An Agile Story…Sort Of

This article first appeared on the Scrum Alliance Community Articles.

One of the most inspirational Agile stories I have heard isn’t really an Agile story. It’s the story about the New United Motor Manufacturing, Inc. (NUMMI). It’s a Lean/Toyota Production System story about how collaboration between two enterprises can lead to great things.

In the beginning . . .

The story starts at a General Motors (GM) manufacturing plant in Fremont, California. GM had been running the plant since the 60s, and by the early 80s, it was one of the worst auto manufacturing plants in America — not only in terms of quality of the cars manufactured, but also in terms of the workforce as well. The relationship between the workforce and management was, to put it mildly, adversarial. The workforce was unionized, so it was difficult to fire anybody, and management wanted throughput increased. Over time, the relationship degraded to the point where the behavior was careless and unprofessional.

Management’s hands were tied by the unions, but they made sure that the work got done. Why did things degrade to such a point? To put it simply, the workers had no pride in their work. It was only a job.

The cost of stopping the line

What was there to take pride in? All that was drilled into the workers was that the line had to move. If it didn’t, it would cost the company $15,000 per minute while it was down. If someone was fired, then the workforce would walk off the job, causing the company significant losses. Management pushed and pushed. There are accounts of people falling into the pit, yet they would not stop the line. If someone was injured, they would not stop the line unless it was an emergency. Find a defect, mark it with a slip of paper, and send the car on its way under the mindset, “It will be fixed later.”

And, boy! Was it worth fixing problems later! The overtime was lucrative. Be it a wrong bumper bar put on the car or something wrong under the dashboard, it was worth fixing later, even if it meant ripping out the entire dash, fixing the problem, and putting it back together. The dash would never be right again, but neither the workers nor management cared at that point. It was the customer’s problem. The fixing aspect was standard practice at the time, and the car quality suffered for it. (I remember that here, in Australia, there were problems with Holden Commodores. Car doors would not sit right, and “lemon laws” were introduced.) Eventually GM had enough, and in March 1982, the plant was closed. The entire workforce was laid off.

The partnership

Meanwhile, Toyota was trying to break into the American market. It entered negotiations with GM. GM would supply the facilities, and Toyota would teach them the Toyota Production System. Toyota was making cars more cheaply then, and of better quality than any American manufacturer could. So for GM to get the “secret sauce” was considered lucrative.

In 1984, the Fremont plant was chosen as the location, and the venture was called NUMMI. As part of the deal, more than 85% of the workforce that had been laid off two years earlier had to be rehired. Charles Duhigg’s book Smarter Faster Better: The Secrets of Being Productive in Life and Business recounts the story of Rick Madrid, one of the line workers who was fired from GM and rehired by NUMMI. Madrid recalls that after he was hired, he was sent to Japan to see how things worked. When he reached the Toyota plant, he remembers seeing everything pretty much as it had been in Fremont, but more clean. He recalls thinking, “Why the hell did they send me all the way here to see how things are done when it’s almost exactly the same as it was done at home?”

And then something happened: He saw a worker put in a bolt for a car door incorrectly. Nothing unusual about that; it was a common problem. But what happened next blew his mind away. Instead of marking the defect and then carrying on to the next job, the worker raised his hand and pulled on a cord. Lights flashed and music played. The worker then removed the bolt, and the line resumed. The worker’s supervisor arrived and asked questions. The worker ignored him and carried on, while giving his supervisor orders! Had anyone done that back in Fremont, they would have been decked.

When the car had reached the end of the station, something amazing happened. The entire line stopped. Another manager came up, but instead of yelling, the manager laid out a new bolt like a nurse lays out surgical instruments for a doctor. The worker then ordered both managers around. During this time, at every other station, workers were double-checking parts they had already installed. Rick was thinking that this was costing Toyota $15,000 per minute. Once the bolt was back in place correctly, the worker raised his hand and pulled the cord again. The line then resumed, and everyone went back to work. Rick was floored.

