Toyota’s Formula for Mastering Innovation
The Elegant Solution in a Tweet!
To Master and De Risk Innovation make Lean-Little-Bets with IDEA loops (Investigate/Design/Execute/Adjust).
In Two Minutes
Toyota uses specific methods to innovate constantly, consistently and productively, allowing it to solve a problem better than anyone else in its category.
For Toyota, the best to innovate is by producing tons of small improvements, instead of seeking a single game-changing solution. Use your business’s craft until you perfect your design to fit its social context.
Innovate by employing methodically a series of IDEA loops: “Investigate/Design/ Execute/Adjust.”
Give people specific constraints to ensure creative solutions to challenges. Base all your creative process to hard data and direct insights from your customers. Make sure you get workers and consumers emotionally involved.
Take advantage of standards to make the Innovation processes easier to learn. Innovate via “systems thinking.” and make all the elements your product and experience play well together. Thrive for perfection by cutting out all complexity and excess*.
Make it lean!
*You Might want to take a look at Laws of Simplicity
The Elegant Solution In Ten Minutes
Toyota’s Principles of Innovation
Innovation is crucial for any business, but it can get tricky. Toyota rises to the challenge, coming up with more than a million ideas per year that its employees can apply to their process.
How do they do it? Toyota Innovates at all level, and so should you. Get everyone in your organisation devoted to think of new ways to do things and improve your customers life’s. Think like Toyota: don’t seek a single game-changing solution. Instead, produce tons of small improvements, look for ‘the elegant solution – the singular and deceptively simple idea with huge impact.’ Such ideas cut through the complexities that distract people from new opportunities, reframing problems in new, productive ways.
Toyota’s quest for elegant solutions started in the nineteenth century when Japan’s Sakichi Toyoda found ways to improve the weaving process. His work led to Toyoda Automatic Loom Works, which eventually became the Toyota Motor Company. Toyoda did not seek new ‘toys’ nor technological frills. Instead, he researched for ‘ingenuity in craft’, so he could manufacture things that people wanted by looking for better ways to perfect his work and make his innovations fit their social context. That is ultimate elegance, and to get it right you have to understand innovation. Start by defining it. Don’t get caught up in false distinctions like the one between ‘incremental and breakthrough innovation.’ Innovation means ‘solving the problem of how to do something better than before.’ Your challenge is to Innovate until you reach perfection – and then to keep improving.
Creativity isn’t a mystery. You can generate ‘applied creativity,’ a core principle of innovation, by engaging in your situation – that is, connecting emotionally – and exploring it. What are you really trying to do? Don’t be trapped by job titles. Instead, focus on who you are and who you are to your organisation. Do you generate new ideas? Do you apply others’ ideas? Are you at your best improving existing processes? Or do you focus on relationships and help people get along? Hone in on the focus that suits you until you get to the bottom of your organisation, your job and your immediate tasks, while continuing to seek your ultimate goals.
Examine what you do everyday. Ask difficult and challenging questions: How do I serve people? Why is my work important? Can this be done better? How can I improve this job, process, company or product? Use your answers step by step. Both history and Toyota show that seeking a single idea that will turn the world upside-down is not the best way to achieve radical improvements that can revolutionise your business and lead you toward perfection. A big breakthrough idea sounds glamorous, but it is risky and not the best way to Innovate. Instead, seek evolutionary, small changes that make your product a bit better each time. Generate innovation by reversing standard questions. Instead of asking what you can improve, ask what is keeping you from perfection. Now, eliminate those obstacles.
That is how Toyota’s experts designed the Lexus. First, they established a clear, ambitious goal: Create a luxury car better than a Mercedes or a BMW. Then, each core member of the design team rented a better luxury car and drove it almost 150 miles, tracking performance and the experience of the ride, until they identified the ‘Mercedes S class and BMW 7 series’ as targets to beat. Wicked isn it?
They studied U.S. luxury car owners, examining everything from where they ate to how they worked. Toyota used direct observation, focus groups, academic studies and reverse engineering of BMW and Mercedes cars to establish criteria for the car that would become the Lexus. The team set and pursued impossibly high standards. The crucial final steps included acts of elimination: the team cut weight, noise and other obstacles to achieve perfection.
Toyota’s design team Innovated on its goals. To do the same, you need to think in terms of the bigger picture. Make sure your changes work with the way your entire solution fits together and functions. This isn’t easy, since “System” nor ‘solutions thinking’ are natural, but you can learn to do it. Look ahead to see how your changes will move through the solution. Seek each problem’s ‘root cause,’ which is often hidden behind what seems to be the source. You can’t do this alone. Your entire organisation has to be devoted to this kind of thinking. This is easier in small companies, especially start-ups, but it can be done anywhere. Everyone should examine how suggested changes will fit into the larger whole.
10 Rules to Guide Innovation
& Building The Elegant Solution
As you apply Toyota’s principles for innovation, let these practical rules provide direction:
1. Let Learning Lead
Many potential innovations fail because those involved failed to really understand the situation, which can happen when people don’t value or understand learning. To avoid this, make learning everyone’s first responsibility. Give people time to observe, and teach them how. Many conceptual tools or learning models can help your organisation learn. Toyota uses the ‘Deming Wheel,’ a sequence of Plan/Do/Check/Act (PDCA). Adapting such a standard model of learning leads to other crucial components of gathering information, such as developing standardised vocabularies and methods. A more generalised, applicable four-step learning model, is called ‘IDEA Loops’ (investigate, design, execute and adjust)’. To use it, investigate what is going on. Design solutions. Execute experiments to see if the solutions work. Adjust your actions, incorporating what you’ve learned. Then start over again with an investigation. Record the results of each IDEA loop in a standardised document, so your organisation has access to what you discovered in a known format. To build reflection into your process, take the time after you’ve acted to examine your actions.
