GA 296 | How Toyota Uses Agile with Nigel Thurlow

How do you create a key differentiator? How do you delineate yourself from the competition? How do you start to be able to adapt more rapidly? How do you optimize weak signal detection, develop things like situational awareness and be able to respond before your competitors see things? Coming.

Today, I'm excited to welcome Nigel Thurlow to the show. Now, as I mentioned, last week we recorded several podcasts during the recent AME conference, including the one you're listening to now. Nigel Thurlow is the Chief of Agile at Toyota Connected. During his time at Toyota Connected, Nigel has established the Toyota Agile Academy and created Scrum the Toyota Way. Nigel delivered a mind blowing keynote address during the AME Conference the day before we recorded this interview. So during our conversation we touch on many of the things Nigel discussed during his keynote related to the way Agile is being leveraged at Toyota. Show notes for this episode, which will include links to everything we talk about, can be found over@gembapodcast.com just look for episode 296. Finally, if you're looking to accelerate your continuous improvement program in 2020, Gemba Academy would be honored to help you. And while we now offer more than 1500 videos spanning Lean, Six Sigma and many other continuous improvement related topics, including virtual tours at companies like Menlo Innovations and FastCap, we don't want to be known as a company that SIMP provides videos. We're genuinely interested in our customer success, which is why a major part of what we do is coach and mentor our customers virtually and on site as needed. To learn more, head over to gembaacademy.com okay, enough from me. Let's get to the show.

Nigel, thank you for coming onto the show.

How are you? I'm very well. Good morning.

Yes, I really enjoyed your keynote yesterday.

Thank you very much.

Yeah, we were joking that maybe not joking for you because you were up in front of 1500 people that technical problems, but they battled through it and at first I thought it was part of your thing, you know, because you're talking about complexity and this and that and the microphone's not working.

It sort of helped to demonstrate the unpredictable nature of things, but it also, I think it made, it gave us a lot of fun in the, the auditorium and it enabled me to dance around a bit and have a bit of fun with the audience. Awesome. It broke it up a little bit rather than just presenting a lot of boring slides.

Yeah, yeah, brilliant. So tell us a little bit about who you are, Nigel, obviously who you work for and maybe how you got into this line of work, your background, because you didn't really actually share that yesterday. So I'm curious, like what's your background?

