What should Toyota do?

A good friend of mine, Dan Peters, sent me a link to one of the many articles emerging in the last 24 hours on Toyota’s 11 day shutdown of its domestic plants in the first part of 2009.

“Toyota will stop output for six days in February and five days in March”

It is actually 14 days if you count the three days in January, but who’s counting.

Dan happens to be one of the smartest guys I know when it comes to Lean and Theory of Constraints so I value his thoughts and our discussions. I’m going to quote Dan so you can get the gist of the conversation.

“I can’t see the auto market recovering to its recent levels anytime soon, so they are going to be carrying a lot of non-productive capacity. I wonder how they will turn it into productive capacity. Or worse, I wonder if I’m going to have to eat my words about how Toyota doesn’t do layoffs”

My response was that Toyota should take all of its excess productive capacity (people in particular) and send them out to consult other companies that are desirous to become lean. They could charge a fair rate and provide a good service. In the end it would avoid the layoff catastrophe and help their people hone their skills.

Here is Dan’s response:

“Instead of the government giving $30B to our automakers, they oughta give a third to Toyota for consultants to go straighten out our big three, and the other two thirds to Toyota for consultants to go advise the federal and state (and maybe even local for large metro areas) governments themselves. Then, when they trim away half of the current budget from all levels of government, they’ll have funded themselves, plus a nice fat tax break for the rest of us. Don’t think I’ve ever heard of a better win-win.”

What do you think Toyota should do with its excess capacity?

Comments

[Jon Miller]

Toyota has done quite a bit of that in Japanese local government functions, privatized ones such as the postal service or the Nagoyoa airport, generally with good results.

Having TPS in your blood is a bit different than knowing how to help other people see what you see. "Normal" for many organizations is so staggeringly different from normal at Toyota.

We would be glad to give a boot camp to these Toyota people on how to function successfully as a consultant. It's sort of what we do actually.

I doubt that an across-the-board TPS injection into the automotive industry would do much good. It would just create more capacity... The auto factories need to be converted to making something people actually need. We did it during WWII. This time not weapons but windmills, please. The Toyota folks could go and be team leaders, group leaders and managers of these factories.

[Vladimir Dzalbo]

I am not completely convinced by the "Toyota Consultancy" idea. The problem with many people working in such a proclaimed "perfect" environment is that they know how to do things right, but that is not quite sure they know exactly what it is others have to do to achieve the same results.

I cannot recall who owns the words I once heard in Mark Graban's podcast (quite an old one from 2006 or 2007), but one of his guests was mentioning his experience Toyota people consulting 3rd party organization. The guest referred to the Toyota guys as fish: they just could not properly express their ideas and serve as consultants. They could do things properly just because it was in their DNA, while explaining it required quite different set of skills.

A very simple example to clarify: when I was a kid, my school invited a very skilled nuclear researcher to give us classes on Physics (there was a lack of good teachers in the area). Everybody knew that guy was an excellent physicist and also a good communicator but the whole experience turned to be a total a disaster: he just could not transfer the knowledge he possessed. He even did not try it in many cases, because he found some of the ideas axiomatic and unexplainable, while they were not for school kids.

[Bill Spohnholtz]

I agree with the previous two comments about how not everyone makes a good consultant, however they could be hired as leads for all these "bail out" projects coming up and they could lead by example. Having one or two of them on every team with average displaced American workers would probably improve the productivity of all involved.

[Matt Youell]

I don't know how good Toyota is at consulting, but they seem good at building cars. Toyota should sell their production capacity to Chrysler. Then Chrysler can keep designing pretty cars and leave manufacturing to a superior player. Kind of a Matsushita play.