From the very beginning of modern technology two hundred years ago, there had always been a symbiosis among members of given industries in given regions. They learned from each other, and most of all, there was constant feedback from users and competitors to basic research. This feedback then led to more basic discoveries and caused a leapfrog effect that circumvented attempts at outside control. - The Anatomy of Industrial Decline
One cannot overlook the cross-fertilization of ideas and technology across industries. Factory visits are not a new invention. The Springfield Armory, attributed by historians as the birthplace of “The American System of Manufacture” (early mass production of interchangeable parts), entertained visitors in the early 1800’s. The US Government even suspended patent rights on armory methods for a time to improve adoption of these new methods.
By default much of the history about “Lean” manufacturing has surrounded the auto industry, with Ford and Toyota listed as the major players in the development of Lean. Learning the historical context should help you understand the principles discussed in later chapters. The object of including a chapter on history is to portray them as real people who faced real problems. Their results were not the results of some secret formula or eureka moment in which they received divine inspiration. They both had significant competition in their early growth years, and had no obvious or outstanding advantage over their peers. One hesitates to use the term “Urban Myth,” because many of the legends surrounding Lean are “Industrial Strength.” While dispelling myths, the original reason for the research was to clarify the “Whys” behind the evolutionary nature of TPS (Toyota Production System); it was not created in a vacuum. If we don't recognize the history and understand the application, we may be doomed to repeat this learning curve indefinitely.
Both Toyota and Ford -- primarily for his success of the Model T -- could be classed as depending upon both luck and skill. “Toyota’s manufacturing system looks as if it were deliberately designed as a competitive weapon; it was created gradually through a complex historical process that can never be reduced to a managers’ rational foresight alone.”[ii] Most readers are more familiar with the most recent Toyota and its fame as the developer of Lean; Toyota points to Ford as their primary inspiration. This history is a reflection of their journey from obscurity to prominence.
Ohno observed in 1950, that Toyota took about 9 men to produce as much as a single man in the US auto industry. “…By 1965, Nissan and Toyota had already matched or surpassed the productivity levels of American automakers. After the mid-1960’s, productivity in Japan doubled in real terms as sales expanded. By 1980, Japan had replaced the United States as the largest automobile producing nation in the world, in technology as well as production volume…”[iii] The history of the Japanese auto industry overtaking the American auto industry mimics Nature, where the victim has been overtaken before sensing the danger.
Coincidence plays a much larger part in history than most people realize. Nassim Taleb, a professional trader and mathematics professor, has written two books on this subject.[iv] In Fooled by Randomness, he examines what randomness means in business and in life, and why human beings are so prone to mistake dumb luck for consummate skill. And The Black Swan; a black swan is a highly improbable event with three principal characteristics: it is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. Similar to a Perfect Storm.
If you are completely candid with yourself, you will soon discover how much your discoveries hinge on contingencies. Every now and then, when you happen to combine both boldness and skill, you may be able to exploit a few of the lucky situations that arise. But skill alone will not be enough, for much of the novelty in creativity is decided only when you are bold enough to thrust at chance.[v]
One view that has been popularized represents Toyota as working against all odds. This is interpretation does not hold up when doing comparative analysis against their peers in Japan, or any of the other businesses in war-torn areas following World War II. On a local level, they were as connected to the power structure as any industry in their region could be, and had a number of lucky breaks which others did not.
Ford had attracted to his factory a core of perhaps a dozen or a dozen and half young, gifted mechanics, none of whom had developed set ways of doing things. Encouraged by Ford, this group carried out production experiments and worked out fresh ideas in gauging, fixture design, machine tool design and placement, factory layout, quality control, and materials handling. In a sense, the Ford production engineers took what was best from each approach to manufacture and overcame limitations to these methods by adding their own brand of production techniques.[vi]
This is not unlike Toyota’s collective absorption of technology from any source available. How much of this strategy was deliberate on the part of either company is debatable; however, the results are proof of concept. In their most formative stages there was an active effort to ADOPT any best practice from any industry and actively keep looking, not accepting single results. The next stage was to ADAPT the best practice to their specific environment, even multiple versions which would match each process. ABSORB -- they actually applied the information that they had learned. The last stage was to ANALYZE. Using the “Lessons Learned” format they evaluated the performance and modified where possible to improve. Their next step was to adapt again, and again. This cycle works best when there is continual input from external sources. An analogy would be the merry-go-round on the children’s playground. It stops if not continually pushed.
Ideas often come suddenly to individuals, but they usually have a long history.
Lancelot Whyte
ADOPT - ADAPT - ABSORB - ANALYZE cycle (illustration in book) [vii]
This continuous cycle requires constant maintenance, or you will eventually be eclipsed by your rivals. This cycle is similar to the PDCA (Plan-Do-Check-Act) loop made popular by Deming[viii].
Our industrial history needs a preface before beginning the in-depth discussion of the two automotive giants. Each example which comes to mind has precedents, even back to early China or Egypt. For our purposes, the transition began in earnest when people started to transfer principles from single applications across multiple disciplines and industries. For some industrial historians this point can be traced to interchangeable parts. While the US led in multiple industries applying this concept[ix], it is not an American invention, nor was it a simple idea to implement. We have a proverbial situation of “the Chicken or the Egg,” where multiple disciplines required development to support the concept. In the background were the talented mechanics (the equivalent of today’s engineers) that spent years developing processes and machines to produce the various products are studied.
