In my previous blog post, “The Lean Movement’s Strategic Errors,” I noted five strategic errors that were made in how Lean management was presented to business leaders and subsequent efforts over the last 30 years to promote and advance Lean management:

  1. Presentation of Lean as a method for wealth creation
  2. Ignoring leadership’s critical role in enabling Lean transformations
  3. Failure to learn from earlier efforts to promote Scientific Management
  4. Failure to comprehend leaders’ attraction to new tools and their disinterest in any new system of management
  5. Lack of teamwork among Lean advocates

The first strategic error, wealth creation, bears additional discussion. The fundamental challenge 20 or 30 years ago was how to present something revolutionary, Toyota’s production (and overall management) system, to business leaders. It seems logical to present it in light of what seemingly is of greatest interests to them: wealth creation (stock price, market capitalization, cash flow, profits). This is a principal point of practical utility to executives, and should therefore easily capture their interest.

Wealth creation is the result of Lean that was featured in its presentation to executives, while the process, kaizen, was given little attention. It is noteworthy that some of the advocates of Scientific Management tried this same approach in the early 1920s, yet they failed to generate much interest for the new management system among business leaders. The reason for this will soon become clear.

Comp2While certainly desirable, wealth creation represents orthodoxy, a complacency of opinion, in both the result of business activities and the purpose of business. Fitting Toyota’s production (and overall management) system into this conformist view of business is an major error which undercuts its revolutionary nature – e.g. the use of the Scientific Method in management practice, flow, pull, etc. – and renders it to be nothing more than a minor variant of traditional batch-and-queue material and information processing.

The truth is that TPS and The Toyota Way represent a great advancement in knowledge, practice, and the human condition. In contrast, batch-and-queue material and information processing represents stasis in knowledge and practice, and an erosion of the human condition. Never should the two be confused, but that is what has happened.

Conformity to the generalization that the purpose of business is wealth creation signals to leaders that it is not necessary for them to advance their knowledge or practice of management beyond traditional batch-and-queue processing, and that their duties in leading people can be conducted absent of any improvement. Instead, they can freely pursue shortcuts to gain competitive advantage and even cut off competition. This is not management; it is gamesmanship.

Deep down, business leaders’ foremost predilection, after securing remuneration that greatly exceeds the value of their services, is to avoid competition with other businesses by creating supply-driven sellers’ markets. Why? Because it is simply too difficult to learn how to compete and too difficult to maintain and improve an organization’s competitive capabilities over long periods of time. Leaning how to respond to competitive, demand-driven buyers’ markets is a great challenge that the vast majority of leaders prefer to avoid. The easy way is the preferred way (see NOTE at the end of this article).

So, whenever possible, business leaders look to buy competitors or competing product lines. They also try to create non-competitive sellers’ markets through patents, litigation, and by other means. An important aspect of this largely unimaginative method for assuring competitiveness is the diminution of human resources by various means, as they are seen as a cost and not as the source of great ideas to improve productivity via process improvement. Clinging to sellers’ markets carries with it great costs and consequences.

Why was TPS and The Toyota Way were created? In the book Toyota Production System: Practical Approach to Production Management by Yasuhiro Monden (first edition, 1983), Taiichi Ohno said (p. i): “Above all, one of our most important purposes was increased productivity and reduced costs.” This was true not only in operations, but in all business processes including new product development. These revolutionary management innovations, TPS and The Toyota Way, were created and evolved to improve Toyota’s competitiveness in buyers’ markets and help assure the company’s long-term survival in fulfillment of its purpose.

Kiichiro Toyoda said: “The ability of this company… to make the transition from a controlled [sellers’ market] to a free [buyers’] market economy will determine its ultimate success or failure.” Taiichi Ohno said: “The world has already changed from a time when industry could sell everything it produced…We discovered that industry has to accept orders from each customer and make products that differ according to individual requirements.” For Toyota, the difficult way – changing all processes to improve competitiveness in buyers’ markets – is the preferred way because it satisfies customers better and generates valuable learning. Wealth creation is a byproduct of TPS and The Toyota Way, not its purpose.

