I'm really excited to have Steve Bera as my guest for episode #256 of the podcast. I read about him as he was featured prominently in a chapter of the 1994 Pulitzer-Prize winning book Comeback: The Fall & Rise of the American Automobile Industry. I just finished it during my recent flight back from China.
The book is about the struggles of the Detroit automakers in the 1980s and early '90s. Steve was featured in the book as he was one of the first 16 GM managers and leaders to be sent to work with Toyota at the famed NUMMI joint venture factory in California. Steve was also part of the “This American Life” episode that looked back at the lessons from NUMMI. If you're not familiar with the NUMMI story, you might want to listen to that first.
He learned some amazing lessons from Toyota… but left GM after his two-year NUMMI stint, as he was concerned that he wouldn't be effective back within the traditional GM (you'll hear about that in Part 2). So, since then, Steve has worked as a consultant and leader in many industries, including some recent time working for large retailers, working to create Lean supply chains.
We had a very long chat, so I'm releasing two parts to this discussion in separate episodes (see also Episode #259). I am also sharing a transcript for the episode at the end of this post. I hope you enjoy the reflections as much as I did. You can also read a summary I wrote of the two posts on LinkedIn.
Streaming Player (Run Time 37:37)
For a link to this episode, refer people to www.leanblog.org/256.
Topics covered in this episode:
- How did you get to be one of the 16 “NUMMI Commandos?”
- What lessons did you learn from Toyota and NUMMI about this different style of leadership?
- Any favorite stories about what was surprising about the NUMMI way?
- Why is a “no layoffs” philosophy so important, whether it was NUMMI or other organizations?
For earlier episodes of my podcast, visit the main Podcast page, which includes information on how to subscribe via RSS, through Android apps, or via Apple iTunes. You can also subscribe and listen via Stitcher.
Thanks for listening!
Here's a photo of Steve from his time at NUMMI:
Note: This transcript may contain errors… if you see a suspected error, please post a comment below and I'll send you a coupon for a free copy of my e-Book of Lean Blog Podcast Transcripts. This transcript will be available for a limited time and will then become part of the eBook.
Mark Graban: Steve, hi. Thanks so much for being a guest with us on the podcast.
Steve Bera: Mark, I appreciate the opportunity to once again revisit a success story that has been now over 30 years since NUMMI begun, and to talk about it once again is something that I look forward to.
Mark: There's, I'm sure, a longer background to help introduce yourself, but how did you get to be one of what they called the 16 “NUMMI commandos”?
Steve: At the time that I was being considered I was in the GM building, in their corporate production control group. I went there in 1979, and then in 1982 and '83 is when Toyota had finalized the agreement with General Motors. They had profiled all the individuals as far as their functional backgrounds what they were looking for, in terms of the type of people to help them start up a joint venture.
They were looking for production control types, manufacturing quality, finance, marketing. I was asked if I wanted to be considered for that, and I did. It wound up being an invitation to fly to California to interview with the gentleman who also became my manager, a gentleman by the name of Mr. Uchikawa.
I flew up to California. I'm not quite sure how it all came about, but I didn't last longer than 30 minutes in my interview with him, and he had made his decision. Whatever questions he asked and whatever responses I gave seemed to go well.
But it wasn't until I returned back to Detroit that I was advised that I have been selected to participate as one of the 16 members to start up a joint venture.
Mark: In the books and the articles about the group, you're labeled as high potential managers. How competitive was it to get into that group? Was it semi competitive? Were there really lots of people dying for the opportunity? This was all very new and uncertain.
Steve: Yeah. What we didn't know is how many were in the queue in the selection process. I was one of the only ones that came out of the GM building in the production control group.
I think that somewhere in the corporate structure, each department had identified their — for lack of a better descriptive — high potential individuals to be successful in joining Toyota. Ultimately, that decision would rest with Toyota, but they felt that based upon my background in multiple areas of the corporation, I would have an opportunity to succeed if selected.
Mark: That term “NUMMI commandos,” wasn't that “The Wall Street Journal” that later used that descriptor? It wasn't how you were describing yourselves at the time, right?
Steve: That's correct. Paul Ingrassia and Joel White, I believe they won a Pulitzer Prize for writing that book. they were the ones who wrote and coined the phrase NUMMI commandos.
Mark: That book, Comeback, which I recommend, that's how I was reading about Steve, just as a comment to the listeners here. Who am I to question Pulitzer Prize-winning authors? It seemed like “NUMMI ninjas” might have had a better ring to it, at least in alliteration, but maybe they thought that sounded too Japanese.
