Episode 96: The People Side of Lean

Augmented reveals the stories behind the new era of industrial operations, where technology will restore the agility of frontline workers. The topic is "The People Side of Lean." Our guest is Jeffrey Liker, academic, consultant, and best-selling author of The Toyota Way. In this conversation, we talk about how to develop internal organizational capability and problem-solving skills on the frontline. If you liked this show, subscribe at augmentedpodcast.co. If you liked this episode, you might also like Episode 84 on The Evolution of Lean. Augmented is a podcast for industry leaders, process engineers, and shop floor operators, hosted by futurist Trond Arne Undheim and presented by Tulip. Follow the podcast on Twitter or LinkedIn. Trond's Takeaway: Lean is about motivating people to succeed in an industrial organization more than it is about a bundle of techniques to avoid waste on a factory production line. The goal is to have workers always asking themselves if there is a better way. Transcript: TROND: Welcome to another episode of the Augmented Podcast. Augmented brings industrial conversations that matter, serving up the most relevant conversations on industrial tech. Our vision is a world where technology will restore the agility of frontline workers. In this episode of the podcast, the topic is the People Side of Lean. Our guest is Jeffrey Liker, academic, consultant, and best-selling author of The Toyota Way. In this conversation, we talk about how to develop internal organizational capability, problem-solving skills on the frontline. Augmented is a podcast for industry leaders, process engineers, and shop floor operators, hosted by futurist Trond Arne Undheim and presented by Tulip. Jeffrey, how are you? Welcome to the podcast. JEFFREY: Thank you. TROND: So I think some people in this audience will have read your book or have heard of your book and your books but especially the one that I mentioned, Toyota. So I think we'll talk about that a little bit. But you started out as an engineering undergrad at Northeastern, and you got yourself a Ph.D. in sociology. And then I've been reading up on you and listening to some of the stuff on the musical side of things. I think we both are guitarists. JEFFREY: Oh, is that right? TROND: Yeah, yeah, classical guitar in my case. So I was wondering about that. JEFFREY: So I play also a classical guitar now. I played folk and rock earlier when I was young. But for the last more than ten years, I've been only studying classical guitar. TROND: Well, so then we share a bunch of hours practicing the etude, so Fernando Sor, and eventually getting to the Villa-Lobos stuff. So the reason I bring that up, of course, beyond it's wonderful to talk about this kind of stuff with, you know, there aren't that many classical guitarists out there. But you said something that I thought maybe you could comment on later. But this idea of what happened to you during your studies of classical guitar actually plays into what you later brought into your professional life in terms of teaching you something about practicing in particular ways. So I hope you can get into that. But obviously, you've then become a professor. You are a speaker and an advisor, and an author of this bestseller, The Toyota Way. Now you run some consulting. And I guess I'm curious; this was a very, very brief attempt at summarizing where you got into this. What was it that brought you into manufacturing in the first place? I mean, surely, it wasn't just classical guitar because that's not a linear path. [laughs] JEFFREY: No. So for undergraduate, I had basically studied industrial engineering because I didn't really know what I wanted to do with my life. And my father was an engineer. And then I literally took a course catalog and just started reading the descriptions of different kinds of engineering. And industrial engineering was the only one that mentioned people. And in theory, industrial engineering is a systems perspective which integrates people, materials, methods, machines, the four Ms. And in the description from Northeastern University, they said it's as much about human organization as it is about tools and techniques. So that appealed to me. When I got to Northeastern...I was not a particularly good high school student. So I didn't have a lot of choices of what colleges I went to, so Northeastern was pretty easy to get into. But they had a cooperative education program where you go to school, and you work. You go back and forth between school and work and had a pretty elaborate system for setting you up with jobs. I got one of the better jobs, which was at a company called General Foods Corporation at the time, and they make things like Jell-O, and Gravy Train dog food, and Birds Eye vegetables, and a lot of other household names, Kool-Aid, all automated processes, even at that time in the 1970s. And they had been experimenting with something called socio-technical systems, which is supposed to be what I was interested in, which is bringing together the social and technical, which no one at Northeastern University had any interest in except me. But I was very interested in this dog food plant where they were written up as a case study pioneer. And the basic essence of it was to give groups of people who are responsible, for example, for some automated processes to make a certain line of Gravy Train dog food, give them responsibility for all their processes, and they called them autonomous workgroups. And what we try to do is as much as possible, give them all the responsibility so they can work autonomously without having to go and find the engineer or deal with other support functions, which takes time and is kind of a waste. So that fascinated me. I studied it. I wrote papers about it even in