The Toyota Engagement Equation 

Authors: Tracy Richardson & Ernie Richardson

ISBN: 978-1-259-83742-5

Posted: June 10, 2022

Summary by: Samantha Millison

Cover of "The Toyota Engagement Equation"

Introduction

1987 was a big year for Toyota, as the organization built its first manufacturing base in North America and launched its first wholly-owned North American operation. Tracey Richardson was lucky enough to sign on as the 292nd hire at Toyota, and she learned a very unique way of doing business through the Toyota Way. Toyota implemented a series of best practices, later known as the Toyota Production System (TPS), that simultaneously assured quality and minimized waste in a Lean environment. The Toyota company stood out as it never seemed to let its guard down; Rather than relaxing, the people of Toyota often asked, “What can we do better in the future to improve quality, improve efficiency, or reduce costs?”. Through this type of thinking and culture at Toyota, everyone became a problem-solving expert at his or her level, with the result being a continuous chain of improvement activities that pervaded the entire organization. Toyota’s approach was set apart from the rest. Leaders did not just teach methods, they wanted to make sure that trainees understood the “why”, and they instilled the extraordinary Toyota culture. All of the essential elements that Toyota prioritized fit together through the authors’ Engagement Equation:

GTS6 + E3 = DNA

The previous learning equation was designed to help learners remember and internalize the main objectives of Toyota, which took years of practice to assimilate. From above, GTS6 represents the six competencies required by every worker to identify and correct problems. E3 represents the role of leaders in motivating and serving the workforce. The end result is DNA, short for discipline and accountability, which is present all throughout the Toyota organization.

Part 1: Leading and Learning in Georgetown, Kentucky:

Everyone who was brought on to Toyota, including Tracey Richardson, quickly adopted the culture of Toyota through their competitive employment process. There were multiple rounds of tests, which ultimately put a spotlight on the candidates who could simultaneously handle the demanding task of production and thrive in a fast-paced environment where you always had to be thinking and solving problems. No single test would determine the final evaluation of a candidate, which gave everyone a fair chance to prove themselves by accounting for the fact that different people might display competencies in different ways. Through all of the tests administered over the course of the hiring process, Toyota assessed five main skills: listening skills, problem-solving skills, teamwork, initiative, and leadership.


Tracey Richardson and other accepted candidates quickly learned that the values of the Toyota Production System (TPS) were vital to Toyota’s foundation. The TPS put an emphasis on making sure that people understood “what” they needed to do, but also “why” they were doing it. This understanding sometimes meant the difference between a complacent team member versus an engaged and empowered one. Another emphasis was on standardization – if everybody followed the same process in the same sequence, discrepancies were much easier to identify and correct when they arose. If people did make mistakes in their standardized work, then leaders would take the time to show them why it was important to follow specific steps in their standard order. Also, TPS enforced setting a standard because if a standard was set, then improvement could occur. Furthermore, one could not have improvement without standards, because they had to fully understand how standards were supposed to work before they could contemplate revising one. For Toyota, improvements were conducted scientifically based on the classic Plan, Do, Check, Act (PDCA) paradigm – which was first exposed as a variant called SDCA, an acronym for Standardize, Do, Check, Act. The idea of “always being uncomfortable” was continually stressed at Toyota, where “uncomfortable” meant embracing challenges rather than shying away from them. Being outside of one’s comfort zone was the only way that a person could grow because they actually had to learn. Toyota emphasized that trust was essential when it came to getting things done, especially in the organization’s environment of continuous improvement. Without buy-in, the success rate for implementation could be lowered significantly. Another objective implemented within TPS was leading and learning simultaneously, which allowed leaders to learn and coach at the same time. The idea was to lead not from a position of power, but from an empowering position. Such a mindset greatly promoted the continuous improvement culture at Toyota, and implementation of the Lean culture was successful through a culture chain – an effective way of showing how team members internalized the values and principles that they lived with every day. People worked towards time efficiency, seeing abnormalities, following standards, being aware of each second, and feeling connected. People knew that standards were there to help them, that problems were their friends and helped them to become better, and that there were 27,000 seconds in a shift that needed to be made as ‘value-added’ as possible. Toyota wanted to teach Lean culture to the rest of the United States, and their values expanded through an organization called the Center for Quality People and Organizations (CQPO), which still exists today. CQPO consists of intensive presentations, training programs, planning and design activities, and consultation services that are fully commensurate with the Lean processes in use throughout Toyota internationally. This allowed for a Lean education community to emerge and spread throughout the United States.

Part 2: Elements of a Thinking System:

Tracey Richardson realized that it was one thing to have values similar to what Toyota had, but actually teaching the thinking behind the methods that were so successfully implemented at Toyota was another challenge. The wisdom that was passed on at Toyota was essential to the results that were created there. However, nobody could actually “teach” wisdom – all that a leader could do was guide people as they acquired wisdom, often through practice, direct observation, reflection, and the process of trial and error.