Steve: I think they did a great job of describing the story line with everyone. When you think back about just that word “commando,” and that really wasn't our role when we were out there, I almost feel like that term “commando” was supposed to be something once we were repatriated back into the corporation to be able to help drive change within General Motors.
Mark: We'll come back to how that played out here in a little bit. Thinking about your early education in Japan with Toyota, with NUMMI, what were some of the early lessons that you learned about that different style of leadership compared to what you were used to at General Motors?
Steve: The one thing that in GM, I would say the 16 of us, we were very deep in our understanding of our own areas of expertise. Whether it was production control or finance or marketing, everyone had had an extensive background in that.
But the thing that I found immediately when we went out there with the team who was going to be training us, they not only were deep in every aspect of their business, they were very broad. They were broad-based knowledge of everything.
They could speak to the engineering. They could speak to customer service. They could speak to the financial aspects to the business. It was something that was almost intimidating, because we weren't raised that way in GM.
You were good at what you did. That's what your performance was based upon, and we just found that we needed to broaden our own spectrum of understanding of the car business from one end of the business unit to the other.
The other thing that we did I think that was really critically important was the way the team was involved to an extraordinary depth of time, where it wasn't where they would just show up and leave. Their presence was everywhere in each one of our areas of responsibility whether it was in the plant, whether it was in the office, whether it was in the meetings.
They were there to ensure that we were steering the ship in the right direction. A lot of times in our world we find that we think we know a lot, and sometimes that our ego can get in the way of good judgment. I think that was the one thing. I've used the word before. Humility is something each one of us learn at different points of our life.
I think humility is something that everyone learned very quickly out there because they realized that we didn't have all the answers. We knew we weren't contemporary thinkers in terms of manufacturing in the car business, but they showed us over the course of the training where the gaps were and what we understood as far as the best practices. That was the Toyota Production System.
Mark: Just to delve into humility a little bit, Toyota leaders today talk about the idea of leading with humility. There's a more recent book called Toyota By Toyota that was written by a number of Americans who worked at the Toyota Georgetown plant in Kentucky, which of course opened a few years after the NUMMI experience experiment started.
The first chapter of that book really focuses on leading with humility. I've talked about this with people. I've always wondered. Is humility somehow an ingrained trait where people have a certain level of humility, or you said it can be learned. Could you maybe elaborate on that a little bit?
Steve: Humility comes back from a reflection. You almost do a comparative against your peers and those around you. I've always looked at, “How do I build my own portfolio?” I look at those that have strengths and attributes in the way they conduct themselves, the way they run their business, the way they speak, the way they communicate.
I look at that, and then I take those attributes that they have that I feel will strengthen me. Then in some cases maybe they had those characteristics that I didn't feel were good for me.
What it amounted to is, when I looked at my own portfolio after working with Toyota for the length of time that I was there, I realized that I was really short from the standpoint of a broad-based knowledge and understanding of how to not only lead people but to understand my business to where I was trying to establish a paragon.
A paragon within myself, that model of excellence by which I had to abide by and hopefully try to emulate the performance of others around me.
Mark: It sounded like you had this broad-based systems knowledge of functions and breaking down silos. How did that reflect in terms of how things were measured at NUMMI, how teams, individuals, departments, were measured and evaluated?
Steve: One of the first things that we were exposed to was that when we were at full strength and we had, we'll just round it to be, 2,100 team members and members of the management team, every day the only number that we were exposed to was, “How many cars were we supposed to build yesterday and how many did we build?”
That's exactly what I was contrary to what I had been experiencing in my previous General Motors career because it was more of a deep dive. In other words, “In individual performances how well did I score? How well did my department score?” as opposed to, “Did we do the things as an organization and as a team to where it was a positive contribution to achieve the business objectives, a strategic direction of where we were going?”
That's, to me, the one thing that we all had to come to grips with. It was, “We all win, and we all fail.” Yes, there are measurement systems that would probably evaluate the individual, but it was more in terms of not so much a numeric, but of a qualitative input into what we did to support the objectives of the business.
Mark: In breaking down the silos, I'm curious. You talk about the production volume number, which is, of course, important, but in earlier parts of the book, Comeback, and I remember from my time at GM, it was really just “quantity, quantity, move the metal, make the numbers.”