courses where it didn't fit. But the closest I could get to the social side was through sociology courses which I took as soon as I was able to take electives, which was about my third year. And I got to know a sociology professor closely and ultimately decided to get a Ph.D. in sociology and did that successfully, published papers in sociology journals at a pretty high level. And then discovered it was really hard to get a job. TROND: Right. [laughs] JEFFREY: And there happened to be an advertisement from an industrial engineering department at University of Michigan for someone with a Ph.D. in a social science and an undergraduate degree in industrial engineering. And I was probably the only person in the world that fit the job. And they were so excited to hear from me because they had almost given up. And I ended up getting that job quickly then getting to Michigan excited because it's a great university. I had a low teaching load. They paid more than sociology departments. So it was like a dream job. Except once I got there, I realized that I had no idea what I was supposed to be doing [chuckles] because it wasn't a sociology department. And I had gotten away from industry. In fact, I was studying family development and life’s course development, and more personal psychology and sociology stuff. So I was as far away as I could be. So I had to kind of figure out what to do next. And fortunately, being at Michigan and also being unique, a lot of people contacted me and wanted me to be part of their projects. And one of them was a U.S.-Japan auto study comparing the U.S.-Japan auto industry going at the same time as a study at MIT and Harvard that ultimately led to the book The Machine That Changed the World, which defined lean manufacturing. So this was sort of a competitive program. And they asked me to be part of it, and that's what led to my learning about Toyota. I mean, I studied Toyota, Nissan, Mazda mainly and compared them to GM, Ford, and Chrysler. But it was clear that Toyota was different and special. And ultimately, then I learned about the Toyota Production System. And from my perspective, not from people in Toyota, but from my perspective, what they had done is really solve the problem of socio-technical systems. Because what I was seeing at General Foods was workers who were responsible for technical process and then were given autonomy to run the process, but there was nothing really socio-technical about it. There was a technical system, and then there was social system autonomous work groups and not particularly connected in a certain way. But the Toyota Production System truly was a system that was designed to integrate people with the technical system, which included things like stamping, and welding, and painting, which were fairly automated as well as assembly, which is purely manual. And Toyota had developed this back in the 1940s when it was a lone company and then continued to evolve it. And the main pillars are just-in-time and built-in quality. They have a house, and then the foundation is stable and standardized processes. And in the center are people who are continuously improving. Now, the socio-technical part the connection is that just-in-time for Toyota means that we're trying to flow value to the customer without interruption. So if what they do is turn raw materials into cars that you drive, then anything that's turning material into a component or car physically is value-added, and everything else is waste. And so things like defects where you have to do rework are waste. And machines are shut down, so we have to wait for the machines to get fixed; that's waste. And inventory sitting in piles doing nothing is waste. So the opposite of waste is a perfect process. And Toyota also was smart enough, and all that they figured out was more like folk learning or craft learning. It was learning from doing and experience and common sense. And they didn't particularly care about linking it to academic theories or learning from academic theories, for that matter. So their common sense view is that the world is complicated. Humans are really bad at predicting the future. So the best we can do is to get in the ballpark with what we think is a good process and then run it and see how it fails. And then the failures are what lead to then the connection of people who have to solve the problems through creative thinking. So that was the integration that I did not see before that. TROND: Just one thing that strikes me...because nowadays, comparing the U.S. or Europe and Asia in terms of business practices, it's sort of like, oh, of course, you have to compare them because they are culturally different. But it strikes me that in the automotive industry, was it immediately really clear to you at the outset that there would be such striking differences between the Japanese and the U.S. auto industry? Or is that actually something that had to be studied? Or was it something that was known, but no one really knew exactly what the differences were? JEFFREY: So it wasn't like the American auto companies figured out that if they get good at using chopsticks, they'll be good at making cars. They weren't looking for something peculiar in Japanese culture. But they were addressing the more general problem, which was that Japanese companies were making small fuel-efficient cars at low cost with high quality. And none of the American companies could do that. The costs were higher. The quality was terrible compared to Japan. They took a long time to do everything, including developing cars. So somehow, the Japanese were purported, they weren't convinced this was true, but according to the evidence, the Japanese were purported to be better at just about everything. And the Americans wanted to know why particularly. And at that