Saturday, October 22, 2011

Takeuchi and Nonaka: The Roots of Scrum

Scrum for software was directly modeled after "The New New Product Development Game" by Hirotaka Takeuchi and Ikujiro Nonaka published in the Harvard Business Review in 1986. During 2011, I had the good fortune to meet and work with Professor Nonaka in Tokyo. Some say Nonaka has replaced Peter Drucker as the leading management guru on the planet. Certainly, a number of the Harvard Business School professors view him as their teacher. Nonaka was hired by the Japanese government after World War II to help analyse why they lost the war. He thought it was interesting that we both had a military background. He does not use a computer and to him, Scrum is only indirectly related to software. It is directly related to leadership and running the top companies in the world. See the recent HBR paper on "Wise Leadership" by Takeuchi and Nonaka.

Nonaka told me Professor Takeuchi had recently moved back to the Harvard Business School (a mile from my home) and I should connect up with him right away. During this year I helped teach one of his business school classes. One of his teams set a world record for the paper airplane exercise we do in ScrumMaster training. I also helped him with a Harvard Business School summer executive program. Takeuchi teaches Scrum in his classes by reviewing the case studies taught at the business school and showing how success was always due to cross-functional teams working intensely together generating continuous improvement. This is Scrum to Takeuchi.

I felt we were lucky to choose their model for a software implementation of Scrum. Takeuchi is considered one of the top ten business school professors in the world and their formal model has led us down the path to an extraordinary implementation of their vision of Scrum project management. Both of these teachers are surprised and impressed with the wide-spread adoption of Scrum in software.

However, I was puzzled by the fact that Takeuchi and Nonaka have written many books and papers about Toyota, Honda, and other lean companies, yet they never talk about lean. They talk about Scrum, which means to them cross-functional teams engaging in the dynamic conflict of ideas that generates "ba," the energy flow that surfaces knowledge that forms new products. It's the innovation they are interested in and what westerner's call lean are a bunch of context dependent techniques that are side effects of knowledge generation. It seems that Scrum is at the root of lean to them.

So I dug into this puzzle a little deeper by carefully studying where this "lean" idea came from as it appears to be a western idea and not so much a Japanese idea. It all goes back to an MIT institute founded in the late 1980s to study why the Japanese automotive industry was starting to dominate world production. They focussed mainly on Toyota and its unique method of production.

Taiichi Ohno, the inventor of the Toyota Production System says everything he knows he first learned at Ford. Then all he did was go back to Japan and remove waste. The story of his work is summarized in “The Machine That Changed the World” where Womack discusses what Ohno did after he returned from studying mass production at Ford.

“Back at Toyota City, Ohno began experimenting. The first step was to group workers into teams with a team leader rather than a foreman. The teams were given a set of assembly steps, their piece of the line, and told to work together on how best to perform the necessary operations. The team leader would do assembly tasks as well as coordinate the team, and, in particular, would fill in for any absent worker—concepts unheard of in mass production plants… Ohno next gave the teams the job of housekeeping, minor tool repairs, and quality checking. Finally, as the last step when teams were running smoothly, he set time aside periodically for the team to suggest ways collectively to improve the process [1].”

Ford Motor company dominated the auto industry with mass production until Alfred Sloan introduced better management practices at General Motors. Toyota moved beyond General Motors with cross functional teams and continuous improvement. They consistently achieved four times the productivity and twelve times the quality of General Motors by the early 1990’s. By 1994 I was writing that General Motors would inevitably go bankrupt within 20 years and Cutter Consortium would not let me publish this statement. I had to take it out of a paper I was writing for them as they thought it was too controversial or maybe "unAmerican." Yet the truth is the truth and General Motors beat my prediction. It only took about 14 years.

This cross functional team process  and continuous improvement was observed not only at Toyota, but in many of the best companies worldwide by Takeuchi and Nonaka while they taught at the Harvard Business School in the early 1980s. The teams at Toyota and elsewhere reminded them of the game of rugby and they called this style of project management “Scrum,” a short form of the term “scrummage” where the game is restarted when the ball has gone out of play.

