Just Go And See

I was talking with my friend Devon about operations a few weeks ago (as one does) and he asked me an interesting question:

"In the course of your ops work have you seen a failure of people to see things that are right in front of them?"

He went on to relate this to the way Japanese companies approach operations. Kiichiro Toyoda, the founder of Toyota, was once was invited to England early in his career to help improve how factories worked. A lot of his improvements came from simple observations. He saw that laborers had to cross the factory floor several times a day to get parts. Faults in assembly wouldn't be caught until the end of the production process. Large piles of raw materials were sitting everywhere.

When Kiichiro returned to Japan, he began to systematize these observations of waste into the Toyota production process. Famously, the "gemba walk," is a key responsibility for managers. In Japanese it translates to something like "walk to the real place." Toyota managers are expected to go and observe the production process closely with their own eyes, to talk with employees, and to hear and feel the machines.

To answer Devon's question, I think Americans have particular trouble with this idea. American management training has historically been a practice of abstraction, where the messy business of production is organized into financial units that can more easily be recombined and optimized. There's a story from the 1980's when General Motors, after several decades of getting their market share eaten, invited Toyota to set up a joint venture plant in California. American executives were flabbergasted that Toyota consultants wanted to move the vending machines. They had been trained to ignore any optimizations that would result in anything less than a million dollars in ROI. To the Toyota consultants, moving the vending machines was obvious. Workers had to cross the entire building if they wanted to buy a snack and eat it in the break room. Moving the vending machines was a matter of efficiency, but also it built trust with the team. When Americans see a production process, they are often really seeing spreadsheets dance in front of their eyes, even if they're on the factory floor.

I don't think I'm being unfair when I say this. Even very large and sophisticated American companies are having very obvious and expensive troubles with production. Stanley Black & Decker was forced to close a $90M plant in 2023 when problems with a new automated production line couldn't be solved. In 2013, Apple suppliers in Texas were failing to deliver more than 1,000 screws per day, forcing Apple to turn back to China for their supply chain needs. And by this time everyone knows about the quality issues that plague Boeing, all of which stem from a lack of management attention to small critical details, like the tightness of the bolts that hold a door plug from blowing out the side of an airplane at 16,000 feet.

It seems that somewhere along the line, many American companies have lost the systemic ability to plainly see very obvious things related to physical processes.

I think the digitalization of the production process has also exaggerated this tendency. Software dashboards and control systems put data at the manager's fingertips, but also they interpose themselves as a sometimes-distracting feature-rich layer that can leave managers isolated in an information cocoon. Good managers are aware of this fail mode, which is why you so often hear about surprisingly large and sophisticated operations using so much email and Excel; they're simple software tools that are easy to reconfigure and don't interrupt the fingertip feel and first-hand knowledge that's latent in so many legacy production processes.

There's also some reticence, I think, to seem overly performative. It can seem a little silly to put the engineers in desks on the factory floor if there's a perfectly good engineering bay that was designed for them at considerable cost. You would think that an engineer's job is to design parts, which then get handed off to the production team. With remote work this process could theoretically be accomplished anywhere in the world. But because we're human, co-location is always better for improving communication. Questions that would take two days to be answered by email can be resolved with a quick walk to the machinist's station. Even better, if the machinist has a very strong idea about how the part could be redesigned for easier production, he can go find the designer and give him a piece of his mind. Co-location is democratic.

I think one reason why the Japanese excel at optimizing physical systems and the people who make them work is that their culture assigns spiritual value to objects. Long before Marie Kondo launched her smash hit household organizing show, she interned at a Shinto shrine. According to Shinto beliefs, helpful spirits inhabit everyday objects, and if they are treated with respect they will reciprocate with useful service. I am not claiming that every Toyota consultant from Japan still believes this literally, but a kind of respect for physical objects still permeates Japanese culture. It helps them see physical processes more attentively and put things in their proper place.

In my work at Blackpowder, half of what we do is to help people see. Whatever the problem area, whether it's a finance stack that's not working, or a production process to be optimized, we go to the scene of the problem area first and simply observe.

Key questions to ask during an observation period:

1. Where is this process obviously breaking down?
2. What's awkward, repetitive, or unreliable about this process?
3. What steps are taking too long? Where's the dead space?
4. What do people say about the process? What do they like, and what do they hate?
5. What are they key value-added steps, and are those properly controlled and resourced?
6. Where are mistakes not getting caught, and why?
7. Are our measurement systems giving us accurate information?

If we want to build things in America again, we first must re-learn how to see.

Blackpowder is a plug-in finance and operations firm focused on 1) setting up smooth financial ops for busy founders and 2) process optimization for mid-sized manufacturing companies. If you enjoyed this article, consider sharing it with your friends, and subscribing below for free weekly insights.