Our Model: The Toyota Product Development System

As highly regarded as the Toyota Production System (TPS) is, the Toyota Product Development System (TPDS) is every bit as important to Toyota's superior performance. And as big an impact as TPS-derived "Lean" principles have had on manufacturing worldwide, the impact that the underlying principles of Toyota's Product Development System will have on worldwide development will be even greater!

“The real difference between Toyota and other vehicle manufacturers is not the Toyota Production System, it is the Toyota Product Development System.” -- Kosaku Yamada, Chief Engineer of Toyota’s Lexus line

The big challenge is understanding those principles properly, such that they can be applied effectively to different companies with different cultures (simply trying to duplicate what Toyota does would not work). Capturing those underlying principles in the form of systems and methods is what Targeted Convergence™ is all about..

Many studies have shown that development productivity (the percent of time that developers spend on directly impacting the product design) of the vast majority of manufacturing companies in the world is about 20%. There are very few exceptions... but some spectacular ones. Consider Toyota: studies have shown that their development productivity, including all development managers, is 80% (4x the norm)! How can that be? Consider these common attributes of development organizations that Toyota does not share:

• Large numbers of compliance activities and/or metrics
• Engineers hunting for information or expertise
• Engineers waiting for information
• Frustrated engineers
• Administrative reviews; dog-and-pony shows; design results not truly visible
• Many meetings that are useless from the attendees' perspectives
• Design engineers with limited design experience
• Managers who lack the engineering expertise to mentor or evaluate those they manage

That productivity increase does not just affect overall throughput. Toyota consistently develops new car designs in roughly half the time of their competitors, using half the people. And they do not accomplish this with any reduction in scope, innovation, or quality. Toyota's products are consistently some of the most innovative in the market and are consistently rated at the top of most every quality measure.

In the US, it is commonly said that all development work stops three weeks prior to a gate review, as everyone focuses on preparing for the meeting. Toyota does not utilize such administrative gate reviews; their major milestone meetings are simply highly visible design meetings, hard-scheduled such that all the necessary knowledge is acquired prior to the major design decision to be made at that milestone. There is no evaluation of compliance to specifications, of validity of specifications, of success of sub-projects, or of developer performance. Rather, there is simply evaluation of the acquired knowledge and the ramifications on customer concerns in order to determine the best design decision.

Consider that Toyota productivity is 80%; in order to match Toyota productivity, an organization cannot spend more than 20% of its time on compliance activities (including gate reviews, preparing for gate reviews, planning and scheduling tasks and meetings, monitoring progress or reporting status, etc.). Most companies already spend more than 20% of their time on such activities; thus, adding more cannot possibly be a step in the right direction! The problem is not having "gates" or "reviews" or "milestones"; the problem is that such reviews are not an inherent part of the design process, but rather become an "overseeing" activity. Do the people in your organization complain that no real work gets done the three weeks before a gate review because everyone is just preparing for the review?

Despite the reduced emphasis on process management, Toyota doesn't miss milestones... ever! How can that be? Its hard to imagine for most development organizations... unless either there is huge sandbagging in the planning or huge ability to change scope. But Toyota has the shortest project development times in their industry and produces the highest rated products in each class of product that they compete in, products that are hugely complex and require ongoing innovation. How can that be? Consider these attributes of most development organizations that Toyota does not share:

• Tremendous effort is put into well-publicized, detailed, task-based plans at the start of the project.
• Those project plans are not accurate (or often not existent) at the end of the project.
• Few, if any, truly understand the details of the project plan. Definitely not the engineers.
• Routine / expected schedule slippages.
• Projects are reviewed / monitored based upon tasks completed; true risk is not understandable.
• Firefighting is the norm (and expected) toward end of the project.

Toyota doesn't miss milestones because their development process proceeds based on knowledge: knowledge of what is possible, what is not possible, and what is simply not known. To handle the uncertainty of the latter case, they use concurrent sub-projects to manage the risk. Those concurrent sub-projects are not expensive independent projects to build two complete alternatives; rather, they are concurrent sub-projects to fill the missing knowledge. As that knowledge is acquired, design decisions can be made before any development capacity is wasted. (Efficiently acquiring such knowledge is never a waste, no matter the result, as that knowledge is applicable to many future development projects.)

In response to the extensive processes in most development organizations, Toyota would say: keep it simple, trust your employees, make sure everything is visible to them, and enable them to act on what they see. Toyota is proof that high quality results can be consistently delivered on time with minimal process overhead.

How do they do it? They focus on learning first! That single premise drives most everything that they do different from the norm.We call it Learning-First Product Development. We offer books, seminars, and workshops to teach you what that means and why it is so effective. We offer Set-Based Thinking™ to get you started on the right path, capturing your knowledge such that it is truly reusable. And we offer Targeted Convergence™ to further leverage that knowledge, converging efficiently from all you know to particular product designs.