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The Toyota Way

Listen to the Intro

01:38


THE TOYOTA WAY SUMMARY

Jeffrey K. Liker

14 Management Principles from the World's Greatest Manufacturer


4.5 (146 ratings)
15 mins
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Topics
SuccessStrategyEntrepreneurshipEntrepreneurial StoriesWork Culture
Table of Contents
 * The Toyota Way Summary of 5 key ideas
 * What is The Toyota Way about?
 * Who should read The Toyota Way?
 * About the Author
 * Books like The Toyota Way
 * People also liked


THE TOYOTA WAY
SUMMARY OF 5 KEY IDEAS

Audio & text in the Blinkist app
Key idea 1 of 5


WHAT’S IN IT FOR ME? LEARN THE MANAGEMENT PRINCIPLES THAT MAKE UP THE TOYOTA
WAY.

The small Japanese factory where Kiichiro watched his father work was a world
away from today. It was 1920, and Sakichi Toyoda was working on the prototype
for an automatic loom that would stop when a thread broke. 

Neither of them could know that Kiichiro would one day make “Toyota” a household
name. Nor did they suspect that it was here, among the looms and cloth makers
who used them, that a seed was being planted in young Kiichiro’s head – a seed
that would one day become known as the “Toyota Way.”

Kiichiro Toyoda went on to found the Toyota Motor Corporation, which has become
one of the largest automotive manufacturers in the world. Today, Toyota vehicles
and products are sold in more than 170 countries and territories, with factories
on every continent. 

The Toyota Way is a set of management principles responsible for transforming a
modern Japanese machining company into an international giant. And it’s a method
that has become the gold standard for businesses across hundreds of industries.

This Blink distills these principles into four categories: philosophy, process,
people, and problem-solving. Through each of these key ideas, you’ll learn how
to eliminate waste, develop a culture of continuous improvement, and build trust
– so you can manage your business the Toyota way. 


ADOPT A LONG-TERM PERSPECTIVE

From the very start, Kiichiro Toyoda wanted to build a philosophy of
self-reliance and constant improvement into his business. At the center of his
philosophy is the idea that businesses should take a long-term perspective.
Unlike most companies seeking to maximize each financial quarter, Toyota
prioritizes incremental improvement over time. This gives decisions room to
breathe instead of being reactive – like avoiding layoffs in an economic
downturn to boost short-term profits.

Toyota believes its mission transcends profits. By providing ever-better
products that enhance mobility, Toyota aims to benefit customers, employees,
partners, and society as a whole. This sense of purpose beyond shareholders’
profits guides actions small and large.

For example, Toyota elected to open a joint manufacturing plant, NUMMI, with its
competitor General Motors in 1984. Toyota dedicated resources to uplift the
struggling automaker’s manufacturing capabilities and support a culture shift
within GM’s then hostile workforce. This choice, which involved careful analysis
of how the companies were going to integrate two vastly different cultures under
one roof, supported the entire industry’s health. 

Compare that to the failed merger of American car manufacturer Chrysler and the
German company Daimler. As German management practices started to be implemented
in the American factories, cultures clashed – and the so-called merger was
revealed to be more of a hostile takeover. At the turn of the millennium,
Chrysler reported a loss of half a billion dollars over just three months. The
companies separated seven years later. 

Toyota’s long-term perspective applies to everything, including support for
their employees. The company has kept its US plants open despite higher domestic
wages, valuing loyal employees over seeking the lowest labor costs abroad. This
kind of philosophical consistency engenders employee trust and loyalty. 

Additionally, Toyota chooses to build capabilities from the ground up when they
can, exemplifying its ethos of self-reliance and hands-on diligence. Whether
it’s developing revolutionary loom technology or fuel-sipping hybrid
drivetrains, Toyota relies on its own expertise rather than its partners’
know-how. That’s because homegrown capabilities can’t be copied overnight.

By taking a long-term perspective, Toyota makes choices that strengthen
capabilities and crafts relationships. This commitment to steady improvement has
powered Toyota’s rise from struggling startup to global giant. 


KEEP YOUR PROCESS LEAN

Toyota's production system is renowned for eliminating waste while achieving
top-quality products and productivity. Although “lean production” wasn’t
originally the term used by Kiichiro Toyoda, it has become the go-to in
describing his strategies to avoid overproduction and increase value for the
customer. 

