Dear Ben,
IKEA operates globally, manufacturing around the world as Toyota does.
The car industry is difficult to analyze, but Ford and GM acquired Volvo
and Saab when they were cash-rich. Smaller national auto companies
struggle to survive for many reasons, despite the quality of the cars.
As it is, GM is selling Saab and Saab is having great difficulties in
the current downturn. The trucks division does well, but automobiles are
struggling. Ford has made no announcements about Volvo, but they have
said that they would consider offers. Everyone expects them to sell.
Systems thinking as a term is generally contrary to the Fordist
approach. Fordism is reductionist and mechanical. The term systems
thinking generally applies to holistic concepts of organizations and
systems, and it has evolved to include complexity theory and ways to
examine the simple laws and processes that give rise to complex adaptive
systems.
If you'd like to see a good anaysis of systems thinking applied to
organizations as complex adaptive systems, Robert Axelrod and Michael
Cohen wrote a good book several years back call Harnessing Complexity.
This demonstrates a far different approach to industrial management than
you can see in Ford or GM.
The Ford and GM models of management have basically remained the same
for seven decades, Ford wrapped around the innovative but mechanistic
Ford approach to management, a mechanistic approach that treated people
as part of the assembly line where managers do all the thinking and
workers obey. Henry Ford was a mechanical genius, but his approach to
human beings was pure Frederick Winslow Taylor. GM was much the same.
The GM culture was built on forced mergers through the command and
control culture typified by Alfred Sloan.
If you remember the movie Who Framed Roger Rabbit?, there was a grim and
only half-hidden joke behind the plot line. This was the effort to buy
up and destroy an effective mass transport system to replace it with
automobiles. The grim joke is that this is what GM did to the effective,
efficient, and environmentally sound Los Angeles light railway system.
GM also bought up bus companies around the US, making them less
effective and responsive in an effort to increase automobile sales.
MBAs and finance men took charge of Ford soon early on. Sloan was a
finance man, and the concept of planned obsolescence to force the sales
cycle was his notion of a design innovation. Both companies were managed
as top-down corporate empires.
The Toyota Way is a slow, improvement-oriented culture process that
involves all company members from top to bottom in development and
continual improvement. This is systems thinking.
Appreciation for a system is the core of the Deming approach to
mangement. This approach to management influenced Toyota deeply. W.
Edwards Deming (1993: 94-118) terms this approach to systems thinking
"profound knowledge." Profound knowledge is comprised of "four parts,
all related to each other: appreciation for a system; knowledge about
variation; theory of knowledge; psychology" (Deming 1993: 96).
This is holistic rather than reductionist, and you can see how the 14
principles of the Toyota build upward from a cultural base activated
through direct improvements at the point of any problem while shaping
culture throughout.
The 14 Toyota Way Principles are the opposite to Fordism and the Sloan
principles that placed profit as the core value. You can read more about
the Toyota Way in a useful and inspiring book by Jeffrey Liker, an
engineering professor at University of Michigan. If you Google Toyota
Way, you'll find a free download PDF of chapter that explains the 14
principles with a detailed examination of how how each works and how
they fit together as a system. The 14 principles are:
1. Base your management decisions on a long-term philosophy, even at the
expense of short-term financial goals.
2. Create a continuous process flow to bring problems to the surface.
3. Use "pull" systems to avoi4. Level out the workload (heijunka). (Work like the tortoise, not the
hare.)
5. Build a culture of stopping to fix problems, to get quality right the
first time.
6. Standardized tasks and processes are the foundation for continuous
improvement and employee empowerment.
7. Use visual control so no problems are hidden.
8. Use only reliable, thoroughly tested technology that serves your
people and processes.
9. Grow leaders who thoroughly understand the work, live the philosophy,
and teach it to others.
10. Develop exceptional people and teams who follow your company’s
philosophy.
11. Respect your extended network of partners and suppliers by
challenging them and helping them improve.
12. Go and see for yourself to thoroughly understand the situation
(genchi genbutsu).
13. Make decisions slowly by consensus, thoroughly considering all
options; implement decisions rapidly (nemawashi).
14. Become a learning organization through relentless reflection
(hansei) and continuous improvement (kaizen).
Principle 5 alone summarizes the difference between the Big Three and
Toyota. At GM, Ford, and Chrysler, stopping the assembly line was
impossible. At Toyota, any worker can stop the line to identify and
solve a problem. If the line stops, principle 12 comes into play and a
team with managers in the lead comes to where the problem is to work
together for a solution.
