What Toyota Can Teach You About Modern IT

Michael DeVito
September 16, 2015

In a recent piece for Harvard Business Review, venture capitalist Maxwell Wessel presents an interesting idea: that the auto industry has a lot to learn from cloud computing.

Noting that today's new transportation vendors like Uber and Zipcar are changing our relationship with cars, Wessel thinks that some of the factors that have driven the transformation in IT might point the way toward the future of transportation. Just as renting IT infrastructure through cloud is almost always cheaper than owning, so too might renting vehicles soon become cheaper than owning.

Wessel goes into more detail throughout his article, but in general, he provides a great example for cross-disciplinary thinking. It may not seem like the auto industry and IT have much in common, but clearly, there are lessons that can be learned from each.

Wessel got us thinking: might there be lessons the auto industry could teach those of us in IT?

As it turns out, there is a thing or two the auto industry can teach us about modern IT. More specifically, we can look towards kanban, Toyota’s method of just-in-time manufacturing, for lessons about maximizing IT efficiency.

The Basics of Kanban

In their quest to eliminate waste in manufacturing which started in the 1940s, Japanese auto manufacturer Toyota started studying supermarkets with the idea of applying shelf-stocking techniques to the factory floor.

They noticed that store clerks restocked items by their store's inventory, not their vendor's supply. They also noticed that most customers purchased what they needed, when they needed it. In short, they noticed that supermarkets aligned inventory levels with actual consumption.

Following their research, Toyota engineers sought to rethink their methods and pioneer a new approach that would match inventory with demand and achieve higher levels of quality and throughput. Today, Toyota uses the just-in-time kanban system to maximize efficiency. They define just-in-time manufacturing as making "only what is needed, when it is needed, and in the amount needed."

Kanban relies heavily on communication through visual management. Kanban cards, in effect, signal the depletion of product, parts, or inventory. When received, the kanban triggers replenishment of that product, part, or inventory. Consumption drives demand for more production, and product is manufactured or ordered only when it's needed.

More generally, just-in-time methods like kanban maximize efficiency and reduce waste. Inspired by supermarkets and implemented in auto manufacturing, today, many businesses use the principles of kanban to help in those key areas.

The 4 Main Principles of Kanban

As Leankit notes in their explanation of kanban, kanban "hinges on the fundamental truth that you can't get where you want to go without first knowing where you are." Kanban can be reduced down to four key principles:

1. Visualize work
2. Limit work in progress
3. Focus on flow
4. Continuous improvement

Whether you're manufacturing cars, managing a supermarket, or, as we'll explain here, managing IT, these four principles will go a long way towards minimizing waste and maximizing efficiency. Below, we'll take a closer look at each of these four principles and how they might apply to modern IT.

Principle 1: Visualize Work

The goal of kanban is to make positive change to optimize the flow of work through the system. That starts with visualizing work.

Toyota uses kanban cards to help visualize work. Cards hold information such as the product's name, code, and storage location. Kanban cards are used to retrieve parts, and to communicate which parts have been used. These started as physical cards and have evolved into "e-kanban," which relies more heavily on digital.

Because each part has its own unique code, Toyota can track parts and inventory through the workflow, adjusting and ordering accordingly. This is tremendously useful in other contexts, too, and is actually the basis of many project management tools today.

The project management tool Trello provides a tremendous example of visualizing work. On it, you can create boards (overarching project groups), lists (stages of work) and cards (individual projects). For a writing project, for example, you may have lists for inbound requests, work being written, submitted work, work that’s being edited, and work that’s been completed.

Looking at your lists, you’d be able to see how long, on average, it takes for a piece of content to go from being an inbound request to completion. You’d also be able to see if there was a big backup at any stage of the process. If work was flowing quickly through each list but then getting stuck in the editing stages, for example, that would be a sign that you have a problem in editing you need to take care of.

As we mentioned above, you can’t get where you’re going without first knowing where you are. Visualizing work tells you exactly where you are and gives you a direct handle on how work progresses.

IT is often not as linear as something like auto manufacturing, but visualizing work is still possible and useful.

Visualizing work in IT looks like identifying 2 main things: what resources you have available, and how those resources are being used. Identifying what resources you have available—from bandwidth, to storage space, to cloud computing power—tells you what you have available to consume. Identifying how those resources are being used, and when, shows you what percentage of those resources you actually need. Are your bandwidth needs consistent? How much of your on-premise server space are you using? Which applications consume the most resources?

Single pane of glass monitoring solutions, which put all of your IT monitoring in one place, lend credence to the utility of visualizing your work. When your monitoring is disjointed, it can be hard to tell what you need or why you need it. When it’s all in one place, you can begin to uncover what’s truly necessary.

Though obviously you can’t place physical cards on traffic passing through your network, this type of visualization works off of the same principle and approaches the same general goal.

Principle 2: Limit Work In Progress

When there are less cars on the road, there’s less traffic. Simple, right?

