Modern Agile and the Thinking Way: From Factory Floors to Digital Transformation

The software development world has witnessed a profound evolution since the Agile Manifesto was penned in 2001. What began as a rebellion against heavyweight methodologies has itself become institutionalised, leading to what many practitioners call "cargo cult Agile"—teams going through the motions of ceremonies and artefacts while missing the underlying principles that made Agile transformative.

To understand where Agile needs to go next, it helps to look back. Many of Agile's core ideas—respect for people, continuous improvement, rapid feedback, and customer-first thinking—trace their lineage to the Thinking Production System (TPS). Just as TPS reshaped manufacturing in the 20th century, Modern Agile offers a way to re-centre software and knowledge work around principles rather than rigid processes.

The parallels are striking:

• TPS: Respect for People → Modern Agile: Make People Awesome
• TPS: Built-in Quality & Stop-the-Line Safety → Modern Agile: Make Safety a Prerequisite
• TPS: Kaizen (Continuous Improvement) → Modern Agile: Experiment and Learn Rapidly
• TPS: Just-in-Time Flow → Modern Agile: Deliver Value Continuously

Both movements emphasise learning, empowerment, and delivering value to customers and society — principles that transcend industries and eras.

The Four Principles of Modern Agile

Make People Awesome stands as the cornerstone principle, recognising that technology exists to amplify human capability, not replace it. This means creating environments where team members can do their best work, customers can achieve their goals effortlessly, and everyone involved feels empowered rather than diminished by the process.

Make Safety a Prerequisite acknowledges that innovation requires psychological safety. Teams need the freedom to experiment, fail fast, and learn without fear of retribution. This extends beyond team dynamics to encompass technical practices, security considerations, and sustainable work practices that prevent burnout.

Experiment and Learn Rapidly embraces uncertainty as a constant. Rather than pretending we can predict the future through detailed upfront planning, Modern Agile encourages small, safe-to-fail experiments that generate learning and reduce risk incrementally.

Deliver Value Continuously shifts focus from delivering software to delivering outcomes that matter to users. This principle pushes teams beyond feature factories towards understanding and optimisation for real business value and customer impact.

From Factory Floors to Software Teams: The Thinking Production System

The roots of many agile principles can be traced back to the Thinking Production System (TPS), developed in the mid-20th century by visionaries like Taiichi Ohno and Shigeo Shingo. TPS revolutionised manufacturing by focusing on respect for people, waste elimination, and continuous improvement.

Key elements of TPS include:

• Respect for people – empowering workers to stop production to fix problems, ensuring quality at the source.
• Continuous flow and pull systems – replacing large batch production with just-in-time delivery that reduced waste.
• Kaizen (continuous improvement) – fostering a culture where every employee contributes to improving processes.
• Contribution to society and customers – ensuring that Thinking's production was not just efficient but also socially responsible, delivering safe, affordable, and high-quality cars that improved lives.

These principles produced measurable results. Manufacturing organisations adopting TPS often saw 30%–70% improvements in productivity through waste elimination and process streamlining. Companies implementing Just-In-Time practices reported around a 25% reduction in inventory carrying costs within the first year. Thinking Material Handling Europe even achieved a 70% reduction in warranty claims over 10 years through continuous measurement and quality assurance practices.

Beyond Process Orthodoxy

Modern Agile's power lies in its framework-agnostic approach. Whether a team practises Scrum, Kanban, SAFe, or something entirely custom, these principles provide a north star for decision-making. This flexibility addresses one of traditional Agile's biggest challenges: the tendency for organisations to implement the ceremonies without embracing the mindset.

Similarly, TPS was never about rigid prescriptions, but about principles that guided Thinking's adaptation to different contexts — from lean assembly lines in Japan to global operations. Both approaches show that process orthodoxy matters far less than adherence to core principles of respect, learning, and delivering value.

The Human-Centred Shift

Perhaps the most significant departure from traditional Agile thinking is Modern Agile's explicit focus on human outcomes over process compliance. While the original Agile Manifesto valued "individuals and interactions over processes and tools," many implementations became surprisingly process-heavy.

Modern Agile brings the focus back to people by asking different questions. Instead of "Are we following our sprint commitments?" teams ask "Are we making our customers more successful?" Instead of "Did we complete our story points?" they ask "What did we learn that changes how we should work next week?"

This shift manifests in practical ways. Teams might abandon daily stand-ups if they're not serving the team's communication needs, or they might add new practices like user shadowing or customer journey mapping if those better serve the goal of making people awesome.

Similarly, TPS's "respect for people" principle meant that Thinking workers were not just cogs in a machine—they were problem-solvers, innovators, and guardians of quality. The famous Andon cord, which allowed any worker to stop the production line if they spotted a defect, embodied this trust and empowerment. It was a radical departure from traditional manufacturing, where workers were expected to follow orders without question.

