With all this communication going back and forth to build consensus, one might think that Toyota takes forever to get anything done. Yet we know how efficient and speedy Toyota is, so it should not be surprising that they have communication down to a science. The most time-consuming and difficult way to understand complex ideas is to have to decipher a lengthy report filled with technical descriptions, business jargon, and tables of data. More efficient is the visual approach—“a picture is worth a thousand words.” Acting on the fact that people are visually oriented, new employees at Toyota learn to communicate with as few words as possible and with visual aids. The A3 report discussed in Use Visual Control So No Problems Are Hidden (in which all necessary information to make a complex decision is presented on one 11” x 17” piece of paper) is a key part of the process of efficiently getting consensus on complex decisions
It is the final report for an extensive analysis of using purchasing cards for small purchases to avoid lengthy and expensive approvals.
The A3 is read from the top left down and then into the second column. Analysis of the current situation revealed that 40% of the purchases in the technical center were for under $500, but represented only 4% of the dollars spent. Yet, the time to process and approve these tiny purchases took as long as for major purchases. The proposal was to use purchasing cards and the benefits in time and money saved are clearly spelled out in the report. A plan is proposed to pilot the program along with details of who will issue the cards and what uses would be blocked out on the card. The plan includes a timeline for full implementation once the pilot is complete.
This A3 report was conceived when a cross-functional purchasing team and team leader were assigned to study the problem. They had learned the Toyota Way of approaching an assignment like this and knew that nemawashi was mandatory. If they went off on their own, did a study, and came back with a lengthy report and executive summary, they would face resistance to their ideas and their solution might not be implemented. So, throughout the process they involved everyone they could think of who might be affected by this decision, not just the purchasing department but also the general managers and vice presidents who were used to having control over their budgets through the approval process. Suddenly they were going to have to relinquish this control and risk overrunning their budget. Employees would have to learn new procedures for purchasing items and would obviously be lobbying for as much flexibility and the highest spending limit possible. And so on. So all of the affected parties saw A3 reports in various stages being circulated and modified to incorporate their ideas. While seeking consensus is a cumbersome process, it goes much faster when all the different opinions, scenarios, and numbers are communicated on one side of one sheet of paper.
Embedded in an A3 report is Toyota’s problem-solving process, which is based on the Deming Cycle. Deming said any good problem-solving process should include all of the elements of planning, doing, checking, and acting (PDCA). (We will discuss the Deming Cycle further in the Become a Learning Organization Through Relentless Reflection (Hansei) and Continuous Improvement (Kaizen).) When Toyota teaches A3 report writing, one of the prerequisites is taking its course on PDCA.
In the spirit of genchi genbutsu, the A3 report starts with one step before planning—a thorough understanding of the current situation, the values, expectations, policies, reason for the current system, etc. Once you lay this groundwork, you are ready for the Deming Cycle steps—the plan, doing or implementing the plan, then checking and acting.
The checking and acting stages are critical and often overlooked in problem solving. Notice the timeline for the purchasing card report in Figure 19-2. A pilot program is created and then, three months into the pilot, the audit and analysis (check) and then a report on the results of the audit. This will include countermeasures to any problems discovered. Then you act by implementing the pilot corporate-wide. Once everything is in place, the process of continuous improvement kicks in and continues operating well beyond this timeline.
After months of study and great pains in writing and refining the A3 report so it included only critical and visual information, the team presented the report to the decision makers for the final decision. This was the executive board presided over by the president of the technical center. They had exactly five minutes on the agenda. They presented the report, which was largely ceremonial, as everyone had seen it multiple times. There was a little discussion. And then the decision makers formally approved the proposal.
Alan Cabito, Group VP of Sales Administration, went to work for Toyota as his first job out of school, so he only knew the Toyota way. But he was able to observe differences in the way Toyota communicated when he started working with General Motors on the NUMMI plant in the 1980s:
Their (General Motors’) solution to making a decision was to write a memo. I haven’t written a memo in I don’t know how many years—maybe 20. I walk over to someone and I sit down and we talk about the issue. And ultimately, I try to get them to buy in or to make it their idea. But you never write a memo. A memo to me is like a directive, as opposed to an A3 PDCA document that has in it an evaluation that everybody can see and understand. To me an A3 is a learning process. A memo’s not a learning process…. In the GM world, at least to those people who came here, memos were a way of finding a direction, and then expecting everybody to follow it without any communication necessary.
One of the benefits of the A3 communication format and a disciplined approach to problem solving is that Toyota runs its meetings very efficiently. The discipline of the A3 process helps to accomplish effective meetings. There are several prerequisites to an efficient meeting:
- Clear objectives prior to the meeting. These are sometimes reflected in an agenda, but the agenda needs to be very focused on clear tasks and deliverables.
- The right people at the meeting. People expected to show up need to show up.
- Prepared participants. All participants know what they should prepare for the meeting and have done it.
- Effective use of visual aids. The A3 format is extremely effective.
- Separate information sharing from problem solving. Share information as much as possible prior to the meeting so that the focus of the meeting can be on problem solving.
- The meeting starts and ends on time.
I have been in too many meetings in many companies where the vast majority fail on all six points. The meeting has a vague purpose, some people do not show up, nobody does any preparation except, perhaps, the person running the meeting, visual aids are ad hoc, most of the meeting is about sharing information, and the meeting starts late and ends late. Now, this is a time-consuming, cumbersome, and wasteful way to arrive at decisions.