Charles Duhigg wrote the book Smarter Faster Better, in which he discusses the eight secrets of being productive in life and business. One of the eight principles is how to manage others effectively.
In this post, we’ll run through the Toyota Production System, which relies heavily on a culture of trust. We’ll examine five types of culture to identify the one best suited for business productivity.
To finish off, we’ll run through a case study of the FBI’s crime-solving database.
What is the Toyota Production System?
At its core, the Toyota Production System defers decision-making to the lowest possible level. This ideology caused a culture clash when Toyota and GM started a joint manufacturing operation together.
The American executives at GM laughed at the Toyota approach at first. They said that American workers don’t care about contributing expertise. GM executives thought that American employees only wanted to “do as little as possible”.
Toyota and GM launched New United Motor Manufacturing Inc in 1984. They started with a new factory in an old GM plant in California that shut down years earlier. The main difference would involve replacing the previous management style with the Toyota Production System.
Many of the same employees returned to work at the factory. But output changed dramatically. Whereas GM told employees to “never stop the line” because of its costs, NUMMI encouraged people to solve problems as they arose.
Lean Manufacturing
Any employee could stop the assembly line at any time to fix a problem. And managers were there primarily to support the workers.
If an employee had an idea to improve efficiency, the manager would help prototype. Following successful innovations, each team would have their own version of the prototype by the next day.
This concept is today widely known as lean manufacturing.
From Pixar and software engineering teams to the FBI and healthcare providers, lean manufacturing has had a profound impact on business productivity.
Agile Methodology
In 2001, a group of computer programmers drafted a set of principles at a ski lodge in Utah. They called it the “Manifesto for Agile Software Development”.
Inspired by Toyota and lean manufacturing, this Agile methodology emphasised collaboration, frequent testing and rapid iteration. It would also give decision-making authority to whoever was closest to the problem.
Agile is now the standard methodology among many of the world’s largest tech firms.
People work smarter and better when they believe they have more decision-making authority and their colleagues are committed to the team’s success.
How to Cultivate a Culture of Trust?
No one goes to work wanting to be bad, Toyota argued. If you put people in a position to succeed, they will. The key is to create a culture of trust, where people feel empowered to make the right decisions.
People want to work well and make good decisions.
When workers feel a greater sense of control, motivation sky rockets.
Lean methodologies make it easy for employees to contribute their expertise to creating value for the company.
Toyota’s culture ties in with the idea of creating effective teams with cultural norms.
Promote Employee Well-Being
To cultivate a culture of trust, companies also need to commit to employees’ well-being. In the case of NUMMI, this involved protecting workers from the recession that hit in 1988.
Consumers were buying fewer cars and NUMMI had to reduce production by 40%. However, rather than resort to layoffs, NUMMI decreased the salaries of the top 65 executives. Assembly line workers would instead be reassigned to janitorial or landscaping roles.
Because of this dedication to their employees, workers were willing to do anything for the company. After each of the four sales slumps between 1984 and 2010, NUMMI refused to lay anyone off.
In return, workers came back when production picked up again more motivated than ever.
Five Types of Business Culture
Two Stanford professor studied hundreds of start-ups in Silicon Valley over 15 years from the mid-90’s. Their goal was to identify the most successful business cultures.
They identified five types of business culture in their study.
These five cultures were:
- Star culture, where many star performers work together.
- Engineering culture, like Facebook, where the technical capabilities come first.
- Bureaucratic culture, where the company is governed by org charts and other bureaucratic tools.
- Autocratic culture, where a decisive CEO directs everything that happens at the company.
- Commitment culture, where the company emphasises slower growth and focuses on employees’ development and well-being above all else.
After 15 years, their data produced interesting insights. No matter how you looked at it, commitment cultures were consistently the top-performing culture.
The Value of a Commitment Culture
Companies with the commitment culture are the kind of workplace people usually only leave when they retire or die.
Commitment cultures were consistently the culture that performed best in the Stanford study. For example, not a single commitment culture in their study went out of business. That was over 15 years.
Commitment cultures were also the fastest to go public with an IPO. They were also generally first to detect market shifts because they knew their customers best.
Star cultures, on the other hand, experienced more internal rivalries and infighting. At first, they expected this group to perform best in the study. These companies did, in fact, produce some of the biggest winners. But they were also less likely to make it to IPO than any other culture.
