Designed for Learning: A Tale of Two Auto Plants

Aconsensus is emerging that the hallmark of tomorrow’s most effective organizations will be their capacity to learn. To survive in the competitive turbulence that is engulfing a growing number of industries, firms will need to pinpoint innovative practices rapidly, to communicate them to their employees and suppliers, and to stimulate further innovation.

However, there are two very different views on the organizational design most effective to support learning, particularly in labor-intensive production of relatively standardized products.1 Proponents of the Japanese-inspired “lean production” model, such as the MIT researchers who contributed to The Machine That Changed the World, argue that organizational learning will be maximized in a system based on specialized work tasks supplemented by modest doses of job rotation and great discipline in the definition and implementation of detailed work procedures.2 By contrast, European managers, union officials, and academics are engaged in a lively discussion on the possibility of a German-Scandinavian alternative.3 Proponents of this “human-centered” model argue that organizational adaptability and learning is best served by greatly lengthened work cycles and a return to craftlike work forms that give teams substantial latitude in how they perform their tasks and authority over what have traditionally been higher-level management decisions.

Toyota is often credited with pioneering the key elements of the lean production model. In the United States, the best documented of Toyota’s plants is the Toyota-General Motors (GM) joint venture, the New United Motor Manufacturing, Inc. (NUMMI) plant in California. Volvo’s Uddevalla plant exemplifies the human-centered alternative. It is one of Volvo’s most innovative plants, radically extending the long-cycle and team autonomy concepts that shaped the famous Kalmar plant.4

In November 1992, Volvo announced that it would close the Uddevalla and Kalmar plants, but these plant closings should not close the debate over the significance of their innovations. The two plants are not being shut down due to poor performance. In fact, Kalmar operated at productivity and quality levels higher than those at Volvo’s main Torslanda plant, and Uddevalla was already matching Torslanda in productivity. However, Volvo was operating at very low capacity utilization levels, and managers believed that shutting down the two smaller plants was an effective way to reduce total overhead.

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References

1. By contrast, there is now a rather strong consensus on the organizational designs required to support learning in more automated settings and where product designs or services change very frequently. On automated settings, see:

P.S. Adler, ed., Technology and the Future of Work (New York: Oxford University Press, 1992).

On settings where designs or services frequently change, see:

S. Davis and W. Davidson, 2020 Vision (New York; Simon & Schuster, 1991).

2. J.P. Womack, D.T. Jones, and D. Roos, The Machine That Changed the World (New York: Rawson, 1990).

3. See F. Naschold, Evaluation Report Commissioned by the Board of the LOM Programme (Berlin: Science Center, 1992), pp. 2–3; and

C. Berggren, Alternatives to Lean Production (Ithaca, New York: ILR Press, 1992).

4. See R.R. Rehder, “Building Cars As If People Mattered,” Columbia Journal of World Business, Summer 1992, pp. 57–70; and

C. Berggren (1992).

5. J. Krafcik, “Learning from NUMMI” (Cambridge, Massachusetts: MIT Sloan School of Management, International Motor Vehicle Program, Working Paper, 1986).

6. Power Report, June 1992. Revised data for earlier years provided by J.D. Power and Associates.

7. “Edgar Fray on Volvo’s Brave New Humanistic World,” New York Times, 7 July 1991, p. F5.

8. One caveat to this conclusion should be mentioned: the productivity and quality performance data are strongly influenced by the manufacturability of the respective vehicle designs. Toyota products’ manufacturability has been ranked the best in the industry, whereas Volvo has been ranked fifteenth. See:

J. Krafcik, “The Effect of Design Manufacturability on Productivity and Quality: An Update of the IMVP Assembly Plant Study (Cambridge, Massachusetts: MIT Sloan School of Management, International Motor Vehicle Program, Working Paper, 1990).

9. See M. Parker and J. Slaughter, Choosing Sides: Unions and the Team Concept (Boston, Massachusetts: South End Press, 1988).

10. K. Dohse, U. Jurgens, and T. Malsch, “From Fordism to Toyotism? The Social Organization of the Labor Process in the Japanese Automobile Industry,” Politics and Society 14 (1985): 115–146.

11. S. Kamata, Japan in the Passing Lane (New York: Random House, 1983); and

J. Fucini and S. Fucini, Working for the Japanese (New York: Free Press, 1990).

12. Parker and Slaughter (1988).

13. R. Wokutch, Worker Protection, Japanese Style: Occupational Safety and Health in the Auto Industry (Ithaca, New York: ILR Press, 1992), p. 225.

14. See, for example, Fucini and Fucini (1990); and

R. Cole, “Nihon kigyo yo, kokujin koyo no judaisei o shire” (Be aware of the importance of black employment in Japanese firms), Chou Koron, 10 October 1989.

15. R. Cole, “Racial Factors in Site Location and Employment Patterns of Japanese Auto Firms in America,” California Management Review, Fall 1988, pp. 9–22.

16. K. Ellegard, T. Engstrom, and L. Nilsson, Reforming Industrial Work: Principles and Reality (Stockholm: Swedish Work Environment Fund, 1991).

17. P.S. Adler, “The Learning Bureaucracy: New United Motors Manufacturing, Inc.,” in Research in Organizational Behavior, eds. B.M. Staw and L.L. Cummings (Greenwich, Connecticut: JAI Press, 1992).

18. K. Koike, “Learning and Incentive Systems in Japanese Industry” (Paper presented to the conference “Japan in a Global Economy: A European Perspective,” held at Stockholm School of Economics, 5–6 September 1991).

19. K. Endo, “Satei (Personal Assessment) and Inter-Worker Competition in Japanese Firms,” Industrial Relations, in press.

20. Koike (1991).

21. C. Brown and M. Reich, “When Does Cooperation Work? A Look at NUMMI and GM-Van Nuys,” California Management Review, Summer 1989, pp. 26–37.

22. Adler (1992).

23. R.B. Freeman and J.L. Medoff, What Do Unions Do? (New York: Basic Books, 1984).

24. R. Cole, Work Mobility and Participation (Berkeley: University of California Press, 1979).

25. “More Japanese Workers Demanding Shorter Hours and Less Hectic Work,” New York Times, 3 March 1992, p. A6.

26. Ellegard et al. (1991), p. 25.

27. See P.S. Adler, “Time-and-Motion Regained,” Harvard Business Review, January-February 1993, pp. 97–108.

28. R. Cole, “Different Quality Paradigms and Their Implications for Organizational Learning” (Paper presented to the conference “Japan in a Global Economy: A European Perspective,” held at Stockholm School of Economics, 5–6 September 1991).

29. “Factory Fantasia,” Automotive News, 13 July 1992, pp. 3, 31; and “Japan Lures Auto Workers with ‘Dream’ Factories,” New York Times, 20 July 1992, pp. A1, D2.

Acknowledgments

Our thanks to J.D. Power and Associates for permission to reproduce copyrighted data. Their unauthorized reproduction is prohibited.