Systems Thinking

The World Watches As the Toyota Production System Falls On Its Face: A Cautionary Tale For the Call Center

Tripp Babbitt
Contributor: Tripp Babbitt
Posted: 03/08/2010


The fall from grace by Toyota marks the end of the Toyota Production System that so many manufacturing and service organizations have tried to copy . . . or does it? A quick review of the Toyota Production System shows that their losses occurred while a focus on growth and financial performance took over the Toyota mindset. The predictable outcome of a focus on financial performance is reduced financial outcomes.

New Toyota managers hired in during this growth period did not achieve the depth of understanding associated with the teachings of Taiichi Ohno and W. Edwards Deming (both contributed to the thinking that became the Toyota Production System).

Instead these new Toyota managers came from a productivity mindset that was focused on three things:

  1. How much work do I have to do?
  2. How many people do I have to do it?
  3. How long does it take to do it?
Toyota Debacle Reminds We Are Asking The Wrong Questions Particularly In the Call Center

For call center managers a productivity and financial mindset also prevails. The same productivity questions are asked with the addition of service levels. But are we asking the right questions?
I would say a resounding "NO!" The measures that matter are what matters to customers. This is to take an outside-in approach. When we focus our ingenuity on creating customer value, productivity and financial performance improve . . . dramatically. But the paradox is that focusing on productivity and financial improvement over customer value creates waste in higher costs and reduced customer satisfaction.

Armed with these wrong-headed productivity questions Toyota managers focused on things like standardization, reducing waste and increasing productivity by reducing activity times. All of these solutions were misguided as Ohno taught we must first understand our problems before seeking a solution. In statistical terms, Deming taught the same thinking where we must first understand variation in order not to tamper with the work and make things worse. This is especially important in the call center.

Toyota Falls On Its Face In Customer Service

But beyond the growth and focus on financial performance, Toyota (and every other car manufacturer) continues to fall on its face in customer service. Reports that customer complaints were reaching dealerships and being ignored were uncovered. An attempt to use the same Toyota Production System tools on dealerships resulted in a misapplication of the thinking of both Deming and Ohno . . . they assume manufacturing tools work for service.

In the call center, call center managers have a greater variety of demand that is different from manufacturing. There are so many different ways demands are presented by customers and the different types that show up in service. call center scripts, interactive voice response systems (IVRs) in the call center and standardization entrap the customer demands and don’t allow call center variety.

One way we can measure the inability to absorb variety in the call center is through the measure of failure demand caused by a failure to do something or do something right for a customer). When scripts, standardization, Interactive Voice Response systems, etc can’t absorb the variety of customer demands . . . customers call back (failure demand) until they get what they need or worse, customers go somewhere else for customer service. .

Toyota Production System, A Cautionary Tale for the Call Center

The ability of the call center to absorb variety is key to designing a system that works for customers and their experience. A better design of customer experience and improved call center management thinking are the opportunities to improve service.
With a focus on productivity and financial performance Toyota has lost what made them great in manufacturing.

On the service side, Toyota has made the mistake of treating service like manufacturing when differences exist. Call center managers can learn from these mistakes.

First published on Customer Management IQ

Tripp Babbitt
Contributor: Tripp Babbitt
Posted: 03/08/2010

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