What Takeuchi and Nonaka saw at Toyota, Honda, Canon, Fuji-Xerox, 3M, HP and other high performing organizations is Scrum project management, which means to them teams that are autonomous, motivated by trascendent purpose, and engaged in cross learning. Short iterations combined with these team dynamics facilitate a knowledge generation cycle that leads to innovation, faster time to market, and higher quality. The “lean techniques” touted by Western observers are side effects of what Takeuchi and Nonaka see as the root cause of performance. And the root cause is Scrum which is teams engaged in continuous improvement.


jmeydam said...

In the last years your focus seems to have been on outsourcing projects and development efficiency. I would love to hear more from you on teams like your first Scrum team at Easel - true product development teams in the spirit of Takeuchi and Nonaka's paper.

Lean Startup is gaining mindshare; people are asking how this fits with Scrum. "Outcome over output", "Stop building worthless software" - I think (and hope) these topics are going to dominate the discussions of Agile software development.

Exciting times ahead!

Timo Mulder said...

Thanks for this inspiring blog Jeff!

When I started to implement scrum for the first time it wasn't a typical sofware project but a new business development initiative involving all kinds of activities like marketing, sales, legal, it and operations.

I immediately saw that Scrum helped the team to focus and communicate better. Also the retrospectives made sure that issues where solved during the following sprint. The team members used these sessions to foster continues improvement and issues did not became huge conflicts as they were put on the table more earlier in the process.

Now Im coaching a complete business portfolio where we use scrum and kanban to improve portfolio management. Another interesting team that Im coaching now as a Scrum Master is a 'work counsil team' for a big bank in the Netherlands. Their goal is the present an important paper to the board of directors at the end of the year and Scrum they say is really helping them achieving this important deadline.

So indeed, Scrum is not only software related. I believe all companies will benefit from Scrum. And those who stay behind will feel the consequenses.:)

Keep up the good work / blog post!

Greetings from Amsterdam,

Timo Mulder

Scrum Master @ ABN AMRO Incubator

henry said...

Great blog Jeff. The Takeichi/Nonaka paper, The Big Idea: The Wise Leader
is also a good read. In it they mention how Scrum is now a leading Software Development process.

zenpdm said...

Jeff, Thanks for the great background information on Takeichi/Nonaka paper. I came to Scrum the other way. I was first introduced to Lean in the manufacturing line as R&D engineer building Special Purpose Machines. In that capacity I had to work closely with Mfg Systems Engineers in building machines that fit the Toyota System.
I learned there the idea of Kaizen, Gemba, Poka Yoke, Nagare, Kanban, Muri, Mora, Muda etc.
When I moved to software development as young engineer I was always looking for ways of getting those principles into my work and 7 years back I read about Scrum from one of your books and totally felt in place. Scrum first, lean later or vice-versa does not matter to me but thanks for bringing those trans-formative methods to software development.
I still would like to see the lean principles of gemba, poka-yoke, chief engineer, nagare etc somehow brought to Scrum frame work, I would like to know your thoughts on this.



Jeff Sutherland said...

The lean techniques can all be seen in a good Scrum if you look for them. I was the Chief Engineer for the first Scrum team, hired to deliver a new product in six months that would replace all legacy products. We implemented the ScrumMaster who worked on the line just as Taiicho Ohno set up at Toyota to improve on what he saw at Ford. One of our biggest customers was Ford Motor Company. The speed of the software market means the Chief Engineer needs a product owner to keep up. The product owner is embedded in the team and drives all priorities based on going to the market and then going to the gemba.

Poka yoke is embedded in all Scrums that I am responsible for through a systematic prioritization of automated testing to make deployment fail safe.

If you do not see these things in a Scrum, the people have not studied Takeuchi and Nonaka and have not implemented it properly.