Strategic Skill-set management key to sustainable growth

16 Jun 2010 Sandeep Mehta

Washington Post had an article about how growth caused skill-set imbalances at Toyota and may have lead to quality problems – Toyota Way’ was lost on road to phenomenal worldwide growth:

 How did Toyota lose its way? The core reason, according to a number of auto-industry experts, is that the carmaker outgrew its human expertise. ‘Toyota cannot develop engineers as fast as they can proliferate new models,’ said Jeffrey Liker, a professor of engineering at the University of Michigan and author of five recent books on the virtues of the Toyota Way. ‘Each engineer is doing more and has more opportunity for error.’ Before the avalanche of growth, Toyota took about 10 years to train first-class engineers, Liker said. These engineers and senior managers had time to absorb company values that gave them an intuitive feel for weighing quality demands against cost concerns — and how to squeeze suppliers on cost without getting inferior parts, said Susan Helper, a professor of economics at Case Western University in Cleveland and an expert on global manufacturing.

As per the article, rapid growth prevented Toyota from allowing the 10 years required for training.  The key question for R&D managers is not whether growth is good (it is required, necessary), nor is it if they can afford to spend 10 years to train engineers (they can not), but how do they use new R&D processes and tools to accelerate training and transfer more knowledge to engineers.

An added dimension is that of complexity – not just from increasing complexity of products but also from inclusion of new technology (electronics, computers etc):

As Toyota’s new cars became less mechanical and more dependent on electronics and computers, management’s intuitive feel for quality was further diluted, along with its expert understanding of how suppliers made parts, Helper said.

Clearly, traditional training regime will be challenged in this new world of doubling capabilities every 18 months.  It is pretty well known how automotive companies have trouble synchronizing development with electronics such as GPS or entertainment systems.

To cut costs, Toyota “dramatically reduced” crash testing of new car models, according to Koji Endo, a longtime auto analyst and managing director of Advanced Research Japan, a corporate research firm in Tokyo.
“They do virtual testing using computer models, and it is expertly done,” Endo said. “But from time to time there are unexpected real-world problems that the computer models do not account for.”

This is the final challenge – integrating new and advanced R&D tools into management and making sure that processes to manage risks scale with R&D tools.  As tools such as Finite Element Method (FEM) or Computational Fluid Dynamics (CFD) become even more capable / cheaper (due to computing enhancements), R&D managers will have even more pressure to use numerical models instead of physical.

Not only do managers have to evolve new processes and tools for skill-set management, but they have to align skill-sets with strategic needs.  Exciting times!

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