The Elegant Solution

Toyota’s Formula for Mastering Innovation

by Matthew E. May
Copyright © 2007 by Matthew E. May. Reprinted by permission of Free
Press, a division of Simon & Schuster, Inc., N.Y.
256 pages

Focus Take-Aways
Leadership & Mgt. • Innovation means solving a problem better than anyone else.
Strategy
Sales & Marketing
• Toyota uses specific methods to innovate constantly, consistently and productively.
Finance • The best way to innovate is to produce a lot of little improvements, rather than
Human Resources seeking a single transformational breakthrough.
IT, Production & Logistics
Career Development
• Seek innovation in the craft of what you do, perfect your product and design it to fit
its social context.
Small Business
Economics & Politics • Innovate methodically by employing a series of "IDEA" loops: "Investigate-Design-
Industries Execute-Adjust."
Regions
• Work within constraints to force people to derive creative solutions to challenges.
Concepts & Trends
• Ground all creativity in hard data and direct experience.
• To inspire innovation, get workers and consumers emotionally involved.
• Use standards to make innovation and learning easier. Innovate via "systems
thinking." Make all the elements of a product or process fit together.
• Seek perfection by cutting out all complexity and excess. Make it lean.

Rating (10 is best)

Overall Applicability Innovation Style

9 9 7 8

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 Relevance

What You Will Learn

In this Abstract, you will learn: 1) How Toyota innovates so well and consistently;
2) What principles guide its leaders’ actions; and 3) How to use its model to nurture
disciplined innovation at your company.

Recommendation
Matthew E. May is so enthusiastic that he makes the case for innovation sound a bit too
simple, easy and risk-free. He sounds, in other words, like what he is: essentially a committed
convert to a specific perspective, an approach that has brought a great deal of genuine value
to his life. As a result, getAbstract recommends his book to readers who can take it with a
grain of salt. With that bit of leveling understood, let’s hope he attracts many such readers,
because his points about innovation and value creation are salient and important. He cuts
through a lot of the overtheorized verbiage that the subject of innovation has generated,
and he provides a clear, broadly applicable action plan. Whether your business is building
cars, like Toyota – which provides many – but not all of the examples here, selling hats
or even writing fiction, you’ll find ample good suggestions about how to apply continual
improvement to create innovative, elegant solutions.

Abstract

Toyota’s Principles of Innovation

Today, innovation is crucial, but difficult. Toyota rises to the challenge, coming up with a
“The quest for the million ideas each year that its managers can apply to their process. How? The company
elegant solution
shapes true innovates at every level, and so should yours. Get everyone in your organization to be
innovation.” devoted to coming up with new ways to do things and serve customers better. Think
like Toyota: don’t seek the single big idea that changes everything. Instead, look for “the
elegant solution – the singular and deceptively simple idea with huge impact.” Such ideas
cut through the complexities that blind people to new opportunities, reframing problems
in new, productive ways.
Toyota’s quest for elegant solutions started in the nineteenth century when Japan’s
Sakichi Toyoda found ways to improve the weaving process. His work led to Toyoda
Automatic Loom Works, which eventually became the Toyota Motor Company. Toyoda
did not seek new “gadgets” or technological frills. Instead, he sought “ingenuity in craft,”
ways to perfect his work and make his innovations fit their social context, so he could
manufacture things that people wanted. That’s elegance, and to achieve it you have to
understand innovation. Start by defining it. Don’t get caught up in false distinctions like
“The three the one between “incremental and breakthrough innovation.” Innovation means “solving
principles of the problem of how to do something better than ever.” Your challenge is to innovate until
ingenuity in
craft, pursuit of
you reach perfection – and then to keep improving.
perfection and fit
Creativity isn’t a mystery. You can generate “applied creativity,” a core principle
with society guide
the pathway to of innovation, by engaging in your situation – that is, connecting emotionally – and
elegant solutions.” exploring it. What are you really trying to do? Don’t be trapped by job titles. Instead,
focus on who you are and who you are to your organization. Do you generate new ideas?
Do you apply others’ ideas? Are you at your best improving existing processes? Or do
you focus on relationships and help people get along? Hone in on the focus that suits
The Elegant Solution © Copyright 2007 getAbstract 2 of 5
 you until you get to the bottom of your organization, your job and your immediate tasks,
“Lean gets to the
while continuing to seek your ultimate goals.
heart of elegance Examine what you do daily. Ask tough, challenging questions: How do I serve people?
through simplicity.
Regardless of Why is my work important? Can this be done better? How can I improve this job, process,
whether the company or product? Use your answers step by step. Both history and Toyota show that
perspective is seeking a single idea that will turn the world upside-down is not the best way to achieve
professional or
personal, lean is
radical improvements that can revolutionize your business and lead you toward perfection.
about one thing: A big breakthrough idea sounds glamorous, but it is risky and not the best way to innovate.
doing more of Instead, seek evolutionary, small changes that make your product a bit better each time.
what matters by Generate innovation by reversing standard questions. Instead of asking what you can
eliminating
what doesn’t.” improve, ask what is keeping you from perfection. Now, eliminate those obstacles.
That is how Toyota’s experts designed the Lexus. First, they established a clear, ambitious
goal: develop a luxury car better than a Mercedes or a BMW. Then, each core member
of the design team rented a different luxury car and drove it almost 150 miles, tracking
performance and the experience of the ride, until they identified the “Mercedes S class
and BMW 7 series” as targets to beat. They studied U.S. luxury car owners in several
cities, examining everything from where they ate to how they worked. Toyota used
direct observation, focus groups, academic studies and reverse engineering of BMW
“When it comes to and Mercedes cars to establish criteria for the car that would become the Lexus. The
solutions, simple team set and pursued impossibly high standards. The crucial final steps included acts of
is better. Elegant elimination: the team cut weight, noise and other obstacles to achieve perfection.
is better still.
Elegance is the The design team innovated in the context of its goals. To do the same, think in terms of the
simplicity found larger system. Make sure your changes work with the way your entire system fits together
on the far side of
complexity.” and functions. This isn’t easy, since “systems thinking” isn’t natural, but you can learn
to do it. Look ahead to see how your changes will move through the system. Seek each
problem’s “root cause,” which is often hidden behind what seems to be the source. You
can’t do this alone. Your entire organization has to be devoted to this kind of thinking. This
is easier in small companies, especially start-ups, but it can be done anywhere. Everyone
should examine how suggested changes will fit into the larger whole.