A core concept is one-piece flow, where products proceed one unit at a time
through value-added steps that are aligned in a “flow.” This exposes problems
immediately, so they can be fixed as they happen. By smoothly linking processes
to meet customer demand, quality improves dramatically while waste drops.

Toyota also implements a pull system, where parts are produced only when the
downstream process needs it. This avoids overproduction, or muda – one of
Toyota's “three enemies.” The other two – muri, or overburden, and mura, which
means unevenness – provide a framework to ensure that the production lines at
Toyota always run like clockwork. 

Heijunka is a concept of leveling out production schedules to stabilize demand
on people, machinery, and suppliers. Steady, level production results in less
waste and more continuous improvement. Standardized work is the foundation for
this continuous improvement: as workers learn current best practices, they can
propose enhancements to the standard and continually raise the bar.

It’s important that quality is built in at the source, not inspected later.
Workers at Toyota are empowered to stop processes immediately to fix quality
problems. Visual controls like andon lights, which are color-coded to flag a
product defect, make abnormalities instantly apparent on the shop floor. This
leads to world-renowned reliability, and reduces the amount of faulty goods.
Just like with Sakichi’s loom, when a single thread of the production line
breaks, it doesn’t spoil the completed product. 

While individual principles like continual improvement and one-piece flow are
powerful, Toyota excels by integrating them into a comprehensive sociotechnical
system. In other words, it makes sure to balance technology with human
creativity and problem-solving. Simple, human-centric signals like the andon
lights enhance production, and new technology is only adopted after thorough
testing to ensure it supports processes and people. 

This total system produces extraordinary results by using technology to enhance
human ingenuity, not replace it. By steadfastly optimizing the system, not
discrete metrics, Toyota consistently sets the benchmark for manufacturing
excellence.


VALUE YOUR PEOPLE AND PARTNERS

Toyota views people as the heart of the company – and invests heavily in their
growth. Leaders are slowly developed to deeply understand the work and
philosophy that drives decisions, and frontline workers tackle problem-solving
and improvements as empowered teams.

The resulting organizational culture blends individual excellence with teamwork.
Workers are trained to do their jobs perfectly, and are encouraged to write
standardized procedures themselves – enabling continuous improvement. High-level
goals cascade down the organization through policy deployment, translating
objectives into concrete actions for teams and individuals at every level.

While the default is to develop internal capabilities first, Toyota does enter
external partnerships to access new technology. The emphasis is hands-on
learning by doing, not just classroom training. The company takes care to
continuously provide development opportunities for its employees.

Toyota’s respect for its people stretches past the borders of the company
itself. It views suppliers as long-term partners, not vendors. That’s because it
believes that an atmosphere of coercion hinders collaboration. The result is a
learning enterprise that’s characterized by mutual knowledge-sharing and
improvement. Toyota patiently nurtures struggling suppliers, taking a holistic
approach to rebuilding capabilities. 

The company continues to maintain some internal capability in outsourced areas.
For example, it recognized early on that electric and hybrid vehicles were the
way of the future – but didn’t have the internal capabilities to develop the
battery system required to make it work. Instead of outsourcing the entire
development, Toyota partnered with Panasonic to establish a joint venture:
Panasonic EV Energy.

The focus of this collaboration was to learn together. Toyota teaches lean
methods by practicing them in joint ventures such as this, and thus supports
growth through the entire industry. The batteries developed by Panasonic EV
Energy were essential tech for the Prius hybrid car. From 1997 to 2022, the
Prius continuously ranked in terms of efficiency, reliability, and sales figures
– selling over 5 million units in total.

In this way, Toyota elevates people and engages partners, bringing the long-term
perspective into every aspect of its business relationships. 


LEARN YOUR WAY TO THE FUTURE

To stay competitive, organizations must adopt a mindset that seeks to deeply
understand problems and iteratively experiment toward solutions. Toyota stands
out in its structured approach to developing this critical capability.

At the company, leaders are coaches who develop scientific thinkers, not just
problem-solvers. Genchi genbutsu, or “go and see,” means managers should observe
and grasp the reality of a problem firsthand before jumping to conclusions.
Toyota cautions against superficial root-cause analysis like mechanically asking
“why” five times. True scientific thinking requires open-mindedness and
resisting the urge to settle for quick answers.

