From Toyota to Tech: Wiring Organizations to Win 

How can organizations transform from danger conditions to winning conditions? From lagging behind the competition to leaping beyond the competition? 

This was a focus of an LEI webinar in November with Tyson Heaton, LEI Senior Coach, and Dr. Steven Spear, renown lean expert and senior lecturer at MIT. The two discussed Wiring the Winning Organization,¹ coauthored by Steven, which examines how good companies over decades have led markets by solving their most important problems better, faster, and easier than the competition.  

They also talked about Steven being a student of Toyota going back to 1995, which preceded his landmark article, “Decoding the DNA of the Toyota Production System.”² That Harvard Business Review report helped demystify the underlying mechanisms of Toyota’s performance, and the findings shaped and guided Steven’s ideas of business transformation. 

Lifelong Toyota Learning 

Steven and Tyson in early November participated in an LEI Lean Leadership Learning Tour in Kentucky, during which they visited Toyota, GE Appliances, and Summit Polymers facilities. “Every time I go into a Toyota facility, it’s like — boom— whoa, I didn’t see that one coming,” said Steven.  

He recalled visiting Toyota in 1999 and immediately recognizing that there was something fundamentally different going on. Around that time, automaker BMW had the tagline of “the ultimate driving machine.” Steven said he and article coauthor Kent Bowen thought at the time, “This Toyota system is ‘the ultimate learning machine.’ They have figured out how to take all of human activity, and on that I mean by no exaggeration, all of human activity, and in the ideal strive to the point where you get everybody engaged intellectually in the enterprise so that everything is subject to critique and improvement — everything, everywhere, all the time, ideally by everybody.” 

Steven had not been back to the Toyota Georgetown facility in years, and, while there on the tour, was told that since then the plant had reduced the size of final assembly to 25% of what it was. Steven understood this was not one great redesign, but incremental problem solving throughout the facility. For example, Steven had spoken with frontline associate Keith, who was still being trained in problem solving. Keith said he had 152 problems to be solved that he had been working on in his 30-foot station, and he was currently at number 87 with the support of his team leader and group leader. 

“Now think about this: 30 feet is about three minutes of cycle time, more or less,” described Steven. “So he found one problem per second in that area. And he was one guy… Multiply that by 10,000. Boom. That’s your answer for how you get your final assembly down to 25%. This guy — and he’s a newbie — he’s finding one problem per second.” 

Such Toyota takeaways have been inspiring organizations and individuals for more than a century. Tyson was reminded of his last visit to a Toyota factory about a decade ago, which began with a video of how Sakichi Toyoda developed jidoka (automation with a human touch) in the early 1900s and invented the Toyoda Automatic Loom, which automatically stopped when a thread broke and indicated which thread broke.  

Steven also remembered seeing the video: “The way they tell the story there is that as a young man, he’s watching the women in his village weaving and how physically difficult it was. And then they tell the story, and I’m not paraphrasing too loosely, about how he was heartbroken to realize that if one of the threads broke and they continue to weave, they would have inadvertently woven fabric with a run in it. Where they thought they were doing something that someone else would appreciate — creating perfect fabric for clothing — they had created something worthy of rags. And how he committed himself to not let that insult continue.” 

This wasn’t a story about technology and yield, noted Steven, but of the human element of designing systems where people step into their job with the confidence that they’re going to succeed, that they will do something that someone else appreciates and values. Yet because  human beings are designing complex systems, those systems are likely at some point to fail. Employees are “aware that if they fail, they’ll find out and they can improve on the next day. So it’s this notion of continuous regeneration.” 

Tyson said that jidoka— or lack thereof — reminds him of a kid with a jack-in-the-box who is always waiting for it to jump up and shock him. “When I observe workers and there isn’t a strong component of jidoka, they’re constantly waiting for the next problem to show up to react to. So they don’t free up any intellectual capacity for problem solving because they’re waiting for the next event to happen, and they know they need to react quickly.” 

