Genchi Genbutsu – Counter Revolutionary Change as a Success Strategy

A Scion Drives Toyota Back to Basics, in the Management section of yesterday’s Wall Street Journal chronicles the factors that earlier this year led to the appointment of Akio Toyoda, grandson of the company’s founder, as Toyota’s next President. What’s provocative about this, other than the potential intrigue of nepotism which always draws reader interest, is the “back to basics” subtheme which may bear examination for healthcare leaders as well.

The leadership change at this high performing company came after corporate self-examination in the wake of falling profitability. Toyoda is surprisingly expected to “focus, most of all, on abandoning kakushin, or “revolutionary change,” which characterized the prior President’s approach to redesigning plants and operations. He believes that more than the global recession, Toyota is a victim of prioritizing high technology, embracing marginally superior but costly new processes, engaging in overly rapid market expansion with insufficient attention to competitive pricing and product placement, and concentrating decision making in very few top executives. All of this contributed to a sense that company leadership was getting ever more distant from the realities of manufacturing and that the company was losing touch with its core competency – building reliable, practical, affordable vehicles for the mainstream consumer.

Surely there is a lesson for healthcare leaders here somewhere. While not yet highly visible victims of the worldwide recession as are the auto companies, we have recently experienced an era of significant industry consolidation, rapid growth of fewer and larger healthcare delivery and support systems, increasing reliance on complex and expensive technology which is sometimes of marginal benefit to the patient, and relying on rarified and non-transparent decision making at the highest levels to develop and implement strategy. All similar to what is described at Toyota. Does this pride precede a similar fall? So what’s to be done?

Well, these high power, but risky, success strategies are increasingly being challenged by “back to the basics” strategies (in the form of initiatives from the Institute for Healthcare Improvement, mandates from CMS, and positions from the Institute of Medicine and similar organizations) that focus on obtaining success by getting the core work of health care done right. These requires at least temporarily shifting focus from the highly strategic, externally competitive, perspective of some healthcare leaders and organizations, and towards what “Akio Toyoda has long preached a traditional Toyota practice called genchi genbutsu, a leadership maxim that boils down to get out of your office and visit the source of the problem.” In other words, by adopting a sinister counter-revolutionary insurgency known as – returning to excellence in fundamental automaking (or health care) operations as a primary competitive (or viability) strategy.