How to Change a Culture: Lessons from NUMMI
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WINTER 2010 VOL. 51 NO. 2 John Shook How to Change a Culture: Lessons From NUMMI REPRINT NUMBER 51211 MANAGING CORPORATE CULTURE New United Motor Manufacturing Inc., a joint venture between General Motors and Toyota, gave GM a chance to learn about the Toyota production system and to change the culture of a notoriously dysfunctional plant. How to Change THE LEADING QUESTION a Culture: Lessons How can managers change the culture of their From NUMMI organization? GM and Toyota launched their joint auto plant where GM’s work FINDINGS Start by changing force had been at its worst. Here’s what happened next. And why. what people do BY JOHN SHOOK rather than how they think. ”It’s easier to act your way to a new way of thinking than to IN SPRING 2010, New United Motor Manufacturing Inc., the famed joint venture experiment by think your way to a Toyota Motor Corp. and General Motors Co., will close its doors. As someone who was there at its new way of acting.” launch and witnessed a striking story of phenomenal company culture reinvention, I am often asked: Give employees the means by which “What did you really do to change the culture at NUMMI so dramatically, so quickly?” they can success- I could answer the question from high altitude by simply saying, “We instituted the Toyota produc- fully do their jobs. Recognize that the tion and management systems.” But in the end that doesn’t explain much. A better way to answer is to way that problems describe more specifically what we actually did that resulted in turning the once dysfunctional disaster — are treated reflects your corporate GM’s Fremont, California, plant — into a model manufacturing plant with the very same workers. culture. AP IMAGES WINTER 2010 MIT SLOAN MANAGEMENT REVIEW 63 A09-MI1-012 Shook3.indd 63 12/3/09 5:40:01 PM MANAGING CORPORATE CULTURE And describing what we did, and what worked teach me first. So, starting in late 1983, Toyota put me to so profoundly, says some interesting things about work at headquarters and at the Takaoka plant, NUM- what “culture” is in the first place. MI’s “mother plant” that produced the Corolla. I worked on all the major processes of car assembly. Backstory: Why NUMMI Began, Then, working with Japanese colleagues, I helped de- and How It Fared velop a training program to introduce the Toyota Toyota hired me in late 1983 to work on the Toyota system to the American employees of NUMMI. side of its new venture with GM. I was assigned to a At the time, the work force in the old GM Fremont newly formed group at the company’s Toyota City plant was considered to be an extraordinarily “bad” headquarters in Japan to develop and deliver train- one. Many considered it to be GM’s worst. The work ing programs to support its impending overseas force in those days had a horrible reputation, fre- expansion. All of this was just happening. NUMMI quently going out on strike (sometimes wildcat didn’t even have a name yet. The agreement with strikes), filing grievance after grievance and even sab- the United Auto Workers union was yet to be signed. otaging quality. Absenteeism routinely ran over 20%. There weren’t yet any employees of NUMMI, nor And, oh yes, the plant had produced some of the even any managers. NUMMI wasn’t successful; it worst quality in the GM system. Remember, this was wasn’t famous. It was just a dream. the early 1980s. So to be the worst in GM’s system at Why was the joint venture attempted? GM, for its that time meant you were very, very bad indeed. part, had a few very tangible business objectives that it Toyota had many concerns about transplanting thought NUMMI could address. It didn’t know how to perhaps the most important aspect of its produc- make a small car profitably. It wanted to put an idle tion system — its way of cultivating employee plant and work force back on line. And, of perhaps less involvement — into a workplace as poor as Fre- importance at the time, but still acknowledged, it had mont. Toyota wondered how workers with such a heard a little about Toyota’s production system, and bad reputation could support it in building in qual- NUMMI would provide the chance to see it up close ity. How would they support the concept and and personal; NUMMI would be a chance to learn. practice of teamwork? (See “What Is the Nature of a On the other side of the fence, Toyota faced pres- Good Company-Employee Relationship?”) sure to produce vehicles in the United States. It was As it turned out, the “militant” work force was already trailing Honda Motor Co. Ltd. and Nissan not a major