Toyota doesn’t want people exhausting their brainpower monitoring stuff, and will instead build the monitors, the built-in tests, into the work, added Steven. Associates can then apply their energy to “creating solutions to the problems which, until that thing popped up, they didn’t even know existed.”  

“I think there are these deep things related to Toyota’s culture and history that’s part of their wiring because it was built at the foundation level,” said Tyson. Other companies seeking improvement may need rewiring, and they’ll get examples of that in Wiring the Winning Organization. 

Wiring the Winning Organization 

Steven said that he and the book’s coauthor, Gene Kim, were trying to establish that good companies behave in similar ways, and they’re not caught up in semantics of the system or methods they’re using. This is contrast to “ritualization to the point of cultishness around terminology, semantics, particular tools.” The two wanted to get past the tribal attitudes and point to general principles that are applicable in any situation where leaders are responsible for the work conditions that other people find themselves in every day. 

Leading companies across sectors may differ in the semantics they use, but they are behaving the same way. They “make it much easier for people to solve hard problems together because they’re competing. One, they’re competing based on speed, not on accounting cost. The speed in particular on which they’re competing is problem-solving speed. Because the attitude is, if you and I start today with the same problems, then I can’t get ahead of you and you can’t get ahead of me. However, the one of us that can see problems, solve problems, and bring those solutions into sustainable use — that’s a step ahead.” 

Steven added, “If the priority is develop people because we’re competing on the speed of seeing problems, solving problems, and systematizing solutions, then leaders have to commit time and commit space and resources to developing people. And again, like the example with this dude Keith, he had time and coaching from his team leader, and his team leader from his group leader, to do just that. And so he was winning as an individual because he had the satisfaction every day of knowing he was working his way through the 152 [problems], and Toyota was benefiting because he was finding all these opportunities for them to do better work with less effort.” 

Leading companies compete across sectors on the speed, breadth, depth, and quality of their problem solving. “There’s a whole long list of literature in the operations management domain which compares across good and bad organizations and says, ‘The ones that are winning, there’s something different about how they’re managing people.’ We start off the book and say, ‘Yeah, but that’s not just an aside. That’s actually the thing we’re trying to optimize on’ — this ability to see and solve problems and bring solutions into reliable, systemic, repeatable use.” 

The book also contrasts companies in the “danger zone” (conditions ruled by stimuli response in which it’s “wicked hard” to solve hard, complex, intertwined problems and there is little time for reflection, experiments, and iteration) and those in the “winning zone” (where it’s much easier to solve problems and time to solve them). Steven said there are three mechanisms to move from the danger zone to the winning zone: 

• Slowification: “When we’re in situations where we don’t yet have useful habits or stimuli response, that’s when we need to slow down and have that generative, creative, reflective thinking and doing where we can actually learn something. So in the book, we give all these examples of organizations which were very, very deliberate. When there was a problem, they created the protective time and space to actually do slow thinking rather than fast.”  

• Simplification: “Is there some way to decompose the problem so the problem itself is easier to solve in its parts and then reassemble it, rather than trying to do it all at once?”  

• Amplification: This mechanism makes problems “obvious earlier than not and more often than not. So fast and frequent… seeing little problems before they’ve had opportunity to become big problems.” 

Some people will say they don’t have the time for this three-pronged approach because they have to get things done, which is a strategy to not pause and instead make more problems, Steven argued. They’re “actually going to double down and make more problems.” 

Tyson said a theme at Toyota is that they only talk about problems — they spend time on the red (problems) and not the green (normal conditions). Part of that is they’ve reoriented around the idea of a problem and being bad [to] around the idea that they’re good things that allow us to exercise capability and improve and grow.” 

