New technologies are roiling the waters of Industries as diverse as entertainment, hospitality, taxis, and aerospace. But perhaps nowhere are the waters murkier for what the future holds than the auto industry where autonomous vehicles, shared assets, new fuels, and other trends threaten to fundamentally change it.
What may be ahead for carmakers, product developers, and the lean management movement in a disrupted world is the subject of this Q&A with Jim Womack, founding CEO of the nonprofit Lean Enterprise Institute (LEI). He talked with LEI Communications Director Chet Marchwinski at the Designing the Future Summit that showcases how companies are applying lean product and process development (LPPD).
Jim is the author of Gemba Walks and co-author of The Machine That Changed the World, Lean Thinking, Lean Solutions, and Seeing the Whole Value Stream. He led the research team at MIT that coined the term “lean production” in 1987. Ever since, he’s been a pioneer in helping managers, executives, and companies apply lean management principles to create more value with less waste. You can view the video interview here.
Q: You’re a longtime observer of the auto industry. Will the new technologies disrupting it – autonomous vehicles, alternative fuels, hyper-connectivity — encourage car companies, to be more than car companies by providing not just an automobile but essential services like insurance and delivering the next car we need when it’s needed?
Jim: Well, first I’m not trying to make the world safe for car companies. Maybe we don’t need car companies. Maybe a car company steps forward to have a direct and continuing touch with the person who’s lost mobility. Maybe somebody else steps forward. And that’s part of the disruption. We think the people who are likely to step forward are coming out of the new Silicon-Valley world rather than the old Detroit world. And that’s what’s so scary about this for the big car companies.
Their response is to invest in everything. Go out and buy an autonomy business, go out and buy a sharing thing, or at least take a big stake in a sharing organization, and do experiments with alternatives to batteries. So they’re trying to mostly protect themselves. That’s good. But why don’t we start with a customer and work backward to figure out what we need in the way of an industrial structure. And it’s really in the early days on that so what you see right now is a lot of chaos.
I first started looking at this 10 years ago. I looked at autonomy plus shared assets at Uber and Lyft plus non-carbon sources of energy because the battery is not the point. The fuel cell is not the point. It’s where you got the electrons, where you got the carbon, where you got the hydrogen. You don’t want to get carbon with them.
I think there’s a lot of benefit if we can do it, but it’s going to be really hard to do. The launch date for an autonomous product that has nobody in the vehicle except you and me, just goes back at the rate that the calendar goes forward. It was going to be 2019, and 2020, now 2021, maybe 2022. And then when we’re going to have a fully-electrified fleet, well, in the States, from a governmental perspective, it’s not on the plan. In Europe, it’s off and on. In China where they have a dictatorial power to do these things, well, it seems to be on full blast. But even so, that’s hard to figure.
And then finally there’s this business about asset sharing, which was supposed to be at a point where none of us would need a car. We would just take Uber and Lyft. Well, Uber and Lyft have yet to show any evidence they can make any money.
Q: We’re just going to have to get into aerospace and air taxis, and so on.
Jim: That’s right. Autonomous air taxis. Why don’t you go first? Just tell me how it is.
Q: In an e-letter, you noted that there’s the auto industry’s response to disruption, and then there’s Toyota’s response to disruption. Toyota is pursuing electric vehicles and also hydrogen fuel cells, and self-driving vehicles but also human-driven vehicles with software so humans can’t make a serious mistake. They have a partnership with Uber but they’re also experimenting with their own fleet of shared autonomous vehicles. Is Toyota engaging in deep study, or is it simply that they don’t know what to do, or is it an example of early set-based concurrent engineering?
Jim: Well it’s interesting isn’t it? The key thing Toyota remembered to bring to the party was a whole lot of money, like three times what anybody else has got to play with. And that’s company policy going all the way back to its bankruptcy of 1950. They said, “We’re out of cash. We will never run out of cash again.” Therefore, they go into this as a rather cautious company. They like to be a follower actually rather than a leader, technologically. The Prius is the big exception.
So this is a pretty cautious company. Don’t forget, they don’t believe in forecasts. They believed the forecast for sales in 1950, and that’s why they went bankrupt. They built a whole bunch of stuff that nobody wanted because the economy tanked and they ran out of cash. So, therefore, Toyota believes in a portfolio of opportunities and alternatives to experiment with. It will try every experiment they can afford, and they can afford a lot of experiments.
Q: You mentioned the study phase, the first phase of lean product and process development, when the team does research and really learns about the needs and desires of the intended customer. But you’ve asked these product-development teams to rethink how they define customer value during this phase. What’s the problem that you see?