There's stories in the book, Comeback, about how one silo in GM really didn't want to help the car division. There were elements, in those different stories, of putting quantity before quality. What was the approach to finding the right balance in those metrics and NUMMI, or did Toyota assume you had to build the quantity, but they had to be built right the first time? Was that just so ingrained?
Steve: That's an excellent point, because I recall my days when I was in the GM building, when we would get on the elevator, going up to the 14th floor for a meeting with our key execs. On the wall of the elevator was how many cars and trucks were built the day before.
I can't speak to whether that's 35,000 or 40,000, whatever that number was, that's all that we were able to discern by reading that number, is, “This is what we built that day.”
As history has shown us for years that of whatever production we did back then, we never were so concerned about the fact that maybe five or six thousands of those cars were still in the yard that required repair. That's what was happening.
When we went to Toyota, they never built the yard to be able to handle poor-quality vehicles. It was just a small area by which when the car came off the line, it was fixed at that moment in time. Instead of thousands of cars that needed repair, you might have had 10 or 15 cars that maybe had a small defect in them that needed to be repaired.
The mentality was that if you build a perfect car every time, you keep your costs down, and you keep your customers happy, and the work ethic amongst your workforce is something to be proud of.
Mark: What were the perceptions early on, as the NUMMI plant was rehiring UAW employees, working on training people in a new approach to quality and management, and as that was ramping up, how was that perceived back in Detroit?
In the book, Comeback, it paints a picture that Roger Smith, the CEO at the time, had this sort of competitive coup. He got this deal with Toyota, but at the same time, Roger Smith and GM were putting, it seemed like, all of their bets on automation, and envisioning a different path than Toyota was going down.
What were some of the comparisons, or how this was perceived, do you think, in terms of was Detroit learning from Toyota, or were they just kind of letting that happen?
Steve: I think at the onset and once we started up in production, many of the GM execs made visits out to NUMMI. As they would walk through the facility, they would see things that they would never have observed or experienced in the normal operations back home.
That was that the team members were basically running the operation, and the team members were empowered to shut the line down at any time if a problem developed. The team members were provisioned to resolve any internal issues.
If quality problems developed, it was up to them to resolve that amongst themselves. The only time that you'd find the members of the management team would be called was if they hit a roadblock.
The GM folks were also dealing with, I think, some very difficult barriers back in their home operations because of the agreements we had with the UAW at the time — such a large proliferation of classifications, the fact that you can't work out of your classification, the rules on overtime.
Toyota made sure that that was not going to be an impediment to what we had going forward. I think every executive that visited out there saw the hygiene of the plant, they saw a very effective production system. They didn't see a lot of automation other than that which was typical of 30 years ago in most of the plants.
Yes, you had an automated body shop. Yes, you had automated movement of the vehicles and what have you, but not to where you are today. Roger Smith was comfortable in the direction that he was heading, because again, he was a finance man. His bottom line, he was making a lot of money for the corporation.
The problem is that there were ancillary-type problems that were covered under the profitability of the corporation, whereby you don't see problems with warranty when you're making that kind of money. It's buried within, where Toyota felt like that's just the way you run a business, is, “We don't want to have high warranty costs within our organization, because number one, that'll erode customer satisfaction.”
Mark: That's a longer-term impact than looking at just the quarterly numbers, right?
Steve: That's correct. When we first got to California, we were just working extraordinary amounts of hours to put the whole organization together. While we were doing that, Toyota was already in the conference room planning Georgetown, Kentucky.
They were already a few years ahead of us, and that's another part that impressed all of us, is they had already had a success story that they know that they were going to have when that baby was born in NUMMI.
Now they were getting ready to, “All right, what's the next challenge that we're going to have?” and that was going to be Georgetown. It's proved out that their planning, their ability to plan to see the future and create that flexibility in the marketplace is something that today, still, I'm so impressed by.
Mark: When we talk about planning, and we'll come back to what the GM plant had been, if there was one, I'm curious what other difference you saw. You described Roger Smith as a finance man, and there's a long history of GM CEOs going through Rick Wagoner and all the way up through the GM bankruptcy, always punching their ticket in the New York finance office.
How would you describe the Toyota senior leaders you dealt with? Were they more, would you say, factory people, operations people?
Steve: All the way through the president, which it has to be Mr. Toyoda, he had an office out there, and I could approach him in any hallway and ask him a question. Until this day, I still remember the days that I had to get a signature for a million-dollar investment for what I was doing.
