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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.

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.

In March of 2017, I met again in Tokyo with Nonaka and Takeuchi. Nonaka is now writing a book on the U.S. Marines and feels the OODA loop that they adopted from fighter pilot John Boyd is a key to knowledge generation, even more important than the PDCA cycle.