time, there had been an oil crisis, and there was a demand for small cars. The real question they were interested in is how could they make small cars that were competitive with the Japanese? So they had to understand what the Japanese were doing. Now, they realized that some of what the Japanese were doing were purely technical things that had nothing to do with culture. And then there was also a level of attention to detail and motivation that maybe was, for some reason, peculiar to Japan. But they needed to figure out how to replicate it in the United States. And then, in addition to that, they had Americans like Dr. Deming, who had gone to Japan and taught the Japanese supposedly quality control methods. And Japanese companies had taken quality control methods that were created in the United States more seriously than the American companies. So part of it was relearning what came from America to Japan and got done better. So it wasn't necessarily this kind of strange place, and how can we emulate this strange culture? TROND: Right. But that becomes then your challenge then, right? Because what you then discover is that your field is immensely important to this because what you then went on to do is...and I guess part of your consulting work has been developing internal organizational capability. These are skills that particular organizations, namely Toyota, had in Japan. So you're thinking that this then became...it's like a learning process, the Japanese learned some lessons, and then the whole rest of the automotive industry then they were trying to relearn those lessons. Is that sort of what has been happening then in the 30 years after that? JEFFREY: Yeah, the basic question was, why are they so good? Why are we so bad? And how can we get better in America? Then there were lots of answers to that question coming from different people in different places. My particular answer was that Toyota especially had developed a socio-technical system that was extremely effective, that was centered on people who were developed to have the skills of problem-solving and continuous improvement. And while the study was going on, they were doing a study out of MIT that led to The Machine That Changed the World. And around that same time, a joint venture between Toyota and General Motors had been formed called NUMMI. It was in California. And in their first year, it was launched in 1983, and in the first year, they had taken what was the worst General Motors plant in the world, with the worst attendance, the worst morale, workers who were fighting against supervisors every day, including physically fighting with them, terrible quality, and General Motors had closed the plant because it was so bad. And then, in the joint venture, they reopened the plant and took back 80% of the same workers who were like the worst of the worst of American workers. And within a year, Toyota had turned the plant around so that it was the best in North America with the best workers. TROND: That's crazy, right? Because wouldn't some of the research thesis in either your study or in the MIT study, The Machine That Changed the World, would have to have been around technology or at least some sort of ingenious plan that these people had, you know, some secret sauce that someone had? Would you say that these two research teams were surprised at finding that the people was the key to the difference here or motivating people in a different way? JEFFREY: Well, frankly, I think I probably had a better grasp that people were really the key than most other researchers because of my background and my interest in human-centered manufacturing. So I was kind of looking for that. And it was what the Toyota people would say...whenever they made a presentation or whenever you interviewed them, they would say, "People are kind of distracted by the tools and methods, but really at the center are people." And generally, most people listening to them didn't believe it, or it didn't register. Because Toyota did have cool stuff, like, for example, something called a kanban system, which is how do you move material around in the factory? They have thousands of parts that have to all be moved and orchestrated in complicated ways. And Toyota did it with physical cards. And the concept was a pulse system that the worker; when they see that they're getting low on parts, they take a card and they post it. They put it in a box, and then the material handler picks it up. And they said, okay, they need another bin of these. On my next route, I'll bring a bin of whatever cards I get. So they were replenishing the line based on a signal from the operator saying, "I need more." So it was a signal from the person who knows best what they need. And it also, from Toyota's point of view, put the employee in the driver's seat because now they're controlling their supply in addition to controlling their work process. And it didn't require that you predict the future all the time because who knows what is happening on the line and where they're backed up, and where they maybe have too many parts, and they don't need more? But the worker knows. He knows when he needs it and when he doesn't. It was kind of an ingenious system, but the fact that you had these cards moving all over the factory and thousands of parts are moving just to the right place at the right time based on these cards, that was fascinating. So a lot of the consumers were more interested in that than they were in the people aspect, even though Toyota kept talking about the people aspect. TROND: But so this is my question, then there was more than one element that they were doing right. JEFFREY: There were multiple elements, yeah. TROND: There were multiple elements. Some of them were structural or visual, famously. JEFFREY: Right. TROND: But you then