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For Lean Thinkers, "Clutch" Offers Lessons in Planning and Leading

Sullivan, Paul

Lean Thinkers, who know well the importance of the Plan-Do-Check-Act (PDCA) methodology, will appreciate the practical lessons in planning and leadership that author Paul Sullivan draws from clutch performers in the sports, military, and business worlds.

Using examples from the real world, including the Toyota-GM joint venture in California, Sullivan examines why some performers thrive in the clutch -- conditions of extreme pressure -- and why others choke. It’s a fascinating as well as an instructive examination for any business person because Sullivan shows that being a clutch performer doesn’t come from inborn ability; it can be learned.

Of special interest to Lean Thinkers:  Sullivan devotes Chapter 9 to the enduring lesson for Toyota and GM from their New United Motor Manufacturing, Inc., (NUMMI) joint venture. The lesson first for GM and more recently for Toyota is that overconfidence precedes a choke.

John Shook, who helped Toyota transfer its business system to NUMMI,  was interviewed for this chapter on what made Toyota a clutch performer and why recently it seemed to choke. An excerpt follows.

(from Clutch by Paul Sullivan)

The first concern Toyota had at NUMMI was about American workers: It was not confident they could actually work to Japanese standards. The perception was that the American autoworker was lazy. But the bigger concern, Shook said, was whether they could be taught Toyota’s management style. “Plans are useless; planning is everything,” Shook said. “Planning means knowing where you stand, knowing where you want to go, and all the contingencies between here and there.” The big picture plan for NUMMI was for Toyota to understand the U.S. market, build cars Americans wanted to buy, and expand their brand. But for the line workers, the plan was to teach them to be more involved in the details of making cars. Toyota did not want them to mindlessly execute whatever tasks they were charged with but to play a role in improving the designs themselves. What this meant was real quality control, not just slogans. The NUMMI workers were told that it was their obligation to stop the assembly line if they saw something wrong with a car. The goal was not to get the car through the line as fast as possible, come what may, but to make sure it left the plant properly engineered. This was how it worked in Japan, but Toyota executives were not sure it could be translated. That was Shook’s job. How Shook—who knew nothing about cars beyond having liked them growing up in Tennessee—got to teach unionized autoworkers the Toyota style of Japanese management showed in and of itself that an American could be taught TPS.

After being hired, Shook was put to work as an autoworker in Toyota City. He started by building Corollas. He rotated through the whole process from body welding to production control. In his months on the line, he saw firsthand how a manager would respond when Shook pulled the rope to report a problem. A sign lit up over his workstation, and one of the team leaders came over. He told me he did this particularly often when he was installing seat belts. Although this slowed the process down, it increased the quality, and by the early 1980s Toyota was becoming known for the quality and not just the low price of its cars. At NUMMI, Shook helped implement the same process. “When GM was told about this, they said, you’re crazy,” he said. “GM looked at us as if to say, ‘This workforce would stop the line anyway, and now you give them the right to pull a rope and stop the line?’ We said, ‘No. We give them the obligation to do that.’ That’s their job to see those problems and call someone over to fix it. Their job is not to get the car out of the door even if it’s bad.” To some surprise, the new system worked. The idea of teamwork, imported from Japan, took hold at the California plant. Part of the reason was that both sides had something invested: Toyota needed to succeed in America, and the five thousand workers knew that NUMMI was providing the only autoworker jobs in California.

As Toyota’s philosophy took hold with the line workers, Shook said, managers were pushed to do more as well. The expectations were different. The goal was to challenge them. For example, if Shook told a manager to cut 20 percent from the cost of a cup holder, he did not expect him to actually cut 20 percent. In fact he would be upset if he came back with 20 percent cut from the cost. “We don’t understand causality well enough to know that there is exactly 20 percent worth of savings,” he told me. “If I say you need to get 20 percent and you hit it, that’s insane. C’mon! There is no way I can sit here and guess there is 20 percent savings in something.” He would be happier if the person came back and said the cost could only be cut by 5 percent—or maybe it was 50 percent. The request was an exercise; it was done to see if something could be made better. “At the end of the day, I don’t care if you make it for 20 percent less. The goal is to make it better,” he said. “This is playing with ideas so we can learn.”

This might sound logical but it stands in stark contrast to one of the dominant American management systems: Set a target and meet it. In that school of thought, the 20 percent reduction was the goal—not the improvement of the thing itself. And the person charged with making that reduction would be judged strictly on whether or not she accomplished it. If she did, she had succeeded; if she did not, she had failed, even if she had tried harder. As absurd as this sounds, it was what Steven Rattner, the man who was briefly the U.S. car czar in the Treasury Department, found when he went into a nearly bankrupt GM in 2009. “Everyone knew Detroit’s reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM,” he wrote in Fortune. “From my first day at Treasury, PowerPoint decks would arrive from GM (we quickly concluded that no decision seemed to be made at GM without one) requesting approvals. We were appalled by the absence of sound analysis provided to justify these expenditures.”

At NUMMI, and Toyota in general, the Toyota Production System was designed to prevent the overconfidence that comes from an ingrained way of doing things. What drove the company was the desire to make the cars they produced better, even when they were already good. And this meant competition within the company itself. As a case in point, Shook pointed to the first Toyotas made after Lexus was launched in 1989. The challenge of having a designated luxury line made Toyota engineers think even harder about design quality, to the point where models in the early 1990s were “outrageously over-engineered.” While that is an extreme case, it highlighted the culture that kept Toyota from growing complacent. “You have to get used to the idea that the plateau will never come,” Shook said. “Your job is that process along the way of doing those little improvements. You’re truly never done. It’s actually only when you come to terms with that that you can relax and the pressure no longer bothers you.” In other words, there is always something to improve and improvement itself, not a fixed goal, becomes your job. There is no time to sit back and be complacent.

Excerpted from Clutch. Published by Portfolio. Copyright Paul Sullivan, 2010.

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