That's sure. Well, currently I'm the chief of Agile at Toyota Connected and Toyota Connected is the part of Toyota that's working on the Internet of things, connected vehicle technologies, big data and the future of our sort of the future of our technology within our vehicles. But I was recruited into Toyota Connected a couple of years ago by the CEO Zach Hicks to help them with their agile journey and to explain what Agile really meant in a Toyota context. Because as you know, we are a lean company with our history in the Toyota production system. But prior to that I'd spent a couple of years at Toyota Motor North America helping them implement their agile journey and starting to introduce Scrum as a behavior pattern, as a, a way standardized, repeatable process. And I often describe, as I mentioned yesterday, that Scrum is more of a. Well, Scrum guys won't like me for saying this, but it's really PDCA with Kanban and some time boxes. So it sort of brings together three concepts and it becomes an awesome planning tool. But when we started to look at how we could apply that with our systems thinking and then I started to dig into complexity thinking, we started to see that this wasn't a panacea, it wasn't an answer for everything. And whilst it was an extreme, extremely useful tool we could use, we needed to go a little bit further. And of course we've got this very deep systems thinking background from Toyota's production system. So I started to research back in time the history of this and started to understand where this had come from. And my role at Toyota Connected started to evolve as I started to do this. And so I started to transition the operational duties I was responsible for to a new gentleman who took over the day to day operational duties. And I started to focus on the research and the training and the coaching and the mentoring within the Toyota organization and then started to develop new ways of thinking about some of the problems we were facing. So what I'm now doing is running a consulting organization for Toyota Connected and that organization is now offering coaching and mentoring and training not only to the Toyota family. And we're very heavily embedded at Toyota financial services at the moment, helping our friends down the road from our office, but also we're starting to those services to external organizations as well. Which means we can take the Toyota way of doing things and show them how we bring in those agile concepts within the Toyota way of doing things and start to bring those together. But as I was doing this research, we sort of went way, way, way, way back in time and I ended up stopping at Aristotle. I thought that was far enough. But then we started to realize that the stuff that Aristotle was talking about, which was picked up by Copernicus in what was called the Copernican revolution, which is realize that the planet Earth wasn't the center of the universe. And we started to sort of formulate some scientific ideas which then were picked up by Galileo and the father of modern science and then shortly after him a guy called Sir Francis Bacon, an Englishman. So you're very welcome. Started pick up, started to talk about empiricism and inductive reasoning. And why is this even relevant? Because if you fast forward through the sort of timeline and the video I made about this, you start to realize this was the roots of pdca, empirical thinking, empiricism. And the same roots of empiricism are what the agile folks use within Scrum and various agile models when they talk about transparency, inspection, adaptation. It's the same thing as pdca. And so we started to look at that, but then we started to realize that inductive reasoning and reductionist type techniques like the 5Y analysis, problem solving wouldn't work in complex problems. And I started to try and understand what complex problems were. And after a lot of study, a lot of research, and working with people like Dave Snowden, who's the guy who created the Cynefin framework, and one of the sort of deep eminent scientists in complexity theory currently, he's probably the most well recognized person in complexity studies. And then I started to work with the University of North Texas and their complexity department and the team science department under the auspices of Professor John Turner. And then I met a friend in the US Navy who used to fly F14s on US aircraft carriers and served with the military for a long time and indeed still serves in the reserves. And we started to realize there was another element missing, teamwork. So we'd got our inductive reasoning and lean systems thinking. We'd now started to understand complexity and we started to understand teamwork as opposed to people just getting together to do stuff, actual teamwork. And that started to lead us into a lot of sort of thoughts about, well, it doesn't seem that we're actually organized and optimized to work ideally. And we started to look at leadership models and I started to look at leadership in Toyota and leadership external to Toyota. And while we have a very deep sort of learning, culture and respect culture. In Toyota, we're still very hierarchical. Especially in Japan, there's a very hierarchical culture. And this is limiting innovation and the ability to adapt rapidly and to pivot with things that are coming at us in this new world. And as we start to look at that new world, this sort of very volatile, sort of unpredictable world, and we're seeing famous name companies collapse frequently and regularly, and we're seeing companies who are struggling to adapt and pivot with their organization when the markets are changing, the customers are changing, the demand is changing and attitudes and opinions are changing. So we decided that we sort of realized that something needed to change. And when we talk about agility at Toyota, we talk about organizational agility. You can have teams running around doing Scrum or some other agile, using some other agile tools, and you can have some little agile teams which can respond very quickly as a team. But then you need the product to respond rapidly like your iPhone or your Android phone. If that doesn't rotate, if that doesn't change every eight or nine months, there's no agility in the product and that phone maker is not likely to be around very much longer. And so we've got team agility, we've got product agility, but we really need organizational agility and we need organizations to be able to pivot. And I use the, I've read this on, in another blog at some point, but I sort of use the example yesterday of Blockbuster, if they pivoted and become a fast food company. It's a crazy example, but think about it. Blockbuster had extensive physical stores all over the US and they had people and stores. And if they pivoted and used that real estate and those people invested in to go in a different direction, maybe they'd still be around doing something completely different, but they'd still be around. And so when we talk about organizational agility, we talk about how quickly can you as an organization pivot if a recession comes or the product line you're in isn't succeeding? There's a lot of manufacturing companies here who are expert manufacturers, expert engineering companies, expert lean, expert lean people. And they make product X, Y or Z. But what if product X, Y or Z falls out of favor? How do they pivot and make product abc? And so that's what we mean by organizational agility. But to achieve that, an organization has to transform holistically. And I've stopped talking about lean transformations and agile transformations and Scrum transformations and Kanban transformations because everybody's trying to find, you know, rebrand things and turn it into some consulting business. What I'm trying to do is to say if an organization truly wants to serve their customers, the customer first promise I talked about extensively yesterday, the organization needs to be able to pivot rapidly, but they also need to be able to optimize the way they deliver value to their customers. This means the organization as a whole holistically needs to transform. And so that means they need to look at different leadership styles, how teams are formed and working together, how multiple teams in what's called a multi team system are working together and operating together. And they need to understand complex problems because the world is now full of problems that aren't easy to solve. And when you get into deep, complex problems, you start to get wicked problems, which are problems where when you create, when you solve the problem or you think you have, it creates half a dozen more problems. And so there's no easy way to reduce that down to a single root cause fix. And away we go. So different thinking is needed, different tools are needed to make sense of your surroundings and to be able to do what's called weak signal detection. A lot of companies that failed don't see the failure coming until the failure has arrived. So how do we detect the problem before it arrives and actually pivot and deal with that? So a lot of the tool sets and a lot of the new thinking and complexity thinking helps us deal with that. Team science helps us enable teams to learn teamwork and become highly productive and high performing and to focus on the interpersonal reactions, the cognitive elements of teamwork, and to build high performing teams. And this is not just important at the operational level, this is important at leadership level and throughout the ranks of management and leadership. A lot of people who call themselves leaders are probably managers with an executive title. They're not actually leaders. And leadership is a different construct, different, totally different construct to management. And you can have leaders at all levels of the organization. But what we're proposing and what we're trialing and testing out in some of our organizations is how we can have different styles of leadership where we fully empower teams by distributing those leadership roles and those decision making roles, moving the authority closer to where the information is so the people who are doing the work get to make more decisions about how the work is done. That means that the science of teams is now applicable in leadership circles at the executive level and this sort of middle management led that everybody often talks about. So what we're now looking at doing is giving these middle managers new roles, functional leadership Roles where they're no longer managing people, but they're facilitating teams and groups or multi team systems, groups of teams to actually operate far more effectively and to drive the behaviors we want and then to help them design organizations. And when a lot of people talk about value stream mapping, and I credit my friend, a gentleman in Belgium called Dirk van Goobergen, who's a deep, lean expert, he doesn't like the phrase value stream mapping. And while I love John Schuckmight rather very, very dearly, and I think the book is an excellent book, seminal publication, everybody should own Mapping the value stream doesn't have much value. We want to design the value stream. So my friend Dirk talks more about value stream design. And the value stream design is how do we optimize our organization to maximize the value we're delivering to the customer. So we shorten the lead time, improve our quality of our deliverables and of course we reduce our cost to deliver. And if you can design the right value stream, you'll eliminate cost. You then have a competitive advantage over your competition. But this takes strong leadership and different leadership because we're very used to having to hand things off to legal or procurement or vendor management or this team or that team. As I mentioned in the presentation yesterday, flow is not movement. Flow is not the item or the product or the service or the document flowing through the organization, moving through the organization from department to department. Flow is a continuous stream of value added activity. And indeed movement is waste. So we want to eliminate the movement wherever possible unless the movement facilitates a continuous flow of value added activity. So how do you design your value streams and your organizational structure and the way you operationalize and execute the value deliver to maximize flow of value added activities, thereby getting the value to your customer more rapidly, reducing your cost, gaining a competitive advantage and continuing to service the needs of the customers and retain that customer loyalty? I said a lot. Maybe I should stop now.

