Organizational Slack and Toyota’s Innovation

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

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.