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4 min read

The fundamentality of True North to TPS (or Why You Should Care about True North)

In the context of the Toyota Production System,  True North has a very concrete and specific meaning, an ideal that transcends any particular business or occupation. True North is not for you to invent, but rather to  understand in the context of your business. It will guide your business strategy, but it is  not your strategy. And if you follow the True North principles, it will generate terrific business results. But to be clear True North is not a set of results either.  If you understand its meaning, then all of the other pieces of Toyota's system will make sense to you. And if you don't understand it, then the rest of their system won't make any sense to you at all.  That's how important it is.

Consider this: At some point, each of us is either a customer or a supplier. We generally think of external customers as the  customers, but every downstream process within your company is also a customer. External suppliers are also very important providers -- they're the outside factory that typically accounts for 80% of product cost and, like our employees, can have a really big impact on improvement if we only include them in our TPS efforts. (See  Supplier Kaizen for how to do this.) Customers and suppliers are really two sides of the same coin. Like doctor-patient, clerk-customer, machining-assembly, distributor-end user -- we all rely on each other.

Customers and suppliers – internal and/or external - they are the Yin and the Yang of commerce. The customer wants perfect goods and services, and the supplier wants to provide that very same thing.  To head in a True North direction, your business perspective must be win-win for the customer and the supplier. 

In any process we say that the customer is first, meaning suppliers need to understand  value from the customers' standpoint. For example, as customers, we would ideally have perfect quality and instant delivery of products and services, with absolutely no waste. That's the ideal, and  this is True North, independent of your industry or job function.

But in order to approach this ideal for the consumer, we need to do a much better job supporting and developing our providers.  Management's commitments to developing this most valuable, creative resource are the other side of the coin.

So that's the big picture. Now, let's break it down into its parts looking at the Yin and Yang of each part.
We’ll start with perfect quality. As consumers, we expect this, and providers will naturally do their best work to deliver it if they in work an environment that supports them. It's just human nature. Who likes to produce defects? No one. When provider quality is not perfect, the customer’s process becomes unstable and unpredictable.
There are two roads that can be taken when defects occur in a process: The traditional response to defects -- a very costly one -- is inspection, sorting, rework or scrap. These words may vary between industries, but they never  drive defects to zero. These responses also subject the providers to mindless tasks that don't fix problems but only sweep them under the rug.

On the other hand, in a True North environment, the providers, be they employees or external suppliers, will be challenged to perfect the process through problem-solving and  kaizen rather than just inspecting out defects. In this scenario, the consumer is provided real value while the provider is developing his or her ability. Win-win.  Providing meaningful work to employees and suppliers, and challenging them to solve problems, is management's first True North goal. This requires drawing a line in the sand for defects: No defect is ever passed to the next process. Quality at the source is essential.

When first considering the idea of never ever passing a defect to the next process, you may be thinking "OMG we'll never ship another product."  But if you refuse to sort and sift through bad material from suppliers, quality will improve. Are your team members spending more time on sorting and rework than production? If so, then you haven’t solved the problems. But if you identify and fix these problems  on the spot, you’ll all be problem-solvers. You can start today!

Of course, managers worry about stopping production to fix problems, but they soon learn that this behavior not only increases productivity and quality but also develops the skills and passion of the providers. It's the manager's responsibility to create an environment in which employees not only know where to look for improvement but also  feel safe and supported when they identify problemsThat's True North too. If the providers feel that reporting problems will affect their personal well-being then the problems are compounded: First the problem is not reported, and second the problem festers with the provider.

What is the solution? Employees must be developed as problem-solvers. They need to be given a basic understanding of problem-solving methods to support their efforts.  Employee development through learning and practice is True North too. And the same ideal holds when we're working with external suppliers too.

Here are a couple of more tenets of True North that will create an environment favorable to problem-solving and improvement. First, an explicit and credible promise from management that employees will not lose jobs as a result of participating in improvements is key. While no company can guarantee lifetime employment, we can provide assurances that downsizing is not a planned outcome of improvement.  Articulating the opportunities of TPS is  management's responsibility. Management must also commit to removing destructive physical and mental stress (also known as Muri) from work. Simply put, employees with fried brains will not make good problem-solvers. If we can't identify and remove stressors, then they become the silent killer of engagement and enthusiasm. If as True North indicates, our employees and suppliers are the most important resources for improvement, then we had best make Muri elimination a top priority too.

Imagine a flock of geese in migration. For them, the direction is clear and shared. They have, as  W. Edwards Deming put it, "constancy of purpose." Leadership will change from time to time along the migration, but the direction – True North - remains constant. Good luck & happy new year!

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