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Category Archives: Toyota

Toyota’s in house development

“SATOSHI OGISO was 32 in 1993 when he took on the task of building what Toyota, his employer, vaguely thought of as the car of the future. The deadline was the start of the 21st century. In America at that time car designers were sketching gas-guzzlers or sport-utility vehicles. But Mr Ogiso’s team, mostly in their early 30s, wanted to create something that would “do the Earth good”, as he puts it. Within two years they had come up with Toyota’s hybrid technology, in which a battery powers the car for short distances and a petrol engine kicks in at higher speeds, recharging the battery. Within four years they had their first Prius on the road.

Now there are 2m of them and Toyota has a prototype plug-in version that can be charged at home, like other electric vehicles, but has a petrol engine for long distances. In Toyota’s more distant vision, the home (built, of course, by Toyota’s housing division) will be solar-powered, which will cut emissions even further. And at night, when demand is low, the home may even be plugged into the hybrid car, which will have recharged its battery from the engine.

This is the kind of thing you would expect from Japanese manufacturing, with its focus on craftsmanship, or monozukuri. Mr Ogiso’s project exemplifies some of the strongest traits: teamwork, in-house development and a desire to earn glory for the company. What was different was the engineers’ ages. All young, they were given the freedom to follow their instincts, with no middle managers to second-guess them. “The senior engineers could not understand the hybrid engineering,” chuckles Mr Ogiso.

The tradition of in-house innovation runs deep in Japan, and some of the resulting products may help the country to adapt to an ageing society. Bill Hall at Synovate, a market-research company, reels off a list of new products that are already available, or will be soon: the Toto intelligent toilet that can detect the level of sugar in urine; Panasonic’s robotic bed that turns into a wheelchair; Toyota’s battery-powered individual three-wheeler, with built-in sensors to avoid collisions.”

The Economist Nov 18th 2010 | from PRINT EDITION Pp.10; Read full article here

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Market will decide on Toyota recall

The company’s proactive and unprecedented recall and sales halt, while expensive in the short term, may protect its image.

As in any good relationship, open communication is vital and Toyota Motor Corp., which recently suspended production and sales of eight models suspected of having sticky accelerator pedal problems, now has the perfect chance to show the world how healthy a relationship it has with its customers.

The recall and sales halt, which most industry observers agree was the right move, has generated different discussions about the company’s renowned quality expertise.

“Toyota has built this reputation on quality and reliability and safety and being a practical choice. When consumers start questioning that, it really can damage them in terms of reputation, especially when Hyundai, Ford, Honda, Subaru, and Nissan offer great choices and are coming up in quality ratings,” Jake Fisher, an automotive engineer for Consumer Reports, told Reuters.

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However, Toyota could minimize the adverse effects of the recall and sales halt depending on how well the company communicates with its customers, according to Dave Sargent, vice president of the global automotive division at J.D. Power and Associates.

“We feel that Toyota is taking the right steps here,” says Sargent. “It is critical that they also focus on communications with customers and dealers. There appears to be some uncertainty right now. This is understandable, but Toyota needs to be as clear as possible around what consumers should do, what dealers should say to customers and potential customers, and (when they know) when sales and production will restart. This is obviously a hugely complex challenge. Action is critical, but clear communication is also important.”

As far as the impact on overall customer satisfaction of the Toyota brand is concerned, Sargent isn’t convinced Toyota will take that big a hit.

“Historically, vehicle recalls have minimal effect [as far as customer satisfaction ratings go] as only a very tiny percentage of owners actually experience the problem,” Sargent explains. “For the majority of owners, the most significant impact will be the inconvenience of taking their vehicle in to the dealer to be fixed. The high volume of recall work is also likely to affect other owners trying to get a dealer service appointment. The effect will be largely dependent on how well Toyota and the dealers manage this process. There may also be an indirect effect coming from some consumers’ residual concerns about the general reliability of their vehicle and potential effect on the resale value. Overall the impact is likely to be less profound than might be expected.”

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It’s still unclear what Toyota is going to do as a definite measure to fix the problem, but Sargent is certain that Toyota is not going to risk it’s highly valued reputation by releasing the affected vehicles before the problem has been clearly identified and fixed.

