Operational Excellence and Respect

By Levent Turk

What if I told you Operational Excellence is not about learning and applying, but unlearning and abandoning?
One-size-fits-all strategies, management, and production systems try to impose their behavioral codes. The results could only be perfect if employees were machines that worked according to preloaded software. However, people act by their feelings. They feel depending on how they think and think according to their desires and beliefs.
Systems often ignore humans and try to drive their behavior. But to realize the true potential, we must understand the human condition and utilize the non-productive energy that cannot be visualized and eliminated by systems like Lean and 6-Sigma. If systems cannot measure the problems they create, they cannot reach excellence.
Developing a Toyota like culture takes decades. Still, there is a way. You don't need to learn anything new for Operational Excellence. It is all about avoiding mistakes. Most managers have similar goals, make similar mistakes, fail, and learn the same things. With the unique combination of Western Philosophy, psychology, and neuroscience, this book decodes the secrets of Operational Excellence based on the experience of a former Toyota General Manager who learned TPS in Japan and successfully implemented it in multiple automotive OEMs. Instead of telling what to do to achieve probable success, I decrypt what not to do to avoid guaranteed failures.
If the only source of knowledge is experience as Einstein put it, this book can save you many years of trial and error and common failures.

• Language: English
• Publisher: Lulu.com
• Release date: Jan 23, 2021
• ISBN: 9781716198038

Book preview

Preface

I was recently listening to a stock market commentary as COVID-19 emerges with a second wave, and the world waits for a vaccine. Like most people, I am trying not to get sick and understand what the economy will be like after the pandemic. The brokers who make a commentary in such events always manage to explain what happened and why it happened with such respectable expertise and admirable synthesis. Their cause and effect stories make so much sense that my brain understands the situation and releases dopamine. I find myself relaxed. The brokers also talk about their future predictions, but they are much more cautious in doing so. Yet, their prudence gives me confidence, the dopamine flows, I feel comfortable.

This is very strange because I wanted to know what would happen tomorrow, and they only spoke a little about that. So why am I relaxed?

It is because my brain thought it understood what is going on enough to predict what happens next. It signaled, Everything is under control. The more we are exposed to similar cause and effect stories, the greater our belief that similar reasons will produce similar results. We turn past experiences into a belief about the future and simply relax.

We believe in things that are likely to happen. That is okay. The problem arises when we think of something that we believe is more likely to happen. For example, our belief that the sun will rise from the east tomorrow gets stronger every day we live. We hardly think that the sun did not exist in the past and will not exist in the future. After all, sunrise is a natural phenomenon that seemingly repeats each day.

In contrast to nature, predictability is much lower in man-made environments, such as workplaces where human behavior plays a significant role. Prediction errors in this environment can become costly for ourselves and those affected by our decisions and actions.

Why do brokers talk mostly about the past, rarely the future, and never about their failed predictions? They seem to know that predictions about the future are always bound to past experiences. And predictions may come out to be correct only if the conditions that created them repeat in the future.

Similarly, books about success stories tell us about success in the past, but, interestingly, we read them to be successful in the future. I have read many such books, which always speak about what is right and how to do something right. They all have happy endings. I have been through a lot of training programs that have similar characteristics.  Of course, we can take away some points from these books and trainings. However, their narrative styles do not content themselves with objectivity and go so far as to assert to the readers that the actions they recommend will bring success to all.

I do not believe that we can achieve the same success by repeating the actions that brought someone else success. The unpredictability of the future prevents the past from being repeated. It is almost impossible for a person who has achieved great success to achieve the same success by repeating the same actions today. He would either do different things or achieve another victory.

Failing to understand that the brokers cannot predict the future had cost me some loss in the stock market when I was young. However, after following the prescriptions describing success in business life, I learned more: Nobody can predict the future, let alone create success recipes. Most of what I planned did not work as I planned. I did not change my goals and managed to reach them, but I did so by following a path that I did not plan. It is always an effort to transform failures into successes by trial and error, as our errors make us face reality. It is only with this reality in our minds that we can describe a problem correctly.

