Is your IT organization more like Honda or Toyota?

Written by
Etienne Gadient

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Is your IT organization more like Honda or Toyota?

Written by
Etienne Gadient

Is your IT organization more like Honda or Toyota?

Written by
Etienne Gadient

(A collaboration with Bill Benedict)

ATC Author Bill Benedict and I (Etienne Gadient) were recently on a road trip together, discussing industry trends.   Bill's experience with supply chain optimization made him the perfect collaborator and contributor to an idea that I have been working on over the last several months.  

We were talking about one very misaligned company that we had both consulted and the benefits that a six sigma black belt had brought in terms of understanding why this company had orchestrated their processes (and the fallacy of their assumptions).  We realized an amazing parallel between the disruption of cloud, IT organizations  and the tension between the innovation methods at Toyota and Honda.    We are going to talk about the toyota and honda method as applied to IT organizations.  Fasten your seatbelts and let's get on the road...

Toyota has been a darling of the manufacturing world.  Their comprehensive implementation of Lean six sigma has led to some of the world's leading auto manufacturing plants.  Toyota brings incredible quality and resource efficiency through the rigid application of the smallest details for each step of manufacturing, including a significant use of automation and orchestration.  Toyota has some of the lowest defect rates in the auto, frequently achieving the 1 defect in a million aspiration of six sigma.  So why would anyone want to be anything else?  

Toyota's "religious" implementation of six sigma requires that they have an incredibly accurate forecasting methods, one that predicts all of the just in time inventory required, along with the production levels required from each factory to ensure that they consistently hit the "goldilocks zone" (not too hot, not too cold) of supply chain manufacturing.  

Unfortunately, the implicit limitation to such process rigidity is an inability to adapt rapidly.  If a factory is optimized to build Toyota 4Runners, it is time and cost prohibitive to retool the factory to build Highlanders, unless there is a long term strategic change in direction.  In most cases, a "line change" takes months and millions of dollars, because the development pipeline...ahem...manufacturing process is optimized around to the end to end methods for that automobile.  

We have seen a close parallel in the way many IT shops built private clouds over the last several years, with a significant focus on automation and orchestration, creating implicit rigidity in an environment where forecasting is impossible.  This is one example where the conventional thinking of private cloud was largely misguided...more automation imposes more rigidity in pipeline workflow.  

Honda sees the situation differently.  Despite being one of the largest manufacturers of automobiles in the world, Honda uses the least robotic automation of all the major automobile manufacturers (excluding artisan brands such as Rolls Royce and Morgan).  Honda has continually prioritized repeatability in manufacturing techniques and commonality of parts over the automation of the actual manufacturing task itself.  This contradicts the conventional wisdom for almost all manufacturing, especially six sigma and lean manufacturing methods.  And yet, Honda is able to compete successfully against the traditional is this so?  

Honda's method focuses on innovating and architecting how individual steps are implemented rather than focusing on the end to end process.  Using this method of "structured engineering", Honda can produce multiple cars on the same line, in the same day.  This gives Honda an unparalleled ability to adapt to micro market trends and demand while still ensuring that quality is high and defects are minimized.  In short, make the method of installing a specific part common across many cars across the line and the training for an individual to do that process is minimized.  ...yes, I said in factory worker...not a robot.  Because humans still do most of the manufacturing and assembly, Honda can outmaneuver their competition during market shifts.  

It gets better.  Honda embraces ...and expects... every employee to identify issues and to look at ways to improve/simplify the process...just like Toyota...but Honda takes that beyond the micro focus of the task to the overall process.   By trusting their employees, Honda brings an important concept to bear, Sangen Shugi.

Besides sounding like characters from an Anime cartoon, Sangen Shugi is the concept of "going to the spot" of the issue, using the people who do the function as your guide.  Literally translated, San-Gen-Shugi means the "principle of three realities."   This ensures that the context of the issue is kept grounded in reality.   Once understood, Sangen Shugi brings focus to the point of innovation rapidly, using three realities:

  • Gen-ba means, "Real Place”:  Go to the shop floor to understand the reality. 
  • Gen-butsu means, "Real Part":  Look at the real part or the real services provided and analyze it while focusing on the facts.
  • Gen-jitsu means, "Real Facts":  Present conclusions using real data for a better understanding of what is actually happening in the field.

(Thanks to Alejandro Sibaja, Six Sigma Black Belt for this description

Note: For those of you wondering if this is related to Gemba... In Japanese, "Genba" sounds like "Gemba", and is frequently written this way in English.  The two concepts are the same.

In Honda culture, when an issue is identified, all parties collaborate to solution short term and long term solutions, using people who actually do the work, a unique approach in auto manufacturing.  Traditionally at other companies, architects and designers do not work side by side with hands on engineers.   This has the potential to create a whole new set of problems organizationally.  For Sangen Shugi, true experimentation and risk must be fostered and embraced.  At Honda, "No One will blame you for making a mistake if you tried something new;  in fact you may be promoted for that." said Chuck Ernst, Foreman of Honda's factory in Lincoln, Al.  And the opposite is true too... "However, you could fall out of favor if you're afraid to stray from what worked before - no matter how well it worked."

And that is the organizational point of Sangen Shugi for IT.  Traditionally, IT was built around formal enterprise architectures where risk and true innovation has been discouraged.  Traditional IT has followed many of the top down concepts built similar to Toyota.  A truly successful cloud program, built using a Cloud Center of Excellence, needs the latitude to experiment and innovate with the ability to fail and pivot.   For an organization to embrace agile, it is not just fail fast... It is understand the issue, solution the problem and enable your people to pivot. 

So which Organization are you more like today and which do you want to be? Toyota or Honda? 

Join us next week when we look at the practical implications of Sangen Shugi and a Cloud Center of Excellence...