10 Rules to Guide Innovation

As you apply Toyota’s principles for innovation, let these practical rules provide direction:
“The truth is
that business 1. “Let Learning Lead” – Many would-be innovations fail because those involved
innovation is about don’t really understand the situation, which can happen when people don’t value
satisfaction and or understand learning. To solve this, make learning everyone’s first responsibility.
value, not new
gadgetry.”
Give people time to observe, and teach them how. Many conceptual tools or learning
models can help your organization learn. Toyota uses the “Deming Wheel,” a
sequence of “Plan-Do-Check-Act, or PDCA.” Adapting such a standard model
of learning leads to other crucial components of gathering information, such as
developing standardized vocabularies and methods. A more generalized, applicable
four-step learning model, is called “I.D.E.A. Loops,” which stands for “investigate,
design, execute and adjust.” To use it, investigate what is going on. Design solutions.
Execute experiments to see if the solutions work. Adjust your actions, incorporating
what you’ve learned. Then start over again with an investigation. Record the results
“Ingenuity is equal of each IDEA loop in a standardized document, so your organization has access to
parts creativity
and application.”
what you discovered in a known format. To build reflection – which the Japanese call
“hansei” – into your process, take the time after you’ve acted to examine your actions.

The Elegant Solution © Copyright 2007 getAbstract 3 of 5

 Your goal is to figure out why things happened as they did.
2. “Learn to See” – As you innovate, things won’t always work out as planned. Some
new product or item might function but still not solve your real problem. This happens
“What separates when you don’t understand the issue deeply. To solve this dilemma, “learn to see” the
inventors from problem in context; understand how, when, where, and why it happens, and what
innovators is the
ability to think
impact it has on people. First, get the facts. Build your perceptions until you see
through all the things as the customer does. Use three general tools. Initially, note what customers
conditions and do. Watch them in context. Make your focus groups and lab experiments as realistic
connections
as possible. Then “become the customer.” Go where the customers go. Do what they
required to allow
a solution to fit do. Future Toyota managers become mystery car shoppers, so they experience the
seamlessly into purchasing process. Next, “collaborate” with customers, involve them. Ask what
the everyday they want and need. Now give it to them.
beat of those who
will use it. That 3. “Design for Today” – Often something you try just doesn’t work as well as you
kind of thinking is hoped. This can happen when you get addicted to invention for its own sake or to an
systems thinking.” idea just because it’s yours. To prevent this, design for a need that actually exists now.
This doesn’t mean you can’t develop new products if they demand a long lead time,
but begin by solving problems that are impediments in the present, not ones you
anticipate in the future. Hybrid cars are a good example. It took Toyota a long time to
develop them, but they met a real need. Focusing on existing needs also grounds your
development process in the real world; it allows you to master, as Sakichi Toyoda
suggested, every inch of the production process. Incorporate your understanding of
“Innovation trends into the design process, but stay anchored in today’s market.
demands
exploiting limits,
4. “Think in Pictures” – You’ve involved people in your innovation project by telling an
not ignoring them.” engaging story, but to really explain it, use pictures. Draw or diagram the problem (and
solution) or use photos to bring the dream alive through images. You don’t have to be an
artist; you can use stick figures, clay models, collages, or existing graphic or software
tools to evoke your dream. You can do this in words, like thinkers from Walt Disney to
Martin Luther King Jr. As they ask and answer questions, people can literally visualize
solutions to the immediate challenge. This process allows participants to connect
thoughts their own way, and shatters logjams created by enforcing linear processes.
“Great innovation 5. “Capture the Intangible” – Sometimes you know what the goal is, but something is
is often born missing. This can happen when the people focus too narrowly on the specific object
of an ability to
harmonizing
being created and miss its larger purpose. To illuminate your vision, try to explain
opposing that intangible missing essence. If you buy a Cadillac, you aren’t buying just the
tensions.” transportation function. You’re also buying the feeling, the meaning, the personal
connection – the intangibles that come with the car. The most common intangible need
is the desire to avoid risk. People who might buy your product fear that you’ll waste
their money, that it will fail or hurt them, or that they’ll look bad. If you can show them
these things won’t happen, you’ll come closer to selling the intangible. Moving up, you
want people to love your product, and to have a sense of collaboration, to feel that when
they buy it they are part of creating something great.
“The truth is, 6. “Leverage the Limits” – If innovation is essentially dead at your company, the
before anyone can
organization may have gotten too comfortable. To reignite its start-up spirit, use
innovate anything,
learning must take limits as Toyota does (and as artists do) to force more creative solutions. Set “stretch
place. Learning is goals” to push beyond the current level of performance. Align these bold, but specific,
how we convert goals with the organization’s core function. Jane Beseda set such stretch goals to
ideas into action.”
revolutionize Toyota’s North American Parts Operation. She set a target: cut $100
million from distribution costs and eliminate $100 million worth of inventory from
the supply chain. At the same time, she wanted to improve customer service by 50%.

