Organizational Slack and Toyota’s Innovation

Topics: The Toyota Way, Organization, Toyota Production System Pages: 5 (1645 words) Published: November 5, 2008
Organizational slack, by Lawson’s definition, is that “cushion of actual or potential resources which allows an organization to adapt successfully to internal pressures for adjustment or to external pressures for change in policy as well as to initiate changes in strategy with respect to the external environments.” As efficiency has been considered a primary principle in business over the past twenty years, this slack, necessary resource that are important for the future in terms of flexibility, innovation, and learning have been eliminated. These resources or slacks, however, are often essential to the survival of businesses providing the value. Therefore, let us examine the significance of this organizational slack and learn about how they can be adopted and maintained in a business through the example of Toyota Principle.

To understand the importance of organizational slack, we can take a look at what outcomes we can experience without them, why we need them, and how to keep them in a business. First, what happens when slacks are eliminated? The disasters related to nuclear and health care are good examples. The accident of Three Mile Island nuclear-power plant in 1979 was a result of not taking time to use the available knowledge which was necessary to avoid it. The nuclear accident in Takaimura, Japan, in 1999 was due to shortcuts in training and safety activities in response to pressures to increase uranium fuel production. In health care industry, a great number of Americans are killed each year because of medication whose approval by FDA has been faster with increased number in kinds. Had efforts been made to build time and process for these cases, they would have been prevented.

Second, why do we need slack? We know that the organizations need to develop strategic flexibility, the capability of a business to proact or respond quickly to changing competitive conditions and secure competitive advantage. The conditions of certain organizations challenge this capability even further without the cushion. For example, some technologies involve systems with such interactive complexity that cannot be fully predicted or controlled. High-reliability organizations that deal with dangerous technologies need a slack for adopting the tools to keep them safe even with expensive redundancy, time, and other resources. The medical systems respond to pressures for efficiency ignoring the fact that they do need more time and care to minimize medical accidents. When GM cut the cost for their staff resource, the strike at a part plan also stopped assembly plants and lead to the sales loss of $2.2 billion because the company ignored the system interdependency. The organizations that need complicated technology that are not visible or not readily comprehensible and brings complex-system interactions should make investigations in extensive and frequent manners. Weak investigations lead to inconclusive diagnoses that can result in such disasters as plane crashes. In addition to these, today’s high demands on organizations include more innovation, flexibility, and speed that require managing knowledge. The time to learn to give room for development and collaboration and the time to create organizational knowledge that is a key to strategic resource are essential to meet this demand. All these conditions represent the strong need for organizational slack.

Third, how can we keep the slack in the organizations? The decision makers need to think before cutting out slack. They should recognize the value of resources that facilitate processing and learning and knowledge creation and should not sacrifice them in pursuit of short-term efficiency. The managers may design in slack in the organizations. To benefit from more and more complex interactions, information, and technology that we are asked to use, they need to add back the time to consider, discuss, and process input. Lastly, they have to understand thinking...

References: • Liker, J. (2004). The Toyota Way. McGraw-Hill.
• Senge, P. (1990). The Fifth Discipline: The Art and Practice of Learning Organization. New York: Doubleday.
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