No, it's brilliant. I mean, what. I guess what I'm most curious to hear is how this is. This thinking has been received at Toyota. And I know you, you know, so you're being recorded and all that, right? But I'm sure it hasn't always been sunshine and rainbows, so.

And it still isn't. I mean, we're a gigantic company worldwide, we're about 400,000 people. And that's broken into many different geographical locations, many different independent operations, all linking back ultimately to the mothership in Japan. So these very different cultures, very different sort of management decision delivery types and Techniques and very different operations. But what's happening is a lot of our different Toyota organizational units have been trained by us, have been supported by us and coached by us. Some of that's been very successful, some of it's not worked at all yet, and some of it's sort of in the middle and they're on that journey. It's like anything, if people are starting to implement lean principles and lean techniques, it's a long journey. And hey, Toyota's been doing it for over 80 years and we're still learning. So this is the reality. You're never done, you're just on that journey and we're improving as much as we can. So certainly in the software teams and in some of the IT and IS teams, of course that has been received very well because these people are expecting this agile world where we're moving into the business world and marketing and accounting and finance and all these sort of non sort of technical areas. It's had different receptions, some of it extremely positive. At Toyota connected Jennifer Brown, our chief people officer, our head of hr, she's done some amazing things in the talent recruitment team with new visual ideas and visual boards and shorten the time to recruit and eliminated a multitude of challenges there. Our accounting finance team and our procurement vendor management teams, they're using some of the techniques I've shown them to accelerate the way they do things and to bring people together in what's called a workflow cycle, where you can temporarily bring people together from different abstract groups that wouldn't normally work together as a team day to day. So like legal, finance and various other groups, we can bring them together and they'll work daily for four hours a day, or three times a week for four hours or whatever it happens to take without phones and email interruptions to eliminate that sort of context switching waste. And that helps us to use some of these techniques to accelerate. So there's no one size fits all. Everything is context specific. There are many tools, many techniques and practices out there, all of them very valid. What we're doing is formulating the different patterns to enable us to apply them in different contexts to accelerate moving forward. Some of our external partners like Denso and ASIN and various other organizations are now reaching out to us for training. There's various other global organizations outside of Toyota now reaching out to us to support them and help them. And indeed there are some experiments happening in Japan in some smaller areas, Triad are using Scrum and some of these agile techniques and some other companies in Japan are trialing some of our other business units in Japan. And there are plans for us to start implementing a full training program in Japan with Japanese trainers, not just teaching scrum and agility, but teaching complexity and new leadership styles and of course the team science elements. So this is a new world, but everything starts with the customer and ends with the customer. And the whole concept of flow is optimizing that value delivery to the customer by only focusing on value added activity and trying to eliminate wherever possible the non value added activity or just the additional waste of bureaucracy.