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 While you might be able to improve your results by 10% just through working harder,
you have to change how you work to improve by 50%. Beseda found that different
departments worked at cross-purposes. To solve that problem, Toyota adopted a new
planning approach called, “Vertical-Horizontal-Vertical.” Each unit’s team planned
on its own, met with teams from other units to plan integrated efforts, and then
“A team that
doesn’t thrive on updated its unit-specific plans.
the challenge 7. “Master the Tension” – If your team is solving problems, but in a flat, uninspired
of limitations
fashion, try to “work through creative tension.” Toyota applies “dynamic tension,”
is a red flag. It
means there is that is, establishing goals that pull the organization in two opposite directions, and
an inherent fear then finding a solution that balances both. Use each half of these paired forces to
of failure in your frame your efforts to resolve the opposite challenge. Then reverse. Using paired
organization. And
that spells danger challenges can push your teams past the mental blocks and lazy thinking.
for innovation, 8. “Run the Numbers” – Often teams come up with solutions that don’t work in the
because most real real world. This happens when you treat innovation as an art. Instead, balance
innovation springs
from failure your vision with hard data. Re-examine the challenge. Measure your process. Keep
and conflict.” analyzing it until you can articulate the issue in ways that lead to new solutions.
Toyota pushes its engineers to refrain from “immediate action,” because the first
action is always along overly familiar lines. It emphasizes the need to move past
hearsay and even experience.
9. “Make Kaizen Mandatory” – If your company innovates, but does so erratically,
it is not managing creativity correctly. To solve this, integrate the “kaizen ethic”
throughout your organization. In kaizen, you engage in an ongoing process of
“All change developing a standard, following it, and then developing even better methods, which
demands
become the new standard. Many creative people shy away from standards, fearing
knowledge.
Meaningful that they restrict creativity. That’s false. A standard is simply the best way known to
change do something, but you should adhere to it only until you find a better way. When you
– innovation – set a standard, make sure it is the best method. Document it completely. Distribute
demands profound
knowledge.” the information companywide, and shape your training programs so people live the
standard. Kaizen accents quality over the long haul. If crunch times pull on you
abandon your standards, fight that temptation.
10. “Keep It Lean” – Many companies assume that “more is better.” They add options and
features, making products hard to use and burying their core functions. Instead, keep
solutions lean. Focus on fulfilling customer desires and refuse to add anything else. This
isn’t easy. Complexity is the opposite of lean. Complexity stems from inconsistency,
“The Toyota overload and waste. Seek the sources of these problems system-wide and fix them.
organization
implements a Putting It All Together
million ideas a
year. It’s a fact.
If you are reorganizing your company for innovation, start with only one team. Get
One million.” that team dedicated to shared goals and methods. Focus the members, so they commit
to solving a single problem. Stick to your priorities. Show them how you want them to
work, and review their actions with clear, specific metrics. Make perfection your goal.
As you lead, demonstrate integrity, articulate a vision and guide people toward your
shared goal.

About The Author

Matthew E. May has been an advisor at the University of Toyota for more than eight
years. He founded a Los Angeles firm specializing in innovation.

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