“Some people love to make things complicated. The key is to make things simple.”
(As recounted by Michikazu Tanaka in The Birth of Lean)
In the previous post, I contrasted Toyota’s Kanban system of managing production operations with that of the Western attempt to do the same thing with MRP (Material Requirements Planning) software. Both represented significant divergencies from the traditional methods of managing complex production systems of that time. In my analysis, I tried to compare the two methods using the four key attributes of complex adaptive systems: diversity, connectedness, interdependence and adaptation.
I know, I know – sounds boring as hell, doesn’t it? But if you are like me and are trying to figure out “why” Lean/TPS works so well for some, but doesn’t quite cut it for others, this approach starts to shed some light on why it works when it works, and why other approaches, whether it be unsuccessful Lean/TPS attempts or MRP, inexorably leads to increased sales of aspirin or Tylenol worldwide.
It all boils down to the level of complexity of the systems you are working with. Increasing the complexity of your system will lead to an exponential increase in the amount of energy (labor, mental effort, cost. time and resources in general) that must be expended to make the system work for you. Decreasing the complexity of your system, via simplification, does just the opposite. Increasing complexity leads to aspirin, booze, frowns and sleepless nights, while simplification leads to spring water, frothy lattes, smiles and pleasant dreams. I’ll let you decide which you prefer.
But how does Lean/TPS, done correctly, lead to simplification? How does it allow us to use less energy to get the results we want from our systems? I hinted at the reasons in my previous comparison between Kanban and MRP, but I definitely fell short of laying out a clear and followable roadmap.
But to follow a roadmap you need to start out with a clear outline of the “rules of the road” that we must follow. I will start to do that by introducing some comprehensive work done by a fellow named Steven Spear in his 1999 dissertation for his Ph.D. at the Harvard Business School. I’m sure most of you have heard the name many times before. In addition to his Harvard Ph.D., Spear holds a BS in economics from Princeton University, an MA in management and an MS in mechanical engineering from MIT. He currently teaches at MIT. Can’t get more elitist than that! He also wrote a book titled The High Velocity Edge (which originally was titled Chasing the Rabbit, which I read. I’m not sure why the title change).
I’m not one who is generally drawn to the writings of academics. Especially from the elite schools. They’re usually trying to sell something that makes no sense to anyone but themselves. But most people just assume that they are too dumb to understand and read it anyway. But this guy is different. While doing his dissertation, he spent 176 days working or observing others work, primarily at Toyota (at 33 sites in Japan and North America), but also at a big three auto plant in the U.S. And this lasted over a three-and-a-half-year period. And he wasn’t working in the front offices. He was on the line getting his hands dirty, working with real people, creating real value – the value that the customer will pay for. He was at the gemba.
The title of Spear’s dissertation is a little long, but it says a lot:
The dissertation itself is also a little long – 511 pages to be exact. I think I read most of it. I skipped around a lot, so I may have missed something along the way, but not much. And the amazing thing is –– it’s not boring! You wouldn’t know it from the title. He talks about real plants, real people, real problems, real mistakes, real solutions, and most importantly, real learning in real time. (Sorry for all the “real” stuff, but that’s the way it reads).
The title tells us all we need to know with respect to why I am talking about it in this series. First, he identifies TPS as a “complex system”. He really doesn’t get into the details of what a complex system is all about, but that’s what I’ve tried to do in my previous posts (see Part 2, Part 3 and Part 4 of this series). But he does provide a roadmap of how to navigate the complex system called TPS by providing 5 “rules of the road” that Toyota seems to follow almost religiously. He calls them the 5 “Rules-in-Use”. These rules are not written down anywhere. You won’t get tested on them to become an employee of Toyota. These rules are based on Spear’s observations during his three-and-a-half-year immersion in the TPS system. These rules are learned through hands-on, day-to-day, directed participation in the TPS system. Here is what Spear says in the thesis abstract:
“…the tools and practices that have received attention are not fundamental to TPS. Rather, they are responses to site specific challenges in production and delivery of goods and service. The unstated, implicit but nevertheless pervasive guidelines that govern the design, operation, and improvement of individual activities, connections between activities, and flow-paths for production and delivery are fundamental. I have codified these as five “Rules-in-Use.”
The Rules are fundamental to TPS. They are learned through frequent, structured, directed problem-solving. Therefore, people who know the Rules-in-Use and mechanisms to teach the Rules through frequent, structured, directed problem-solving are both necessary if an organization is going to learn TPS. Both are barriers to imitation.”