obstacle. Many problems did crop up, Motor Co., which were by then building cars in but they were ultimately overcome. In fact, the Ohio and Tennessee, respectively. Toyota could have union and workers didn’t just accept Toyota’s sys- just chosen to go it alone, which would have been tem, they embraced it with passion. The absenteeism quicker and simpler. But Toyota’s aim was to learn, that had regularly reached 20% or more? It imme- and to learn quickly. What better way than to get diately fell to a steady 2%. The quality that had been started with an existing plant (Fremont), and with a GM’s worst? In just one year, it became GM’s best. partner helping it navigate unfamiliar waters? All with the exact same workers, including the old It is important to note, however, that from the troublemakers. The only thing that changed was beginning, Toyota’s objectives at NUMMI were de- the production and management system — and, fined by learning rather than by the kinds of tangible somehow, the culture. business objectives that typically define a joint ven- ture. And if there’s one thing Toyota knows how to Need a New Way of Thinking? do it is how to learn, especially where learning is Act Your Way to It most important: down at the operational levels of “Okay, so, how did you change the culture? What the company. It was that approach to learning that did you do that changed such a troublesome work defined its approach to NUMMI from day 1. force into an excellent one?” Not surprisingly, NUMMI was an incredible learn- That’s a great question. ing opportunity for me personally. Before I could help It’s one thing to say the culture changed because we Toyota teach anything to GM or to anyone else, it had to put in the Toyota Production System or changed the 64 MIT SLOAN MANAGEMENT REVIEW WINTER 2010 SLOANREVIEW.MIT.EDU WHAT IS THE NATURE OF A GOOD COMPANY-EMPLOYEE RELATIONSHIP? I have often been asked what motivates In NUMMI’s very early days, there was a It strikes to the very heart of the company- Toyota’s employees in Japan to “work so little-known and fascinating debate behind employee relationship. hard.” One powerful motivator, I believe, is the scenes about basic human resource pol- At Toyota, a worker’s immediate supervi- the concept and feeling of membership. It is icy. It made sense to the people at NUMMI sor does not have the power to hire and interesting to ask, “What is the nature of the to have production floor leaders participate fire. The company will stand behind each company-employee relationship?” At Toyota in the process of hiring their own team worker as an employee, to protect him or NUMMI, there is clear and evident com- members — giving them authority along from a frivolous boss. The worker is hired mitment on the part of the by the company. He is an em- company to the employees. ployee — citizen, even — of Toyota, even in Japan and con- the company, not of the indi- trary to popular myth, does not vidual who happens to be his guarantee lifetime employ- supervisor today. “Personnel ment. No employer can power” is held by the compa- credibly make such a guaran- ny’s personnel department, tee. What an employer can do not by individual managers. and what Toyota does is state Employees need to feel se- that the last thing the company cure in their relationship with wants to do is lay off employ- the company. With this feel- ees. Only as a last resort will it ing, they can also feel free to turn to reducing the work support and actively engage in force. Through such a policy, kaizen, or continuous im- real trust can develop between provement. Then, even if the company and employees, kaizen happens to result in the along with the motivation for need for fewer workers in a employees to accept responsi- given process, there is no bility and take ownership. At feeling of threat or insecurity NUMMI, this policy was called that a specific person will lose “mutual trust.” The policy of “mutual trust” at NUMMI’s Fresno, California, plant led his position as an employee of workers to have different expectations about the relationship between “Laying off as the last re- the company and its employees. the company. sort” was put to the test in Thus, including production the late 1980s. NUMMI’s product simply with responsibility. That thinking was shared supervisors in hiring interviews represented a wasn’t selling well. Production volume was by the new NUMMI American senior man- breach of the basic philosophy of separation down so much that there were several agers and the Toyota people who were of power and would send a message, how- hundred workers who weren’t actually stationed at NUMMI.