Toyota Production System, Lean management and Agile development

This post begins at Fremont, California home of one of the worst auto factories ever owned by GM. The quality of both the cars and the employees that produced them was so notorious that GM made the decision to close the factory in 1982.   In 1983 Toyota and GM began negotiations to again open the Fremont factory, with each partner having  different goals. GM began to think about manufacturing smaller and more efficient cars and thought that they can learn the successful “Toyota Production System.” Toyota on the other found themselves behind Honda and Nissan, both of whom had factories in the States, and they were afraid that they could lose market share in the United States. Those discussions lead to the creation of NUMMI (New United Motor Manufacture Inc).


  As you can imagine there were many areas of disagreement, and one of them is applicable to our story today. Toyota came into this partnership with a culture that was known as the Toyota Production System. This radically different culture promoted two basic ideas:

  1. Employees were coming to work to contribute their expertise. The company trustedthem to make the right decisions and contribute to their greatest ability.
  2. To promote continuous improvement, which was obtained by the company shyingaway from bureaucracy and encouraging employees to come with new ideas and a willingness to test them.

Those two Ideas where translated into a more tactical approach that was implemented intoemployees’ daily work lives:

  • People are more important than processes and to succeed they need to work in groups based on commitment and trust;
  • Decentralized decision making – pushing decision making to the lowest possible level: People that are doing the work know the domain better and can fix issues and improve the process;
  • If you put people in the position to succeed they will;
  • Mistakes are OK, as long you learn from them. The biggest problem occurs when employees do not have opportunity to make mistakes.

in the 1980 GM struggled with the result of centralization of their divisions (opposite direction of their legendary CEO Alfred Sloan) and with financial issues that they tried to resolve in automation. The paradox was that the Toyota system didn’t just give autonomy and power to divisions, this system gave autonomy and power to the production line workers. The partnership between the two was actually partenship between two oposite perspective and attitude of the work force.  

When GM heard about the Toyota approach they literally laughed. Workers in the Fremont factory were characterized as only caring about themselves while performing the least amount of work that they could get away with (sound familiar?). GM had committed to the union that NUMMI will reemploy 80% of the previous factory’s employees, perhaps because the thought this new initiative would fail while still learning enough from Toyota in order to be successful. Toyota, on the other hand, agreed to take the risk.  Perhaps they knew that success in Fremont would translate into greater success throughout the US.   Once the agreement was signed, waves of employees from the old GM Fremont factory made their way to the Takaoka auto factory in Japan to learn about the Toyota Production System. They returned with stories about the “Andon cord,” and how managers are “working” for employees. The general feeling was that something different was going to happened under NUMMI.   In 12/10/1984 the first Chevy Nova (Yellow Chevy Nova) was manufactured and things were really different. The past bad behavior had disappeared, the Andon cord had not been pulled, nor had  new suggestions been implemented.   


A month after NUMMI was opened the President of Toyota Tetsuro Toyoda paid a visit to the new factory. While going through one of the production lines he noticed an employee struggling to install some rear lights on a vehicle. Mr. Toyoda approached the employee, looked at his badge, and said: “Joe, please pull the Andon Cord.”  Joe looked at Mr. Toyoda (and the entire factory executive team behind him) and replied, “I can fix it, sir.” Mr. Toyoda replied ‘Please Joe,” to which Joe replied, “I can fix it, sir.” Mr. Toyoda then reached out and took Joe’s hand, he lifted it up and together they pulled the Andon Cord. A yellow light began to flash and Joe (with his hand shaking) continued to work on the car. Once the car reached the end of Joe’s work area, the production line stopped. Joe finished his work and pulled the Andon Cord again, the production line return to normal work.

Mr. Toyoda bowed to Joe and began to speak in Japanese. “Joe,” he said, “please forgive me! I’ve done a bad job of communicating to your managers the importance of the Andon Cord. Only you can make the best cars. I’ll do everything in my power to make sure that I don’t let you down again.”   By noon the entire factory had heard about it. The day after that the Andon Cord was reportedly pulled over ten times, and an average of 100 per day a month after Mr. Toyoda’s visit. 

Two years later, and a visit from the Harvard Business School to have data proving that the worst factory ever had become the best factory GM had, with a quality level on par with Toyota factories in Japan. NUMMI was a huge success that was discussed and celebrated. 

The Toyota Lean System, or Lean Management as it is known in the states, penetrated many industries and began to make a difference. From Hollywood to Health Care, the new culture and concepts influenced many different industries.   This change didn’t pass up the software industry. On February 11-13, 2001, at The Lodge at Snowbird ski resort in the Wasatch mountains of Utah several software engineers met to discuss how to bring Lean Management into software development. They looked for a way to help software companies to adopt the Toyota Production System, instead of creating new strict ceremonies and processes.   If you look at the Agile Manifesto, you’ll see the Toyota Production System elements that I laid out at the beginning of this post.

Each statement of the Agile Manifesto promotes trust, commitment, and continuous improvement. The Agile Manifesto simply tried to adjust this culture and tactics to the software industry.   Culture changes are the hardest to implement, therefore human beings are more open to embrace new process and ceremonies to promote new culture. Regretfully it’s not working. Changing a culture is hard work that demands a lot from everyone that is involved in this effort.   

Today’s agile approaches (SCRUM, KanBan, DevOps and whatever will come in the future) become yet other strict processes with fixed ceremonies that needed to be trained, so people will follow them. The Agile manifesto didn’t mention any strict process or ceremonies. Following the Toyota Production system, it was an attempt to give autonomy to teams and workers, an autonomy that should increase the variety of the company options and will continuously improve the company. Regretfully this idea was abundant and replace with strict rules and judgment if an agile process is right or wrong. This is not what agile is all about!

  And NUMMI?  NUMMI was closed in 2010. Today this factory is being used by Tesla to produce their cars


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