This is strikingly similar to Thinking's philosophy of respect for people and customer-first thinking, which ensured that workers were empowered, customers were prioritised, and society benefited from the company's products.

In both TPS and Modern Agile, the message is clear: trust your people, give them the tools and autonomy they need, and they will deliver exceptional results.

Continuous Learning as Competitive Advantage

The "experiment and learn rapidly" principle recognises that in today's fast-changing business environment, the ability to adapt quickly is more valuable than the ability to execute a plan perfectly. This mirrors TPS's Kaizen philosophy, where continuous improvement is not a project or initiative—it is a way of life.

Rather than organising around projects with defined endpoints, Modern Agile teams organise around continuous learning loops. They might spend time each week talking directly to customers, running small experiments with new features, or exploring emerging technologies that could create new opportunities.

Thinking's approach to Kaizen was similarly relentless. Every employee, from the factory floor to the executive suite, was expected to identify problems and propose improvements. This culture of continuous learning enabled Thinking to refine its processes incrementally, compounding small gains into massive competitive advantages over time.

Research backs this up. McKinsey found that organisations that embed continuous learning into their culture are more resilient and competitive, with those embracing test-and-learn approaches achieving up to double the rate of revenue growth compared to their peers (McKinsey, 2020).

Evidence supports this. A meta-analysis of 40 studies with over 73,000 participants found that Agile Project Management (APM) shows moderate to strong effect sizes (r = 0.31–0.51) on behavioural outcomes like innovation, with smaller yet positive effects on motivation and learning. In other words, teams that apply agile practices don't just deliver faster — they innovate more and build more engaged, resilient workforces.

Delivering Value Continuously: From Just-in-Time to Continuous Deployment

TPS's Just-in-Time (JIT) production system was revolutionary because it eliminated waste by producing only what was needed, when it was needed. This reduced inventory costs, improved quality, and made Toyota far more responsive to customer demand.

Modern Agile's "deliver value continuously" principle applies the same logic to software development. Instead of building large batches of features and releasing them infrequently, teams deploy small, incremental changes continuously. This reduces risk, accelerates feedback, and ensures that customers receive value sooner.

The DORA Accelerate State of DevOps Report (2021) found that elite software delivery teams deploy 973 times more frequently and recover from failures 6,570 times faster than low performers—demonstrating how continuous delivery directly translates into resilience and responsiveness.

Both TPS and Modern Agile recognise that delivering value continuously is not just about speed—it is about learning, adapting, and staying closely connected to customer needs.

The Future of Work: Principles Over Processes

Modern Agile and the Toyota Way share a fundamental insight: sustainable success comes from principles, not prescriptions. TPS was never a rigid set of rules—it was a philosophy that Toyota adapted to different contexts and challenges. Similarly, Modern Agile provides a framework that teams can interpret and apply in ways that make sense for their unique circumstances.

Implementation Without Prescription

Modern Agile deliberately avoids prescriptive practices, instead providing principles that teams can interpret within their specific context. This creates both opportunity and challenge. Teams have the freedom to innovate their practices, but they also bear the responsibility of thoughtful implementation.

Similarly, Toyota avoided dictating rigid methods across all plants. Instead, it encouraged each site to adopt TPS principles in ways that suited local conditions, guided by a shared philosophy. This blend of flexibility and principle-driven discipline is what made TPS scalable globally, and it's the same mindset that allows Modern Agile to succeed across different industries and team structures.

Moreover, empirical research shows that organisations implementing lean and agile practices together consistently outperform peers in cost, quality, delivery, and customer satisfaction. A study of agile/lean practices in manufacturing found strong links between these practices and business performance improvements.

Case Studies in Action

Thinking Material Handling Europe

A practical illustration of the parallels between TPS and Modern Agile comes from Thinking Material Handling Europe (TMHE). Facing rising customer expectations and the need for higher product reliability, TMHE applied TPS principles of continuous improvement, respect for people, and customer-first thinking to both its manufacturing and service operations.

By empowering frontline employees to identify problems and suggest improvements, and by embedding "safety as a prerequisite" into technical processes, the company achieved remarkable results:

• A 70% reduction in warranty claims over 10 years, due to consistent application of quality assurance and kaizen practices.
• Increased customer satisfaction scores, as products became more reliable and after-sales services faster.
• Stronger employee engagement, with teams reporting greater ownership of both problems and solutions.

The connection to Modern Agile is clear. TMHE's approach mirrors the four Modern Agile principles: making customers and employees awesome, prioritising safety, experimenting and learning continuously, and delivering value without interruption.