“The actions that Toyota have taken this week are clearly designed to fix the problem (and the perception of a problem) once and for all,” says Sargent. “It is highly unlikely that they will move forward without being completely satisfied that the problem is fixed. Their long-term reputation is more important to them than losing a few weeks of sales, however painful that is in the short term.”

Meanwhile, The National Automobile Dealers Association (NADA) is encouraging Toyota dealers to verify whether or not they have business interruption insurance that might help them endure this crisis.

“This is creating a very difficult situation for dealers, in an already tough market. NADA is working with Toyota to identify a plan to help get dealers through this,” the association said in a statement.

Last year, the Japanese automaker issued a recall of vehicles to reduce the risk of pedal entrapment by incorrect or out of place accessory floor mats, according to a company statement. Approximately 1.7 million Toyota Division vehicles are subject to both separate recall actions.

Toyota’s accelerator pedal recall and suspension of sales is confined to the following Toyota Division vehicles: 2009-2010 RAV4, 2009-2010 Corolla, 2009-2010 Matrix, 2005-2010 Avalon, Certain 2007-2010 Camry, 2010 Highlander, 2007-2010 Tundra, 2008-2010 Sequoia.

From Quality Digest

 
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Posted by on February 1, 2010 in Toyota

 

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Is it time for TPS II?

What the world’s biggest carmakers can learn from other corporate turnarounds.

“Less than two years ago Toyota swept past an ailing General Motors (GM) to become the world’s biggest carmaker. Now its newly installed boss, Akio Toyoda, the 53 year old grandson of the founder, says that the firm could be locked in a spiral of decline. Toyota is still a hugely formidable company, and some within the industry (and inside Toyota itself) believe that Mr Toyoda may be overstating the case. Yet there is no shortage of signs that all is not well.

Toyota’s story has implications beyond the motor industry, for it is not just a car company; it is the model for manufacturing excellence whose “lean” techniques have been copied by countless firms. How it slipped up –and how it may right itself –carries lessons for others.

Falling giants.

Althought some of its rivals, notably Volkswagen of Germany and Hyunday of South Korea, have come through the terrible past year relatively unscathed. Toyota’s market-share has either fallen or been flat in every region in which it operates except Japan—a market that was shrinking well before the crisis struck.

In America, its biggest and normally most profitable market, Toyota has been plagued by highly publicised recalls that have raised embarrassing questions about the safety of its vehicles. In China, India and Brazil, the big emerging markets that will provide nearly all the industry’s future growth, Toyota has been slow of the mark. Its lead in hybrid technology is under threat as other big carmakers scramble to bring low –and zero –emission vehicles to market before low –carbon legislation bites. Astonishingly, in the first three months of 2009 it made an even bigger loss than GM, which was then on the verge of bankruptcy. Underlying all these problems is an uncomfortable truth: Toyota’s rivals have now caught up. They now offer cars that are just as reliable but far more exciting than the rather dull vehicles Toyota has concentrated on producing in ever –larger numbers.

A bit of vroom needed.

Toyota can also learn from the woes of other carmakers. A decade ago Ford thought it had found a saviour in the dynamic Jac Nasser, who declared his intention to transform the firm from an old –economy carmaker into a nimble, internet-savvy, consumer powerhouse that managed brands and sold services. He also went on a wild acquisition spree, paying huge sums for Volvo and Land Rover. Unfortunately, amid Mr Nasser’s cultural revolution, Ford lost sight of its main purpose: building decent vehicles as efficiently and profitably as possible. That is what Ford is reaping the rewards for doing now, under the less exciting but steadier leadership of Alan Mulally.

Toyota, too, has a good chance of putting things right. It is no GM, which had far deeper structural problems before it used bankruptcy to off-load some of them. It has a boss who understands what has gone wrong –namely, that it has jeopardized its formerly stellar reputation for quality by pursuing volume at all costs and by failing to put the needs of its customers first. It has started to sort out some of its problems. Quality and reliability are getting back up to the mark. Now it needs to make more exciting and innovative cars.

