Written by This Lean Enterprise Institute podcast episode shares an interview conducted by Josh Howell (LEI President), and Mark Reich (LEI Chief Engineer Strategy) and Olivier Larue, President of Ydatum.
They discuss the Toyota Production System (TPS), specifically the “Toyota triangle”, which includes philosophical, technical, and managerial elements that are crucial for TPS to function as an economic system for growth.
He emphasizes that human development and creativity are central to problem-solving within TPS, despite not being explicitly highlighted in the more widely known “TPS house” diagram. The discussion also addresses organizational challenges in problem-solving, specifically the tendency for individuals to avoid difficult but necessary problems if a safe environment for failure is not provided.
He adds that if the machine is considered the most important asset, respect for people cannot truly be achieved.
He argues that “true efficiency” cannot be achieved if the production system generates negative externalities, such as pollution and poor labor relations. He specifically identifies unserviceable debt as a significant externality of the mass production system, where profit and cash flow often conflict. In this system, companies may compromise cash flow to make a profit, leading to debt. TPS aims to get cash from operations to avoid this reliance on debt, which can be a burden on society.
While TPS undoubtedly helps firms reduce costs and increase profits, he emphasizes that its full benefits extend to customers (providing better products), workers (creating a better work environment and fostering development), and society at large (reducing pollution by offering hybrid cars). This broader focus on value creation for all stakeholders supports a more sustainable and ethical economic model.
He recently authored the book, The Toyota Economic System, which will present the three elements of the “Toyota triangle” — philosophical, technical, and managerial — and their necessity in making TPS an economic system for growth.