started focusing, I guess, on not just the people aspect, but you started structuring that thinking because the obvious question must have been, how can we do some of this ourselves? And I guess that's my question is once you and the team started figuring out okay, there are some systematic differences here in the way they motivate people, handle the teams, but also structure, honestly, the organizational incentives minute by minute, how then did you think about transferring this? Or were you, at this point, just really concerned about describing it? JEFFREY: Like I said, I was kind of unusual in my background, being somewhere between industrial engineering and sociology and being in industrial engineering departments. So maybe I wasn't as constrained by some of the constraints of my academic colleagues. But I never believed this whole model that the university gathers information structures that formulates it, then tells the world what to do. I never thought that made any sense. And certainly, in the case of lean, it didn't, and it wasn't true. So the way that companies were learning about this stuff was from consultants, largely, and from people who had worked for Toyota. So anybody who had worked for Toyota, even if they were driving a forklift truck, in some cases, suddenly became a hot commodity. I consulted to Ford, and they were developing the Ford Production System. They were using a consulting firm, and all their consulting firm's business was to poach people from Toyota and then sell them as consultants to other companies. And that company literally had people every day of the week who were in their cars outside the gates of Toyota. And as people came out, they would start talking to them to try to find people that they could hire away from Toyota. TROND: It's funny to hear you talking about that, Jeff, right? Because in some way, you, of all people, you're a little bit to blame for the fame of Toyota in that sense. I mean, you've sold a million books with The New Toyota -- JEFFREY: Well, that was -- TROND: I'm just saying it's a phenomenon here that people obsess over a company, but you were part of creating this movement and this enormous interest in this. [laughs] JEFFREY: I didn’t feel that that was...I personally had a policy because I had a consulting company too. So I personally had a policy that I would not hire somebody away from Toyota unless they were leaving anyway. That was my personal policy. But the important point was that there were a lot of really well-trained people coming out of Toyota who really understood the whole system and had lived it. And they could go to any other company and do magic, and suddenly things got better. [laughs] And what they were doing was setting up the structures and the tools, and they also were engaging the people and coaching the people. They were doing both simultaneously, and that's how they were trained. Toyota had sent an army of Japanese people to America. So every person who was in a leadership position had a one-on-one coach for years, a person whose only reason for being in the United States was to train them. So they got excellent training, and then they were able to use that training. And then other people once they had worked with a company and then that company got good at lean, then, within that company, you'd spawn more consultants change agents. Like, there was a company that I was studying called Donnelly Mirrors that made exterior mirrors for cars. And one of the persons that was trained by a Toyota person became a plant manager. And he ended up then getting offered a job as the vice president of manufacturing for Merillat Kitchen Cabinets. And now he's the CEO of the parent company that owns Merillat. And he's transformed the entire company. So little by little, this capability developed where most big companies in the world have hired people with lean experience. Sometimes it's second generation, sometimes third generation. And there are some very well-trained people. So the capability still resides within the people. And if you have someone who doesn't understand the system but they just set up a kanban system or they set up quality systems, and they try to imitate what they read in a book or what they learned in a course; usually, it doesn't work very well. TROND: Well, that was going to be my next question. Because how scalable is this beyond the initial learnings of Toyota and the fact that it has relied so heavily on consulting? Because there is sort of an alternate discourse in a lot of organizational thinking these days that says, well, not just that the people are the key to it but actually, that as a leader, however much you know or how aware you are of people processes, it is the organization itself that kind of has to find the answers. So there's perhaps some skepticism that you can come in and change a culture. Aren't there organizations that have such strong organizational practices, whether they are cultural in some meaningful way or they're simply this is the way they've done things that even one person who comes in has a hard time applying a Toyota method? What do you think about that kind of challenge? JEFFREY: Okay, so, anyway, I think what you said is...how I would interpret it is it’s a gross oversimplification of reality. So first of all, in the second edition of The Toyota Way, because I realized from the first edition, which was fairly early back in the early 2000s, I realized that some people were taking my message as copy Toyota, even though I didn't say that in the book. And I specifically said not to do that, but I said it in the last chapter. So I put out the second edition a year ago, and I say it in the first page or first few pages. I say, "Don't copy Toyota," and explain why. And then, throughout the book, I say that, and then, in