Chasing the Rabbit: Official Blog by Author Steven Spear

Paul Krugman (“Health Care Now,” NY Times, January 29, 2009) wrongly concedes the main argument against expanded health care coverage: That it will put a financial burden on the economy.  Aside from the easy rebuttal that an overly sick populace is a drain on society, there is the more succinct point: We can provide much better care to many more people than we currently do at less cost and with less strain on providers.  This assertion is not hypothetical but based on concrete evidence across the spectrum of preventative, primary, chronic, acute, urgent, and extended care.  

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Can organizations sustain their ‘quality’ efforts in the current economic environment?  This question is being asked in all sectors—industry and healthcare, high tech and heavy industry, manufacturing and services.

For great organizations, the answer is not only “we can!” but also “we must!”  For others, there is hesitation and doubt. 

Why?  How these two groups think about the question reflects fundamentally different assumptions. 

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Chasing the Rabbit asserts that the marked differences in performance among organizations that do much the same work are directly due how complex work processes are managed.  Great organizations specify in advance how work is expected to be done to capture the approach most likely to lead to success with tests built into the work indicating when something is going wrong while work is being done.

This is a critical.  Without a stable base from which to start reliability is hard to achieve and without rapid recognition of when improvement and innovation are needed, it is impossible to get better.  This leaves people mired in the same frustrations and aggravations, subject to occasional catastrophe.  Take this first step, and you can use the other capabilities of high speed, disciplined problem solving to build new knowledge and expertise, and knowledge sharing to make sure it has wide impact.

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The likely ascension of Akio Toyoda to Toyota’s presidency raises questions about how Toyota will navigate the current economic crisis, perhaps compromised by a “cautious management, [that] has become even more conservative and bureaucratic in recent years.” (”Toyota, Needing Change, Taps a Scion to Lead,” by Norihiko Shirouzu, WSJ January 12, 2008).  It is worth highlighting what made Toyota great, what creates vulnerability, and what Toyota needs to do to re-establish vigor.

Toyota’s extraordinary successes–becoming worldwide sales leader, achieving market caps exceeding the cumulative total of its several next competitors, and so forth–is deeply rooted in the pervasive innovativeness of the company, as I explain in my book, “Chasing the Rabbit: How Market Leaders Outdistance the Competition…“.  Hardly competitive in the 1950s, Toyota first innovated process management, pushing the boundaries of initial quality and workplace productivity.  It then innovated product design management, simultaneously diversifying its product portfolio while cutting design times and costs.  It innovated products, moving upscale with Lexus and to entry level with Scion.  Despite off-shoring and outsourcing by other manufacturers, it innovate supply chain management, building design and manufacturing facilities and creating supplier networks in regional markets. It innovated technologically with the hybrid drive.  

With Toyota’s institutionalization of innovation–and the relentless experimentation and learning that underpin it–as a source of competitive  advantage, Toyota’s risk is that people misinterpret the particulars of how they do their job as something essential and fundamental, becoming ritualistically dogmatic about particular artifacts.  They think that the particular pull system, form of standard work, or shop floor ratios of team members to team leaders, for instance, are the ‘right’ answer, with departures from those being ‘wrong.’ They forget that these as tools are meant to foster innovation by increasing the chance that process and product designs capture the best known approaches and reveal when problems have to be solved.  Paralysis sets in.

Mr. Toyoda will be unable to single handedly handle all of the company’s challenges.  He will need the combined creativity of its thousands of employees and suppliers.  To uncork their vast potential and engage their contribution, he will have to lead by example, re-emphasizing that the company’s success depends on innovation done with a ‘hair-on-fire’ urgency to discover problems and their solutions, and that the way to succeed is by racing ever faster.

For the laudable goals of fewer green house gases and less foreign oil dependence, why promote convoluted supplier mandates for corporate fleet fuel economy (’CAFE’) standards (NY Times–How Many Miles Per Gallon, Jan. 11, 2009)?  We typically influence behavior better by focusing on consumers.  To reduce smoking, we tax cigarettes and decrease purchase and smoking opportunities.  To increase home ownership, we subsidize mortgages.  To increase learning, we provide educational loans.

Simpler and more effective would be targeting consumers in three phases to drive up disincentives and drive down need.  Short term, raising gas taxes would have impact–Summer 2009’s price spike changed purchase behavior (fewer SUVs) and use (more carpooling, biking, and mass transit).   Short to intermediate term, we can fund mass transit in places already prepared–urban centers, commuting corridors like Boston, New York, Washington and the like.  Longer term, we can change our urban planning and zoning schemes.  Housing, work, commerce, and education are zoned to be fragmented and distributed, so people have to drive far and carry lots of stuff.  Reducing sprawl will allow less frequent trips of shorter distances in smaller cars.

CAFE standards–like many other supplier mandates–look easy but their effects are likely indirect, ineffective, and often carry substantial unidentified hidden costs.