Mr Toyoda’s approach is not visionary. It is simple, incremental and requires painstaking attention to what the customers want. That is its virtue.”

Extracted from: The Economist December 12th-18th 2009. Pp 69-71. The Economist Print Edition

 
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Posted by on December 16, 2009 in Lean Manufacturing, Toyota

 

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The machine that changed the world…… 20 years ago!!

“ So far we’ve talked about innovations that involve the introduction in production vehicles of ideas already fairly well understood on the technical level. We’ve listed a number of advances of this type in the 1980s, and many more will be available in the 1990s -in particular, the application of electronics to mechanical vehicle systems such as vehicle suspension and the availability of mobile communications at lower cost in a much wider variety of vehicles. But what about epochal innovations– really big leaps in technological know-how such as would be entailed in workable fuel-cell power units or all-plastic body structures or sophisticated navigation and congestion-avoidance systems? As we will see, the 1990s may prove a time for such innovations. Can lean producers respond to these much more daunting challenges?

In fact, the world auto industry has lived during its first century in a benign environment -demand for its products has increased continually, even in the most developed countries; space has been available in most areas to expand road networks greatly; and the earth’s atmosphere has been able to tolerate ever-growing use of motor vehicles, with minor technical fixes in the 1970s and 1980s designed to solve smog problems in congested urban areas. Shortly, the environment for operating motor vehicles may become much more demanding.

Demand for cars is now close so saturation in North America, Japan, and the western half of Europe. A small amount of incremental growth will be possible in the 1990s, but by the end of the century producers in these markets will need to provide consumers with something new if they want to increase theirs sales volume (measured in dollars or marks or yen rather than units). Moreover, the growth of vehicle use and increasing resistance to road building have made the road systems of these regions steadily more congested, gradually stripping motor-vehicle use of its pleasure…” Pp135-137

Lexus Hybrid Drive Car

The Luxury Hybrid machine from Toyota

“ …Our goal is to specify the ideal enterprise in much the way buyers of such a craft-built cars as the Aston Martin used to specify the car of their dreams. Unfortunately, no such dream machine currently exists, so we will create it: Multiregional Motors (MRM).

The management challenge, we believe, is simple in concept: to devise a form of enterprise that functions smoothly on a multiregional basis and gains the advantage of close contact with local markets and the presence as an insider in each of the major regios. At the same time, it must benefit from access to systems for global production, supply, product development, technology acquisition, finance, and distribution…

…The key features of what we call Multiregional Motors are as follows:

An integrated, global personnel system that promotes personnel from any country in the company as if nationality did not exist. Achieving this goal obviously will require great attention to learning languages and socialization and a willingness on the part of younger personnel to work for much of their career outside their home country. However, we already see evidence that younger managers find career paths of this type attractive….

A set of mechanisms for continuous, horizontal information flow among manufacturing, supply systems, product development, technology acquisition, and distribution. The best way to put these mechanisms in place is to develop strong shusa-led teams for product development, which brings these skills together with a clear objective…

Teams would stay together for the life of the product, and team members would then be rotated to other product-development teams, quite possibly in other regions and even in different specialties (for example, product planning, supplier coordination, marketing). In this way the key mechanism of information flow would be employees themselves as they travel among technical specialties and across the regions of the company. Everyone would stay fresh and a broad network of horizontal information channels would develop across the company…

A mechanism for coordinating the development of new products in each region and facilitating their sale as niche products in other regions -without producing lowest-common denominator products. The logical way to accomplish this goal is to authorize each region to develop a full set of products for its regional market. Other regions may order these products for cross shipment as niche products wherever demand warrants…” Pp 223 – 227

Womack P. James,  T. Jones Daniel &  Roos Daniel (1990) The machine that changed the world. How Lean Production revolutionized the Global Car Wars. Ed. Simon & Schuster UK, Ltd. UK.

 

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Was Henry Ford a true Lean thinker?

Do not forget that Today and Tomorrow was written in the 1920s, over a half century ago when Ford’s career was at its peak.  Shortly, he would face his first failure and discouragement even though the Ford Motor Company ultimately survived.