The authors’ Engagement Equation developed after great reflection on the basic principles that were so critical to Toyota’s success, and a deeper understanding of the equation’s components came along with embracing Toyota’s values. In using DNA to describe the elements of a business culture, it was the case that culture was the sum total of what was going on in the heart and mind of every employee. Therefore, it was a tool for instilling the thinking behind the workplace culture, one employee at a time. One part of DNA was the value of every second. Every team member played an essential role in supporting the overall output, and every second counted. When people truly embraced the meaning and cost translation of a second of time, it was the pathway to purpose. Another part of DNA was the importance of standards, as improvement was impossible without them. The best practice to improve was to use the A3 problem-solving process from PDCA, where the main goal of the A3 process was to share wisdom in order to develop people with a common lens. The half of DNA known as E3 was about always wanting to improve. Companies needed to continually evolve in competitive markets, and always improving became the new normal. The idea was that if people could continue to fix problems, determine measures, improve processes, and set standards, then the company had a much greater opportunity for long-term sustainability and growth, which strengthened its ability to provide long-term employment. The half of DNA known as GTS6 represented six different elements of problem solving:

Overall, DNA was the outcome of E3 (which stands for Everybody Everyday Engaged) and GTS6 (which represents the mindsets that people carried with them as they went through all the steps). Ultimately, every employee needed to be engaged in the mindsets of the problem-solving process so that such thinking became a way of life across the entire organization. 

Part 3: Everybody Everyday Engaged:

Similar to Tracey Richardson, Toyota reiterated to Ernie Richardson the idea that management was not about “knowing and telling,” but was about “leading and learning” simultaneously. Leaders had to condition themselves to refrain from “telling, selling, and convincing,” but instead practiced “engaging, involving, and empowering” people. At Toyota, failure led to success – one just had to be patient enough to see the greater purpose behind the lesson. Frequent and honest communication as a leader with team members gave the opportunity for both parties to develop simultaneously, and leaders were encouraged to learn something about each one of the team members to help build mutual trust and respect within. “Developing the people” was key – solving a problem was important, but so was engaging people in solving a problem themselves so they could someday replace the leaders that were coaching them and carry on the organization. A key aspect of helping people move up was encouraging them to share what they knew in the form of improved standards. In a sense, this made them disposable in their current role, but at the same time, more valuable to the company because of the deeper knowledge and understanding that they acquired. A major emphasis was that the minute a person quit learning was the minute that their value started to decrease.


Toyota stressed a process called Hoshin kanri, which dealt with looking at indicators, tracking important ones on visual boards, utilizing the boards to see gaps, and then making sure to always move the needle forward. Within this process, employees were conditioned to use leading indicators to predict results rather than waiting for them, as leading helped them to manage the problem so that the problem did not manage them. Another important aspect of Hoshin kanri was ongoing dialogue, as it helped people learn whether their thinking was correct, how and what they were tracking daily, and if there were any gaps present. Ongoing dialogue also helped to build trust by showing workers that leaders valued their input and were truly listening. The Hoshin kanri allowed for the introduction of strategic goals and many other key outcomes into the workplace.


At Toyota, everyone who contributed to the success of the organization was valued. Toyota emphasized that any time they lost an employee, it was a loss for the company. As a leader, it was Ernie Richardson’s responsibility to engage and understand each team member’s learning style and what team members might need to develop into future leaders. Everyone lost when that did not happen. Toyota had an investment in each person they hired, and when people became a part of their team, they made a commitment to do everything possible to make them successful. Leaders developed the thinking of each team member, expecting that he or she would be a future leader. The takeaway at Toyota was that when they said “everybody matters,” they really meant it, and they never gave up on people and their development. With that in mind, building trust was crucial. Trust helped to foster a win-win relationship where managers and workers were no more than two human beings working together towards a common goal. When an organization constantly strived to make their people successful, the organization received great success as well. The journey to success went far beyond machines, production methods, and seconds on the clock – the biggest success of all was seeing people that had prospered thanks to the organization’s efforts, and knowing that the organization had made the kind of difference that truly mattered. Ultimately, the legacy that a person left was the impact they had on others – and money could not buy that kind of satisfaction. It was second nature for people to head towards the crisis, not away from it, even if people were unsure of what the consequences would be. When people were in need, regardless of what department they were in, others would figure out a way to help them. After all, one could not understand how important it was to help others in need until they actually experienced it for themselves. Because people could relate Toyota’s type of thinking to their own work and problems, they continuously used it throughout the rest of their lives. Overall, Toyota’s ideas were adaptable, fundamental, and accessible, and allowed people to never stop learning.

Reflection: The Applicability to State Government:

The Toyota Engagement Equation provides great insight into how a big organization, such as Toyota, functions. The book can be compared to the Netflix documentary “American Factory”, which is about the emergence of a new factory in the husk of an abandoned General Motors plant located in post-industrial Ohio by a Chinese billionaire – holistically, both have a lot in common with regards to how demanding it can be to work for a big industry. The employees’ mindsets described by E3 and the steps within GTS6 are both very applicable to what we are trying to do with state government, and the authors’ Engagement Equation sums up what it means to uphold a Lean environment nearly perfectly. However, application today would be less “extreme” compared to what it was in the book; during the time that Toyota was expanding in the United States, it seemed as though people’s jobs were the epitome of their lives (based on how Tracy Richardson dropped everything the moment that she got chosen for an interview with Toyota). People’s desperation to land a job working in a big industry is different nowadays, so the “extremity” to which Toyota’s values would be emphasized at state government level today is also different. Nonetheless, the takeaways that Tracy Richardson and Ernie Richardson have from working at Toyota can and should be applied today as much as possible. By doing so, we can foster a Lean environment encompassed by constant growth and improvement.