The Business Complexity Accelerator at Toyota

There was an interesting article in the Knowledge@Wharton newsletter today. Wharton management professor John Paul MacDuffie interviewed Toyota expert, author and Tokyo University Professor Takahiro Fujimoto. The piece is called Under the Hood of Toyota’s Recall: ‘A Tremendous Expansion of Complexity’ and raises the by now familiar questions of complexity of modern automobile systems design, attitudes at Toyota towards its recent quality problems, and what this means for both Toyota and its competitors. To sum up the article with an automotive metaphor, Toyota needs to take its foot off of the business complexity accelerator.

Fujimoto said, “I was surprised to see that Toyota was the first to be caught in this trap of what we may call

complexity problems.” What has puzzled Toyota watchers is how Toyota, proven to be so great at solving problems for so many years, seems to have stumbled in a big way during this recent acceleration-related recall. Why?

Toyota failed to see this problem in the right way, at least in the beginning.

Failing to grasp a problem clearly, quantitatively and without prejudice is the first step in problem solving. Was this a case that the problem solving approach was flawed, or was it that the problem solving process is still sound but that Toyota did not follow their own process?

The danger is that people tend to connect the two problems. “This happened and that happened, so there must be causal relations between the two.” But this is not the case. There appears to be no connections between the design problems and the Toyota production system or Toyota Way.

He clearly says that the recent quality issue at Toyota is not connected to their way of working within the production operations, i.e. the Toyota Production System or even more broadly their philosophy, the Toyota Way. He suggests that that the complexity of new systems within the design simply got out of hand, and when they did, Toyota was unable to respond properly. While the processes within TPS are sound, the mindsets and behaviors of people may have shifted in an unhealthy way towards overconfidence, even arrogance. Fujimoto said:

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The Rise of Sustainable Supply Chains

After the recession of 2008 companies got leaner and part of this new way of doing business involves looking at inefficiencies throughout the value chain as a way to leverage cost and enhance savings. Lean efforts have been demonstrated to yield substantial environmental benefits (pollution prevention, waste reduction and reuse opportunities) as well as leverage compliance issues.

Although sustainable supply chains have been steadily growing, in 2010 we saw an explosion of activity. The growth of greener supply chains in 2010 included a much greater focus on monitoring, measurement and verification from a host of companies including Wal-Mart, IBM, Proctor and Gamble, Kaiser Permanente, Puma, Ford, Intel, Pepsi, Kimberly-Clark,

Unilever, Johnson & Johnson, Dell, AT&T, P&G, and Herman Miller.

In addition to private enterprise, government agencies in the US (General Services Administration) and abroad (DEFRA in Britain) have set green standards and guidelines for federal procurement.

Major value chain concerns such as materials water and waste management, are part of a growing sustainability trend where companies are increasingly concerned with their suppliers’ sustainability efforts.

Corporate social responsibility issues including addressing concerns for human rights, fair labor and sustainable development got a lot of attention from big companies like Nestle, Corporate Express, Danisco, Starbucks, Unilever and the apparel industry.

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Help improve food safety

The use of a new ISO standard on the traceability of finfish products will help improve food safety by supplying stakeholders throughout the supply chain with accurate information about the origin and nature of these products.

Finfish constitute an important part of the modern food industry. We consume more and more products coming from the four corners of the globe and fish, in particular, may be caught thousands of kilometers from their place of consumption.

During the past decade, several food crises have seriously affected many countries. Following the outbreak, the

concept of traceability of food products has become a matter of special interest to policy makers and scientists.

ISO 12875:2011, Traceability of finfish products – Specification on the information to be recorded in captured

finfish distribution chains, specifies the information to be recorded in marine-captured finfish supply chains in order to establish traceability.

It specifies how traded fishery products are to be identified, and the information to be generated and held on those products by each of the food businesses that physically trade them through the distribution chains. The standard deals with the distribution for human consumption of marine-captured finfish and their products, from catch through to retailers or caterers.

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Three Challenges Facing Operational Excellence in Utilities

Within a regulated industry like utilities, operational excellence is a key tool in the balancing act between keeping prices for consumers down and providing value for shareholders. However, market forces are combining to place hurdles in the way of utilities’ continuous improvement efforts, which will ultimately be to the benefit of consumers. In the UK, for example, the “Big Six” energy suppliers are facing pressure from the public and regulators to keep retail prices down and for their influence on the market to be reduced. The energy infrastructure in the country is ageing and a quarter of the capacity will be decommissioned by 2020. Climate change legislation is placing an ever increasing burden on operations. These factors broadly align with the three major challenges facing operational excellence in utilities across the globe: new obligations, changes to the industry landscape and a growing, more demanding customer base.

