The Management Brief | Why the Toyota Production System Remains Elusive for Most Companies 

Given the remarkable success of the Toyota Production System (TPS) at Toyota and other companies like Danaher, why haven’t more organizations embraced it? In the United States alone, over 240,000 companies employ at least 50 people, yet relatively few have successfully implemented TPS. 

TPS gained worldwide attention in 1990 with the publication of The Machine that Changed the World¹ by James P. Womack, Daniel T. Jones, and Daniel Roos. Their book presented findings from five years of research at the Massachusetts Institute of Technology that studied success factors in the automobile industry. The team coined the phrase “lean manufacturing,” which has become synonymous with operational excellence and continuous improvement. 

However, in his later book Gemba Walks Expanded 2nd Edition,² Womack expresses regret about the term “lean manufacturing.” The name misleads people into thinking TPS only applies to manufacturing operations. Jeffrey Liker addressed this misconception by calling his groundbreaking book The Toyota Way,³ emphasizing that TPS represents a comprehensive philosophy rather than just a set of manufacturing techniques. 

TPS Misunderstood 

In a podcast released July 1, 2025 by the Lean Enterprise Institute, Olivier LaRue, President of Ydatum, offered insights into why TPS adoption remains limited despite its proven effectiveness. He emphasized that TPS is not merely a collection of tools or techniques. Instead, it functions as an integrated operating system built on three elements: philosophy, technical methods, and managerial practices. Human development sits at the center of all three. 

Toyota illustrates this concept with a graphic showing three interlocking triangles with people at the center. The philosophical element provides the framework that defines an organization’s purpose and answers the fundamental question: “Why do we exist?” Liker’s book The Toyota Way outlines 14 foundational principles that help employees understand this deeper purpose. LaRue explores these philosophical foundations further in his book The Toyota Economic System – The Philosophical Element.⁴

Three Core Problems TPS Solves 

LaRue argues that TPS should be understood as an economic system, not simply a production system. This reframing helps senior leaders recognize that TPS addresses three fundamental organizational challenges and delivers benefits beyond operational excellence: 

1. Aligning Profit with Cash Flow 

Traditional mass production systems create a disconnect between reported profits and actual cash flow. Companies produce large batches ahead of demand to reduce unit costs, but this approach ties up cash in inventory or forces organizations to take on debt. Mass production offers minimal product variation and limited flexibility. 

In contrast, TPS focuses on providing exactly what customers want, in the quantities they need, when they need it, at a price they’re willing to pay — all without compromising profitability. This approach keeps cash flowing while maintaining healthy margins. 

2. Human Relations and the Dignity of Work 

In most traditional organizations, problem solving remains the responsibility of a small group of managers and specialists. Direction flows from the top down, with frontline workers expected to follow instructions rather than think critically about their work. 

TPS inverts this model. By creating an environment where everyone becomes a problem solver, organizations tap into the creativity and knowledge of their entire workforce. People solve problems at the point where they occur, which appeals to the fundamental human need for autonomy and control over one’s work. 

Eiji Toyoda, Toyota’s fifth and longest-serving chief executive, captured this principle in one powerful phrase: “Before cars. Make people.” 

This philosophy positions TPS as both a problem-solving system and a human development system. The system is intentionally designed to make problems visible when they’re still small and manageable. As Toyoda often said, “A campfire is easier to extinguish than a forest fire.” TPS tackles complex problems by nature, but it can only succeed in an environment where people feel safe to identify issues, experiment, and occasionally make mistakes. 

3. Environmental Stewardship 

Environmental stewardship in TPS doesn’t mean choosing between profitability and sustainability. Instead, it recognizes that some of the most challenging and important problems involve designing products and processes that achieve both goals simultaneously. These challenges include achieving carbon neutrality, conserving water, managing solid waste responsibly, and promoting biodiversity. 

Why Lean Implementations Fall Short — and How to Succeed 

LaRue highlights a critical insight: most lean implementations fail to reach their potential because organizations treat them as “add-ons” to existing mass production systems. These systems remain fundamentally inflexible and batch-oriented, focused primarily on cost reduction through economies of scale. 

Without addressing the underlying philosophical and managerial elements, organizations simply layer lean tools onto incompatible systems. The result is frustration, minimal improvement, and eventual abandonment of the effort. 

Start Small 

LaRue observes that most of us have experienced failed business transformation projects. These failures typically stem from two problems: an unclear “Big Why” and lack of commitment to long-term improvement. 

Many organizations approach lean transformation as a major initiative requiring extensive branding, marketing, and company-wide rollout. This approach creates resistance and magnifies risk. 

A more effective strategy starts humbly with a small pilot project. This approach minimizes risk, allows for learning and adjustment, and builds credibility through early wins. As management expert John P. Kotter emphasizes in Leading Change,⁵ successful transformation requires progressing through eight distinct steps in sequence. Skipping steps or rushing the process typically leads to failure — or forces organizations to backtrack and complete the missed steps later. 

Philosophical Shift, Commitment, and Patience 

TPS offers a powerful framework for organizational excellence, but its adoption requires more than implementing tools and techniques. Success demands a fundamental shift in philosophy, a commitment to human development, and patience to build capability over time. Organizations that understand TPS as a comprehensive economic and social system — rather than just a manufacturing methodology — position themselves to achieve its full transformative potential. 

1. James P. Womack, Daniel T. Jones, and Daniel Roos, The Machine that Changed the World (Scribner, 1990).  ↩︎
2. Jim Womack, Gemba Walks Expanded 2nd Edition, Lean Enterprise Institute, 2019).  ↩︎
3. Jeffrey K. Liker, The Toyota Way (McGraw-Hill, 2003).  ↩︎
4. Olivier Larue, The Toyota Economic System – The Philosophical Element (Ydatum Inc., 2025).  ↩︎