the end, I say, "Develop your own system." So it's probably repeated a dozen times or more with the hope that maybe somebody would then not ask me after reading it, "So, are we supposed to copy Toyota?" So the reason for that is because, as you said, you have your own culture. And you're in a different situation. You're in a different industry. You're starting in a different place. You're drawing on different labor. You have maybe plants around the world that are in different situations. So the other thing I said in the book, which is kind of interesting and counterintuitive, is I said, "Don't copy Toyota; even Toyota doesn't copy Toyota." TROND: So what does that mean? Did they really not? JEFFREY: What it means is that...because Toyota had this dilemma that they had developed this wonderful system in Japan that worked great, but they realized that in auto, you need to be global to survive. So when they set up NUMMI, that was the first experiment they did to try to bring their system to a different culture. And in reality, if you look at some of the cultural dimensions that make lean work in Japan, the U.S. is almost opposite on every one of them, like, we're the worst case. So if you were a scientist and you said, let’s find the hardest place in the world to make this work and see if we can make it work, it would be the United States, particularly with General Motors workers already disaffected and turned off. So Toyota's perspective was, let's go in with a blank sheet of paper and pretend we know nothing. We know what the total production system is and what we're trying to achieve with it. But beyond that, we don't know anything about the human resource system and how to set it up. And so they hired Americans, and they coached them. But they relied a lot on Americans, including bringing back the union leader of the most militant union in America. They brought him back. TROND: Wow. JEFFREY: And said, "You're a leader for a reason. They chose you. We need your help. We're going to teach you about our system, but you need to help make it work." So that created this sort of new thing, a new organizational entity in California. And then what Toyota learned from that was not a new solution that they then brought to every other plant, whether it was Czechoslovakia, or England, or China. But rather, they realized we need to evolve a cultural system every time we set up a plant, starting with the local culture. And we need to get good at doing that, and they got good at doing it. So they have, I don't know, how many plants but over 100 plants around the world and in every culture you can imagine. And every one of them becomes the benchmark for that country as one of their best plants. And people come and visit it and are amazed by what they see. The basic principles are what I try to explain in The Toyota Way. The principles don't change. At some level, the principle is we need continuous improvement because we never know how things are going to fail until they fail. So we need to be responding to these problems as a curse. We need people at every level well trained at problem-solving. And to get people to take on that additional responsibility, we need to treat people with a high level of respect. So their model, The Toyota Way, was simply respect for people and continuous improvement. And that won't change no matter where they go. And their concept of how to teach problem-solving doesn't change. And then their vision of just-in-time one-piece flow that doesn't change, and their vision of building in quality so that you don't allow outflows of poor quality beyond your workstation that doesn't change. So there are some fundamental principles that don't change, but how exactly they are brought into the plant and what the human resource system looks like, there'll be sort of an amalgam between the Japanese model and the local model. But they, as quickly as possible, try to give local autonomy to people from that culture to become the plant managers, to become the leaders. And they develop those people; often, those people will go to Japan for periods of time. TROND: So, Jeff, I want to move to...well, you say a lot of things with Toyota don't change because they adapt locally. So my next question is going to be about future outlook. But before we get there, can we pick up on this classical guitar lesson? So you were playing classical guitar. And there was something there that, at least you said that in one interview that I picked up on, something to do with the way that guitar study is meticulous practice, which both you and I know it is. You literally will sit plucking a string sometimes to hear the sound of that string. I believe that was the example. So can you explain that again? Because, I don't know, maybe it was just me, but it resonated with me. And then you brought it back to how you actually best teach this stuff. Because you were so elaborate, but also you rolled off your tongue all these best practices of Toyota. And unless you either took your course or you are already literate in Toyota, no one can remember all these things, even though it's like six different lessons from Toyota or 14 in your book. It is a lot. But on the other hand, when you are a worker, and you're super busy with your manager or just in the line here and you're trying to pick up on all these things, you discovered with a colleague, I guess, who was building on some of your work some ways that had something in common with how you best practice classical guitar. What is that all about? JEFFREY: Well, so, first of all, like I said, the core skill that Toyota believes every person working for Toyota should have is what they call problem-solving. And that's the ability to, when they see a problem, to study what's really happening. Why is this problem occurring? And