And later in the thesis he shared this observation:
“…in the course of speaking with employees (team members, team leaders, group leaders, and managers) at various plants and interviewing members of Toyota’s Operations Management Consulting Division, I realized that virtually everyone learned TPS through directed problem-solving and not as the result of textbook or classroom-like series of explanations.”
Let’s take this apart a little to better understand what he is saying. When he says: “the tools and practices that have received attention are not fundamental to TPS”, he is referring to the things that many of today’s “Lean” experts preach as gospel: Kanban cards, Andon cords/lights, 5S, floor markings, hour-by-hour boards, etc. But these things are just solutions to specific problems and not practices that must be followed in all situations. They are the results of the “Rules-in-Use” and not fundamental to TPS in themselves.
Also note that he stresses that not knowing these TPS “Rules-in-Use” and how to teach those rules are: “…barriers to imitation”. Could this have anything to do with those well publicized “failures” in many (most?) Lean implementations? The “tools” are not fundamental to TPS. But the “why” behind the tools are fundamental. Thus the “Rules-in-Use”.
So let’s take a look at the five “Rules-in-Use” and get a flavor of what Spear is talking about.
Rules-in-Use (See pgs. 32-38)
Rule 1: guides the design and performance of all individual activities.
Rule-1 states: design and perform every activity so that it is structured and self-diagnostic.
Rule 2: guides the design and operation of connections between activities.
Rule-2 states: design and operate the connection between every person who or every machine that supplies a good, service or information and the customer who receives the specific item so that the connection is direct, ‘binary”, and self-diagnostic.
Rule 3: guides the design and operation of flow paths (systems of connected activities) over which goods, services or information take form within or among organizations.
Rule-3 states: Each good, service and piece of information must have a simple, pre-specified, self-diagnostic flow path over which it will travel as it takes form.
Rule 4: guides the improvement of individual value-adding activities.
Rule-4 states: include activity-improvement in the work content of each supplier. Assign a specific, capable person to teach the supplier to improve his own work by solving actual problems when and where they occur. Design and do all improvement activities so that they are experiments – Structured, Self-Diagnostic (Hypothesis-testing) Activities. Continue to improve the activity until it is IDEAL.
Rule 5: guides the improvement of connections between activities and of flow-paths over which goods, services and information take form.
Rule-5 states: Resolve connection and flow-path problems that affect a customer-supplier in the smallest possible group that includes the affected individuals. Conversely, form groups based on the expected nature and frequency of problems. Use Structured, Self-Diagnostic Activities to improve. Continue to improve until production and delivery is IDEAL.
An activity or a system of activities is IDEAL if it always produces and delivers:
- defect-free responses (those that meet the customer’s expectations),
- on-demand (only when triggered by the customer’s request),
- in batches of one,
- with immediate response times,
- without waste, and
- with physical, emotional and professional safety for the supplier.
There it is! The fundamental principles underlying TPS! Just go out there and do it! …..NOW!
I will be covering each of these rules in more detail as we move along. And I will be defining those words in italics which are key to understanding what these rules represent on a day-to-day basis. But I want to take a minute and focus on Spear’s definition of IDEAL. Look familiar? If you would go back and read my post Teams are “Us” – Part 2: What’s a Team To Do?, you will find a similar set of guidelines that defines Toyota’s “True North”. That definition was provided to me back in 2001 by Mr. Hajime Ohba, President of The Toyota Supplier Support Center (TSSC). Guess who was Spear’s primary contact and coordinator for his many projects and visits at Toyota. Yep, the very same Mr. Ohba. Spear got three and a half years with Ohba – I only got a few days – but it was a very good few days.
But back to the 5 “Rules-in-Use”. What have they got to do with this series I am writing on complex adaptive systems? What’s the big deal? Well, let me put back up Jim Rickards’ list of the attributes and behavior of a complex adaptive system that I introduced in my last two posts.
“Complex systems begin with individual components called autonomous agents, which make decisions and produce results in the system. To be complex, a system:
- Requires diversity in the types of agents. If they are diverse, they will respond differently to various inputs, producing more varied results.
- Requires connectedness. …The agents must have a way to contact one another.
- Requires interdependence, which means that the agents influence one another.
- Requires adaptation. In complex systems, adaptation means more than change; rather it refers specifically to learning.