Toyota’s improvement framework involves developing scientific thinking habits:
setting a direction, grasping current conditions, establishing target
conditions, and running experiments toward each short-term target. It uses
coaching techniques to explore a manager or employee’s thinking and doing. This
patient learning approach and repeated practice builds neural pathways until
scientific thinking becomes more automatic.

Production team members practice problem-solving through Toyota’s quality
circles. These off-line improvement activities, guided by the team leader,
provide hands-on learning. Enterprise-wide initiatives like Toyota Business
Practices also teach scientific thinking through real problem-solving projects
and coaching across different levels in the organization. 

Rather than catchall problem-solving, Toyota takes a one-piece flow approach on
the factory floor as well. Large challenges are broken down into smaller ones,
which are tackled iteratively. Each experiment yields learnings to inform the
next. This combines ambitious vision with steady, step-by-step improvement.

Let’s return to the Prius for a moment – a feat of technology that exemplifies
Toyota’s philosophy. Despite initial skepticism, Toyota took a bold leap into
the hybrid world. Through a nuanced strategy of experimentation and refinement,
the Prius became a core profit driver and paved the way for electric vehicles.

Things worked differently for Tesla. The company utilized a bold vision and
first-mover advantage in electric vehicles to dramatically disrupt the auto
industry. But it faced huge quality and production issues when it actually came
to delivering on their electric vehicle promise, which caused many delays. 

In today’s uncertain environment, companies need to be innovative – but they
also need to balance that innovation with stable, continuous improvement.


MAKE YOUR OWN WAY

The Toyota Way isn’t just a set of tools and practices – it’s a total management
philosophy guided by continuous improvement, respect toward employees, and
adding long-term value for customers and society. Jumping between various lean
tools and programs without this underlying philosophy will lead to short-term
gains that decay over time.

To sustain a lean transformation, commitment must start from the top: leaders
need a long-term vision centered around developing people and delivering
excellence. Without buy-in and continuity from executives, any gains are likely
to slip away as old habits recur. So leadership development is critical.

The Toyota Way provides inspiration, but you’ll have to create your own lean
enterprise suited to your situation. Start by piloting changes in a model area,
learn by doing, and expand carefully based on what works. The key is to develop
scientific thinkers through coaching and hands-on problem solving.

But don't expect instant results or an easy road. Shifting mindsets and
behaviors takes years of practice. To win hearts and minds, empower people to
take ownership of standards and improvements – and look beyond lean tools to
build a culture of continuous improvement and respect for people. Remember,
trust comes from consistent actions, not words. 

Practice patience, uphold your vision, and stay committed through ups and downs
of your never-ending journey of improvement. Your hard work and pursuit of
excellence will pay off in better processes, products, and engaged people. 

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KEY IDEAS IN THE TOYOTA WAY


 * INTRODUCTION

 * 1
   
   
   ADOPT A LONG-TERM PERSPECTIVE

 * 2
   
   
   KEEP YOUR PROCESS LEAN

 * 3
   
   
   VALUE YOUR PEOPLE AND PARTNERS

 * 4
   
   
   LEARN YOUR WAY TO THE FUTURE

 * 5
   
   
   MAKE YOUR OWN WAY

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WHAT IS THE TOYOTA WAY ABOUT?

The Toyota Way (2003) delves into Toyota's unique approach to lean manufacturing
and continuous improvement. It shares the foundational principles that drive
Toyota's exceptional operational and organizational culture, emphasizing
long-term thinking, respect for people, and problem-solving. These principles
have revolutionized business, and have been adapted and applied beyond
manufacturing to various sectors and industries.




WHO SHOULD READ THE TOYOTA WAY?

 * Anyone curious about Lean Manufacturing 
 * Business leaders seeking process improvement strategies
 * Management students and professionals studying best practices

Buy on Amazon


ABOUT THE AUTHOR

Dr. Jeffrey K. Liker is a professor of industrial and operations engineering at
the University of Michigan, and an expert in lean methodologies. He is best
known for his work on the Toyota Production System. Liker has written numerous
books and articles on lean principles, earning him international acclaim and
recognition in the field of operations management.


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