The way that Toyota had it was as long I had done the prescreening with all the other executives before I got to him, it was automatic for him to sign the document for my million dollars, and that's not the way that was at GM.
GM had such of a difficult time when you talk about processing and paper working and getting approvals. The departmentalization that required input into it just took forever and ever.
We dealt all within that building, and we were empowered to get signatures on approvals of everybody before we finally got the last approval, which has to be Mr. Toyoda at that time. It gave us a lot that we've never been exposed before.
Mark: I'm curious, how GM viewed…coming in into the NUMMI experiment, there's talk of Roger Smith and people of GM thought there was some sort of magic or secret about how Toyota was successful.
How much did they really understand the impact of the culture or the philosophy of the Toyota Production System, the management system, or was that just not on the radar, because they were just looking at the cost of these small cars that were being built?
Steve: I think that is a very good question. I don't believe that in that time that anyone in the organization understood that word, “culture.” What does that really mean? Because the culture as a comparative to General Motors was such as you hit the clock in the morning, you walk out till the end of the day and whatever it happens, it happens, and not just count the numbers every 24 hours.
With Toyota, it was more of, “How do you feel? Can you emphasize of what's going on in this business? If you walk into the facilities, do you see a problem that might be existing in the paycheck? Do you see a problem in the stamping operations? Do you see a problem in the body shop?”
That was the culture they bred. It's that you had to have this acute understanding of everything it's going on, so you put it together and connect the dots to say, “Gee, could it be some problem with my develop because of what that observation was?”
GM wasn't like it. Everyone was an independent business person within the corporate hierarchy and especially within the plant. You did what your job was, and you're good at it, but unfortunately you never knew if the person next door to you. how good they were.
Mark: There was a different approach, you mentioned, on observation. There was a sort of different way that observation was done in the factory level, right?
Steve: Yeah, when we first went out there, it's ironic that most of us were working in the facilities that required us to be in electric cars or bikes or what's have you. When we first go out there, there was still some of the cars that were left over from the old days.
When we walk out to the plant, and we tried to get some of our managers to say, “OK, let's get in this car. We'll take it a tour around.”
It was just so emphatic on their part to say, “We won't be getting in a car. We won't getting on a bike, because the important thing for you when you walk through the facilities is to be able to see and understand what's going on. If you're driving by something, you're not going to be able to acknowledge a problem. You want to be able to see every aspect of the business and its impact upon the success story for the day.”
Mark: Do you have any favorite stories about anything that was surprising about the NUMMI way or the Toyota approach?
Steve: We talked a little bit about training. We spent hours and hours, and weeks and weeks behind closed doors in training, not only in Japan, but also in Fremont at the NUMMI plant.
But the one thing that came out was… Toyota was very good, and Mr. Uchikawa who was our boss. He had this ability to read body language and facial expressions.
When they were teaching and he was doing a lot of the teaching himself of how are we going to run the business going forward, he could see many times we had a furrowed brow, or we looked like we had a tightness to our body as we were sitting there.
He would stop the training, and all he would say is, “I can tell you do not understand. You do not embrace some of these concepts. I want you to leave here. I want you to go think about it, and we can reconvene tomorrow.”
No one has ever, ever given us a training block like that, but it proved to be they were right, because the change is not something that comes easy, especially with the Americans.
We weren't young. Most of us have had 15, 20 years in the corporation, so we were creatures of habit. To accept the change, wound up being a very difficult process for all of us, but we would come back the next day.
We had a refresh look at it and opened mind. You've ever read anything about zen?
Steve: Zen tells a great story about a business executive who went to a Zen master. He had some challenges. He needed his advice on how to handle some of his business challenges.
The Zen master asked him if he wanted a cup of coffee. He said, “Sure.” He poured him a cup of coffee, and then as the cup filled, it kept flowing over and over. The business executive said, “Why are you overfilling the cup?”
He said, “Because you've come here and your mind is like that cup. It is already full, and until such time as we can change and drain some of that out to replace some of it, we will never be able to move forward with your new rum of understanding.”
Mark: When they ended the class really, he wasn't in the tone of scolding you or being punitive. Was it more a matter of just being patient and letting you [laughs] pause, reflect, and absorb?
Steve: I would say they also clearly expressed some frustration with it. It wasn't only one time, but when we walked out of that room, they would take their knuckle, the single knuckle and just tap it on the top of our heads and said, “You have to use this.” We were getting the message very quickly.