Jim: In the world today, no one has ridden in an autonomous vehicle without a test engineer. Now, there have been a few Tesla drivers who inadvertently discovered that they should have been the test engineer. But if you go to the Waymo project, which is Google’s self-driving car program, now an independent subsidiary, they’re still holding back on when to take the test engineer out. So how do you know what people feel about a product when no one has ever actually used it?
The point is that you have to do long-term investment on big systems without any evidence of what people actually think about this, which is the exact opposite of the minimum viable prototype (MVP) concept that the lean startup movement introduced. So there’s no way to do a cheap, quick test. What you have to do is this great big system test. So that’s very risky. Okay, so that’s one of the problems here.
And then the other is that these are all technically very daunting and they involve not just one or two things that haven’t been done before, they involve lots of things. So you’re going to build a new product that’s got a whole lot of components. And what we believe in the lean product and process development community is that before you finalize the design, you should make sure that the components want to live together. So they have to be compatible before you go to final assembly — compatibility before completion.
Well, how are we going to do that? You can’t have software for an autonomous vehicle that sort of works. That’s fine for a social-media app, and that’s where the lean startup movement started with the MVP idea. They pointed out that people were trying to get perfect code before they ever showed it to a customer. Well, I don’t know about you, but I don’t want the beta version of an autonomous vehicle. I really want the mature bug-free version.
But let’s just take one more thing that is happening in this disrupted age. We thought we understood a lot of products and we thought we knew the customer base. But it’s not just that customers want something new and different, they don’t want the old thing. And it’s quite striking in the car business right now.
For example, Ford, with help from Jim Morgan, got to be pretty darn good at developing cars. So three, four, five years ago, they set out to develop replacement models for their cars. And over the last five years, it turned out people don’t want traditional cars. So the risk is that you develop a brilliant traditional car, which nobody wants. We’ve taken development time down in the car industry from about five years in the States to three and a half. But in the world we’re in right now, three and a half years is eternity. So what’s a developer to do? And the answer is to be lucky because, inherently, there’s just a lot of risk in this.
Q: That’s right. The whole market shifted away from sedans to SUVs and pickups. Are development teams thinking long-term enough?
Jim: I don’t know where this saying came from in Toyota, but I’ve heard it over the years, “Every countermeasure to deal with the problem can be depended on to create a new problem.”
Oh, by the way, the same guys who want to bring you autonomy are the guys who brought you handheld electronics that create driver distraction, which is why the death rate is up. But that’s okay because we’re going to provide autonomy, which will take it right back down again. That’s pretty weird.
Q: Your lean journey began at MIT in 1979 with publication of Machine That Changed the World. So I’m wondering what do you see as the current state of the lean management movement, and what do you see as its future state?
Jim: I started studying the car industry in 1979. The Machine That Changed the World was published in 1990 so that was a long, long process of getting that done. And there had been a previous car project that we did in the early eighties that produced a book called The Future of the Automobile that never really found an audience. So I’ve been at this for a long time.
Here are the big problems that we’ve encountered. The nature of the way lean management ideas came to the U.S. and Europe was that people thought it was mostly about factories, techniques, and methods – JIT, jidoka, andon, and so forth. It’s a toolkit. And it took a long time for people to realize that no, wait a minute. These lean enterprises that we would like to create have interlocking systems, including a product and process development module, a supplier management module, a customer support module, and, sure enough, a production module all wrapped up in a general management concept.
As people tried to apply the tools, typically with consultants in short-term interventions, they discovered that nothing sticks; they were doing kaizen on top of chaos. It turns out that the specific gravity of kaizen is greater than the specific gravity of chaos. So glub, glub, glub, glub, the kaizen disappears.
We [LEI] did surveys for years asking what’s your biggest problem [with a lean transformation]? And they would say, “Regression to old ways; we can’t sustain it.”
We now realize that you need the whole system and in particular, you need a management system that can identify problems very quickly and counter-measure them so that you sustain performance. And, if you’ve created what Toyota would call basic stability, then you can raise the standard. That’s what kaizen is about.
Q: Maybe people will even go back to Machine and read, what was it, Chapter 5 about product development that everyone seems to have skipped the first time around?
Jim: They went right to production. That’s right. That book has five substantive chapters, one on each of the five elements. Now, I think we’re making some progress, but it’s never as fast as it should be or as we want it to be.
- In Gemba Walks, Jim Womack’s latest book, he draws on 30 years of experience to illustrate the power of rooting improvement efforts in the “gemba,” a Japanese word referring to the place where work takes place and where value is created. Buy a copy.
- Watch the interview on the LPPD channel on Youtube.