then try out ideas to close the gap between what should be happening and what is happening. And you can view that as running experiments. So the scientific mindset is one of I don't know. I need to collect the data and get the evidence. And also, I don't know if my idea works until I test it and look at what happens and study what happens. So that was very much central in Toyota. And they also would talk about on-the-job development, and they were very skeptical of any classroom teaching or any conceptual, theoretical explanations. So the way you would learn something is you'd go to the shop floor and do it with a supervisor. So the first lesson was to stand in a circle and just observe without preconceptions, kind of like playing one-string guitar. And the instructor would not tell you anything about what you should be looking for. But they would just ask you questions to try to dig deeper into what's really going on with the problems or why the problems are occurring. And the lesson length with guitar, you might be sweating after 20 minutes of intense practice. This lesson length was eight hours. So for eight hours, you're just on the shop floor taking breaks for lunch and to go to the bathroom and in the same place just watching. So that was just an introductory lesson to open your mind to be able to see what's really happening. And then they would give you a task to, say, double the productivity of an area. And you would keep on trying. They would keep on asking questions, and eventually, you would achieve it. So this on-the-job development was learning by doing. Now, later, I came to understand that the culture of Japan never really went beyond the craftsman era of the master-apprentice relationship. That's very central throughout Japan, whether you're making dolls, or you're wrapping gifts, or you're in a factory making a car. So the master-apprentice relationship system is similar to you having a guitar teacher. And then, if you start to look at modern psychology leadership books, popular leadership books, there's a fascination these days with the idea of habits, how people form habits and the role of habits in our lives. So one of my former students, Mike Rother, who had become a lean practitioner, we had worked together at Ford, for example, and was very good at introducing the tools of lean and transforming a plant. He started to observe time after time that they do great work. He would check in a few months later, and everything they had done had fallen apart and wasn't being followed anymore. And his ultimate conclusion was that what they were missing was the habit of scientific thinking that Toyota put so much effort into. But he realized that it would be a bad solution to, say, find a Toyota culture -- TROND: Right. And go study scientific thinking. Yeah, exactly. JEFFREY: Right. So he developed his own way in companies he was working with who let him experiment. He developed his own way of coaching people and developing coaches inside the company. And his ultimate vision was that every manager becomes a coach. They're a learner first, and they learn scientific thinking, then they coach others, which is what Toyota does. But he needed more structure than Toyota had because the Toyota leaders just kind of learned this over the last 25 years working in the company. And he started to create this structure of practice routines, like drills we would have in guitar. And he also had studied mastery. There's a lot of research about how do you master any complex skill, and it was 10,000 hours of practice and that idea. But what he discovered was that the key was deliberate practice, where you always know what you should be doing and comparing it to what you are doing, and then trying to close the gap. And that's what a good instructor will do is ask you to play this piece, realize that you're weak in certain areas, and then give you an exercise. And then you practice for a week and come back, and he listens again to decide whether you've mastered or not or whether he needs to go back, or we can move to the next step. So whatever complex skill you're learning, whether it's guitar, playing a sport, or learning how to cook, a good teacher will break down the skill into small pieces. And then, you will practice those pieces until you get them right. And the teacher will judge whether you got them right or not. And then when you're ready, then you move on. And then, as you collect these skills, you start to learn to make nice music that sounds good. So it turns out that Mike was developing this stuff when he came across a book on the martial arts. And they use the term kata, which is used in Japanese martial arts for these small practice routines, what you do repeatedly exactly as the master shows you. And the master won't let you move on until you've mastered that one kata. Then they'll move to the second kata and then third. And if you ask somebody in karate, "How many katas do you have?" They might say, "46," and you say, "Wow, you're really good. You've mastered 46 kata, like playing up through the 35th Sor exercise. So he developed what he called the improvement kata, which is here is how you practice scientific thinking, breaking it down into pieces, practicing each piece, and then a coaching kata for what the coach does to coach the student. And the purpose of the scientific thinking is not to publish a paper in a journal but to achieve a life goal, which could be something at work, or it could be that I want to lose weight. It could be a personal goal, or I want to get a new job that pays more and is a better job. And it becomes an exploration process of setting the goal. And then breaking down the goal into little pieces and then taking a step every day continuously toward, say, a weekly target and then setting the next week's