As I said earlier, I have long doubted that the mass-production system practiced in America and around the world today even in Japan, was Ford’s true intention. For this reason, I have constantly sought the origin of his ideas. For example, take a look at the American social environment of the 1920s when Ford was prospering

“But are we moving too fast – not only merely in the making of automobiles, but in life generally? One hears a [great] deal about the worker being ground down by hard labour, of what is called progress being made at the expense of something or other, and that efficiency is wrecking all the finer things of life.

It is quite true that life is out of balance – and always has been. Until lately, most people have had no leisure to use and, of course, they do not know how to use it. One of our large problems is to find some balance between work and play, between sleep and food, and eventually to discover why men grow old and die. Of this more later.

Certainly we are moving faster than before. Or, more correctly, we are being moved faster. But is 20 minutes in a motor car easier or harder than four hours solid trudging down a dirt road? Which mode of travel leaves the pilgrim fresher at the end? Which leaves him more time and more mental energy? And soon we shall be making an hour by air what were days journeys by motor. Shall we all then be nervous wrecks?

But does this state of nervous wreckage to which we are all said to be coming exist in life – or in books? One hears of the workers nervous exhaustion in books, but does one hears it from workers?…

The very word “efficiency” is hated because so much that is not efficiency has masqueraded as such. Efficiency is merely the doing of work in the best way you know rather than in the worst way. It is the training of the worker and the giving to him of power so that he may earn more and have more and live more comfortably. The Chinese coolie working through long hours for a few cents a day is not happier than the American worker with his own home and automobile. The one is a slave; the other is a free man.”

There have been many changes in the last half century. Circumstances in China have changed drastically, for instance. Recently, between September 1977 and September 1978, I visited many Chinese industries trying hard to promote modern industrialization.

From the Ford’s time to the present, through our postwar period when we began work on the Toyota production system, and within the industrialization that China is trying to achieve, there is one universal element – and Ford called it a “true efficiency”. Ford said efficiency is simply a matter of doing work using the best methods known, not the worst.

The Toyota production system works with the same idea. Efficiency is never a function of quantity and speed. Ford raised the question: “Are we moving too fast?” In connection with the automobile industry, it is undeniable that we have been pursuing efficiency and regarding quantity and speed as its two major factors. The Toyota production system, on the other hand, has always suppressed overproduction, producing in response to the needs of the marketplace

In the high-growth period, market needs were great and losses caused by overproduction did not appear on the surface. During slow growth, however, excess inventory shows up wether we like it or not. This kind of waste is definitely the result of pursuing quantity and speed.

When describing the characteristics of the Toyota production system, we explained the concept of small lot sizes and quick setup. Actually, at the heart of this is our intention to reform the existing and deeply rooted concept of “faster and more” by generating a continuous work flow.

To be truthful, even at Toyota, it is very difficult to get the die pressing, resin modelling, casting, and forging processes into a total production flow as streamlined as the flows in assembly or machine processing. For example, with training, setup of a large press can be accomplished in three to five minutes. This is shorter than that of other companies by a surprisingly large margin. In the future, as work flow is perfected, we could slow down and still keep it under 10 minutes.

This explains why the Toyota production system is the opposite of America’s system of mass production and quantity sales – the latter system generates unnecessary losses in pursuit of quantity and speed.

Ohno, Taiichi. 1988. Toyota Production System. Beyond large-scale production. Pp 107-109. Productivity Press. New York.

 

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A bit of Toyota’s humanoid robot

Amazing the equilibrium, acceleration and deceleration.

 
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Posted by on July 29, 2009 in Toyota

 

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Maasaki Imai reviews Kaizen and Just in Time 23 years later. It is time to meet the challenge for surviving

The 73-year-old mind of Masaaki Imai runs razor sharp belying the frailty of his small frame. He talks with sincere conviction, pausing to select the right words.

He has to be careful, after all, his words have been changing the way the corporate world talks, and more important, acts.

When he first threw the word ‘Kaizen’ at the corporate world through his book Kaizen: The Key to Japan’s [ Images ] Competitive Success in 1986, it was swallowed hungrily by a world in the throes of transition. Translated in fourteen languages, Kaizen became a fad the world over.