2. Learn to See
As you Innovate, things won’t always work out as you planned. Some new product or item might function but still not solve your real problem. This happens when you don’t understand the situation deeply. To solve this, ‘learn to see’ the problem in full context; understand how, when, where, and why it happens, and what impact it has on people. First, get the facts. Build your perceptions until you see things as the customer does. Use three general tools. Initially, note what customers do. Watch them in context. Make your focus groups and lab experiments as realistic as possible. Then ‘become the customer.’ Go where the customers go. Do what they do. Future Toyota managers become mystery car shoppers, so they experience the purchasing process. Next, ‘collaborate’ with customers, involve them. Ask what they want and need. Now give it to them.
3. Design for Today
Often something you try just doesn’t work as well as you hoped. This can happen when you get addicted to invention for its own sake or to an idea just because it’s yours. To prevent this, design for a need that actually exists now. This doesn’t mean you can’t develop new products if they demand a long lead time, but begin by solving problems that are impediments in the present, not ones you anticipate in the future. Hybrid cars are a good example. It took Toyota a long time to develop them, but they met a real need. Focusing on existing needs also grounds your development process in the real world; it allows you to master, as Sakichi Toyoda suggested, every inch of the production process. Incorporate your understanding of trends into the design process, but stay anchored in today’s market.
4. Think in Pictures
You’ve involved people in your innovation project by telling an engaging story, but to really explain it, use pictures. Draw or diagram the problem (and solution) or use photos to bring the dream alive through images. You don’t have to be an artist; you can use stick figures, clay models, collages, or existing graphic or software tools to evoke your dream. You can do this in words, like thinkers from Walt Disney to Martin Luther King Jr. As they ask and answer questions, people can literally visualise solutions to the immediate challenge. This process allows participants to connect thoughts their own way, and shatters logjams created by enforcing linear processes.
5. Capture the Intangible
Sometimes you know what the goal is, but something is missing. This can happen when the people focus too narrowly on the specific object being created and miss its larger purpose. To illuminate your vision, try to explain that intangible missing essence. If you buy a Cadillac, you aren’t buying just the transportation function. You’re also buying the feeling, the meaning, the personal connection – the intangibles that come with the car. The most common intangible need is the desire to avoid risk. People who might buy your product fear that you’ll waste their money, that it will fail or hurt them, or that they’ll look bad. If you can show them these things won’t happen, you’ll come closer to selling the intangible. Moving up, you want people to love your product, and to have a sense of collaboration, to feel that when they buy it they are part of creating something great.
6. Leverage the Limits
If Innovation is essentially dead at your company, the organisation may have gotten too comfortable. To reignite its start-up spirit, use limits as Toyota does (and as artists do) to force more creative solutions. Set ‘stretch goals’ to push beyond the current level of performance. Align these bold, but specific, goals with the organisation’s core function. Jane Beseda set such stretch goals to revolutionise Toyota’s North American Parts Operation. She set a target: cut $100 million from distribution costs and eliminate $100 million worth of inventory from the supply chain. At the same time, she wanted to improve customer service by 50%.
While you might be able to improve your results by 10% just through working harder, you have to change how you work to improve by 50%. Beseda found that better departments worked at cross-purposes. To solve that problem, Toyota adopted a new planning approach called, ‘Vertical-Horizontal-Vertical.’ Each unit’s team planned on its own, met with teams from other units to plan integrated efforts, and then updated its unit-specific plans.
7. Master the Tension
If your team is solving problems, but in a flat, uninspired boring fashion, try to ‘work through creative tension.’ Toyota applies ‘dynamic tension’ that is, establishing goals that pull the organisation in two opposite directions, and then finding a solution that balances both. Use each half of these paired forces to frame your efforts to resolve the opposite challenge. Then reverse. Using paired challenges can push your teams past the mental blocks and lazy thinking.
8. Run the Numbers
Often teams come up with solutions that simply don’t work. This happens when you treat innovation as an art. Instead, balance your vision with hard data. Re-examine the challenge. Measure your process. Keep analysing it until you can articulate the issue in ways that lead to new solutions. Toyota pushes its engineers to refrain from ‘immediate action,’ because the first action is always along overly familiar lines. It emphasises the need to move past hearsay and even experience.
9. Make Kaizen Mandatory
If your company Innovates, but does so erratically, it is not managing creativity correctly. To solve this, integrate the ‘kaizen ethic’ throughout your organisation. In kaizen, you engage in an ongoing process of developing a standard, following it, and then developing even better methods, which become the new standard. Many creative people run away from standards, thinking it restricts creativity. That’s false. A standard is simply the best way known to do something, but you should adhere to it only until you find a better way. When you set a standard, make sure it is the best method. Document it completely. Distribute the information companywide, and shape your training programs so people live the standard. Kaizen accents quality over the long haul. If crunch times pull on you abandon your standards, fight that temptation.
10. Keep It Lean
Many companies assume that ‘more is better.’ They add options and features, making products hard to use and burying their core functions. Instead, keep solutions lean. Focus on fulfilling customer desires and refuse to add anything else. This isn’t easy. Complexity is the opposite of lean. Complexity stems from inconsistency, overload and waste. Seek the sources of these problems solution-wide and fix them.
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