The Difference Between Improving and Perfecting Your Manufacturing Business

Detroit scoffed at the continuous, incremental improvements of the Japanese—what they call kaizen—which includes Six Sigma, integrated, lean manufacturing, and just-in-time production. Instead, the Americans favored large, one-time improvements.

We all know the result for Detroit, but what we don’t fully appreciate is that Japan’s success was more than a collection of manufacturing techniques. Only now are we beginning to understand that Japan’s ascendance began in their workers’ minds, not their hands.

Japan’s goal of perfection was a matter of seeing, not doing. Only by looking at car making in a new way could the Japanese produce superior vehicles. Taiichi Ohno, the Toyota executive credited with creating this new way, clearly stated it:

“All we are doing is looking at the timeline, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the timeline by reducing the non-value adding wastes.”

Ohno would draw a circle beside a bottleneck area on the assembly line and require executives to stand in it all day. As the hours passed, they began to really see, and understand, the problem.

This is a cognitive challenge. See differently, and you can do differently. Close observation reveals the ‘muda’, or waste, in every part and every assembly step. Americans, on the other hand, looked for errors with statistical sampling. Good enough, but less than perfect.

As a result, American car makers were the last to realize that their cars were inferior. Meanwhile, the Japanese were imagining cars with zero defects. It was a competition of perceptions.

The Americans assumed that car manufacturing was a mature, exhaustively improved industry. And it was. Who would think to go hunting for overlooked value in a developed, tapped out business? It’s like fracking in depleted oil fields—a wholly new concept of recovering petroleum.

Meanwhile, U.S. autoworkers were accustomed to correcting the same errors over and over. They saw this as part of their job. They were satisfying customers, boosting sales, and preserving revenue. They considered this activity valuable, even virtuous.

Conversely, Japanese workers looked at errors as valuable opportunities to eliminate waste. Their leaders developed multiple categories and hierarchies of waste. With such checklists, the Japanese sharpened the perceptions of workers, suppliers and management.

They took a concept—waste—and treated it like a product. For it, they created catalogs, descriptions and bills of material. Their approach was almost identical to what Detroit did for, say, carburetors. This removed the subjectivity inherent in the conventional perception, terminology and prioritization of waste. Everyone could now be more closely aligned.

This new perception of waste creates what I call “cognitive business value.” Taiichi Ohno took it to the bank, and so can executives in any industry, because it’s not exclusively about manufacturing.

While Americans relied on best practices, the Japanese succeeded with best perceptions.