark! Thanks for sharing. Toyota and Tesla are obviously both great companies and have many formidable qualities; both shared and unique. Comparing them is like asking who plays basketball more correctly between Michael Jordan and LeBron James. It's debatable and depends on a million constantly changing variables. 

Tesla provides a great case study for our generation just like Toyota did for the last generation (and in the incumbent industry leader role they currently enjoy). However neither Tesla or Toyota are perfect companies and I would challenge that neither have found the "holy grail" of manufacturing - as if it even exists. However the takeaways from both companies are the shared characterists that make them great and would make any company great, such as:

- Discipline
- Passion
- Ingenuity
- Courage (for taking calculated risks)
- Sacrifice
- Constancy of purpose
- Zero tolerance for waste (my personal favorite)
- Matching the work with the need
- And many more qualities of pretty much all great companies

You'll find these same attributes to varying degrees in Apple, Nestle, Mars, General Electric, and the long list of others who are known for great execution. And I suppose both Michael Jordan and LeBron James share these attributes as well.

So the question is not isn't so much "how do we best pursue these companies?" but "how do we identify what they were pursuing - and beat them to it?"

Calvin L Williams
Continuous Improvement Strategist
Percent Perfect Methodology®
calvinlwilliams.com

 



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Mark Donovan June 07, 2016

Thank you Calvin for these excellent observations.  I think another question is how do we develop and continually strengthen these important characterstics?  Just like Mike Rother's Improvement Kata helps us to develop the scientific striving mindset, what are the other katas we need? 



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Michel Baudin June 09, 2016

c

Are the barriers to entry into the auto industry "ever-increasing," as asserted in the 2010 HBR article linked to above, or did this article get it wrong? Could it be that the barriers are actually falling, with advances in electronics and information technology leveling the field between incumbents and new entrants?

In 2016, cars are no longer the "industry of industries." Electronics has, at least, as solid a claim to this title. And, in a discussion of Toyota and Tesla, what is the relevance of Peter Drucker? I see him as a pied piper, who led American management astray through eloquent advocacy of questionable ideas . We owe him Management as a profession in its own right, where selling sugared water qualifies you to run a computer company. We also owe him Management By Objectives (MBO), that he acknowledged after 45 years was ineffective.

If we must quote an American management thinker, how about Deming? As a writer, he didn't hold a candle to Drucker. He only wrote a few books, badly structured and with misleading titles, but his ideas were deeper than Drucker's and, unlike Drucker's, most of them have stood the test of time.

I see Tesla as a graft of the Silicon Valley culture onto the car industry. Mark Donovan hails Elon Musk as a hero, and, perhaps, the Tesla story would not have been possible without him, but I see him as the last in a long line of outstanding business leaders who have built what is Silicon Valley today for the past 80 years, starting with Bill Hewlett and Dave Packard and continuing with Andy Grove, Steve Jobs, Mark Zuckerberg, and plenty of other, less known figures.

Jim Womack goes through the entire official history of Toyota and the emergence of its cautious, stepwise approach to innovation, and contrasts it with what he perceives as Tesla's reliance on "genius and adrenaline" to compensate for the lack of a plan or a business system. I don't know how Tesla works or whether they have good plans. What I do know is that Silicon Valley has no shortage of ideas on how to develop innovative products and bring them to market, backed up by success stories. While different and sometimes at odds with the Toyota Way, TPS, or Lean, it should not be underestimated.



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Mark Donovan June 10, 2016

Michel - Thanks for adding your comments.  The idea of the barriers to entry actually falling is really interesting.  Tesla's hurdle to enter the market was certainly not low however there are small players, Wikispeed for one, that are doing some really innovative things on the fringe.  It will be interesting to see if some of these new players gain any significant traction and do breakthrough as Tesla has.  What are some of the other examples you see?   



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Jeff S. June 13, 2016

I like Musk's go for it attitude to include the whole. Its easy to look at a Toyota end state in terms of all the functions that need to be leveled up, but getting there is dirty and not easy.

Is it the pride of lower concrete mind and the power of $ driving the decisions/timelines or an intuitive grasp of human need and urgency to make good? Can a creative genius get in the trenches and look at the details if necessary or does it ride in the clouds and pay for solution?

Technique is important, but TPS approach is/was more important. In that vain People are an intellectual asset requiring a daily evocation of creativity- coming from all levels of the group unit vs individual experts in isolation. Leadership also requires the energy of Inspiration to challenge the group toward a vision and a practical next step.

NUMMI had a system of real time learning for everyone to leverage off of in many different respects. VP's Convis and Childs would put out a challenge, but still put a spotlight on details at operator levels to test and verify the Purpose behind doing new ideas. IMHO there is still much to learn for those now innovating in the house of NUMMI.

great post Mark, thanks



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Mark Donovan June 15, 2016

Thank you Jeff for your great comments.  I love the "daily evocation of creativity" and the "energy of inspiration."  Did you work at NUMMI?



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Kirk Hayes February 02, 2017
1 Person AGREES with this comment

Very interesting, but obviously this is an outsiders perspective who has never worked inside of Tesla.

Since I have worked at Tesla, I would offer up that Elon is a thinker and dreamer is just that. A visionary, not an operations guru.  The folks doing the work and trying to meet Elon's expectations should use every tool possible, including the lean thinking methodology of Toyota.



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