Challenge 1: Market Reforms



Utilities have often found themselves faced with market reforms, due the essential service they provide and the inevitably costs this presents to the consumer.



The aforementioned changes taking place in the UK form part of the government’s wider Electricity Market Reforms, created to help the country meet its legally binding target of cutting CO2 emission by 80 percent by 2020.

Measures laid out to help achieve this include the introduction of a carbon floor price, new long-term contracts to offer investment incentives and an emissions performance standard. More than £110 billion will be required to make the infrastructure updates needed, and a proportion of this will need to come from suppliers.

Achieving operational excellence in the face of these changes presents a significant challenge.

Challenge 2: Changing Customer Expectations :

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Seven Deadly Sins of Business Process Management

Business process management means many things to many people. Just take the words ‘process’ and ‘management’ alone – different people see these quite differently according to their perspective. For many BPM vendors and practitioners alike process management has come to mean process automation. Automation is important but it doesn’t constitute Management. From my perspective Management implies good governance,; each process should be seen as an important asset and therefore owned, understood, correctly applied and improved continuously.

The end goal is improved performance. That improvement may involve automation, but not in all cases. After all – if you look at the activities in your business the vast majority are performed by humans not machines and that’s not going to change any time soon. What irritates me

is that so many of the automation focused tools which purport to offer BPM, offer little capability with respect to Management as I define it above. The result can easily be the automation of processes which are suboptimal, not

properly understood, not properly applied and not continuously improved.

Perspectives: An earlier paper “What BPM Hat are you wearing?” explores the different process perspectives of four main stakeholder groups: End Users, IT, System providers and Risk / Compliance. Access the paper here.
In reality, processes start and end in very different places in the enterprise, often spanning multiple functional areas. There is a risk therefore that process improvement efforts are too narrowly silo’d.  The effect? Different departments fix just their part of a larger process.

It’s difficult to influence what happens either upstream or downstream from that part.  And yet improvement of the full end-to-end flow requires collaboration along the full path.  The failure to achieve such consensus could result in worsened performance, as a fix in one silo could be a retrograde step for another.

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Outsourcing: The Big Lie

Cambridge, Mass., Sept. 22, 2011 — Outsourcing of production and services is the new norm. But in the search for lowest-cost providers, companies often overlook sensible considerations such as total cost, quality, logistics, innovation, and collaborating with partners for mutual prosperity.

John Shook, chairman and CEO of the nonprofit Lean Enterprise Institute (LEI), will examine the downside of outsourcing in the opening keynote presentation, “Outsourcing: The Big Lie,” at the Northeast Shingo Prize Conference, Springfield, MA, Oct.5-6, 2011.

“While there are clearly times when outsourcing makes good business sense, academicians and theorists have  inadvertently oversold its benefits without rigorously considering the full consequences,” said Shook.

Lean Management Expert

In 11 years as a manager at Toyota, Shook helped the automaker introduce its lean management system to North America. He is co-author of the groundbreaking workbook Learning to See that introduced value-stream mapping to a worldwide audience and author of Managing to Learn on the A3 management process.

Shook called for developing lean supply chains to end the “madness” in today’s supply Chain during a panel discussion in June at the Rebuilding Japan Conference hosted by business information giant Bloomberg, LP, at the Japan Society in New York City.

Writing in his April 2011 eletter to the Lean Community, titled “Any Color You Want Except Tuxedo Black,” Shook explained the hidden dangers in today’s single sourcing strategies.

Lean in America Theme

The Northeast Shingo conference, with a 2011 theme of “Made Lean in America,” provides education and networking for managers and executives in manufacturing, healthcare, and government.

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coordinates and organizes the collection and dissemination of clean data.

Express joins BioClinica’s other solutions to improve the efficiency and flexibility required for modern clinical trials. Express is fully integrated in real-time with BioClinca’s Trident IWR and OnPoint CTMS systems. This enables real time data exchange between Express and OnPoint CTMS to support site payment data or visit status updates. Complementing best-in-class functionality is a web services architecture that communicates in real-time between applications and maximizes data visibility and utility via SharePoint with built-in connectivity to Outlook and other Microsoft Office applications. Express also provides on-demand exports for further analysis in SAS or other analytical tools.