Toyota [ Images ], the outstandingly successful Japanese carmaker, became one of his most committed followers.

However, Imai, the founder of a leading international management and executive recruiting firm, and consultant to over two hundred companies, realized that the concept had neither been digested nor well implemented.

He introduced an evolved form of Kaizen in 1997 in his book Gemba Kaizen: A Commonsense, Low-Cost Approach to Management, to reassert the importance of the shop floor in bringing about continual improvement in an organization.

Today, the father of ‘Kaizen’ and ‘Gemba Kaizen’ is convinced that to survive in an increasingly competitive world, top management must adopt a just-in-time approach and drive change down the hierarchy without yielding to resistance.

Forget forecasting, concentrate instead on crashing the time taken to execute orders. According to Imai, 90 per cent of all corporate problems can be solved using common sense and improving quality while reducing cost through the elimination of waste is the only option for survival.

In an exclusive interview to The Smart Manager, Imai explained the principles underlying his just-in-time philosophy:

Kaizen is about constant continual improvement but in today’s world, are small improvements enough? What if you need to make big, radical changes?

Kaizen is the means to achieve a corporate strategy, not the strategy. Every corporation needs to make a radical change, or some change at least, to survive in this very competitive, rapidly changing world.

The most important challenge facing top management today, especially in a manufacturing company, is to establish a target about where they want to take the company in the next two, five and ten years.

In manufacturing, there are only two systems. One is the batch or queue production system, and the other is what we call just-in-time (JIT) or the Toyota production system.

One of the most urgent tasks for top management is to choose the strategy, and say that we have decided to change to the just-in-time production system to be able to survive in the new millennium.

Kaizen is misunderstood by most people. They say Kaizen is small step improvement and this is the age of big jumps, but in my way of thinking, the biggest jump is making the transformation from the batch mode to JIT.

Why should companies move away from the batch mode to just-in-time?

The batch production system, to which almost 99.9 per cent  of all manufacturing companies subscribe, is destined to perish. It is the most inefficient way to make products.

It is prone to all kind of shortcomings: it is almost impossible to build quality in a product and it defeats the purpose of making products at low cost.

It also makes it very difficult to meet customer requirements, which come in different orders, like different volumes in different time frames and so on. On the other hand, JIT production system is the opposite of the batch system.

The batch system derives from the agricultural mentality. When the industrial revolution took place in the nineteenth century, managers adopted the pattern of production from agriculture: first you sow seeds, then harvest and store. The more wheat you had, the more secure you were, so everything was made in big batches.

Similarly, in the batch system, you purchase material and produce in big batches and there are many processes. At every process, you accumulate the batch and at the end you accumulate the finished product in a batch, which is stored in the warehouse.

Which is very efficient, offers standardization. . .

This kind of production system is based on market forecast. You say, this year we will sell half a million cars, so you plan according to that and start making half a million cars. What happens if your forecast is wrong and you manage to sell only quarter million cars?

You are left with quarter million cars unsold and a chunk of cost — labour, raw material, etc — is in it. What are you going to do? You think it is the most efficient production system?

Batch system is good when there is demand. As a company begins to acquire the capacity to produce faster and faster and more and more, eventually there will come a time when its production capacity goes above what the market can bear.

Today, several Japanese electronic companies are in big difficulty. What do you think happened to these companies?

These are the companies that didn’t know that they should have introduced JIT. Most of the electronic companies have a production system based on assumption of the market and market forecast.

The same thing happens in the computer chip industry. You end up with huge inventory of unsold products and excess capacity, then you borrow money to carry that inventory. By that time you have acquired too many people for every process.

Do you think that is a very efficient way of making a product? Eventually the company will have to restructure or go bankrupt.

And what is the solution? Just-in-time. The starting point of JIT is to pull from the market. The market should always come first and production later.

How long would the customer have to wait for the product?

In some cases, only a few hours. In the case of a car, maybe a few days.

But it is a competitive market, why would a customer wait? There are lots of car manufacturers, there is lots of choice, I can walk into any showroom and buy a car. Why should I wait?