What do you make of a company like Amazon?

I don't know much about the inner workings of Amazon. I've read and studied what everybody else has read and studied, certainly things like their two pizza teams, their small teams. And Bezos has been quoted in the media as saying this allows him to drop an idea into these independent teams and let them run with it with a lack of bureaucracy. And so those are sort of techniques that are very well worth studying. I'm working with Steve Denning who writes for Forbes and various other outlets. And he and I, he's been in with the learning consortium to Toyota and we've shared a lot of things we're working on. He's been very generous. And so we're looking at going to visit other companies like Saab Aerospace and Spotify next year just to see how they're progressing because they're big, agile sort of white paper type companies. We want to see how they're growing and evolving and see how some of the theories and ideas we've got are coming. Other research I'm doing with Dave Snowden is we're working on some new research which will release next year as Creative Creative Commons, which is the intersections of the lean sort of world and the complexity world. We're actually starting to map and synthesize and codify some of that and we're going to be visualizing it in very easy to consume formats.

Yeah, most of the folks listening to this are going to be your traditional kind of lean thinking organization. So I guess maybe to wrap things up. Nigel, what advice do you have for the, for the lean hardcore thinking practitioners out there as far as how we can continue to grow and learn and understand complexity and deal with complexity in harmony with the things that we're already doing and trying to even get better at.

So the first thing is don't abandon lean. Don't walk away from tps. That would be madness and craziness theory. This is here to stay and will continue to stay. And it solves and Helps us solve many, many challenges and helps us deliver value. So this isn't going away, but we do need to start a understanding the impact to our businesses with the. With complex problems, but also the volatility in the world. We've been this globalized, digitized economy, politics, environment. There's so many complex challenges, but just from a normal business point of view, there are. Everybody's getting into your space. How do you create a key differentiator? How do you delineate yourself from the competition? How do you start to be able to adapt more rapidly? How do you optimize weak signal detection, develop things like situational awareness and be able to respond before your competitors see things coming? That's where people. So the advice would be to start understanding complexity theory. It's not as hard as it sounds. When you present a few slides in a rapid fire session, of course it becomes hard. But as you start to understand it and develop that and learn new techniques like narratives and storytelling rather than doing assessments and you can start to learn so much more about your organization and the challenges within your organization. You definitely need to focus on understanding psychological safety and truly creating a safe to fail environment. Especially if you're in a safety critical environment. Because if you don't have safe to fail in a safety critical environment, people get hurt or worse. So you need that psychological safer where people can pull the metaphorical and on court and say hey, we got a problem here, we got to stop. So people need to start to understand what psych safety means, start to understand situational awareness, start to understand intent based leadership. These are some of the key areas for them to read. They should watch the videos by David Marquette who wrote the book Turn the Ship Around. They should read the book. This will help them understand leaders intent or intent based leadership and then start to understand the difference between task work and teamwork. These are the areas and the. And as they start to understand this, they'll start to develop different cognitions themselves and different behaviors. And as I started yesterday by saying the one word that sums up what needs to change to optimize is behaviors. It's the one thing that limits us. And I'll finish by saying yesterday I mentioned complex adaptive systems. We as humans are the most complex adaptive system. I hope this has been useful. It has.

How can people connect with you, Nigel?

They can Find me on LinkedIn. They're welcome to email me at Toyota. I'll give you my email address after the show. And then you can, you can make that available. You can link it up and then give them a hidden link to that. They can all get me on LinkedIn. People continuously connect with me on there. And if organizations want me to come and do a one out of sort of leadership talk, then they can reach out to me and we make that available to them.

And Nigel Thurlow N I G E.

L T H U r L O W N I G L T H U r L O W yeah.

Just for the folks that are listening.

Yeah.

Go look you up on LinkedIn.

Yeah.

Thank you.

Pleasure. Thank you so much.

All right, take care.

Thanks for listening to the Gemba Academy podcast. Now we invite you to take a no strings attempt. Attached, fully functional test drive of gembacademy.com. gain immediate access to more than a ousand Lean and Six Sigma learning resources, all free of charge at gembacademy.

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