toyota knowledge management case study

The Lean Post / Articles / How the A3 Came to Be Toyota’s Go-To Management Process for Knowledge Work (intro by John Shook)

Problem Solving

How the A3 Came to Be Toyota’s Go-To Management Process for Knowledge Work (intro by John Shook)

By Isao Yoshino

August 2, 2016

A3 thinking is synonymous with Toyota. Yet many often wonder how exactly this happened. Even if we know A3 thinking was created at Toyota, how did it become so firmly entrenched in the organization’s culture? Retired Toyota leader Mr. Isao Yoshino spearheaded a special program that made A3s Toyota’s foremost means of problem-solving. Read more.

In the late 1970s, Toyota decided to invest in cultivating the managerial capabilities of its mid-level managers. Masao Nemoto, the same influential executive who led Toyota’s successful Deming Prize initiative in 1965, led a development program especially for non-production gemba managers called the “Kanri Nouryoku Program” – “Kan-Pro” for short. Nemoto chose to structure this critical management development initiative around the A3 process .

The A3 is well established now in the lean community. As a process, as a tool, as a way of thinking, managing and developing others. The question often comes up of where did it come from and how did it become a common practice. The basic answer is that it dispersed mainly from Toyota. But how did it become so prevalent in Toyota? And how did it evolve from its humble beginnings as a tool to tell a PDCA quality improvement story on an A3-sized sheet of paper, as it had been commonly used by many Japanese companies since the 1960s?

What had started as a simple tool to tell PDCA stories grew at Toyota into something more: the A3 process came to embody the company’s way of managing in an extraordinarily profound sense. How did this happen?

My first “kacho” (manager) at Toyota (in Japan starting in 1983), Mr. Isao Yoshino, was a member of Nemoto’s four-man team that created and delivered the “Kan-Pro” manager-development initiative that directly answers that question. The program has been unknown outside Toyota … until now.  

-John Shook

Interview with Mr. Isao Yoshino

Q: what was the purpose of the kanri nouryoku program.

A: The main purpose was to nurture “Management Capabilities” of employees who were at manager (kacho) level and above. There were four rudimental capabilities for managers:

• Planning capability, judging capability
• Broad knowledge, experiences and perspectives
• Driving force to get job done, leadership, kaizen capability
• Presentation capability, persuasion capability, negotiation capability

Mr. Nemoto decided to take actions in reinvigorate managers (especially administrative) and help heighten awareness of their role. Mr. Isao Yoshino

Q: Why did Toyota decide it needed this program?

A:  After introducing Total Quality Control (TQC) in 1961 and receiving the Deming Prize in 1965, TQC-based perspective had taken root widely across the company. In the late ‘70s, Mr. Nemoto (one of the main people behind launching TQC) noticed that management capabilities and TQC awareness was decreasing among managers, particularly within the non-manufacturing gemba or office divisions. Mr. Nemoto decided to take actions to reinvigorate the managers (especially administrative) and help heighten awareness of their role. And so, in 1978, he formed a task force that promoted a two-year program (the Kanri Nouryoku Program) for two thousand managers from all over the company. I was one of the four staff members on the task force in Toyota City.  

Q: What sort of tools and activities did the Kanri Nouryoku employ?

A:  All the managers went through “a presentation session” twice per year (June and December). The officers in charge of each department attended to have a Question and Answer session with the managers. Officers tried to focus on the problems each manager was facing as well as the effort and process needed to solve the problems. Officers focused more on “What is the major cause of the problem?”, rather than “Who made those mistakes?” This problem-focused attitude (as opposed to the who-made-the-mistake attitude) of the officers encouraged managers to share their problems rather than hide them.

The key to giving the presentations was that they had to be done using an A3. The managers learned how to select what information/data was needed and what was not needed, since an A3 has only limited space. This helped them acquire the seiri and seiton functions of the 5S concept as applied to knowledge work . A3 was also a great tool for officers. They could easily see, at a glance, all the key points that the presenter wanted to convey. As it is just one single document, you can quickly see from the left top corner to the right bottom of an A3 and grasp the key things the writer wants to communicate. This is something that you cannot get from a written document or PowerPoint presentation.

