The Business of Contradictions

Found this very interesting link by Jeff Sutherland, famed Scrum co-founder and trainer who I took my certification class from, on a paper published by Harvard Business Review. The paper is titled “The Contradictions That Drive Toyota’s Success”. One of the paper’s authors is Hirotaka Takeuchi who co-wrote another famous paper in HBR that was the inspiration and impetus for the Scrum project management movement and which I wrote about before.

As the paper states:

Quite simply, TPS is a “hard” innovation that allows the company to keep improving the way it manufactures vehicles; in addition, Toyota has mastered a “soft” innovation that relates to corporate culture. The company succeeds, we believe, because it creates contradictions and paradoxes in many aspects of organizational life. Employees have to operate in a culture where they constantly grapple with challenges and problems and must come up with fresh ideas. That’s why Toyota constantly gets better. The hard and the soft innovations work in tandem. Like two wheels on a shaft that bear equal weight, together they move the company forward. Toyota’s culture of contradictions plays as important a role in its success as TPS does, but rivals and experts have so far overlooked it.

Toyota believes that efficiency alone cannot guarantee success. Make no mistake: No company practices Taylorism better than Toyota does. What’s different is that the company views employees not just as pairs of hands but as knowledge workers who accumulate chie—the wisdom of experience—on the company’s front lines. Toyota therefore invests heavily in people and organizational capabilities, and it garners ideas from everyone and everywhere: the shop floor, the office, the field.

At the same time, studies of human cognition show that when people grapple with opposing insights, they understand the different aspects of an issue and come up with effective solutions. So Toyota deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture of tensions generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically.

I think much of Toyota’s ability to understand and overcome contradictions is due to the cultural roots of Eastern thinking, which really never viewed contradictions like the West did starting with the Greek thinkers like Aristotle. His legacy of the “Law of the Excluded Middle” permeated the whole of Western thinking and much of the reductionist, logical system on which the sciences and systematic process thinking that industry still drives on.

The Japanese on the other hand do not view contradictions as things to avoid, but rather like the Yin and Yang, as just different manifestations or phenomenon of the natural world which when viewed as a whole, is really just a unity of oppositions. Thus, this thought process would enable the company culture of Toyota to embrace, temper and balance opposing contradictory forces.

The paper found 6 ways Toyota unifies contradictory tendencies:

1. Toyota moves slowly, yet it takes big leaps.
2. Toyota grows steadily, yet it is a paranoid company.
3. Toyota’s operations are efficient, but it uses employees’ time in seemingly wasteful ways.
4. Toyota is frugal, but it splurges on key areas.
5. Toyota insists internal communications be simple, yet it builds complex social networks.
6. Toyota has a strict hierarchy, but it gives employees freedom to push back.

Traditional Western management practices would consider a company running under such an ideological platform as a badly managed company, but that's exactly why Toyota succeeds, because embracing and unifying such contradictory tendencies acknowledges first, that contradictions are a natural way of life (which it is), and that second, adopting such a mindset would allow a corporation to manage their organization in a more dynamic and fluid way. This will prevent complacency and continuously challenge an organization to push it self, whereas “most enterprises stop growing because they stick to processes and practices their past successes have generated.”

But one may mistake such a notion as giving a company license to dispense with all systematic and rigorous processes in favor of chaos, when on the contrary companies “must teach employees how to deal with problems rigorously and systematically, or they won’t be able to harness the power of contradictions”. Again, that’s to embrace, temper and manage the rigorous process and creative fluidity.

Summary of Toyota’s approach:

Three Forces of Expansion

Three forces of expansion lead the company to instigate change and improvement

• Impossible goals
• Local customization
• Experimentation

Three Forces of Integration

Three forces of integration stabilize the company’s expansion and transformation

• Values from the founders
• Up-and-in people management
• Open communication

Characteristics of Toyota Executives

• Willingness to listen and learn from others
• Enthusiasm for constantly making improvements
• Comfort with working in teams
• Ability to take action quickly to solve a problem