What should companies do to survive long-term in the

always-competitive, always-dynamic world?

What is management's task?

We may think that established companies decline while newer companies innovate, because an established company is held back by a former, now-outmoded way of thinking.  However, my research into Toyota’s management approach suggests other causes:

            The problem is not that a company’s way of thinking is old, but that its

            way of thinking and managing does not generate continual improvement,

            adaptation, innovation and, especially, change.

Toyota, for example, has kept its managerial approach the same for 60 years, yet because of the nature of that management approach the company is still up-to-date.

So how does Toyota do it?  How can a company stay adaptive, innovative and more in sync with dynamic, unpredictable conditions?

It's about utilizing human capabilities

While animals are subject to natural selection, humans and human organizations have at least the capability to be consciously adaptive.  We are capable of envisioning new states, pursuing those intentions, creating, learning, adjusting, problem solving.

All organizations are probably to some degree adaptive, of course, but their improvement and adaptation customarily occur periodically, when the need becomes so critical that it is plain to see, and is conducted by a few specialists in the organization.  Such organizations are thus not by their nature adaptive learning organizations.

            In other words, we are not fully utilizing our human ingenuity, and there

            is considerable underutilized human potential across our companies.

How can we mobilize and tap that capability?  There is a growing sense that we need a different way to manage, but so far we have not been able to point to and clearly describe an alternative to management by results as we still practice and teach it today.

From my research we finally have and can explain, in actionable and cohesive detail, a more effective management approach.  This alternative management system, detailed in the book Toyota Kata, provides a means by which any organization can more effectively utilize human capabilities in order to be an adaptive, innovative and thriving organization.

Humans are equipped to deal with uncertainty and unpredictability

Since the future lies beyond what we can see, solutions that fit today’s problems may not remain suitable for tomorrow’s challenges.  So it is not solutions themselves - whether lean techniques, today's profitable product, or any other - that provide sustained competitive advantage.  Rather it is the degree to which we develop and utilize the capability of the organization members to understand conditions and create new solutions.

Developing and utilizing this human capability in the organization is a key factor in Toyota's long-running success, and a core responsibility of its leadership and management.

So any organization whose members have the capability and motivation to face unpredictable situations (which, remember, are the norm) with confidence and effective action and achieve new levels of performance in process, product or service, can enjoy a competitive advantage.

There's a kata for that.

KATA - Developing company capability

If we cannot specify solutions, then what can we give the organization’s members?  What should managers and leaders do?

A task for leaders and managers is to have organization members practice a behavior pattern, to develop an organization mindset or culture that is effective in the unpredictable and uncertain world.  Toyota creates invaluable organization capability by having all employees practice routines by which many more people can learn and become engaged in the process of improvement, adaptation and innovation.

Upon close inspection Toyota’s management approach is characterized by sets of specified procedural sequences - behavior forms - which are taught to all organization members and repeated over and over in daily work.  In Japan such procedures are called "Kata", which originally were movement sequences in martial art.  Some common translations or definitions of kata are:

        •  A way of doing something.  A pattern, form, or routine.

        •  A way of keeping two things in alignment or synchronization with one another.

        •  A training method or drill.

Kata are transferrable sets of behavior forms for people, that are often handed down from master to student over generations.  This is exactly what I am talking about in saying that management’s task is to have the organization members practice specific behavior routines.  Kata are designed precisely for doing what we are talking about here:  practicing behaviors and thereby developing new mindsets and capability.

For more about Kata click here

What I call Toyota’s improvement kata is a specific pattern or routine of thinking that continually generates improvement, adaptiveness and innovation -- learning -- by which an organization can thrive in dynamic, unpredictable conditions.  The improvement kata is much better suited for operating successfully in unpredictable reality than is our current results-focused managerial approach.

Mastering the process of adaptation, innovation & change

It is often thought that adaptation and innovation are not something that can be mastered, because the kind of routinized practice and learning that promotes mastery is different from activities that promote discovery, innovation and change.  I would like to challenge this assumption.  We can master the process of innovation.

Rather than deriving self efficacy from a false sense of certainty about conditions, we can instead get it from the means by which we deal with uncertain conditions.  The Improvement Kata does not specify the content of action - it cannot - since that varies from time to time and situation to situation, but instead only the form that our thinking and behavior should take as we react to a situation.

The path to new, challenging solutions or new levels of performance is not foreseeable.  We cannot predict what will be necessary to achieve them, but we can specify and, with practice, master the form of our action.

Finding our way into the future

Imagine what we might be capable of if all of us could, on an everyday basis, face challenges and uncertainty - even willingly seek them out - and work step-by-step to achieve things we cannot do today with a mindset that is open, confident, positive, effective and free of fear and insecurity?

I invite you to read Toyota Kata and see what you think of the different way to lead and manage that it describes.

Mike

Humans derive a lot of security and confidence, what psychologist Albert Bandura calls "self efficacy", from predictability.  But what lies ahead of us cannot be made predictable.  And if we act like it is it can harm the organization, because we are then recognizing and adjusting to reality too late.