Q: What was your personal experience with the program?

A:  First, I was fortunate to get acquainted with many admirable managers, who inspired me in many ways. I also learned how to express myself more effectively by studying A3 documents from two thousand managers. Strikingly, I discovered that managers whose A3s were excellent were also excellent managers at work.

Strikingly, I discovered that managers whose A3s were excellent were also excellent managers at work. Mr. Isao Yoshino

Nemoto-san highly praised managers who took a risk to report their mistakes (not success stories) on A3s with a hope of finding a solution. Nemoto valued their sincere and proactive attitudes. “Nemoto Lectures” were held for managers three or four times a year. Mr. Nemoto went through every single impression memo from the audience as feedback for his next speech.

Mr. Nemoto also appreciated the efforts by managers who tried to nurture excellent subordinates. This created a new company-wide notion that “developing your subordinates is a virtue.” It was amazing to see managers in their 40s and 50s willing to give 100 percent of their energy to work on hoshin kanri and A3 reporting, because they were convinced the program was practical and useful and worth using to bring themselves up to a higher level. Seeing all this happen at work truly helped me grow professionally.

Q: What was the effect of the program on Toyota?

A:  Well for one, every mid-level manager who was involved in this program over the two years came to clearly understand their roles and responsibilities and also learned the importance of the hoshin kanri system. People at Toyota don’t hesitate to report bad news, which has been Toyota’s heritage since day one. The Kanri Nouryoku program has further reinforced this tradition because of its praise toward managers and others who were honest about their mistakes. And after the program was implemented to the back-office managers, the level of their awareness of their role rose up to the same level of that of manufacturing-related managers, which significantly strengthened the management foundation. 

Everybody became familiar with using the A3 process when documented communication was needed – A3 thinking eventually became an essential part of Toyota’s culture. People learned how to distinguish what is important from what is not. 

Managing to Learn

An Introduction to A3 Leadership and Problem-Solving.

Written by:

About Isao Yoshino

Isao Yoshino is a Lecturer at Nagoya Gakuin University of Japan. Prior to joining academia, he spent 40 years at Toyota working in a number of managerial roles in a variety of departments. Most notably, he was one of the main driving forces behind Toyota’s little-known Kanri Nouryoku program, a development activity for knowledge-work managers that would instill the A3 as the go-to problem-solving process at Toyota.

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While much has been written about Toyota Motor Corp.’s production system, little has captured the way the company manages people to achieve operational learning. At Toyota, there exists a way to solve problems that generates knowledge and helps people doing the work learn how to learn. Company managers use a tool called the A3 (named after the international paper size on which it fits) as a key tactic in sharing a deeper method of thinking that lies at the heart of Toyota’s sustained success.

A3s are deceptively simple. An A3 is composed of a sequence of boxes (seven in the example) arrayed in a template. Inside the boxes the A3’s “author” attempts, in the following order, to: (1) establish the business context and importance of a specific problem or issue; (2) describe the current conditions of the problem; (3) identify the desired outcome; (4) analyze the situation to establish causality; (5) propose countermeasures; (6) prescribe an action plan for getting it done; and (7) map out the follow-up process.

The leading question

Toyota has designed a two-page mechanism for attacking problems. What can we learn from it?

• The A3’s constraints (just 2 pages) and its structure (specific categories, ordered in steps, adding up to a “story”) are the keys to the A3’s power.
• Though the A3 process can be used effectively both to solve problems and to plan initiatives, its greatest payoff may be how it fosters learning. It presents ideal opportunities for mentoring.
• It becomes a basis for collaboration.