This is possible because Toyota managers are engineers who rise up
through the company building the cars, and not MBAs. In this sense, I'd
argue that neither Steve Jobs nor a designer could run a car company
using the Toyota Way or the related but distinct 14 principles of
Deming's approach. It _would_ in contrast be possible to conceive a
Toyota designer rising up into management. At the risk of repeating a
tune from my "top ten" play list, I encourage you to read The Reckoning
by David Halberstam.
I am not an engineer and I am certainly not an expert on the auto
industry, but I care enough about these issues to read enough of the
literature to speak with some knowledge about how the great firms and
the failed firms became what they are today. You just can't speak about
these industries without some background knowledge -- economies of scale
are only a small part of the Toyota way of manufacturing. Lean
production and organizational learning wrapped around a culture of
profound knowledge account for far more. This is why most organizations
producing goods and services can adapt the Toyota Way, and that includes
design schools.
In the auto industry, the troubles that plague Ford, GM, and Chrysler
repeat the problems that have become visible every decade or so since
the 1970s. Years ago, Reuven Frank of NBC News produced a documentary on
the auto industry titled If Japan Can, Why Can't We? This was the first
time that most Americans had ever heard of the physicist and
mathematician whose ideas had helped to revolutionize Japanese
manufacturing: W. Edwards Deming.
The answer in Frank's documentary is still the same: culture. The Big
Three solution to each meltdown is the same: find a hero, create a new
model, sell well, start to crow, "We're back," and then enter a new
cycle of complacency and sloth leading to the next crisis. Along the way
they shed workers, cut salaries, and reduce benefits to save the
company, but they do not transform the culture that drive them. The top
bosses continue to collect bonuses, and when they bail out, they do so
on golden parachutes. In ordinary bad times, the workers pay the price
of these bad decisions while middle management is protected. In really
bad times, middle management pays the price -- top management never
seems to pay, but only to get paid in good times or bad.
The difference between MBA culture and organizational learning is
profound knowledge linked to ethics. I'd argue that neither Ford nor GM
ever saw much systems thinking. If they had done, there would have been
a slow, deep transformation of organizational culture that if you will pardon a pun -- the illusion of prosperity in recent years.
Why are Volvo and Saab owned by US companies? Because they had money and
because they wanted to buy market share and brand image, as they have
always done. The other approach is to build market share and brand value
by building a culture that builds cars, as Toyota has done.
Yours,
Ken
Ken Friedman, PhD, DSc (hc), FDRS
Professor
Dean
Swinburne Design
Swinburne University of Technology
Melbourne, Australia
--
References
Deming, W. Edwards. 1993. The New Economics for Industry, Government,
Education. Cambridge, Massachusetts: Massachusetts Institute of
Technology, Center for Advanced Engineering Study.
--
Ben Jonson wrote:
To the Toyota example one might add IKEA, the Swedish phenomenon of
global home furnishing.
Like Toyota, IKEA could be said to reflect, at least in their
incipience, a particular 'culture, society and the individals within
them' (cultural context and identity). But in their global expansion,
Toyota and IKEA may also suggest examples of "socio-cultural models" or
ways of "cultural (national) systems thinking" gone "international",
that is culturally influenced "systems thinking" that goes beyond, say,
technology-based systems thinking.
(Another Swedish example would be H&M, the global fashion retail chain.
Here the products seem less culturally defined in origin as IKEA -
global rather than Swedish fashion, and less technology driven as the
car industry. Yet could there be "cultural systems thinking", behind H&M
market success?).
Speculating along these lines though, there are differences. For
example, whilst Japanese car makers have gone global in their
manufacturing/assembliy their Swedish counterparts Volvo and SAAB have
essentaily stayed national although owned by international car
manufacturers (Ford and GM respectively).
But why US rather than Japanese owned? Both US and Japanese car makers
apply economy of scale etc. This suggests that success in global markets
goes beyond traditonal "systems thinking", such as 'Fordism'. That is,
"systems thinking" becomes culturally challenged which, moreover, may
suggest that pluralist design education, rather than uniform business
education (MBAs) is better equipped to meet many of the current global
challenges. This, at least, ought to please some if not all readers on
the PHD-DESIGN list.
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