That’s the general idea behind what may well be the most important principle of kanban: limiting work in progress. Working on multiple projects at once slows everything down. In manufacturing, task switching partway through a project wastes time and resources.

Producing 10,000 engines at once, for example, would have little value if there was only a need for 1,000 trucks. When projects are completed just-in-time, everything moves more quickly—and there’s also much less waste from idle inventory.

Leankit says it best:

At some level we’re all guilty of taking on more work than we can handle, starting new tasks before we finish existing ones… and then forgetting to complete some of them or compromising the quality of our work as we get overwhelmed by it all.

Setting work in progress limits should be a priority to avoid the penalties of wasted time, effort, and resources. Just as Toyota found that prioritizing some tasks over others improved workflow and reduced the time it took for tasks to be completed, so too can other businesses improve workflow and maximize efficiency by explicitly prioritizing important projects.

Once again, while not a one-to-one translation to IT, there are still lessons to be learned here. Most IT departments know the struggle of firefighting rather than proactively working ahead; IT professionals are constantly under pressure to get everything done at once.

That may seem like it addresses immediate concerns, but it’s much more productive to focus on the most important projects. Dedicating time and resources to only the most important projects, and saving everything else until those projects are completed, is a serious change in direction for most businesses, much less their IT departments. But doing so will help projects be completed more quickly and may even improve quality of work.

The most difficult thing about minimizing work in progress is figuring out which projects to prioritize in the first place. Cutting out some projects to focus on others may seem counterproductive, but in reality, it’s much more efficient than trying to tackle everything at once.

Principle 3: Focus On Flow

Principles three and four, focus on flow and continuous improvement, build off of the foundations set by principles one and two.

When you’ve minimized work in progress and begun to visualize all of your work, you can start to work on the improvement stages of kanban.

Flow is essential in kanban; the whole point of implementing a kanban system is to create positive change. Progress is the name of the game. By looking at how value is currently flowing through the system, analyzing problem areas in which value flow is stalled, and defining and then implementing changes, you can begin to make that progress. After you make a change, repeat the cycle—see if your change had a positive or negative impact.

Kanban is not a “set it and forget it” process; it’s just the opposite, in fact. The purpose of executing the first two steps is to begin to be able to manage your workflow and improve efficiencies.

In IT, this all goes back to monitoring, even if you don’t happen to be using a single pane of glass monitoring solution. You’ve identified which projects are most important to you, and begun working on them. You’ve set up a system to visualize what resources you have available, and how they’re being used. Now, you can begin to identify ways in which you can provision different resources to maximize efficiency, and also identify how projects you’re working on may impact flow.

Principle 4: Continuous Improvement

All of which brings us to the final principle of kanban: continuous improvement. We hinted at this in our section above on prioritizing flow.

Once your kanban system is in place, it becomes the cornerstone for a culture of continuous improvement. Measure flow. See how resources are being used. See how long projects take to complete. See if you're using all the bandwidth you have at your disposal. See if deploying a cloud solution is having the impact you thought it would.

The most important thing to remember here is that stagnation is your enemy. You want to see flow and progress, even if that means making changes that turned out to be the wrong decision.

The beauty of an approach to IT inspired by kanban and just-in-time techniques is that this isn’t only a hypothetical approach—solutions exist to help transition this type of thinking into real action.

Consider a hypothetical situation in which a company’s IT infrastructure was built around a company-owned data center. After the company prioritized projects and visualized workflow (resources available vs. resources used), there’s only so much they could do to improve flow and ultimately work towards maximizing efficiency and minimizing waste.

No matter what, they’d be tied to the resources they’d invested in—even as demand rose or fell. What’s more, that company would also be working against the principle of minimizing work in progress. How could they be expected to excel at their core competencies if they had to invest significant resources into managing their data center and IT infrastructure?

Now, compare that to a more modern enterprise, whose IT infrastructure was built around a combination of on-premise, colocated, and cloud resources. After going through the same exercise of prioritizing projects and visualizing workflow, that company could adjust its resources on-the-fly to match current demand and the type of work being done.

If they were to see, for example, a rise in demand, they could take advantage of burstable service options through Digital Realty DIA which offer automatic scalability. The same is true for other resources. If the company noticed an extreme excess of computing power through the public cloud, they could quickly and easily scale down and lean up. Flexibility becomes much easier to attain when you’re not tied to physical infrastructure you own.

The multitude of options available through a data center service provider like Digital Realty enable you to directly match your IT infrastructure to your needs, projects, and flow—just as we outlined above.

Kanban: Maximize Efficiency and Minimize Waste

You’re probably not an auto manufacturer. The good thing is that you don’t need to be one to improve efficiency utilizing the time-tested kanban method.

By visualizing work, limiting work in progress, prioritizing flow, and working towards continuous improvement, you can move out of the era of rigid, unchanging IT, and into the era of flexibility and maximum productivity. The resources you have at your disposal as an IT professional are more useful and flexible than they’ve ever been. Taking hints from Toyota and other lean manufacturers, as it turns out, can teach us a lot about using these new capabilities to our advantage.