Learning from Toyota’s Chief Engineer

Integrating the Role of Chief Engineer in the Development of the Lean Management mindset and basic thinking

At Toyota, the individual (or team) known as “Chief Engineer” system is responsible for the product or group of products and the horizontal value-stream process that spreads across the organization and creates those processes.  The Chief Engineer is responsible for monitoring the customer’s value-creation process from its start (upstream) to its finish (downstream), in order to ensure that resources, work and people are indeed focused on creating value.

The system of the Chief Engineer at Toyota is intended to bridge the tension and inherent contradiction between two qualities that are essential for sustainable business success:  increasing specialization expertise and professionalism, which conflicts with operational and conceptual flexibility (the ability to create a variety of forms of expertise in the process of creating value for the customer.)

Four principles led Toyota to build the organizational system known as the “Chief Engineer” and then to develop the updated global working standard and communications protocol (TNGA) as the raw materials for their work:

1. Value for the customer – in traditional, hierarchical organizational structures, professional knowledge is concentrated in the functional (intra-organizational) units and dozens of providers, while the value for the customer is actually created in a combination of these capabilities in a process of value stream that spreads across the organization with the full integration of the providers.
2. Maintenance and dissemination of knowledge to the value creators – creation of a work standard is a process through which Toyota curates the knowledge acquired in the collective experience of the company’s workers and providers. The TNGA standard keeps this knowledge up to date and accessible to the intra-organizational workers in development, manufacturing, and service who are involved in creating the value proposition for the customer.
3. Flexible adaptation to a chaotic, ever-changing environment – a large, complex global organization must have a common language in order to rapidly adapt itself to the demands of the changing, unpredictable market. The role of the Chief Engineer system is to ensure that contacts and connections among all stakeholders are maintained, while providing answer that are specific to the surroundings in which they operate.
4. Striving for constant improvement (Kaisen) – maintaining innovation begins with a change in organizational culture and preservation of the tension between stability (and respect for what is already in place) and change (human initiative).

When I visited Toyota, I learned that the role of the Chief Engineer is substantively different than the role of “Project/Product Manager” (PMO), which is widely accepted in many organizations.  The Chief Engineer at Toyota is not merely another function in the organizational matrix, but rather an operating system that connects across and up and down the organization.

Any organization that seeks to maintain its ability for innovation, rapid response and flexibility and to be able to prevent clogged arteries and bureaucratic clumsiness, must develop capacities for intra-organizational initiative.  The spirit of Startup, Eric Ries wrote in his new book, “The Startup Way”, is not a privilege reserved solely for young, tiny companies.  The function of the Chief Engineer is in actuality the intra-organizational Start-ups network.

As I consider Toyota, which is a global company, I try to understand what connects the multi-cultural mosaic of units and providers into a value stream focused on the customer, together with the tens of millions of Toyota customers throughout the world.

I received a hint of an answer to this question in the definition of the TNGA: The Toyota New Global Architecture, which is a global protocol that defines work standards, means of communication and the degrees of freedom and obligates Toyota’s entire system of workers and providers.  The organizational structures have been replaced by the standard and basic thinking, while the managerial hierarchy has been replaced by a sophisticated organizational culture that encompasses agreed-upon basic assumptions, values, language and rules of behaviour.  The TNGA protocol is the field of action on which the system of the Chief Engineer operates and grows.

The traditional manager may not understand the term “Chief Manager”:  The term “Chief” seems to point to a hierarchical status, even though he may not be the most senior manager.  Nor is this about the job of the traditional manager; rather this is a position that combines the brain work (planning) for the operation of the marketing, development, manufacturing and customer service, and therefore in addition to his professional understanding in his own field, the Chief Engineer must also have deep familiarity with the formal, informal and political organizational systems, in addition to high levels of sensitivity and abilities for communication.  The Chief Engineer is a change leader who sets in motion a system that has a wide variety of qualities, including initiative, design, architecture and production.

The Value Creation Architect (VCA).

Definition of an organizational position as an entrepreneurial system reminds us of the term coined by Allen Word, “Entrepreneur System Designer” (ESD).  As the one who is responsible for the value creation throughout the process and is therefore attached to the product of the process rather than to each stage in the mechanism that creates the activities in the process, he might better be referred to the Value Creation Architect (VCA).

I have taken upon myself the role of Chief Engineer in order to design and develop a work standard for the LGN (LNGA) based on my understanding that each organization is different from Toyota.  There is no “cut and paste” process of the terms and work methods of Toyota, nor should there be.  But we can adopt the four basic principles for the system of the Chief Engineer at Toyota. As I wrote in my previous column, I have set two goals for the process of investigation: A. To lead the design of the LNGA for the community of users of the Lean view; B) To research and design the system of the Chief Engineer together with partners throughout the world who are dealing with similar business and managerial dilemmas.

Strategy on the Road to Experimentation and Learning

In their book, “The Toyota Engagement Equation,” Tracey and Ernie Richardson show us that Lean is a learning-oriented system that puts people in the centre, presents an alternative to traditional management, and challenges managerial systems that are motivated by immediate financial goals.  Thus, this is a most appropriate strategy for the needs of an organization in the future business arena.  I open my strategic A3 of the VCA Concept Paper that defines our vision thus: Introduction of hackathon – of an open ecosystem lab. An experimental space which involves and integrates Lean activists and facilitators of the LPPD methodology to create the Open source that is necessary for learning and for development of the Lean New Global Architecture (LNGA) managerial engagement standard.

The process of organizational change is intended to disrupt the current order – to change the traditional view of management over a gradual evolutionary process. Thus, the existing standard is necessarily the basis for the construction of the entire process. Leading organizational change is like building a series of stable standards that will serve as steps on the climb up a steep incline: design of an up to date view of management that can adapt itself to the conditions of a changing marketplace.

Are we also ready to join the development and design of the system of the Value Creation Architect (VCA) in our organizations, with the tools used to develop an LPPD product in our backpacks?

Boaz Tamir, ILE.