Can the Toyota Way survive Toyota's ways?

toyota_lean.gi.top.jpgToyota cars on an assembly line in 1952.By Nin-Hai Tseng, contributor


NEW YORK (Fortune) -- In the 1950s, a Toyota engineer named Taiichi Ohno, just back from visiting the United States, where he was wowed by its supermarkets, began to think about how he could use what he saw as a way to run a factory. He obsessed over the idea of eliminating waste, of avoiding inventory buildup, of empowering workers to follow instructions meticulously and of aiming to continually improve.

Over time, his ways became enshrined as the Toyota Way and spawned a way of doing business. Consultancies were formed to teach others how to be like Toyota (TM). Websites sprang up, countless books launched, and companies worked tirelessly to copy the automaker's wise counsel.

But now, with Toyota facing intense scrutiny following massive recalls of its vehicles, the preachers of improvement are scrambling for an improved message. Their new mantra: It's not the Toyota Way that's the issue, it's Toyota.

"The problem is that humans are running companies and humans make mistakes and sometimes they veer away from the rules," says Jim Lancaster, CEO of Lantech, a Kentucky-based manufacturer of packaging equipment and a recent speaker at the sold-out lean summit held last week in Orlando, Fla., by the Lean Enterprise Institute.

It's still unclear if Toyota's crisis was caused by the company losing sight of its own principles, or if even following the Toyota Way wasn't enough to prevent problems brewing outside its factories, such as design development, software programming, and crisis management.

Since October 2009, Toyota has recalled more than 8 million vehicles globally for accelerator, braking and floor-mat problems. The apologies (albeit, too late), class-action lawsuits, and Congressional hearings that followed have snowballed into a corporate nightmare. Certainly Toyota's reputation as an undisputed leader in quality has suffered, according to a February ABC News poll.

Yet for those who make their living off of lean, giving up and finding a new corporation to follow is out of the question. So they're searching for answers:

"One of the lessons coming out of Toyota is that you don't want to get sloppy with good production techniques just because you are growing too fast," said Cliff Waldman, an economist for Manufacturers Alliance/MAPI, an Arlington, Va.-based group that provides economic research to the manufacturing industry.

Waldman added that the carmaker had several problems, including a culture of secrecy and a company growing too big and too fast without the proper checks in place.

From speaking with manufacturers, Waldman said overall Toyota's lean philosophy has continued to be well regarded as a model to follow.

"The Toyota crisis is more the function of Toyota itself rather than the lean production techniques they are a forerunner of," said Waldman, adding that manufacturers have increasingly turned to lean techniques to give them an edge amid fierce competition in world markets.

Boeing (BA, Fortune 500), in 2006, adopted Lean +, which extended the company's lean practices and improvement tools beyond factories and into offices and back shops. The jetmaker declined to comment about Toyota, but said Lean + has helped improve quality and productivity at Boeing. "We're not anticipating any changes," a company spokeswoman said.

Not everyone is defending the Toyota Way, however. Kailash Kapur, an industrial and systems engineering professor at the University of Washington who has worked with General Motors and Ford (F, Fortune 500), said Toyota's troubles further prove why business leaders should re-evaluate lean.

The focus on hyper-efficient supply chains may be well-intentioned, but the approach carries all sorts of unintended consequences, Kapur said. Shaving production costs and streamlining processes, in the end, could compromise the quality of products and services.

"I sincerely believe that others are copying lean without understanding the methods and their limitations," Kapur wrote in an e-mail.

Nevertheless, it appears interest in the lean way has not waned if book sales and summits on the topic are of any measure.

Attention on Toyota in recent weeks have bumped sales of Jeff Liker's "The Toyota Way" by 10% to 20%, according to publisher McGraw-Hill (MHP, Fortune 500), which also reported an overall sales increase of dozens of its lean and six sigma-themed business management books.

And at the Lean Enterprise Institute, corporate executives and lean-thought leaders gathered to share various tools and techniques. While talk of Toyota's problems weren't officially part of the agenda, it was undoubtedly the hot topic during side conversations among speakers and attendees -- many left puzzled wondering what went wrong.

Lean Enterprise Institute Founder and Chairman James Womack could not be reached for comment, but in a recently taped discussion at Lantech, Womack blamed Toyota for its troubles and defended the lean philosophy that his Cambridge, Mass.-based think tank researches.

"The more you know about lean, the less the black eye," Womack said in the video when asked about the Toyota recalls. "I can't prove that it hasn't given it a black eye." To top of page

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