That scenario wasn’t the only surprise Rick Madrid saw while in Japan. Halfway through a shift, he observed a worker, who had an idea for a new tool to help him with his job, tell his manager about it. The manager went off to the workshop and, 15 minutes later, came back with a prototype. The two refined the tool for the rest of the shift. The next day, everyone their own similar tool.

When Rick got back to the States, he told his fellow workers what he saw. They didn’t believe him. What Rick saw was Toyota’s philosophy that the person doing the work is the expert at what needs to be done. The individual is in charge when something goes wrong; it is his or her responsibility to fix the problem. It is management’s responsibility to support the worker in fixing the problem. It is management’s responsibility to help, guide, and support the workers in doing their job, not just to order them about. Also, Toyota hates waste, and it’s a waste to not exploit everyone’s expertise.

Applying Toyota’s philosophy back home

When the Fremont plant reopened, those who returned to work didn’t go back to their old ways. They were too scared. They needed their jobs. Therefore workers didn’t start pulling their cords when things went wrong. This was not good, as Toyota’s philosophy is to fix problems at their earliest point when they occur — that is, at the time the problem is identified.

A month after the plant opened, NUMMI’s president Tetsuro Toyoda was touring the facility when he spotted a worker who had put in a taillight incorrectly and was struggling to get it back in. He looked at the man’s uniform for his name and said, “Joe, please pull the cord.” The president, Joe’s supervisor, and his manager were all watching.

“I can fix this, sir,” said Joe.

“Joe, please pull the cord,” repeated Tetsuro. Up to now, the cord had been pulled only three times since the opening of the plant, and one of those times was by accident. Everyone was afraid to cost the company $15,000 per minute.

Joe repeated, “I can fix this, sir.”

Tetsuro took Joe’s hand, raised it to the cord, and then pulled it. Joe was shaking. The two men then fixed the taillight and pulled the cord again. From that point on, workers started pulling the cord more often. Now, you would think that this would have been bad for Toyota. However, in a typical Toyota factory in Japan, the cord is pulled more than 5,000 times per day. Toyota’s philosophy of fixing problems when they occur has been found to be significantly cheaper on average than fixing the defect later. That is why pulling the cord is encouraged.

It didn’t take long, about six months, for the Fremont plant to produce cars of the same quality as those from a Japanese plant. These same workers, who two years earlier were causing all types of mischief, were taking pride in their work. In WBEZ’s This American Life broadcast and other interviews, Rick Madrid remembers fondly his time at NUMMI. He took pride in his work.

It’s a Scrum story, after all

Given that Scrum, specifically, and Agile have their origins in the Toyota Production System, it is my opinion that a ScrumMaster and a product owner have the responsibility to support team members so that they can do the best they can. If that means being ordered around by a team member to fix a P1 issue, resolve a blockage, or even give the team some tough love to point them in the right direction — basically anything that will help them succeed — then so be it. Anything short of that, and you introduce the possibility of failure. When workers are empowered to do a good job; aren’t struggling against impediments; and are given the responsibility, the right tools, control, and support, they will take pride in the work and be more productive. This, in my opinion, is what Scrum and Agile are about.

GM had sent 16 rising stars to start the NUMMI plant. Once the plant opened successfully, the 16 were ready to spread the word throughout GM. They were motivated; they wanted to change the world. But GM put a wet blanket over that spark. They didn’t know what to do with the 16. Some became frustrated over time and eventually quit. All that knowledge was lost. It took GM more than 15 years to implement the lessons learned at NUMMI, but by then it was already too late. In 2009, in the middle of the global financial crisis, the auto industry was all but destroyed. The fallout is still being felt today, with the closure of car manufacturing here in Australia. GM became the largest industrial bankruptcy in U.S. history. The NUMMI plant closed a year later, in 2010, although it has recently reopened as a Tesla plant.

Rick Madrid retired in 1992. His hat and badge are at the Smithsonian in the American Enterprise exhibit.


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