However, A3 reports — and more importantly the underlying thinking — play more than a purely practical role; they also embody a more critical core strength of a lean company. A3s serve as mechanisms for managers to mentor others in root-cause analysis and scientific thinking, while also aligning the interests of individuals and departments throughout the organization by encouraging productive dialogue and helping people learn from one another. A3 management is a system based on building structured opportunities for people to learn in the manner that comes most naturally to them: through experience, by learning from mistakes and through plan-based trial and error.

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About the Author

John Shook is an industrial anthropologist and senior advisor to the Lean Enterprise Institute, where he works with companies and individuals to help them understand and implement lean production. He is author of Managing to Learn: Using the A3 Management Process to Solve Problems, Gain Agreement, Mentor, and Lead (Lean Enterprise Institute), and coauthor of Learning to See (Lean Enterprise Institute). He worked with Toyota for 10 years, helping it transfer its production, engineering and management systems from Japan to its overseas affiliates and suppliers.

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Evaluating the Importance of Knowledge Management in Organisations: A Case of Toyota

2022, Evaluating the Importance of Knowledge Management in Organisations: A Case of Toyota

Knowledge management can lead to organisations gaining a sustained competitive advantage. Knowledge creation and sharing should be part of an organisations culture as this can lead to organisations gaining a competitive edge over competitors. Toyota motor corporation in Japan realised that through knowledge creation and sharing the organisation can gain a competitive edge over its competitors. The culture at Toyota is deeply rooted in the Japanese culture. The Japanese culture encourages constant improvement (Kaizen), attention to detail, teamwork and respect for people. Toyota has been able to gain a competitive edge over its competitors due to its global knowledge sharing culture. The culture at Toyota is to ensure that Knowledge is shared amongst its global assembly plants and suppliers. This has led to the production of reliable cars regardless of the assembly plant because the local knowledge is shared with the global subsidiaries.

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Teaching and learning

(Still) learning from Toyota

In the two years since I retired as president and CEO of Canadian Autoparts Toyota (CAPTIN), I’ve had the good fortune to work with many global manufacturers in different industries on challenges related to lean management. Through that exposure, I’ve been struck by how much the Toyota production system has already changed the face of operations and management, and by the energy that companies continue to expend in trying to apply it to their own operations.

Yet I’ve also found that even though companies are currently benefiting from lean, they have largely just scratched the surface, given the benefits they could achieve. What’s more, the goal line itself is moving—and will go on moving—as companies such as Toyota continue to define the cutting edge. Of course, this will come as no surprise for any student of the Toyota production system and should even serve as a challenge. After all, the goal is continuous improvement.

Room to improve

The two pillars of the Toyota way of doing things are kaizen (the philosophy of continuous improvement) and respect and empowerment for people, particularly line workers. Both are absolutely required in order for lean to work. One huge barrier to both goals is complacency. Through my exposure to different manufacturing environments, I’ve been surprised to find that senior managers often feel they’ve been very successful in their efforts to emulate Toyota’s production system—when in fact their progress has been limited.

The reality is that many senior executives—and by extension many organizations—aren’t nearly as self-reflective or objective about evaluating themselves as they should be. A lot of executives have a propensity to talk about the good things they’re doing rather than focus on applying resources to the things that aren’t what they want them to be.

When I recently visited a large manufacturer, for example, I compared notes with a company executive about an evaluation tool it had adapted from Toyota. The tool measures a host of categories (such as safety, quality, cost, and human development) and averages the scores on a scale of zero to five. The executive was describing how his unit scored a five—a perfect score. “Where?” I asked him, surprised. “On what dimension?”

“Overall,” he answered. “Five was the average.”

When he asked me about my experiences at Toyota over the years and the scores its units received, I answered candidly that the best score I’d ever seen was a 3.2—and that was only for a year, before the unit fell back. What happens in Toyota’s culture is that as soon as you start making a lot of progress toward a goal, the goal is changed and the carrot is moved. It’s a deep part of the culture to create new challenges constantly and not to rest when you meet old ones. Only through honest self-reflection can senior executives learn to focus on the things that need improvement, learn how to close the gaps, and get to where they need to be as leaders.