The origins of TPS and The Toyota Way are as a method to compete against companies, especially larger companies with much greater production volumes and much higher market share; to figure out how to produce much lower volumes of product at the same or lower cost than competitors that satisfy customers’ wants and needs. Interlocked with learning how to compete was the need to learn how to fully utilize human resources and a systematic approach to learning. This too is a long journey with no end, therefore requiring evolution and adaptation to changing circumstances in the competitive business landscape.

Unlike athletes who must quickly adopt new methods in order to remain competitive with their peers, business leaders will avoid competition (buyers’ markets) as long as methods and mechanisms exist that allow them to do so. It is true they will invest in new technology (machines and software) to try to improve competitiveness, but only rarely do they seek to re-orient the business from sellers’ to buyers’ markets by improving all processes.

Experience has shown that the revolutionary nature of TPS and The Toyota Way, while eminently practical, fails to connect with business leaders even when it is carefully aligned with business orthodoxy (i.e. wealth creation as both the result of business activities and the purpose of business). It seems that the great majority of leaders are far more interested in satisfying their predilection to avoid competition than they are in learning how to compete.

Click here to learn more about the origins and (continuing) evolution of Toyota’s competitive strength.

Click here to read the next blog post, “The Illusion of Understanding.”

NOTE: Avoiding competition has long been the preferred approach among executives, despite having been urged, for many decades, of the need for and importance of learning how to compete. In 1922, Harlow Person, a contemporary of Frederick Winslow Taylor long-time proponent of Scientific Management, said the following:

“On a sellers’ market the conduct of a business is easy and management is simple – in fact, there does not have to be any real management. But now that you appear to be face to face with a buyers’ market and the necessity of developing real management, if you are to be successful in a most intense competition, if your competitor, instead of yourself, is to be the one to disappear in some readjustment of productive capacity to consumer demand, it is expedient for you to inquire into the nature of that real management [Scientific Management]… ‘the customer is king’… we forget the source of the impulse [for industrial activity] and come to believe that it starts with the producer.”

Isn’t it remarkable how the past informs the present and how history repeats itself?

Source: H.S. Person, “Shaping Your Management to Meet Developing Industrial Conditions,” Bulletin of the Taylor Society: A Society to Promote the Science and the Art of Administration and of Management, New York, N.Y., Vol. 7, No. 6, December, 1922, pp. 211-217. See also REAL LEAN, Volume Two, Chapter 5, “Managing to the Market,” 2007.

5 Responses to Something Revolutionary Seen as Ordinary

  1. Could you elaborate on the meaning of “wealth creation”? Who would not want to create wealth, whatever it is? Is it about individuals making money, or about society as a whole having more resources of every kind available to its members?

    Why do you give such a central role to “Scientific Management”? I just see it as the brand name for Taylor’s consulting services and not something that contained much science. Specifically, I find that Taylor’s understanding of human nature was both dim and simplistic. While Taylor has had some influence on manufacturing, I don’t see this influence as great enough to make his work THE precursor to Lean, compared, for example, with Mass Production as developed at Ford and refined at GM.

    In terms of approach to people, I see Lean as owing more to the Gilbreths than to Taylor. As evidenced in his films, Frank Gilbreth’s focus was improving the design of operations to make them easier for people to do. As spelled out in his writings, Taylor’s was preventing workers from colluding to reduce output.

    • Bob Emiliani says:

      You missed the point of the blog post. I did not say wealth creation is not desirable, either for individuals or society.

      Scientific Management is important because it is the antecedent to Lean management and there is much to learn from the work of its advocates. You, along with many others, greatly misunderstand both Taylor and his work. See the paper “The Evolution of the ‘Respect for People’ Principle in Progressive Management.”

      The work of both Taylor and Gilbreth were important in the development and evolution of progressive management, as, of course, was the work of Ford and Sorensen, and Woollard too. We know for certain that Taylor, Gilbreth, Ford, and Sorensen influenced Toyota leaders, and likely Woollard as well.

      “Soldiering” was only one small aspect of Taylor’s work. You would not want employees “soldiering” if you owned the business.

