Why American Companies Will Not Catch Toyota
Prof. H. Thomas Johnson of Portland State University writes in Manufacturing Engineering (Dec. 2006) about the fundamental differences between the management philosophies of Toyota and nearly all American companies (hospitals, schools, and government agencies). In short, the Toyota view of reality is that a business organization is a “natural living system” that can only be managed to improve its processes in the direction of defined properties (vision). Because it is a human social system, a corporation can only be managed in accordance with living-system principles as articulated by Walter Shewhart and W. Edwards Deming and developed over the last half century, almost alone by Toyota.
In contrast, American managers hold the view that corporations are machines subject to financial controls and their employees available to be motivated to produce results required by the financial markets, regardless of their capabilities. Management accounting practices are based on the belief that a financial change--a cost reduction or capital investment--will somehow be reflected in a corresponding change in the performance of the whole enterprise.
This is reflected in the host of “lean” practices aimed at reducing waste, excess variation, excess consumption of time, energy, and material. Such improvement practices, Johnson says, “presumably improve the activity’s performance, but do not change the principles that shape how it (the work) is carried out.” In other words, they will not produce sustained improvement over time—only a temporary bump.
This is a breakthrough description of the profound difference between Toyota—in Japan and America—and other companies in the U.S. and elsewhere. The article bears reading and re-reading.
In contrast, American managers hold the view that corporations are machines subject to financial controls and their employees available to be motivated to produce results required by the financial markets, regardless of their capabilities. Management accounting practices are based on the belief that a financial change--a cost reduction or capital investment--will somehow be reflected in a corresponding change in the performance of the whole enterprise.
This is reflected in the host of “lean” practices aimed at reducing waste, excess variation, excess consumption of time, energy, and material. Such improvement practices, Johnson says, “presumably improve the activity’s performance, but do not change the principles that shape how it (the work) is carried out.” In other words, they will not produce sustained improvement over time—only a temporary bump.
This is a breakthrough description of the profound difference between Toyota—in Japan and America—and other companies in the U.S. and elsewhere. The article bears reading and re-reading.