Book Review — The Machine That Changed The World
The full title of the book written by By James P. Womack, Daniel T. Jones, and Daniel Roos is “The Machine That Changed the World: The Story of Lean Production — Toyota’s Secret Weapon in the Global Car Wars That Is Revolutionizing World Industry”. This book has been in print since 1990 and is a mainstay amongst business books like: The Goal by Goldratt or The Game of Work by Coonradt.
The car market is an important market to study; cars and trucks account for ~15% of personal consumption in North America, Europe, and Japan. The new car market is worth more than $300 billion per year in the United States. The authors of The Machine That Changed The World use empirical data and vast research to create their thesis that is well described in the following excerpt:
Our conclusion is simple: Lean production is a superior way for humans to make things. It provides better products in wider variety at lower cost. Equally important, it provides more challenging and fulfilling work for employees at every level, from the factory to headquarters. It follows that the whole world should adopt lean production, and as quickly as possible. — Page 231 The Machine That Changed the World
The book does a fantastic job capturing the history of mass production starting in America and Henry Ford’s invention of the assembly line and use of division of labor concepts. To fully understand and chronical the maturation process of manufacturing in the 20th century you have to understand the global advancements from countries such as South Korea and Japan via their utilization of lean processes and methodologies. The authors note in the afterword written in 2007 there have been many changes and updates beyond the initial findings since 1990. That is much a disclaimer to say that much has happened since the writing of the book, yet much of the book still holds true.
Some of the notable concepts from the book:
First, there is a Japanese banking system called keiretsu. The keiretsu is a model in which private companies sell equity to each other, often without cash changing hands. Equity goes around in a circle in a manner in which capital can be allocated optimally and efficiently. Since capital is a finite resource, capital allocation is an extremely important factor within, and across, any business and industry.
Second, lean principles allow auto manufactures to be more adaptable than their non-lean counterparts. This creates a increased adaptability to handle market shifts or to serve market niches. The idea is that a Global Company, one that purely exports from it’s own origin country has less options than a Post-National Company (fig. 8.4 left). A company who has a footprint across the globe and can import or export from several origins or destinations and is more agile in their ability to meet changes or shifts in the market. In this concept a distributed network is stronger than a concentrated network. This can be an important concept to balance when scale is important, investment is high, and investment is often a barrier to entering a market or strategy.
Consider the example of German luxury cars sold as taxis in Germany to create a volume base for their manufacturers, but sold in North America and Japan at much lower volumes and much higher prices as luxury goods. Similarly, Honda has recently pocketed healthy profits by exporting its Accord coupe, built and sold in the United States at high volume, as a much more luxurious, limited-volume product for the Japanese market. — Page 210 The Machine That Changed the World
Supplier Management within the lean process is very different from the litigious and contractual relationship most common in the American business. An example of this is how Toyota employs the Five Why’s. The five why process is fairly simple you drill down to a root cause by asking “Why?” five times. Then, once a counter-measure is apparent, you follow it through for prevention. This process requires collaboration with the supplier and assembler. Both parties are essential to perform a robust root cause analysis to trace the ultimate cause of a defect and ensure resolution. In this process root cause is established and preventative steps are taken, but more importantly, the five why’s promote learning and understanding for the future. Both parties can build upon the learning and understating that occurs through such a collaborative relationship-dynamic; a relationship that spans decades or longer and does not sunset at the end of a product’s lifecycle. The supplier vendor relationship in a lean framework is one that is not managed on pure cost. A scoring system is normal and value is given to quality, cost, and other important factors. It is a joint and balanced scorecard with joint accountabilities.
Lastly, the process that is used to introduce innovation for any organization is extremely important. Innovation is a resource draining activity. Innovation requires an organization or group of people to break the normal inertia that is both a law of physics and law of human behavior. Because innovation is such a resource draining activity it is critical that the approach to innovation is thoughtful. The lean approach to innovation can be summed up in the phrase design to value. The innovation process within lean production starts with a Shusa, or Chief Engineer, who assembles a team from various parts of the company. These team members report into the Shusa which is in contrast to non-lean, or Western companies, who have a dotted line to a leader or are on-loan to a project. In the design to value methodology you have to determine design trade-offs. Design trade-offs can be summarized as making a judgment when the following question is asked:
When does it make sense to sacrifice for the sake of design or feature at the expense of cost, form, or function.
Within a lean design team this question is tackled free from politics and/or power dynamics. With a lean mindset this question evokes responses from an origin of joint accountability, transparency, and shared understanding. I find the lean approach to be very thoughtful and best in class approach for reaching optimized outcomes for capital, adaptability, supplier management and innovation.
The book does not provide a guidebook for transitioning to lean. It is meant more to sell the idea. The authors explicitly acknowledge that there are other resources for implementation but it does discuss some of the impacts of implementing lean. One of the impacts is to the labor force. The excerpt below pairs well with a previous book review I performed on Range. In Range David Epstein explains Why Generalist Triumph in Specialized World, that also happens to be the title of the book. The authors of The Machine That Changed The World bolster some of Epstein’s arguments.
However, as we saw, for the lean-production system to succeed it needs dedicated generalists willing to learn many skills and apply them in a team setting. The problem, as we also noted in Chapter 5, is that brilliant team play qualifies workers for more and better play on the same team but makes it progressively harder to leave. So a danger exists that employees who feel trapped in lean organizations will hold back their knowledge or even actively sabotage the system. Western companies, if they are to become lean. will need to think far more carefully about personnel systems and career paths than we believe any have to date. — Page 258 The Machine That Changed the World
In summary I thought the book was phenomenal but I would like to offer one counterpoint. With serial and linked processes within a highly variable and interdependent network — one failure or constraint can have ripple effects. Fault tolerance and management of fault tolerance is critical to any design of a system. Too often I see lean reducing inventories and not allowing for the slack necessary for extraordinary events like a pandemic or extreme labor shortages or any of the contributing issues to the supply disruptions we are experiencing presently. While the lean mindset is an excellent framework it gets a bad reputation because it focuses heavily on inventory or cost reductions and less on creating slack or capacities for what-if scenarios. What is the right answer, lean or something else?