Tuesday Toolkit 10/06/2020

Welcome to new subscribers. The Tuesday Toolkit is a newsletter covering tools for improving work & life and a bit of fun. Thanks for being here.  Tuesday’s Tool Toyota’s 4P model is one of the tools that propelled Toyota to market dominance in vehicle manufacturing. With a market cap North of $200 Billions dollars, Toyota is not just a huge car manufacturer, they’re one of the largest companies in the world. The pyramidal representation of their philosophy below stems from Jeffrey Liker’s book, “The Toyota Way” and is meant to be borrowed by other companies.  The Four P’s:  1. Philosophy – Base management decisions on a long-term philosophy, even at the expense of short-term financial goals. 2. Process – Create process “flow” to surface problems – Use pull systems to avoid over production – Stop when there is a quality problem Use visual controls so no problems are hidden – Use only reliable, thoroughly tested technology 3. People and Partners – Grow leaders who live the philosophy – Respect, develop, and challenge your people and teams – Respect, challenge and help your suppliers 4. Problem Solving – Continuous organizational learning through Kaizen – Go see for yourself (Genchi Genbutsu) – Make decisions slowly by consensus, thoroughly considering all options; implement rapidly These building blocks are used to guide decision making and promote a long term culture of excellence. From Toyota’s perspective, basing decisions on long term planning leads to long term success. Short term decisions for short term profits fail to consider long term ripple effects, downsides or risks. Long term success requires long term thinking. If your company consistently makes short term decisions, one can expect to be dealing with the ramifications down the road. As we move up the pyramid, we see what long term philosophy focuses on. Specifically, keeping a close eye on the processes used to do work and the processes used to observe work. By creating a culture that surfaces problems, for example, the source of those problems can be eliminated. In the long run those issues (should) cease to exist. The reason for using a flow based system is because that will necessarily make visible any issues. If an engine manufacturing department makes 100 engines at once, any defects will be hard to trace back to their root cause. By only making what is needed when it is needed, if there is an issue, the root cause will be much more apparent and easier to address.  Continuing the climb up the pyramid we get to People and Partners. One of the hardest things to accept in long term thinking is imagining your businesses long after you’ve departed from it. Even the best leaders and people will move on at some point. Recognizing this, Toyota created a culture that invested in making younger employees into excellent leaders to ensure a bright future.  Their not so intuitive addition to growing internal people is investing in growing partner businesses. Part suppliers, shipping companies, and any other third party involved with Toyota was subject to having Toyota leaders come in house to help build better operating procedures. By investing in their supply chain, Toyota was able to create process flow that extended beyond their own four walls. They ensured that when parts were ordered, their suppliers would be able to meet the demand.  Finally, the top of the pyramid is where a lot of the real learning takes place. The word kaizen is Japanese for “improvement” but has taken on additional cultural meaning. Its use is to signify a certain philosophical business strategy of making small, incremental improvements over time. By getting a little better on a frequent basis, you get significantly better over a longer time period (remember their long term thinking?). Part of their belief in getting better over time is making decisions based on personally observed situations (Genchi Genbutsu). Instead of a line worker reporting a machine issue to a supervisor who then repeats the issue up the chain of command, the decision maker would actually come down to the line and do an inspection. By being on the line, the solution developed will take into consideration much more context embedded in the environment than without. For example, the decision to purchase new equipment might not take into consideration the fact that getting it into the right place would require 3 days of the facility shutting down. Going to the line though might make it apparent that a new part for the machine is just as reliable and requires much less down time.  No matter the industry you’re working in, this 4P model from Toyota provides a great framework for thinking about the long term success of your company. Are your leaders investing in you? Does your business take responsibility for challenging your suppliers to do a better job? Let me know how your business uses (or could use) the 4P model on Twitter: @Quinn_Hanson22

Podcast of the Week Impact Theory’s “Conversations with Tom” series featured host Tom Bilyeu and guest Ryan Holiday this week. The powerful episode centers on values, virtues, politics, and stoicism.  The duo discuss overcoming adversity, becoming a badass and address some common criticisms of Stoicism. Namely that it accepts things as they are on the system level. It focuses on individuals accepting external circumstances rather than encouraging changes in the system. The example they give is that Epictetus was a slave for 30 years prior to being released. That was the system in place- poor people “did their part” by being enslaved for 30 years to gain their freedom. Epictetus went on to write about how to overcome challenges and is one of the most popular stoic writers. He hardly mentions the institution of slavery or calls it out for being a problem, though. Thus, the common knock on Stoicism ignoring institutional level problems. However, Holiday goes on to note multiple examples from history of stoics leading revolutions. From overthrowing horrible regimes to the Founding Fathers of the United States citing Stoicism as their motivation for breaking up with Great Britain.  Quotes I loved; – “We look at history primarily to judge the past by the present. To call people shitty. Not to learn from heroes or greatness.” – “I’m not left or right, I’m goal oriented.” – “Make the most of yourself, but not at the expense of your group.” – “If they can force you to do it, you don’t know how to die” -Seneca                      Listen on YouTube          Listen on Spotify Tweet of the Week Sometimes, simple reminders of times in the past are heartwarming.  Quote of the Week “I can’t help the poor if I’m one of them. So I got rich and gave back, to me that’s the win, win.” – Jay Z.  Article of the Week Capitalism After the Pandemic By Mariana Mazzucato This fantastic article centers on how governments around the world have handled recessions and catastrophes. Going back to the housing recession in 2008, the US government bailed out huge institutions with tax payer dollars and were unable to capture any of the upside. Mazzucato compares government intervention with the Venture Capital mindset. A VC would never invest in a company without having a stake in the upside. Governments can do the same. By pointing out that it’s possible for the government to only provide capital to businesses in exchange for equity, Mazzucato creates an entirely new way to think about government funding. If companies harmed by recessions bounce back, the tax payer (who provided the funding) has an upside potential.  Mazzucato goes on to point out there are other ways governments can create huge amounts of value for their countries and citizens by putting rules around their funding. Businesses can only receive government money, for example, if they agree to not lay off employees for financial reasons. Or the government will only supply funding for companies that are registered in the country they operate in, as opposed to keeping their money over sees in tax havens.  Quotes I loved:  – “For too long, governments have socialized risks but privatized rewards: the public has paid the price for cleaning up messes, but the benefits of those cleanups have accrued largely to companies and their investors.” – “The Danish government also refused to bail out companies that were registered in tax havens and barred the use of relief funds for dividends and share buybacks. In Austria and France, airlines were saved on the condition that they reduce their carbon footprint.” – “But the point is to worry not just about the monetary reward of public investments. The government should also attach strong conditions to its deals to ensure they serve the public interest.” – “But if governments instead focus only on ending the immediate pain, without rewriting the rules of the game, then the economic growth that follows the crisis will be neither inclusive nor sustainable. Nor will it serve businesses interested in long-term growth opportunities. The intervention will have been a waste, and the missed opportunity will merely fuel a new crisis. “ Mazzucato’s article is well worth the ten minutes it takes to read. If anything, it will give you a new way to imagine what is possible when a government gives tax payer money to private companies.

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