Mark: There's a really interesting history of what happened. NUMMI was not, as they say, a green field plant that had been previously the GM Fremont plant. It had been shut down. It was a failed factory. This American Life episode about NUMMI kind of does a good job of documenting that story.
There's some discussion in that program in which you were a part, where maybe it was easy to change the culture with NUMMI because the plant had been dead and brought back to life compared to try to take Lean or TPS to other factories where they didn't have the experience.
How much of that do you think was a factor at NUMMI considering that was a lot of, something like 85 percent, of the same employees getting hire back? How much of that was a factor?
Is that a part that is not necessarily repeatable when you try to bring this to other organizations, sites, industries?
Steve: I think the history of Fremont had a lot to do with the changing of the 85 percent that we brought back. The way they thought about the business, because the training in it taking place, and we were required to train everyone for two or three week at the time before they'll became engaged in the workforce.
The one thing that they were acutely aware was the fact they're all work habits. Whether was the drugs, the alcohol, the poor quality, what have you, it caused a demise of the Fremont facility.
Then one thing that Toyota had instilled upon us, we were creating an opportunity for them to have a renaissance in thinking, a renaissance in their career, and a new lease their life on which way they can go, because a lot of those folks who lost their jobs, they'd gone through divorces, they had suicides, there was all kind of problems.
Those who wanted to come back, they walked in with an open mind, but we took the same amount of time with the workforce, the team members, as Toyota did with us, managers, to where we needed to learn our lessons before we returned loose to the actual environment of making cars.
To your point of, a business that is running today does not have that kind of problems. I'm convinced that the workforce, the team members today that are in the most of these companies, are not the ones who are responsible for performance difficulties.
I've just seen so many now over the years since I left that companies may talk about Lean and they may talk about world class manufacturing, something that's fashionable, but there is a very few people who are willing to embrace it from the top down and dedicate the time and the investment into reeducating the workforce in terms of the direction that the company needs to go.
Mark: Part of that reeducation, even though there have been thousands of ways offs, the plant closure, but as the plant was coming back up becoming NUMMI there was talk of a no ways offs approach. Why was that so important within NUMMI? Why do you think that is an important part of, if you will, a Lean culture change, Lean transformation, and other settings?
Steve: The one thing that I think Lean does or can do for any company, it allows you to be the number one competitor in your environment among the rest of those you compete with.
It puts you upfront. Lean, because if you truly subscribe to it, it is embodied by your workforce, by your management team, it is demonstrated in the way you run the business on a day-to-day basis. You're going to have your cost at a minimum, you're going to have your quality at its highest level.
You're going to have your workforce that is going to be dependable, and reliable. I go back to the book that Jack Welch wrote. Control your destiny, or someone else will. I've never lost my desire to quote that, only because when you think about it, how many companies can subscribe to that in their everyday operations, and the way they communicate with the workforce.
Here we are, 30 years later, that we're talking about Lean as a way to be competitive. What does that mean to us in terms of, what was it 30 years ago? It was TPS, the Toyota Production System. All we've done now is we've renamed it. All those strengths, and all those processes that we've used to be successful 30 years ago into a new environment called Lean now.
Mark: One other thing I was curious to hear about, when the plant was coming back online, new approach, new system, it sounds like in the Fremont plant, it's impossible to understate how much ill will there had been between the employees and management, between the union and management, and what a lack of trust there was.
Can you talk about what you remember being done to try to build trust? Was this commitment to know layoffs part of that? Was it part of a separate thing that Toyota believed in at that point?
Steve: I think that was the right carrot to put in place. Again, the no layoff provision was something that had emanated from what had been going on in Japan.
The no layoff policy here was, that wasn't a stand-alone statement, because again, here in our country, we are such a victim of what happens in the world economy, the local economy, our whole philosophy and the way we sold the no layoff policy was, if we are making the best car that we can of all the other manufacturers, and if we're making money, there won't be any need for layoffs.
We should have a new hire environment, because you're building an annuity for the individual, for the company, and for the brand.
Mark: What do you mean by that, building an annuity? Is that just a matter of long-term thinking, and decisions we make today paying off in the future?
Steve: I think that we create an annuity that goes not only for the brand, but for the individual. If you have a work ethic that is so strong, and you have all of your policies, and your procedures, and your quality, and your metrics in order, you can't do anything but go to the bank every day.
Also, you can say two, three, four years down the road, we should be just as strong as we are today, but as long as we stay contemporary in our thinking, and we change with the times, we should be able to have that annuity that gives everybody the security of a job for life.