Eli Whitney is often credited with developing interchangeable parts, this is not accurate. There are several reference books detailing the development of the armory system which show that his efforts were the poorest performing group among the whole federal effort to produce interchangeable parts for small arms. The US government supported the development nearly fifty years before the reality of interchangeable parts came close to the promise. It took another fifty years before the concept was economically viable, and began to push out the craft industrial methods. While much has been researched and written about early arms industry, little credit has been given to the wooden clock industry which pioneered so many of the production methods transferred into the early federal armories.
The armory methods evolved into what has become known as “The American System of Manufacture.”[x] In the latter half of the 1800’s European industry began to complain about unfair competition, and gave excuses about the caliber of workers or special circumstances which could not be replicated in Europe. With the development of machine tools to support the processes necessary to produce the wave of inventions, several industries blossomed – sewing machines, farm equipment, steam locomotives, woodworking equipment, and bicycles. All of this accumulated knowledge was used in the development of the automobile industry. The steel and railroad industries led the way to industry on a massive scale, previously limited to nations and their militaries.
Lest we give the impression that all things relating to the Lean movement originated in the West, here is some background on the first recorded industry in Europe to be displaced by Chinese imports. The ceramic industry was nearly destroyed when the importers of tea and spices began to bring in “china.”
In the eighth year of Qianlong, Emperor of Qing Dynasty (1743), Porcelain-Making Supervisor Tang Ying was appointed by the Emperor to compile An Illustrated Book on Porcelain Making. In this book, the process of porcelain making was vividly explained and described. The book summarized technological achievements of the Jingdezhen ceramic industry, as a sequel to Jiang Qi's Record of Porcelain-Making and Song Yingxing's Tian Gong Kai Wu which had respectively recorded Jingdezhen’s porcelain-making techniques of the Song, Yuan, and Ming Dynasties.[xi]
Main reasons for Jingdezhen's outstanding achievements in traditional porcelain- making were:
1. A careful division of labor. The process from clay to a finished product involved the participation of 72 people. Because of the careful division of labor, workers became very skillful through long time practice.
2. Traditional respect for teachers and deep concern for artists’ morality. In Jingdezhen, "Master" was the most common form of address.
3. An environment of orderly competitions between official kilns and folk kilns brought improved technology.
4. A tradition of improvement. The porcelain-makers of Jingdezhen were so good at learning from others that they absorbed advanced porcelain-making techniques from other parts of the country, and from abroad, and made their own innovations and advancements.
In the real world, the right thing never happens in the right place and the right time. It is the job of journalists and historians to make it appear that it has.
Mark Twain
Please address any questions or comments to: Mark.Tesla2@gmail.com
Copyright 2008 - Mark Warren
[i] From an interview with Charles N. Wheeler, Chicago Tribune - May 25, 1916
[ii] The Evolution of a Manufacturing System at Toyota, Takahiro Fujimoto, pg 4
[iii] The Japanese Automobile Industry, Michael Cusumano, pg. xvii.
[iv] The Black Swan: The Impact of the Highly Improbable and Fooled by Randomness
[v] Chase, Chance, & Creativity: The lucky art of novelty, James H. Austin. Columbia Press, New York, 1977
[vi] From the American System to Mass Production, David Hounshell, pg 220
[vii] “Information is Not Knowledge” - Much of the knowledge relevant to economic activity may be defined as an integrated and articulated ability to utilize information in ways that are generative and adaptive. A person who has knowledge is capable of generating both new information and new knowledge from their pre-existing knowledge. (This is a key to Toyota’s development – the absorption cycle actually generated new knowledge.) It is also a characteristic of having knowledge that a person’s knowledge generating capabilities adapt both to the receipt of new information and to the feedback provided by the generative process of using that knowledge. A serious definition of knowledge, and the one offered here is only one example of such a definition, must encompass the fact that knowledge cannot, itself, be directly exchanged. If such an exchange were possible, the problems of learning and education, as well as many other processes designed to reproduce knowledge, would be enormously simplified.” “It would seem quite reasonable to conclude from these observations that knowledge is derived from information exchange. When we ask individuals to demonstrate their knowledge through examination or the solving of problems, however, we find markedly different results among individuals.” “Knowledge and Learning in the Information Age”; W. Edward Steinmueller, 2000
[viii] Walter Shewhart is the originator of the PDCA concept. (Some think that PDCA means “Please Don’t Change Anything”)
[ix] Networked Machinists: High-Technology Industries in Antebellum America, 2006. David R. Meyer – interesting reference book covering the migration of talent between numerous industries in early America.
Ingenious Yankees: The Rise of the American System of Manufactures in the Private Sector, 1990. Donald Robert Hoke – another history of early American industrial development.
[x] From the American System of Manufacture to Mass Production, 1800-1932, 1984. David Hounshell – this is the definitive work cataloguing a number of early American industries.
[xi] http://www.jingdezhen.gov.cn/en/museum/wenhua2.asp - The China Dream: The Quest for the Last Great Untapped Market on Earth, Joe Studwell, 2002 – pg 12, Economic thinker Adam Smith’s description of the division of labour in the Wealth of Nations was influenced by what he had read of the division of labour in Chinese porcelain production.” This account of the porcelain manufacturing predates Adam Smith’s publication by more than 20 years.
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