While we can understand what others present as trial and success, we learn by trial and error.

Success roadmaps are charming illusions because they mostly mention what works but rarely what does not. When you take the roadmap and go to the field, you realize that there is no road; you need to build it yourself. You need to create a stairway to success, and the available material is limited. It is about solving problems and transforming them into the steps, one at a time. If you give up halfway through, the steps you built so far might seem like an enormous junkyard. This is also an illusion. Even if you do not consciously want it, experience accumulates as you work and lights your way when you face new problems. It also shows you ways to avoid unnecessary problems. The best thing about experience is that it saves us from creating new problems. I'm sure others, especially those who have created something from scratch themselves, will understand what I am saying.

Looking back at my business life now, I remember a few success stories. I cannot remember quick wins, and I do not feel proud of them. Apparently, they did not qualify to be considered as success in my mind. All my success stories are about a considerable period, filled with countless trials and errors.

I rarely benefited from the pride of my previous achievements. However, the trial and error experience has always helped, and it still does. Those who describe the ways to success will probably find the considerations in this book unnecessary. That is expected, especially if they are talking about the experiences of others, not their own. I believe books should explain what does not work and why because knowing what not to do is often more important than what to do. However, that is not easy without experience.

Experience is merely the name men gave to their mistakes.

Oscar Wilde

I started working in Toyota, Japan, in 1992. My job was to learn the Toyota Production System (TPS) for a new overseas Toyota plant. I worked in production lines for three months. Later, I worked in the engineering, manufacturing, quality, and maintenance departments at various Japanese plants. Then, we constructed a new plant in Turkey. We established and trained production teams and started volume production. During the next 13 years, I have taken General Manager roles in Production, Quality, Engineering, and Purchasing Divisions. I have used TPS widely and thoroughly. We achieved benchmark results in TPS implementation among Toyota worldwide, including zero-defect at Toyota Motor Corporation product audits. We developed systems together with my colleagues in Toyota Plants in France and the UK.

After 15 years at Toyota, I knew Lean manufacturing, what works, and how. Furthermore, I had already crossed the bridge over the knowing-doing gap and accumulated implementation experience. I was confident I could replicate my success when I moved to another automotive manufacturer.

Do you think my Lean expertise worked there?

Well, it did not! When I started working at the new company, I could not perform most of what I did at Toyota. Not only was it a turnaround situation, but we also planned to produce different car brands as a contract manufacturer.

This is quite different from the mass production I knew from Toyota; however, I knew that the cultural adaptation and performance improvement for Lean could be made over time.

Still, everyone knew that our capacity predictions would not be enough even if accompanied by a cultural shift. The forthcoming wave of workload was going to exceed the capacity of the team.

What we needed was to use our potential energy as a team to increase capacity. We achieved this by improving collaboration. Instead of relying on our individual problem-solving skills, we played on our collaborative problem-solving skills. Ultimately, we managed to produce five different brands of Minibuses, car derived vans, and a full range of trucks on the same line. We reached our profit target. Of course, this 'success' was only achieved with a lot of trial and error.

This time, I learned how to implement Lean systems in high-diversity, low-production environments. I understood the importance of having employee behaviors aligned toward a common goal. When I switched to another automotive manufacturer three years later, I was more confident in my experience. I knew what worked.

My new job was to manage bus production. My new company's culture was more diverse than my previous companies, and there was an enormous product mix. It was an environment where solving a problem created a bigger one. As we solved chronic issues, quality and efficiency bounced back. Subsequently, the market share increased, and new products entered production. The total number of active parts in the system exceeded 120,000. The number of suppliers exceeded 1,000, and the monthly design changes were over 1,000. The workload was once again over the capacity of the organization. And this time, neither performance nor collaboration was enough to overcome the problem.