“Toyota is competing as the ultimate learning machine, so the ultimate learning machine requires that you’re seeing and solving problems regularly because it’s actually the recognition of a problem that you’ve learned,” said Steven. “That’s the first thing you learn — that I have a problem, which indicates, ‘Oh crap, there’s something I didn’t know.’ And then it’s the investigation into solving that problem where you discover more.”  

He added that there should also be some celebration of success “because that recognizes the progression from a lesser state to a better state and this continuance of getting better and better. That said, we don’t learn from being told that something worked. We only learn from being told that something didn’t work.” 

Start the Transformation with Leader Behaviors 

A critical bridge in moving from the danger zone to winning zone, said Steven, is based on leader behaviors. He recited the cliché of “what leaders find interesting, other people find fascinating” and that “transformation is really about transforming leaders. And, in particular, it’s not about teaching them.” He agreed with comments made by LEI Senior Advisor John Shook in the article “How to Change Culture: Lessons from NUMMI”³ — doing precedes thinking. 

“We have our habits, we have our routines, biases, prejudices, muscle memory — however you want to phrase it — and that’s the stuff we have to change first. We have to break the habits and create new ones,” said Steven. “First, we have to change our doing, and then it changes how we think. And once we have that, then it goes forward… So you put those together, and what they sum up to is that if we want to transform an organization, we have to, have to, have to transform the doing of leaders so their thinking transforms. And two things then happen: other people say, ‘Oh, look at that—Tyson, my leader, he’s acting differently. Perhaps I should emulate what he’s doing because apparently he thinks it’s important.’ And then as Tyson turns the doing into his own thinking, then his own thinking can become his own coaching. And that’s where the multiplication, the exponential growth comes in. But anyway, long and short: start with leaders and focus on their doing, and then the thinking will follow.” 

First, we have to change our doing, and then it changes how we think. And once we have that, then it goes forward… If we want to transform an organization, we have to, have to, have to transform the doing of leaders so their thinking transforms.

Steven said that it’s unfortunate that too many people who reach the C-suite — regardless of what they’ve accomplished professionally through their subject matter expertise (engineering, science, logistics, HR, etc.) — suddenly develop a perspective that they’re no longer going to improve things by engaging employees and appreciating the nuance, subtlety, and idiosyncrasy of the work. They shift to managing through reports, dashboards, and metrics. 

“I suppose there’s some sort of emotional satisfaction to think, ‘Oh, now I’m the big shot. I get to look at all the data and decide what transactions we’re going to make, who to hire, who to fire, what to buy, what to sell, market to enter or exit, or whatever else.’” Metrics may tell an executive where to look, but it’s like a “check engine” light on a dashboard, said Steven. “It’s binary — either it’s off and you don’t have a problem, or it’s on and you do have a problem. The right response is check the engine, not “Can we have more metrics?” 

When Tyson asked where and how organizations should begin to change, Steven reasserted that leaders have to transform first their doing, then their thinking will follow, and once their thinking follows, their behavior will be consistent. “So to this transformation thing, what I learned from Toyota — I didn’t invent any of this, but what’s been proven out in practice — is that you have to start by addressing the behavior and then the thinking of the most senior person you can access. And look, ideally, it’s at the CEO level. And in The High Velocity Edge,⁴ we talk about Paul O’Neill leading the charge on this stuff at Alcoa.” 

Steven also said a transformation should begin with a model line or a small piece of the much larger whole so that it becomes a training platform where individuals can practice acting differently.  

“For example, when Alcoa started building out the Alcoa Business System, they started their pilot site or model line at an extrusion plant in Davenport, Iowa. And the only reason they started there is because the senior leader at that site raised his hand and said, ‘You know what? What the hell, I’ll give this a try.’ So they picked a production cell there. It had nothing to do with that being a critical plant in the whole network of Alcoa or that the most important process there… It was because that was a place to give this leader an opportunity to try new things safely, and then as he tried new things and learned new things, then he could teach others.” 

The Role of AI in Wiring Organizations 

Prompted by an attendee question, Tyson and Steven discussed AI and its impact on organizations and on wiring organizations — potential vs. its pitfalls or risks. 