A self-reflective culture is also likely to contribute to what I call a “no excuse” organization, and this is valuable in times of crisis. When Toyota faced serious problems related to the unintended acceleration of some vehicles, for example, we took this as an opportunity to revisit everything we did to ensure quality in the design of vehicles—from engineering and production to the manufacture of parts and so on. Companies that can use crises to their advantage will always excel against self-satisfied organizations that already feel they’re the best at what they do.

A common characteristic of companies struggling to achieve continuous improvement is that they pick and choose the lean tools they want to use, without necessarily understanding how these tools operate as a system. (Whenever I hear executives say “we did kaizen ,” which in fact is an entire philosophy, I know they don’t get it.) For example, the manufacturer I mentioned earlier had recently put in an andon system, to alert management about problems on the line. 1 1. Many executives will have heard of the andon cord, a Toyota innovation now common in many automotive and assembly environments: line workers are empowered to address quality or other problems by stopping production. Featuring plasma-screen monitors at every workstation, the system had required a considerable development and programming effort to implement. To my mind, it represented a knee-buckling amount of investment compared with systems I’d seen at Toyota, where a new tool might rely on sticky notes and signature cards until its merits were proved.

An executive was explaining to me how successful the implementation had been and how well the company was doing with lean. I had been visiting the plant for a week or so. My back was to the monitor out on the shop floor, and the executive was looking toward it, facing me, when I surprised him by quoting a series of figures from the display. When he asked how I’d done so, I pointed out that the tool was broken; the numbers weren’t updating and hadn’t since Monday. This was no secret to the system’s operators and to the frontline workers. The executive probably hadn’t been visiting with them enough to know what was happening and why. Quite possibly, the new system receiving such praise was itself a monument to waste.

Room to reflect

At the end of the day, stories like this underscore the fact that applying lean is a leadership challenge, not just an operational one. A company’s senior executives often become successful as leaders through years spent learning how to contribute inside a particular culture. Indeed, Toyota views this as a career-long process and encourages it by offering executives a diversity of assignments, significant amounts of training, and even additional college education to help prepare them as lean leaders. It’s no surprise, therefore, that should a company bring in an initiative like Toyota’s production system—or any lean initiative requiring the culture to change fundamentally—its leaders may well struggle and even view the change as a threat. This is particularly true of lean because, in many cases, rank-and-file workers know far more about the system from a “toolbox standpoint” than do executives, whose job is to understand how the whole system comes together. This fact can be intimidating to some executives.

Senior executives who are considering lean management (or are already well into a lean transformation and looking for ways to get more from the effort and make it stick) should start by recognizing that they will need to be comfortable giving up control. This is a lesson I’ve learned firsthand. I remember going to CAPTIN as president and CEO of the company and wanting to get off to a strong start. Hoping to figure out how to get everyone engaged and following my initiatives, I told my colleagues what I wanted. Yet after six or eight months, I wasn’t getting where I wanted to go quickly enough. Around that time, a Japanese colleague told me, “Deryl, if you say ‘do this’ everybody will do it because you’re president, whether you say ‘go this way,’ or ‘go that way.’ But you need to figure out how to manage these issues having absolutely no power at all.”

So with that advice in mind, I stepped back and got a core group of good people together from all over the company—a person from production control, a night-shift supervisor, a manager, a couple of engineers, and a person in finance—and challenged them to develop a system. I presented them with the direction but asked them to make it work.

And they did. By the end of the three-year period we’d set as a target, for example, we’d dramatically improved our participation rate in problem-solving activities—going from being one of the worst companies in Toyota Motor North America to being one of the best. The beauty of the effort was that the team went about constructing the program in ways I never would have thought of. For example, one team member (the production-control manager) wanted more participation in a survey to determine where we should spend additional time training. So he created a storyboard highlighting the steps of problem solving and put it on the shop floor with questionnaires that he’d developed. To get people to fill them out, his team offered the respondents a hamburger or a hot dog that was barbecued right there on the shop floor. This move was hugely successful.

