As president of Toyota, Cho had to learn to rely more on trust than he did in the days of running a few manufacturing plants. He doesn’t have the time to go and see everything for himself. Instead, he surrounds himself with people he trusts and, by default, goes and sees secondhand through them.
But he also uses a method called hourensou to keep in touch with what is going on. It seems almost antithetical to genchi genbutsu, but—if practiced right—it can be an efficient way for an executive to accomplish the same thing. Hourensou is a Japanese word made up of three parts: hou (hou koku—to report), ren (renroku—to give updates periodically), and sou (sou dan—to consult or advise). To serve some of the genchi genbutsu functions, senior management uses hourensou, which is common within top Japanese companies.
Since Toyota executives know the importance of keeping involved at a detailed level and see as a key role the training and developing of subordinates through questioning and carefully targeted advice, they make a big effort to find efficient ways to get information fed to them and to give feedback and advice. There is no one magic bullet for accomplishing this, but one important approach they use is to have subordinates who learn how to communicate efficiently give reports daily on key events that happened during the day. When they can, the executives will still travel to where the work is being done.
For example, Yamashina, as president of the Toyota Technical Center (TTC), has responsibility for five areas: the main technical center in Ann Arbor, Michigan; the prototyping center in Plymouth, Michigan; the Arizona proving grounds; the technical center in California; and design engineers at Toyota’s manufacturing plants. Yamashina schedules meetings with all the departments in TTC once a month, which includes all levels, and travels from site to site to have these meetings in remote locations. Different individuals have an opportunity to report on the status of their projects and prepare what they will say for that monthly meeting. Though Yamashina has a great understanding of what is happening and can, on a regularly scheduled basis, get feedback and give advice, this is not enough. He also insists that each vice president and general manager give him a report on the day, a little update, instead of waiting until the end of the week. This gives Yamashina an opportunity to share live information he got that day from other parts of the company.
While Toyota is not the most computerized company in the world, they are learning to use e-mail effectively for hourensou. As Yamashina explained:
One young engineer explains his test through e-mail and its purpose and asks if others have any experience with similar tests. Suddenly a very experienced engineer sends an e-mail saying, “I tried that test under similar circumstances and the test did not work.” His advice to the young engineer is to find another way to perform the test or stop the test. If there were no system to share the information, probably that young engineer will waste a lot of time and energy. So using e-mail is a type of training or consulting or reporting system from top to bottom and bottom to top. I insist that those who report to me send me a daily journal. So I get 60-70 e-mails from VPs or general managers per day. I insist that they make bullet points in the messages. What are the key things you are doing? It has to be designed in such a way that others will read it. That stimulates thinking and sharing information. It is part of how Toyota does learning.
The first reaction of U.S. managers to hourensou is that it is another form of micro-management, that is, until they begin to practice and experience the benefits at Toyota. According to several managers I spoke to, over time it becomes an essential part of their management repertoire. How could they manage effectively without it?