target, and next week's target and you work your way up the mountain toward the goal. So that became known as Toyota Kata. He wrote a book called Toyota Kata. And then, I put into my model in the new Toyota Way; in the center of the model, I put scientific thinking. And I said this is really the heart and soul of The Toyota Way. And you can get this but only by going back to school, but not school where you listen to lectures but school where you have to do something, and then you're getting coached by someone who knows what they're doing, who knows how to be a coach. TROND: So my question following this, I think, will be interesting to you, or hopefully, because we've sort of gone through our conversation a little bit this way without jumping to the next step too quickly. Because the last question that I really have for you is, what are the implications of all of this? You have studied, you know, Toyota over years and then teaching academically, and in industry, you've taught these lessons. But what are the implications for the future development of, I guess, management practice in organizations, in manufacturing? Given all that you just said and what you've previously iterated about Toyota's ideas that not a lot of things change or necessarily have to change, how then should leaders go about thinking about the future? And I'm going to put in a couple of more things there into the future. I mean, even just the role of digital, the role of technology, the role of automation, all of these things, that it's not like they are the future, but they are, I guess, they are things that have started to change. And there are expectations that might have been brought into the company that these are new, very, very efficient improvement tools. But given everything that you just said about katas and the importance of practicing, how do you think and how do you teach preparing for the future of manufacturing? JEFFREY: And I have been working with a variety of companies that have developed what you might call industry 4.0 technologies, digital technologies, and I teach classes where a lot of the students are executives from companies where in some cases, they have a dual role of lean plus digitalization. So they're right at the center of these two things. And what I learned going back to my undergraduate industrial engineering days and then to my journey with Toyota, I was always interested in the centrality of people, whatever the tools are. And what I was seeing as an undergraduate was that most of the professors who were industrial engineers really didn't have much of a concept of people. They were just looking at techniques for improving efficiency as if the techniques had the power themselves. And what I discovered with people in IT, and software development, and the digital movement is often they don't seem to have a conception of people. And people from their point of view are basically bad robots [laughs] that don't do what they're supposed to do repeatedly. So the ultimate view of some of the technologists who are interested in industry 4.0 is to eliminate the people as much as possible and eliminate human judgment by, for example, putting it into artificial intelligence and having the decisions made by computers. I'm totally convinced from lots of different experiences with lots of different companies that the AI is extremely powerful and it's a breakthrough, but it's very weak compared to the human brain. And what the AI can do is to make some routine decisions, which frees up the person to deal with the bigger problems that aren't routine and can also provide useful data and even some insight that can help the person in improving the process. So I still see people as the ultimate customer for the insights that come out of this digital stuff, Internet of Things, and all that. But in some cases, they can control a machine tool and make an automatic adjustment without any human intervention, but then the machine breaks down. And then the human has to come in and solve the problem. So if you're thinking about digitalization as tools to...and sometimes have a closed loop control system without the person involved. But in addition, maybe, more importantly, to provide useful data to the human, suddenly, you have to think about the human and what makes us tick and what we respond to. And for example, it's very clear that we're much better at taking in visual information than text information. And that's one of the things that is part of the Toyota Production System is visual management. So how can you make the results of what the AI system come up with very clear and simple, and visual so people can respond quickly to the problem? And most of these systems are really not very good. The human user interface is not well designed because they're not starting with the person. And the other thing is that there are physical processes. Sometimes I kind of make a sarcastic remark, like, by the way, the Internet of Things actually includes things. TROND: [laughs] JEFFREY: And there's a different skill set for designing machines and making machines work and repairing machines than there is for designing software. There are a lot of physical things that have to go on in a factory, changing over equipment, be it for making different parts. And the vision of the technologists might be we’ll automate all that, which may be true. Maybe 30 years from now, most of what I say about people will be irrelevant in a factory. I doubt it. But maybe it's 100 years from now, but it's going to be a long time. And there was an interesting study, for example, that looked at the use of robots. And they looked at across the world jobs that could be done by a human or could be done by a robot. And they found that of all the jobs that could be done by a human or a robot, 3% were done