It took me years to realize what we needed in the organization. It was a developed sense of accountability. In short, those who see a problem must initiate the first action, with no responsibility transfer to someone else. That is when I started thinking about how it could be possible for people to behave this way. Now I believe I know the answer. This is only possible if people really want it. And thus, a leader's primary objective is to create the conditions in which people' want it', i.e., neurologically and psychologically, respond in a way that compliments ambition.

After years of trial and error, we finally established a complexity management system that enabled us to produce products that require between 800 to 2000 man-hours on a single production line with a random sequence. We reduced the average problem-solving from 48 hours to 6, product lead-time from 36 days to 16, quality defects by 85%. We improved productivity by 53% by increasing accountability at all levels.

Working life after Toyota forced me to unleash employee potential instead of dealing with capacity through waste elimination. Ultimately, my experience changed the way I think. The concepts of potential and capacity entirely dissociated themselves from each other in my head.

As it has evolved in the west, systems like Lean are all about making better use of capacity, and they are effective at that. However, they cannot see the portion of energy that is not directed towards productive work. Fortunately, the potential energy manifests itself through the accountability and collaboration markers of the culture. The more problems you see with accountability or collaboration in the workplace, the greater the potential is. Not everyone looks at this area, and not all of those who do see the same. At the end of the day, a problem can only be solved by seeing and describing it.

A problem well stated is a problem halved.

Arthur D. Little

These cultural markers are important because they determine the organization's speed and, hence, survival chances. Both are about behaviors and feelings, not systems with tangible KPIs. Tools used to improve system performance fall far short of measuring and enhancing behaviors and feelings. If we want to see and describe the real potential, we cannot go far by wandering through the world of capacity. A checklist of what works helps barely, and a completely different approach is required. It may be a mindset, a belief system, or a shared belief in what good looks like.

Many people heard the urban legend about an elderly lady who tried to dry her newly bathed poodle in the microwave. Of course, listing countless bad things done with microwaves is an impossible task for the manufacturers. On the other hand, I can imagine that the spread of this legend has been saving many other pets' lives. As can be seen, failure teaches us a lot more.

The poodle right before my eyes, I will talk about only one error throughout this book. That is disrespect for people. I believe this error is responsible for consuming employees' energy to protect themselves in zero-sum games or not use their energy at all. Striving to reach operational excellence in this way is like driving a vehicle with high fuel consumption and a leaking fuel tank.

Some time ago, I realized that we are part of the problem as managers, and we create these games by following common sense. Initially, it was just a feeling and was challenging to describe in words. If I could turn it into a conceivable model, then it would be arguable and have the power to create a shared understanding.

The biggest challenge for me in this work was the difficulty of thinking without concepts. I realized that every idea in my mind had something to say about anything I was thinking. There were simply too many cooks in the kitchen.

After leaving 31 years of professional business life, I devoted my time to unlearn what I learned in classical management and rethink. As a result of that effort, I wrote this book to help others see that human potential is not something we need to unleash but rather something we frequently block.

Introduction

We build systems and then follow them. But where do the systems drive us?

Industrial revolutions have shaped today's business and economic systems. This gradual change brought many advances that made our lives easier. Our life span has increased; we can meet our physiological and safety needs more efficiently. Our higher-level needs that we could not imagine in the past are now in front of us as options. Of course, this is true for people who can reap the benefits of industrialization. Still, we will not be concerned with the others in this book.

The role of the human in this industrial development process follows a causality over time. An entrepreneur sets the business first. Then we notice that things could get better, and that thing has generally been the profit. From this moment on, the gap between the status quo and the desired state is defined as the problem. The way we do business is shaped by the way we solve this problem.

Businesses build management and production systems to retain the ground gained. To gain more ground, what is earned must be maintained. For this purpose, the systems' objective is to avoid the repetition of problems. That is why the systems are defensive and consume remarkable energy for non-productive purposes.