In batch system, the company has to anticipate that the customer will request this kind of a model. Right? And it will have to build an inventory of this kind of car, but they don’t know how many orders are coming. They have to have so many cars waiting for your order to arrive, which is very inefficient.

The customer may not know that she wants a product. The inventor has to estimate the market for it. It is the role of marketing to define the product and the role of production to make the product.

Well, I think it is the other way round. The role of marketing is to dig out the potential or hidden requirement that the market has.

You don’t follow the product out approach but first find the need of the market and then make the product. If you don’t have technology, you have to develop it and if you don’t have the machinery for such a product, you have to design it.

Managers today are obsessed by a ‘growth’ mentality? Do you think growth is a smart strategy?

I can say that 99.9 per cent of all companies in the world today are obsessed by a growth mentality. These are companies that can make profits only when the market is growing.

In real life, market demand always fluctuates. The only companies that will survive in to the next millennium will be the ones that have the flexibility to produce according to fluctuating demand.

I read that Kaizen works most effectively in the time of crisis. Why?

During a crisis, everyone understands the urgency of the situation. The transformation of the production system is a massive physical operation, like operating on the bone structure itself, which is why it is very important that top management be committed to make such a transformation.

That is the only way to survive in the new millennium because it is the most effective way of making a product. It also increases your cash flow immediately, so when companies are faced with crisis, it is the best time to introduce Kaizen.

For instance, in India, there are many situations emerging, like China exporting products far below the cost price.

In this age of global supply chain management, being the best in India is not enough, you have to be the best in the world.

Do you have a Kaizen institute in China? What makes China so efficient?

No, we don’t have an institute in China. What makes China superior is its labour cost, which is 1/50th of Japan’s labour cost.

But lower labor cost does not equal efficiency. What makes China so efficient?

I wouldn’t call the country very efficient. They can produce a certain product, particularly consumer-related products, at a lower cost in mass production because so far many western and Japanese companies have transferred technical know-how to them.

China has acquired the basic production capacity. Earlier the same thing happened with Malaysia, Korea, Taiwan. Today it is China’s turn.

What happened was that Japanese, American and European people have transplanted technology, they hired local people and brought machines there and trained them to do the job. So that’s how they can produce.

So, would you call China a superior manufacturer?

Not superior, but they can produce at a far more competitive price. Superior has many connotations, in terms of design, efficiency, etc. I certainly wouldn’t call China superior.

They also have efficient processes. . .

But so far, those processes have been given to them from Japan and the western world.

The price of labour is cheaper in China, but would the productivity of a Japanese worker be higher than that of a Chinese worker?

I am talking about labour cost. Of course, you have to make quality products and in order to make quality products, you must have quality conscious employees. How do you develop quality conscious employees?

Most Japanese companies when they went to China had a hard time training them, the people didn’t have quality consciousness.

The Japanese spent a lot of time selecting the right people and training them in production procedures. So this kind of training has been provided along with some basic principles of quality assurance.

These managerial practices can be transferred, but you see in China, they are paying the equivalent of one Japanese worker’s wages to fifty people. Quality control has been introduced and can be exported in any country.

Japan was at its peak in the 1980s but now China is far ahead, does this suggest that the Japanese model is invalid?

We need to distinguish between external circumstances (social, cultural and political infrastructure) and internal circumstances (like how business is conducted within the company).

The recent negative reports about Japan relate to the external circumstances, such as governmental regulations, overprotected market in some sectors, aging society and the Big Bang needed by the monetary institutions.

There is a realisation that Japan Inc may not be functioning as efficiently as it used to. This in no way means that Japanese management practices (internal management of the company) have proven to be inferior.

The Japanese companies developed a very effective system of management, particularly in the manufacturing sectors, and the rest of the world has much to learn from these practices.

What are your views about management practices in the Indian corporate sector?

I see that Indian managers are extremely intelligent. They are abreast with latest technologies and developments. But the problem is that they completely isolate themselves from reality.

They are under the impression that real knowledge can be gained only by reading books and attending lectures. How often do they actually roll up their sleeves and get into some action?

They really need to make more effort [at getting into the thick of action]. They have immense knowledge, but what they lack is wisdom that comes by doing things yourself.

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