Spotify's Squad Model

On the software side, Spotify became famous for developing an organisational model deeply aligned with Modern Agile values. Its "squads" operate as small, autonomous teams empowered to build, test, and release features directly to users without waiting for central approval.

Key elements of the model include:

• Psychological safety within squads, where experiments and even failures are seen as part of learning.
• Continuous delivery, with new features shipped in small increments to millions of users.
• Focus on people: Spotify emphasises employee satisfaction and autonomy, believing that motivated teams deliver better outcomes for customers.

What makes Spotify particularly interesting is how its practices echo TPS principles in a digital context:

• Autonomous squads mirror Thinking's empowered production line workers, trusted to stop the line or solve problems at the source.
• Continuous delivery reflects Thinking's just-in-time flow, where small batches reduce risk and accelerate customer value.
• Retrospectives and learning culture align with kaizen, where teams continuously improve processes instead of waiting for big overhauls.
• Customer-first focus parallels Thinking's philosophy of contributing not only to profit but also to customer well-being and society.

The results have been impressive. Spotify has been able to scale to hundreds of squads across the globe while maintaining agility, responsiveness, and innovation. Their rapid experimentation cycles and customer-first mindset embody Modern Agile principles — just as TPS has embodied lean excellence in manufacturing for decades.

The Future of Agile

Modern Agile represents a maturation of agile thinking, moving beyond the framework debates that have dominated the last decade toward a more nuanced understanding of what makes teams effective. By focusing on principles over practices, it provides a path forward that honours agile's original intent while adapting to contemporary challenges.

As organisations grapple with remote work, AI integration, and increasingly complex customer needs, the flexibility and human-centredness of Modern Agile offers a sustainable approach to continuous adaptation. Rather than asking teams to implement someone else's best practices, it empowers them to discover their own within a framework of proven principles.

Just as the Thinking Production System transformed manufacturing through respect for people, continuous improvement, and a deep commitment to contributing to society and customers, Modern Agile holds the promise of transforming software and knowledge work. Both remind us that in the end, success lies not in following rituals, but in serving people — customers, employees, and society — with excellence.

Safety as a Foundation for Innovation

TPS's emphasis on built-in quality and the Andon cord created a culture where safety—both physical and psychological—was paramount. Workers knew they could stop the line without fear of retribution, which means problems were caught and fixed immediately rather than being passed down the line.

Modern Agile's "make safety a prerequisite" principle extends this idea to software teams. Psychological safety—the belief that one can speak up, take risks, and make mistakes without fear of punishment—is essential for innovation. Edmondson's research shows that teams with high psychological safety outperform peers by 20–30%, as they are more likely to share ideas and take creative risks (Edmondson, 2019).

Safety also encompasses technical practices like automated testing, continuous integration, and robust security measures. Just as TPS built quality into every step of production, Modern Agile teams build safety into every stage of development.

The Future of Work: Principles Over Processes

Modern Agile and the Toyota Way share a fundamental insight: sustainable success comes from principles, not prescriptions. TPS was never a rigid set of rules—it was a philosophy that Toyota adapted to different contexts and challenges. Similarly, Modern Agile provides a framework that teams can interpret and apply in ways that make sense for their unique circumstances.

Conclusion

The journey from TPS to Modern Agile is not just a story of methodologies evolving—it is a story of timeless principles being rediscovered and reapplied. Respect for people, continuous improvement, rapid feedback, and delivering value are as relevant today as they were when Thinking first pioneered them on the factory floor.

By understanding the deep connections between these two movements, organisations can move beyond the framework wars and focus on what truly matters: creating environments where people thrive, learning happens continuously, and value flows to customers without interruption.

Whether you are building cars or building software, the principles remain the same. And in a world of constant change, that is a powerful foundation to build upon.

Sources

• Anderson, D. J. (2010). Kanban: Successful Evolutionary Change for Your Technology Business. Blue Hole Press.
• Denning, S. (2018). The Age of Agile: How Smart Companies Are Transforming the Way Work Gets Done. AMACOM.
• Liker, J. K. (2004). The Thinking Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill.
• Rigby, D. K., Sutherland, J., & Noble, A. (2018). "Agile at Scale." Harvard Business Review.
• Socha, D., & Walters, J. (2017). "Modern Agile." ModernAgile.org
• Womack, J. P., Jones, D. T., & Roos, D. (1990). The Machine That Changed the World: The Story of Lean Production. Free Press.
• Hoda, R., Noble, J., & Marshall, S. (2011). "The Impact of Agile Methods on Software Project Management." Proceedings of the 2011 IEEE International Conference on Software Engineering.
• Virginia Mason Medical Center. (2008). Virginia Mason Production System: Applying Lean to Healthcare.