Another tip whose value I’ve observed over the years is to find a mentor in the company, someone to whom you can speak candidly. When you’re the president or CEO, it can be kind of lonely, and you won’t have anyone to talk with. I was lucky because Toyota has a robust mentorship system, which pairs retired company executives with active ones. But executives anywhere can find a sounding board—someone who speaks the same corporate language you do and has a similar background. It’s worth the effort to find one.

Finally, if you’re going to lead lean, you need knowledge and passion. I’ve been around leaders who had plenty of one or the other, but you really need both. It’s one thing to create all the energy you need to start a lean initiative and way of working, but quite another to keep it going—and that’s the real trick.

Room to run

Even though I’m retired from Toyota, I’m still engaged with the company. My experiences have given me a unique vantage point to see what Toyota is doing to push the boundaries of lean further still.

For example, about four years ago Toyota began applying lean concepts from its factories beyond the factory floor—taking them into finance, financial services, the dealer networks, production control, logistics, and purchasing. This may seem ironic, given the push so many companies outside the auto industry have made in recent years to drive lean thinking into some of these areas. But that’s very consistent with the deliberate way Toyota always strives to perfect something before it’s expanded, looking to “add as you go” rather than “do it once and stop.”

Of course, Toyota still applies lean thinking to its manufacturing operations as well. Take major model changes, which happen about every four to eight years. They require a huge effort—changing all the stamping dies, all the welding points and locations, the painting process, the assembly process, and so on. Over the past six years or so, Toyota has nearly cut in half the time it takes to do a complete model change.

Similarly, Toyota is innovating on the old concept of a “single-minute exchange of dies” 2 2. Quite honestly, the single-minute exchange of dies aspiration is really just that—a goal. The fastest I ever saw anyone do it during my time at New United Motor Manufacturing (NUMMI) was about 10 to 15 minutes. and applying that thinking to new areas, such as high-pressure injection molding for bumpers or the manufacture of alloy wheels. For instance, if you were making an aluminum-alloy wheel five years ago and needed to change from one die to another, that would require about four or five hours because of the nature of the smelting process. Now, Toyota has adjusted the process so that the changeover time is down to less than an hour.

Finally, Toyota is doing some interesting things to go on pushing the quality of its vehicles. It now conducts surveys at ports, for example, so that its workers can do detailed audits of vehicles as they are funneled in from Canada, the United States, and Japan. This allows the company to get more consistency from plant to plant on everything from the torque applied to lug nuts to the gloss levels of multiple reds so that color standards for paint are met consistently.

The changes extend to dealer networks as well. When customers take delivery of a car, the salesperson is accompanied by a technician who goes through it with the new owner, in a panel-by-panel and option-by-option inspection. They’re looking for actionable information: is an interior surface smudged? Is there a fender or hood gap that doesn’t look quite right? All of this checklist data, fed back through Toyota’s engineering, design, and development group, can be sent on to the specific plant that produced the vehicle, so the plant can quickly compare it with other vehicles produced at the same time.

All of these moves to continue perfecting lean are consistent with the basic Toyota approach I described: try and perfect anything before you expand it. Yet at the same time, the philosophy of continuous improvement tells us that there’s ultimately no such thing as perfection. There’s always another goal to reach for and more lessons to learn.

Deryl Sturdevant, a senior adviser to McKinsey, was president and CEO of Canadian Autoparts Toyota (CAPTIN) from 2006 to 2011. Prior to that, he held numerous executive positions at Toyota, as well as at the New United Motor Manufacturing (NUMMI) plant (a joint venture between Toyota and General Motors), in Fremont, California.

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Knowledge Management: Preparing Case Study for Toyota, Japan

Added on   2023-05-29

About This Document

This article presents a case study on the knowledge management practices at Toyota, Japan. It discusses the importance of absorptive capacity, individual theories of learning and their psychological perspectives in enhancing organizational culture and productivity. The article also highlights the role of knowledge-oriented leadership in knowledge management practices and innovation.

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