  2. Jim Hudson says:

    Bob, you are the first person I’ve encountered to ever link Scientific Management to the evolution of lean. Taylor was notorious for his disdain for workers as well as the premise that management ought to put “the right process” in place, so that workers could “turn the screws” as Matsushita put it. Where is the link you make?

    And by leaving out Deming, are you suggesting that Systems Management has played no role?

    I love the article and agree with your premise, but like Michel, am a bit confused by the references to Scientific Management. I’m with you – this is definitely “a great advancement in knowledge, practice, and the human condition.” Now to make the dramatic shifts in leader buy-in that will push it into mainstream.

    • Bob Emiliani says:

      If I am the fist, which I am not, then that speaks to either: a) The poor scholarship that surrounds Lean management, b) the deep level of misunderstandings of Taylor’s work such that his work is ignored, and/or c) a widespread failure to understand the evolution of progressive management since the creation of management as a unique discipline by mechanical engineers beginning in the late 1800s (see “The Engineer as an Economist” by Henry Towne, 1886).

      Toyota production system is comprised of various tools and methods derived from industrial engineering – a discipline which many different people contributed to over time (click here to read the origins of industrial engineering). Frederick Winslow Taylor is credited as the “father of industrial engineering.” Industrial engineering emerged from Taylor’s Scientific Management. Also, note that the way one creates TPS in their organization is via kaizen, which is rooted in IE methods, and that Shigeo Shingo taught Taylor/Gilbreth IE methods to Toyota engineers beginning in the mid-1950s through the mid-1970s.

      People’s understanding of Taylor’s work is generally stuck in the 1890s which is reflected in his most famous work, The Principles of Scientific Management (1911). They recall a few key items such as the “one best way” and that only educated persons – engineers – are capable of determining the “one best way” through the scientific study of work. People stop there.* Taylor’s thinking evolved until his death in 1915. Soon thereafter his disciples further evolved his work into the idea of “continuous improvement” and giving workers more control in their improvement efforts; i.e. teamwork.

      People also recoil at the language Taylor used when describing workers in his book. As a historian of progressive management, I can assure you that his language was common for the day and rather mild compared to the racist language used to describe workers (especially immigrant workers) in other prominent management books around that time and in later years (through the 1930s).

      To gain a better understanding of the purpose and intent of Taylor’s work, please read “The Spirit and Social Significance of Scientific Management” by Morris Cooke, written in 1913. Also read paper “The Evolution of the ‘Respect for People’ Principle in Progressive Management” by Mark Gajewski (2014).

      Classical industrial engineering was the forerunner to modern systems design and the management of complex industrial systems. As Scientific Management evolved and matured, Taylor and his disciples referred to it as a “system” – the Scientific Management system. Deming was fond of Taylor’s work and, naturally, was well aware of systems nature of Scientific Management. The differences between Taylor and Deming views were few, but significant, and, appropriately, reflect a positive evolution in thinking and practice over time. See “From F. Winslow Taylor to W. Edwards Deming – Over a Century of Progress?” by John Dalrymple and “W. Edwards Deming and Frederick Winslow Taylor: A Comparison of Two Leaders Who Shaped the World’s View of Management” by Stephen Knouse (2007).

      * This is an example of the great dangers of reducing knowledge to book form, as books themselves do not evolve (unless a second or third edition is published, but even that comes to an end someday). People read a famous work and stop there. They do not read what precedes it and what follows it to understand the context and evolutionary nature of all human endeavors.

      In addition, it is imperative to read authors’ original works, not derivative works by others who often misinterpret an author’s original work. In Taylor’s case, most academics misinterpret his work (exemplified by The Principles of Scientific Management), in part because they never worked in an industrial setting as Taylor did. Therefore, they ascribe motives to Taylor’s work that are different than his actual motives and re-interpret intentions and outcomes in ways that would be unfamiliar to Taylor.

      • Jim Hudson says:

        Awesome response Bob. I read through the Mark Gajewski’s paper, which combined with your response have given me a much more complete picture. Thank you for both.

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