“AI is a tool,” said Steven. “That’s it. It’s a cool tool, but let’s remember what it is. It’s got no intelligence, it’s got no judgment, it’s got no soul. None of that. Compared to anything else, it has a prodigious memory. You can load it up with God-only-knows how many millions of documents or images, and it’s very, very good at finding patterns.” 

He then considered AI in the context of mechanisms of winning organizations. “If you’re going to use AI, what would be the danger zone behavior? And that would be to incorporate AI into everything you’re already doing all at once, right? It would be like giving a bunch of kids who know how to ride a bicycle Ferraris. You’re going from a weak tool to a strong tool and saying, ‘Oh, use it to get to school today.’ You know where that calamity ends.” 

He encouraged organizations to “slowify” and gain an understanding of how to use AI, where it applies, where it’s useful, where it’s not useful, and where it’s actually destructive. “We can’t do this in real-time operations because we’re going to just blow things up. Second, we need to simplify. If we’re offline doing this in a safe environment, we probably want to be testing the AI on little things at first so we get a handle on how it behaves before we start trying to use it on more complex things.” 

He compared AI to the development in the 1800s of interchangeable, near-identical parts that enabled mass production and mass sales — long before Henry Ford and the moving assembly line. Rather than everything being handcrafted, they used fixtures to hold parts in place, jigs to guide the hand of the person doing the labor, and gauges to make sure of quality goods. This is in comparison to craftspeople, who are skilled at the task and they don’t need assistance because they rely on practice and touch to know when a product is completed. 

“What fixtures, jigs, and gauges did was democratize, certainly wildly expand, who can make something of quality and consistent quality… It does invite the question [with AI]: can we make, literally or metaphorically, a fixture, a jig, and a gauge to guide the apprentice in the direction of being really good?” asked Steven. 

“I think it changes the way you’ll design, the way you interact with [AI], if you think of it as a jig and a fixture vs. completely removing your responsibility altogether,” noted Tyson. 

“That’s right. Because even when the fixture, jig, and gauge is standard work — apropos being at Toyota — still there’s the human element of having someone who’s been part of the process of designing the fixture, designing the jig, designing the gauge, designing the standard work around it, and being attentive to things not working with that, and so trying to make modifications in it,” added Steven. 

A Final Toyota Callout 

Steven concluded the webinar, saying that leading in the fashion of Toyota can approach something revered and meaningful beyond achieving business objectives: “The Toyota people really locked onto something, which is, we can’t be perfect, but we can pursue perfection every day. And that is enormously satisfying. And beyond that, we can create the opportunity for other people to relentlessly pursue perfection, too. 

“I’ll just say this outright: if that’s how we think about ourselves as leaders — giving other people the opportunity to perfect themselves or try to perfect themselves more and more every day — in some regards, we’re doing something I think that’s really sanctified, not just industrial or capitalistic or professional,” said Steven. “We’re doing something that’s really sanctified in helping people find greater expression for their potential to create as people and a greater opportunity to do something valuable for other people as well. So this is really important stuff, and we shouldn’t overlook the fact that this is really important stuff.” 

This isn’t only theory. It’s theory bridged to actionable insight from one of the field’s most respected voices—and a preview of what Steve will bring to the 2026 Lean Summit stage in Houston this March. Learn more about the Lean Summit »

1. Gene Kim and Steven J. Spear, Wiring the Winning Organization (IT Revolution, 2023).  ↩︎
2. Steven Spear and H. Kent Bowen, “Decoding the DNA of the Toyota Production System,” Harvard Business Review, October 1999. ↩︎
3. John Shook, “How to Change Culture: Lessons from NUMMI,” MIT Sloan Management Review, Jan. 1, 2010.  ↩︎
4. Steven J. Spear, High-Velocity Edge (McGraw-Hill, 2009).  ↩︎