The systems also protect themselves against conflict of opinion. Still, people run the systems, and the problem is that employee behaviors do not fit into the system. Therefore, systems impose and drive the behavioral codes they believe are right. You may think that the purpose of management theories is not to adapt behavior to the system. But when managers set up a system at the workplace according to a management theory they choose, the management theory tries to adjust people's behavior to the system. Every management system imposes its own code of conduct.

Can perfectly designed systems create perfect behavior?

A business travels on a train where the industry is the locomotive. The business is the first car, and the management system is the second. Employees take their place in the next cars according to their hierarchical position. We see people around us designing perfect systems and enumerating golden behaviors of success. I cannot imagine whether they really believe what they say. Still, I assume they must be thinking, What's wrong with adjusting human behavior to the industry? The progress that this journey has brought to humanity in 100 years is indisputable. If so, I advise them to stick their head out of the window and check where we are heading.

This train has been using fossil fuel from the very beginning. Until recently, I used to wonder, What will happen when the oil runs out on our planet? How will planes fly, how will electricity be produced? We now know that the world will be uninhabitable, just in seven decades, much before the fossil fuels run out. Listen to what Economist Jeremy Rifkin says. And now, after 200 years of industrial activity, scientists report that climate change is ravaging the planet and threatening to cause the sixth mass extinction of life on Earth.

Those driving the locomotive saw the barrier in front of them, and hopefully, they will slow down or change the route. Still, there is no reason to believe that the sequence of doing business, establishing a system first, and then adjusting employee behavior will change soon. That is what concerns us in this book.

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The wrong problem

Is it sustainable to follow the sequence from business to systems and then to behavior? Some questions are still open. Are employees satisfied and engaged? Do they use their capacity entirely in the workplace? Can we achieve our true potential unless we reach the limit of our capacity and push it further? How will performance be maximum unless we unleash our potential? Can a company that does not improve performance survive?

Before we answer these questions, let us see which stations we passed before coming to this point: The industry's development in the last 200 years is a big bang. Knowledge of management and understanding of the human mind have rapidly expanded and continue to grow. Gestalt psychology, behavioral psychology, and cognitive psychology developed one after the other. Neuroscience is now adding new information at an incredible speed. Various management theories have emerged, and related knowledge is expanding like the universe. The expansion of knowledge is good. However, do we have in our hands a behavioral management model of workplace that equally fits every leaders' and employee's minds?

I doubt increasing knowledge helps to build such a model. Instead, it makes it difficult. Why? Firstly, this model should consider a lot of information and not contradict them. On the other hand, our evaluations are not so objective because we choose the information that suits us due to confirmation bias. Secondly, the same information causes different cognitive patterns in minds. Now we have remnants of what Fayol, Taylor, Freud, Ford, Jung, Adler, Weber, Mayo, Maslow, McGregor, Drucker, Covey said in our minds. Some of their works were about treating employees. Some others were about treating mental illnesses caused by bad treatment at work. Today, neuroscience advances have led us to understand that a brain is a biological machine that builds meaningful reality models. Since every person's desires, beliefs, and feelings are different, different management models occur in every mind.

The best models are the most conceivable ones. This is the measure of rationality. The most conceivable models use the least information from sensory inputs or memory because the brain is a master of filling gaps. That is why the least knowledgeable leaders are those who seem the most knowledgeable and self-confident. A meaningful model that comes to mind changes the way we perceive the world. When a leader's perspective changes, his own behavior changes first. Then he attempts to change the others.

We do not describe the world we see; we see the world we can describe.

René Descartes

In many cases, leaders' and employees' beliefs fit each other. Still, leaders' actions are repelled by employees due to differences in perceptions. People choose to stay attached to what they find valuable at the end of the day, not what they are asked to do. For this reason, a clear and distinct management model increases the chances of uniting for a common purpose.