“This release of Express EDC is a major advancement for the BioClinica Suite. Sponsors and CROs can choose any of our world-class solutions as a stand-alone or a starting point – then augment functionality for any study when they need it,” said Peter Benton, President of eClinical Solutions for BioClinica. “With the only portfolio of eClinical applications all created within the last five years, BioClinica offers a remarkably different approach with fresh ideas to address the challenges facing clinical organizations globally.”



BioClinica Express provides new capabilities for EDC power users that make slicing and dicing incoming data fast and easy and automatically encodes medical terms within the same application. Role-specific dashboards focus attention where it’s needed the most and data managers can tag or bookmark data to facilitate workflow, save customized data and query listings as ‘private’ or ‘public’ for later use. Study build timelines are minimized using an innovative design environment that reduces programming and maximizes re-usability.

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They try to fit SPC into this framework of parameters, distributional assumptions, tests of hypotheses, and confidence levels. Of course, when this group tries to share their version of SPC they are met with that same total lack of comprehension which is the fate of classical statistics. But statisticians are accustomed to rejection, so this is nothing new. Others hear the words Statistical Process Control and think of

process control techniques. SPC is thought of as a manual process-control technique to be used to maintain the status quo for a process. It is merely a process monitoring technique, to be used after you have already gotten the process into a satisfactory state. “And, since this is what SPC is about, wouldn’t you like to know about some of the neat algorithmic process-control techniques and process modeling techniques that have been developed in the past few years?” This group would be glad to give you a course or sell you some software. But once again, there is a hurdle of truly mathematical proportions to be overcome. The faint of heart need not apply. Those without calculus should not enter in to this door.



A third group uses the word “control” to denote conformance to specifications, and so when they hear the words Statistical Process Control they think about trying to produce product within specifications. Given this perspective, they think of SPC as a complex route to a simple objective, and accordingly they try to simplify SPC. This group tends to want to bypass the computations based on the data and instead use the specifications to set action limits.

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The notion of 3D is most often taken to apply directly to the gemba – the workplace – and therefore the focus of respect for people is the individual person and their work environment. Kaizen activity targeting 3D conditions aim to make processes clean, easy and safe. This is

important, but insufficient when we look deeper into the respect for humanity principle.

The aim of 3D kaizen activity must be not only to remove the 3D elements but to create environments that respect and draw out human potential for doing good. At minimum this means positively replacing the 3D conditions with clean and uncorrupted processes, suitably challenging work that fulfills our sense of purpose, and safety within the workplace that goes beyond physical and emotional harm and also considers security of employment as well as long-term environmental sustainability. Kaizen activity becomes dull and hollow when we lose sight of the fact that we are pursuing the ideal, pursuing perfection. We must work to replace 3D working conditions with those that are spotless, stimulating and secure.

It is important to never to pursue the two pillars of the Toyota Way separately. They are entwined like DNA. Paired with continuous improvement, respecting humanity means respecting all people, not only those who work within our organizations, requiring that we think beyond just our own organization and its profits, to how we benefit wider society.

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With a growing global awareness of the need for environmental protection and sustainability, organizations are eager to demonstrate their efforts to inventory, report, and reduce GHG emissions. In order to assure the credibility of their claims, many of these organizations are turning to third-party bodies to validate and verify emission assertions.



ISO 14066: 2011, Greenhouse gases – Competence requirements for greenhouse gas validation teams and verification teams, spells out the competence requirements of the personnel undertaking the various validation or verification activities within the team appointed for the task. It is intended to achieve consistency in the global carbon market and maintain public confidence in GHG reporting and other communications.

ISO 14066 is the latest document in the ISO toolbox of standards to address climate change and GHG emissions. These were launched in 2006 with ISO 14064, a three-part standard for assessing GHG emission reduction projects in either voluntary or regulatory schemes.

The standard was followed by ISO 14065, which gives accreditation requirements for organizations that validate or verify resulting GHG emission assertions or claims.

Dr. Tod Delaney, Convenor of the ISO working group responsible for ISO 14066, commented: “The accuracy of an organization’s GHG emissions claims is essential, considering the political and financial ramifications of each claim.”

“If an organization publishes claims that are later discovered to be unreliable, it risks damages both financially and in terms of their reputation. This is why the competence of those assessing such claims is absolutely crucial.”

read at http://www.iso.org