by robots, 97%...so this kind of vision of the robots driven by artificial intelligence doing the work of people is really science fiction. It's mostly fiction at this point. At some point, it might become real, but it's got a long way to go. So we still need to understand how to motivate, develop people. But particularly, the more complex the information becomes and the more information available, the more important it is to train people first of all in problem-solving and scientific thinking to use the data effectively and also to simplify the data because we're actually not very good at using a lot of data. We actually can't handle a lot of bits of data at a time like a computer can. So we need simple inputs that then allow us to use our creativity to solve the problem. And most of the companies are not doing that very well. They're offering what they call digital solutions, and I hate that term, on the assumption that somehow the digital technology is the solution. And really, what the digital technology is is just information that can be an input to humans coming up with solutions that fit their situation at that time, not generic solutions. TROND: It's fascinating that you started out with people. You went through all these experiences, and you are directly involved with digital developments. But you're still sticking to the people. We'll see how long that lasts. I think people, from the people I have interviewed, maybe self-selected here on the podcast, people and processes seem enormously important still in manufacturing. Thank you for your perspective. It's been a very rich discussion. And I hope I can bring you back. And like you said if in X number of years people are somehow less important...well, I'm sure their role will change, will adjust. But you're suspecting that no matter what kind of technology we get, there will be some role, or there should be some role for people because you think the judgment even that comes into play is going to be crucial. Is that what I'm -- JEFFREY: There's one more thing I want to add. If you look at industry 4.0, it'll list these are the elements of industry 4.0, and they're all digital technologies. But there's something that's becoming increasingly popular called industry 5.0, where they're asking what's beyond industry 4.0? Which has barely been implemented. But why not look beyond it? Because we've talked about it enough that it must be real. Once we kind of talk about something enough, we kind of lose interest in it. We want to go on to the next thing. So none of these things necessarily have been implemented very well and very broadly. But anyway, so industry 5.0 is about putting people back in the center. So I call it a rework loop. Uh-oh, we missed that the first time. Let's add it back in. TROND: So then what's going to happen if that concludes? Are we going to then go back to some new version of industry 4.0, or will it -- JEFFREY: Well, industry 4.0 is largely a bunch of companies selling stuff and then a bunch of conferences. If you go and actually visit factories, they're still making things in the same way they've always made them. And then there's a monitor that has information on a screen. And the IT person will show you that monitor, and the person on the floor may not even know what it is. But there's a disconnect between a lot of these technologies and what's actually happening on the shop floor to make stuff. And when they do have a success, they'll show you that success. You know, there's like hundreds of processes in the factory. And they'll show you the three that have industry 4.0 solutions in there. And so it's a long way before we start to see these technologies broadly, not only adopted but used effectively in a powerful way. And I think as that happens, we will notice that the companies that do the best with them have highly developed people. TROND: Fantastic. That's a good ending there. I thank you so much. I believe you've made a difference here, arguing for the continued and continuing role of people. And thank you so much for these reflections. JEFFREY: Welcome. Thank you. My pleasure. TROND: You have just listened to another episode of the Augmented Podcast with host Trond Arne Undheim. The topic was the People Side of Lean. Our guest was Jeffrey Liker, academic, consultant, and best-selling author of The Toyota Way. In this conversation, we talked about how to develop internal organizational capability. My takeaway is that Lean is about motivating people to succeed in an industrial organization more than it is about a bundle of techniques to avoid waste on a factory production line. The goal is to have workers always asking themselves if there is a better way. Thanks for listening. If you liked the show, subscribe at augmentedpodcast.co or in your preferred podcast player, and rate us with five stars. If you liked this episode, you might also like Episode 84 on The Evolution of Lean. Hopefully, you will find something awesome in these or in other episodes. And if you do, let us know by messaging us, and we would love to share your thoughts with other listeners. The Augmented Podcast is created in association with Tulip, the frontline operation platform that connects people, machines, devices, and systems used in a production or logistics process in a physical location. Tulip is democratizing technology and empowering those closest to operations to solve problems. Tulip is also hiring, and you can find Tulip at tulip.co. Please share this show with colleagues who care about where industry and especially where industrial tech is heading. To find us on social media is easy; we are Augmented Pod on LinkedIn and Twitter and Augmented Podcast on Facebook and YouTube. Augmented — industrial conversations that matter. See you next time.Special Guest: Jeffrey Liker.