Why Changing Culture Is So Difficult

Culture change is a complex topic in its own right and the subject of many articles. This became most evident to Toyota in its efforts to globalize in the 1980s. To Toyota, globalization did not mean purchasing capacity in other countries. Globalization meant exporting the Toyota culture to build autonomous divisions in other countries that reproduced the DNA of Toyota.

What is culture? There are many definitions, but one thing is for sure: what you see and hear when you walk into a company for the first time are only surface manifestations of culture. Depicts a TPS view of culture as an iceberg. What many visitors to Toyota and its affiliates see when they visit are surface features such as kanban, high employee suggestion rates, clean floors, lots of charts and visuals, cells, and teams. The most common question I have heard when taking groups on tours of Toyota plants is “How do you reward your people to get them so involved?” A reward system itself is simply a surface manifestation of culture. It is a human resource tool—something easy to manipulate and only the tip of the iceberg.

Below the surface is the Toyota Way culture. In fact, Toyota takes a “textarticle” approach to developing culture. Edgar Schein, one of the leaders in analyzing and understanding culture, defines culture this way:

The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.

This is a remarkably apt description of the Toyota Way culture in a number of ways:

1. The Toyota Way has a depth that goes to the level of basic assumptions of the most effective way to “perceive, think, and feel” in relation to problems. Things like genchi genbutsu, recognizing waste, thorough consideration in decision making, and the focus of Toyota on long-term survival are the DNA of Toyota.
2. The Toyota Way was “invented, discovered, and developed” over decades as talented Toyota managers and engineers, like Ohno, “learned to cope with its (Toyota’s) problems of external adaptation and internal integration.” The history of Toyota is very important because we understand the challenges and context that led to active on-the-floor problem solving, not theoretical, top-down exercises.
3. The Toyota Way is explicitly “taught to new members.” Toyota is, in fact, doing seminars on the Toyota Way, but that is a limited part of the learning process. The Toyota Way is explicitly taught the way you should transmit culture—through action in day-to-day work where leaders model the way. As Jane Beseda of Toyota Sales explained:

The Toyota Way matches everything that they (team members) do every hour of the day. So they are swimming in this culture and this philosophy. We’re always doing kaizen projects. It’s a part of who we are.

Regarding this third point, Toyota in Japan hires almost all of its new employees fresh out of school, in some cases from a Toyota City technical high school, where students begin to learn the Toyota Way while still in school. Toyota is their first job … and typically their last. Therefore, they do not have to unlearn past practices from other companies with conflicting approaches. Aspects of the Toyota Way are, in fact, intertwined with Japanese culture, which is relatively homogenous. For example, hansei, hourenso, kaizen, and nemawashi are characteristics of top Japanese companies and not peculiar to Toyota.

We can look to Toyota’s globalization as an object lesson in what it takes to build a culture. When Toyota began seriously globalizing in the 1980s, most broadly in the U.S., they quickly realized the challenges of creating the Toyota Way in a culture that was alien to many of their values. Toyota’s approach to spreading the culture to global operations has been intensive and very costly. The most intensive effort has been in Toyota’s largest market outside Japan—North America. In this case:

1. All U.S. senior managers were assigned Japanese coordinators. The coordinators had two jobs: coordinating with Japan, where there are continuous technical developments, and teaching U.S. employees the Toyota Way through daily mentorship. Every day is a training day, with immediate feedback shaping the thinking and behavior of the U.S employees.
2. Toyota used trips to Japan, which turned out to be one of the most powerful ways to influence the cultural awareness of U.S. employees. We discussed in Chapter 7 the importance of sending group leaders and union officials from NUMMI to Japan to work in Toyota factories.
3. Toyota used the TPS technical systems, or “process” layer of the Toyota Way, to help reinforce the culture Toyota sought to build. For example, we discussed how large batch manufacturing with lots of inventory supports the Western culture of short-term firefighting and ignoring systems problems. By creating flow across operations using TPS and lean product development in its overseas operations, Toyota is helping change this behavior and shape the culture it seeks to nurture.
4. Toyota sent over senior executives to engrain the Toyota DNA in new American leaders. This started with managers from Japan and has evolved to homegrown managers in North America like Gary Convis and Jim Press.

The journey for Toyota is by no means over. Toyota is continually adapting its culture to local conditions. Here are example adaptations from the Toyota Technical Center (TTC) in Ann Arbor, Michigan:

1. Being more flexible about work hours. In Japan, Toyota engineers historically worked as needed, even if it was 15 hours a day, nights, weekends. TTC has become more flexible, to the point of putting in flex-time systems.
2. Performance-based rewards. Traditionally, Toyota in Japan pays a large portion of salary in semi-annual bonuses, but these are tied to company performance, not individual performance. In TTC they developed an individual bonus system based on performance.
3. Hansei events at TTC have been modified to provide more positive feedback in addition to critiques and opportunities for improvement.

Companies moving into lean will not have to take their employees to Japan to learn the culture, but will need to make serious long-term investments to educate and change their culture so employees can adapt to and use many of the Toyota Way principles.

I was personally involved in one encouraging example of true culture change when in January 2000 my colleague Jeff Rivera and I began consulting with Ford’s Cuautitlan assembly plant, outside Mexico City. The site had four assembly lines in one plant, making four different vehicles, from small cars to full-sized trucks to commercial-grade trucks and about 9000 parts. It was more like a city of auto parts than an assembly plant, with parts streaming in once a week across the border.

Our focus was on material flow. We used kaizen workshops to get teams in the plant to reorganize parts and tools for best presentation and efficiency. We then followed up with pull systems to get parts to the line from a supermarket of parts. The operators loved it and in each case there were large gains in efficiency. The internal lean coaches became very committed to the process. But we faced continual resistance from senior management in the plant who did not see any direct labor reduction savings. As a result, once the workshops were completed, there was little follow-up activity. When Ford began struggling financially, it pulled product from the plant. By fall 2001, rumors floated that Ford was going to close it. Eventually, the internal lean coordinators we trained were let go. I feared that was the end of the story.

Then I learned in fall 2002 that Ford Production System (FPS) experts were flocking to see the Cuautitlan plant. Miraculously, the plant had become a model for FPS, a version of TPS. Operators were heavily involved in continuous improvement and the plant was performing at one of the highest levels in North America. Because of the high level of quality and efficiency at Cuautitlan, Ford gave the plant new products to build. How did this sudden turnabout to FPS occur?

1. The director of manufacturing for Ford of Mexico, who brought us in and was a believer in TPS, realized he had to get more hands-on when there were rumors of shutting down the plant.
2. He brought in new plant management, including an assistant plant manager from Hermosillo, Mexico, who had an understanding of TPS. (The Hermosillo plant was originally set up by Mazda, using a production system similar to TPS.)
3. The Cuautitlan plant began focusing on cultural change, not simply FPS tools and checklists. This included mandatory training for all managers on the core disciplines of FPS and a test. Managers who failed the test were let go. Managers who passed were required to implement what they had learned.
4. Management effectively used policy deployment (hoshin), including putting it into a Web-based system so everyone knew his or her objectives. Performance was monitored daily, so that every problem that occurred was immediately conveyed to the appropriate level of management for immediate action.

In other words, this was a top-down process with real teeth in it. Management was taking a tougher approach than Toyota has taken in its U.S. operations. But it was necessary in an environment that had grown complacent and needed radical change in the culture. Management was changing the culture by aligning objectives, measurements, and visual systems to reinforce the appropriate behavior every day.