To understand how a complex system operates, it is necessary to think about the strength of each of these four elements. …At a setting of one, the system is uninteresting. It may have the elements of complexity, but nothing much is going on. Diversity is low, connectedness and interdependence are weak and the result is almost no adaptation or learning taking place. At a setting of ten, the system is chaotic. Agents receive too much information from too many sources and are stymied in their decision making by conflicting and overwhelming signals. Where complexity is most intriguing is…. the “interesting in-between”. This means the dials are set somewhere between three and seven, with each dial different from the others. This allows a good flow of information, interaction and learning among diverse agents, but not so much that the system becomes chaotic. This is the heart of complexity – a system that continuously produces surprising results without breaking down.”
Take another look at the 5 Rules-in-Use and compare them to the 4 attributes listed above. See any parallels? I sure do.
- Attribute 1 deals with the diverse performance of activities by individuals (i.e., decisions they make and actions they take) and how the results of these activities can vary from individual to individual. Spear’s Rule-1 guides the performance of all activities by designing in a structure behind each activity to standardize and simplify decision making and thus reduce variation.
- Attribute 2 deals with the connectedness of individuals with each other. Spear’s Rule-2 designs these connections in such a manner that they are always predictable and simple.
- Attribute 3 deals with how these interconnected individuals interact and are interdependent with each other. Spear’s Rule-3 designs the flow of goods, services or information between the interconnected individuals so that the system can remain stable, predictable and simple.
- Attribute 4 deals with how the system can or cannot adapt to the activities generated by these diverse, connected, interdependent individuals. Can they and do they learn? Spear’s Rule-4 and Rule-5 states that these individuals or groups must learn and specifies how that learning will take place. And all learning must strive towards a well-defined IDEAL state. Learning becomes second nature – and that only happens because the Toyota structure of learning has been made clear and simple.
It looks like Ohno et.al. nailed it! (At least according to Spear). The underlying philosophy of TPS seems tailor made to manage complex adaptive systems and prevent chronic instability and possible chaos. Remember this statement by Joseph Tainter:
“Historical case studies illustrate different outcomes to long-term development of complexity in problem solving. These cases clarify future options for contemporary societies: collapse, simplification, or increasing complexity based on increasing energy subsidies.”
And this observation by James Rickard:
“Collapse is a sudden, involuntary and chaotic form of simplification.”
So Ohno and his compatriots, whether intellectually or instinctively (I don’t know), went aggressively after simplification.
And I’ll throw a little teaser out there for us to think about. Every one of Spear’s Rules require that the activity be “Self-Diagnostic”. In other words, every individual participating in an activity or set of activities must be able to immediately tell if the result is “normal” or “abnormal”. Are the results “as expected” or not – and can that determination be made in “real-time”? Does that sound like a good preventive “counter-measure” to hold back “chaos”? Jidoka anyone?
Spear also co-authored a 1999 Harvard Business Review article with Kent Bowen titled Decoding the DNA of the Toyota Production System. This article is a very generalized overview of what is in his dissertation. But he combines Rule 4 and 5 to make it a 4 Rules-in-Use proposition (an exact match with the 4 attributes). I found the article interesting but with much less impact than his full dissertation. But with 13 pages versus the thesis’ 511 pages, you might want to go with the simplified version. Here are the 4 Rules and related comments as presented in the article:
“The tacit knowledge that underlies the Toyota Production System can be captured in four basic rules. These rules guide the design, operation, and improvement of every activity, connection, and pathway for every product and service. The rules are as follows:
All work shall be highly speciﬁed as to content, sequence, timing, and outcome.
Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses.
The pathway for every product and service must be simple and direct.
Any improvement must be made in accordance with the scientiﬁc method, under the guidance of a teacher, at the lowest possible level in the organization.
All the rules require that activities, connections, and ﬂow paths have built-in tests to signal problems automatically. It is the continual response to problems that makes this seemingly rigid system so ﬂexible and adaptable to changing circumstances.”
These rules are more general than those outlined in the dissertation, and more understandable as stand-alone entities, but are much less useful in actual practice. I think that will become clear as we move forward.
But that last sentence jumped out a me. Compare “It is the continual response to problems that makes this seemingly rigid system so ﬂexible and adaptable to changing circumstances” to Rickards last sentence about the “interesting in-between”: “This is the heart of complexity – a system that continuously produces surprising results without breaking down.” Yes, TPS, as practiced by Toyota, is a model for managing a successful and sustainable complex adaptive system.
In my next post I will dive much deeper into the 5 Rules-in-Use and explore how these rules generate many of the “tools” we hear so much about in today’s “Lean”. And more importantly, how these rules and corresponding tools generate very significant simplifications to what we all too often see in most production systems of today.
Read the HBR article, it may give you a jump-start for the next post. Hope to see you there.