What is desired in every change program is the change in employees' behavior. Systems drive behaviors for this purpose. Behavioral change is supported by personal development trainings. In fact, some managers are no longer satisfied with changing the behavior. They add, You, as a whole, must change. When the self-confidence goes beyond the limits of the mind, we hear things like, Our company values have changed. Follow those from now on. I do not want to offend anybody, but married people know very well how mission impossible it is to change somebody else's values, even that person is your partner.

Humanity witnessed many attempts to manipulate human behavior. The change they achieved is negligible compared with the change that evolution has brought over thousands of years. It is a process that takes time. Of course, we can adapt our behavior to new and robust demands. Still, it is often a defensive reaction rather than a genuine behavioral change.

While we do not like changing ourselves so much, we want to change things around us. It is better suited to our nature. While doing this, we learn by trial and error and evolve, and we may call it a sustainable change. However, our desire to change creates a severe problem when we want other people to change their behaviors because nobody likes it. From then on, we keep on struggling to solve the wrong problem, which is ill-defined by those who create it as resistance to change.

A wrong problem shows what is right. The right problem shows what is wrong.

The right problem

The idea that systems can adjust behavior has been problematic from the very beginning. Old companies with excellent systems but low engagement and new companies with high engagement but weak systems are doomed to poor performance. In any case, the compatibility of systems and behaviors determine the performance.

Based on Aristotle's observation, no true vacuums exist in nature because the difference in pressure results in an immediate force acting to correct the equilibrium. Today's focus is on KPIs. Increasing the pressure on KPIs creates a vacuum on the behaviors side. Natural human behavior fills the vacuum in this overlooked space. Every person wants to protect themselves, grow, and develop with the motive of survival. Wherever group survival is not prioritized, individual survival fills the vacuum. Every person wants to get a more significant share of resources for higher wealth, position, and power. Conflict of interest consumes both individual and group energy in daily work life.

How much energy do you think an organization wastes in a KPI-focused system? If you say 10 -20%, you are over-optimistic. KPI focused organizations run like internal combustion engines, burning human energy. Some people describe such workplaces as toxic. They attribute the causes to narcissistic CEOs, sometimes to the entire workplace culture. Then they list remedies like staying away or escaping from such companies. These suggestions create an infinite loop because those who flee and change their jobs due to toxicity do not learn how to cope with it. Therefore, they are trapped in the cycle of what is known as the blame game.

The ugly truth that we avoid has a root cause: The industry lives in the ecosystem shaped by the industrial revolution. The rational choice theory is the backbone of this system. It assumes that individuals always make rational decisions based on their self-interests, and these decisions provide them with the greatest satisfaction. Naturally, management systems that set off from this assumption excuse the behavior of individuals who usurp the rights of others with self-interest. On the dark side of the moon, the aim is no longer individual survival but personal satisfaction. As time went on, we realized that people could not achieve the promised satisfaction at all.

People are getting lonely, and discontent increases. Still, we continue to cling to this system that accepts human beings as machines that make rational choices. On one hand, we are indifferent to people violating each other's rights by force. On the other hand, we strive to unite our forces and direct our powers to a common goal. What a gigantic contradiction!

The world says: You have needs -- satisfy them. You have as much right as the rich and the mighty. Don't hesitate to satisfy your needs; indeed, expand your needs and demand more. This is the worldly doctrine of today. And they believe that this is freedom. The result for the rich is isolation and suicide, for the poor, envy and murder.

Fyodor Dostoyevski

Self-interest based rational choices cause conflicts of interest in the organization and waste its energy. Therefore, management systems based on rational choice theory are not rational at all. Interestingly, what creates this paradox is not capitalism, but employees. The vacuum that is created by systems is filled by arbitrary behavior. Those who are powerful feed off other employees' energies to gain more power, and the system does not condemn it. I am sure you know such people very well. They pursue power with an insatiable hunger. They take all the credits for positive outcomes, and they never share.

The dynamic behavior of self-seekers is