The Toyota way – what is it and how can you learn from it?

by | Jun 9, 2022 | Business

A lot of businesses talk about things like their ‘vision’ or ‘mission’, without necessarily understanding how to build a work environment that will achieve what they want to see. 

As a business owner, you’ll have come across some of those books or articles that promise to show how you can transform your business into one of a score buzzwords – “dynamic”, “responsive”, “productive” and all the rest.

But there’s one sort of business leadership philosophy that stands out from the crowd. Created in 2001, it’s called the ‘Toyota way’, and is what has helped the iconic Japanese car manufacturer of the same name rise to where it is today.

Building off of founder Sakichi Toyoda’s ‘five principles’, the Toyota way is made up of fourteen principles that any business will benefit from, separated into four sections. Let’s take a look at each.

Section one: long haul reasoning

Section one of the Toyota way sounds the simplest, being made up of just one principle: base your management decisions on a long-term philosophy, even at the expense of short-term financial goals. 

This means that, under the Toyota way, businesses should find a purpose that their workers can get behind to find motivation and establish goals. 

Compromising a long-term goal for short-term gains might also compromise a business’s ability to survive as long or become as successful as it potentially could.

Section two: the right process will produce the right results

The next principles are focused on fine tuning work processes to achieve a quality outcome.

Principle two, for instance, reads: create a continuous workflow to bring problems to the surface. 

To do that, you should redesign your work processes to eliminate waste by continuously improving how you do things, according to Toyota.

In this context, there are seven types of waste:

  • overproduction 
  • waiting (time on hand)
  • unnecessary transport or conveyance
  • over processing or incorrect processing 
  • excess inventory
  • motion
  • defects.

Luckily, Toyota tells us how we can prevent some of those wastes. 

First, use ‘pull’ systems to avoid overproduction (principle three), a pull system being when only the operator working on something signals for extra resources, and not the other way around. 

Managers should also level out the workload by “working like the tortoise, not the hare” (principle three), which minimises waste, unburdens people and prevents unequal production levels.

Meanwhile, build a culture in which stopping to fix a problem is the norm so quality is met the first time (principle five). For Toyota to achieve this, any employee has the authority to stop any process to signal a quality issue. Consider giving your staff similar authority.

Principle six says that the foundation for improvement rests with standardised tasks. Always ask whether you can improve how you do the mundane and repetitive tasks that every business has to do.

According to principle seven, businesses should use “visual control” so that no problem is hidden. In essence, this means keeping the workplace neat and clean, which makes you more productive – simply by improving the atmosphere and reducing time looking for tools. 

Lastly, businesses should use only the most reliable and latest technology – something that Mayflower Accountancy is a big advocate for in business accounting.

Section three: add value by developing your people

Human development is the focus of principles nine to eleven.

Principle nine emphasises the need to nurture leaders who don’t just thoroughly understand the organisation’s work, but agree with its philosophy. 

Next, employees need to embrace the philosophy as well and work in teams of four to five people who are judged by the collective contribution (principle ten).

Principle eleven, meanwhile, says businesses should treat suppliers as they would employees. Doing this can help suppliers fix their own problems to become better at what they do, so the value of your partnership is multiplied.

Section four: solving root problems drives organisational learning

The final section of the Toyota way concerns business owners and management teams themselves.

First, according to principle twelve, managers should investigate operations themselves. After all, without experiencing them firsthand, how will you have an understanding of how they can be improved?

However, decisions should still be made by consensus and only after every option has been considered (principle thirteen).

Finally, principle fourteen dictates that businesses become a “learning organisation” that critiques everything it does. It’s built on the idea that no business is ever built perfectly – indeed there is almost always something that can be done a little bit better.

Talk to us about your business.

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