The secret of the commitment culture is that when you value employee well-being, people want to stick around. And good employees are the hardest asset for any company to find.
Case Study – A Kidnapping & FBI’s Sentinel
Frank Janssen, a 63 year-old man, was kidnapped from his home in 2014. FBI began its investigation with no clues to start with. Then Frank’s wife started receiving text messages that referenced their daughter and someone named Kevin Melton.
That’s when things began to make a bit more sense. Melton was a high-ranking gang member in the bloods before their daughter Colleen, an assistant district attorney, prosecuted him years earlier.
The FBI asked Google to share any information on searches related to “Colleen Jansen Address”. It seemed the assailants were looking for Colleen, and Google directed them to her childhood residence.
New information also emerged: someone with a T-Mobile burner phone Googled the address. And this phone also contacted someone inside Polk Correctional facility, the same prison where Melton was.
Additionally, the same number was used several times to call Melton’s daughters. The investigators believed that Melton himself was directing the kidnapping.
After a thorough investigation, the FBI had hundreds of pieces of evidence, but nothing to link everything together.
In 2012 the FBI unveiled Sentinel, a search engine for organising evidence, clues, witness testimonies and other hints agents could input.
The Creation of Sentinel
Many people at the Bureau were skeptical when the Bureau re-commissioned Sentinel in 2008 after 11 years.
After all, the FBI had already spent $305 million on Sentinel since 1997. And rather than use this new tool, agents defaulted back to index cards like their predecessors decades earlier.
In 2010, an inspector general’s report estimated that it would take another 6 years and $400 million to complete the project. The Bureau made this estimate based on their previous experience, where they provided explicit demands how the software should work. They wanted to plan everything in advance.
After hearing this estimate the FBI called in Fulgham, who was leading the project. They wanted him to find a cheaper and quicker way. He convinced them that the solution was to take inspiration from Toyota and other companies that adopted a lean methodology. This method would cost only $20 million and take one year to complete.
Fulgham employed agile programming to make the process more effective. Rather than cater to a list of demands, the software engineers would brainstorm and test new use cases each week.
Each Monday the team would discuss new potential uses. Every Wednesday they would review the prototypes. And by Friday, they would determine whether to add the functionality to Sentinel.
This agile method relied on deferring decision-making to whoever was closest to the decision. In this case, the software engineers made decisions about their software.
In just over a year, Sentinel was complete. And their methodology allowed thousands of different use cases to be added to the Software.
Had it not been for the Toyota Production System and a culture of trust, Sentinel would still not be operational today.
Solving the Kidnapping
When the FBI began inputting their data from the kidnapping into Sentinel, hundreds of new clues appeared. One of the clues was that the phone that sent the text messages also made a call to a small city outside Atlanta in Georgia.
Sentinel identified an apartment in the same city that a confidential informant told the FBI a year earlier was a criminal safe house. No one in that initial interview worked on this kidnapping case, but the computers flagged it as a potential lead.
The only problem was the number of potential leads, and the FBI didn’t have enough time to review each one individually. They needed to prioritise the leads somehow.
Fortunately, with the success of Sentinel, the Bureau began embracing the same lean and agile philosophies in its other operations. They would defer decision making to the people closest to the decision. The FBI now encouraged junior agents to pursue leads independently without waiting for orders from superiors.
Following this agile culture, two junior investigators decided to visit the apartment. They found that a woman was living in the apartment and asked neighbours for more information. One neighbour said two men visited the woman. But when the agents found these men, they claimed not to know anything about the case.
That’s when the woman called one of the numbers associated with the kidnappers saying “They got my kids!” The agents then began questioning the suspects more forcefully, which resulted in a mention of an apartment in Atlanta.
When officers ran into the apartment, they found two men caught completely off-guard with guns by their sides.
They soon found Frank Janssen locked inside a closet. This was all thanks to the lean methodology.
Managing Others in a Nutshell
The most effective business culture is one of trust and commitment. This type of culture meshes with the Toyota Production System, where each employee is encouraged to make the best decisions for their work.
The Toyota system has been applied to countless industries under the term lean manufacturing.
Agile methodology is a modern take on lean methodology, applied to computer programmers. Each software engineer has the core responsibility for their own work.
Lean and agile methodologies became central to the FBI and their creation of Sentinel. These methodologies have already helped solve countless crimes including a kidnapping that saved Frank Janssen’s life.
Manage others more effectively with the Toyota Production System and Mind & Practice today.