The mass-production system spread from the auto industry to other industries and became the unchallenged stan-dard around the world for how best to conduct the affairs of business and commerce. While the “American metho-d” was enjoying an unqualified success in world markets in the 1950s, a Japanese auto company, struggling to re-cover from World War II, began experimenting with a new approach to production—one whose operating assumpti-ons were as different from those of mass production as the latter was from the earlier craft methods of productio-n. The company was Toyota, and its new managerial process was called lean production.
The guiding principle behind lean production is to combine new management techniques with increasingly sophisti-cated machinery to produce more output with fewer resources and less labor. Lean production differs significantly from both craft and industrial production. In craft production, highly skilled workers, using hand tools, craft each pr-oduct to the design specifications of the buyer. Items are made one at a time. In mass production, “skilled profes-sionals . . . design products made by unskilled or semi-skilled workers tending expensive, single purpose machine-s. These turn out standardized products in very high volume.”^^ In mass production the machinery is so expensive that downtime has to be avoided at all costs. As a result management adds “buffers” in the form of extra invento-ry and workers to make sure of not running out of inputs or slowing down the production flow. Finally, the high cost of investment in machinery precludes quick retooling for new product designs. The customer benefits from ch-eap prices but at the expense of variety.
Lean production, in contrast, “combines the advantage of craft and mass production, while avoiding the high cost of the former and the rigidity of the latter.”^^ To meet these production objectives, management brings together teams of multiskilled workers at every level of the organization to work alongside automated machines, producing high volumes of goods with a great degree of variety to choose from. Lean production is “lean,” say Womack, Jo-nes, and Roos, because “It uses less of everything compared with mass production— half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new product in half the time. Also, it requires keeping far less than half the needed inventory on site, results in many fewer defects, and produces a greater and ever growing variety of products.”^^
The Japanese form of lean production starts by doing away with the traditional managerial hierarchy and replacing it with multiskilled teams that work together at the point of production. In the Japanese lean factory, design engin-eers, computer programmers, and factory workers interact face-to-face, sharing ideas and implementing joint decisi-ons directly on the factory floor. The classical Taylor model of scientific management, which favored the separation of mental from physical labor and the retention of all decision making in the hands of management, is abandoned in favor of a cooperative team approach designed to harness the full mental capabilities and work experience of everyone involved in the process of making an automobile. For example, in the older mass-production model, res-earch and development is separated from the factory and housed in a laboratory. Scientists and engineers design new models and the machinery to produce them in the laboratory and then introduce the changes to the factory floor along with a complete set of detailed instructions and schedules for mass producing the product. Under the new system of lean production, the factory floor becomes in effect the research and development laboratory, a pl-ace where the combined expertise of everyone in the production process is utilized to make “continual improveme-nts” and refinements in the production process and the final product.
Workers from every department are even invited to take part in the design of new cars, a process always under the tight control of an engineering elite in the older U.S. auto companies. Concurrent engineering, as it has come to be known, is based on the principle that everyone affected by the design, scale-up, production, distribution, ma-rketing, and sales of a new automobile should participate as early as possible in the development of a new car to ensure that each departments specific needs and requirements are taken into consideration and to help pinpoint potential trouble spots before full-scale production is set. Studies over the years suggest that up to 75 percent of a products cost is determined at the conceptual stage. A delay of just six months in getting a new product to ma-rket can cut profits by up to 33 percent.^® Japanese companies have found that by including everyone in at the design stage, crucial bottom-line costs can be held to a minimum.
The notion of continual improvement is called kaizen and is considered the key to the success of Japanese produ-ction methods. Unlike the older American model, in which innovations are made infrequently and often in a single changeover, the Japanese production system is set up to encourage continued change and improvement as part of day-to-day operations. To achieve kaizen, management harnesses the collective experience of all of its wo-rkers and places value on joint problem-solving.
Work teams on the factory floor are given much greater latitude over the production process. If a machine breaks down or a line slows, the workers themselves often repair the equipment and clear any bottlenecks in the proces-s—a far different approach than that of the Detroit auto manufacturers, where machine breakdowns require notific-ation of supervisors, who, in turn, summon technicians to the floor to fix the equipment. The result is far fewer br-eakdowns and a more smoothly running line because the workers closest to the production process are better pre-pared to anticipate problems, and when they do come up, resolve them quickly and efficiently. Again, the data is telling. According to a study conducted by James Harbour on the automotive industry, U.S. equipment was inoper-ative more than 50 percent of the time while machines in Japanese auto factories were down less than 15 perce-nt of the time.^^
The team-based model of work creates greater efficiencies by encouraging the development of multiskilled workers. Being well versed in a number of tasks on the production floor gives individual workers a far better understanding of the overall manufacturing process—knowledge that can be used effectively within team settings to pinpoint pro-blems and make suggestions for improvements. To assist workers in seeing how their work fits into the larger pro-duction process, Japanese companies provide employees with access to all computerized information generated wi-thin the company. One Japanese manager explained the importance his company attached to sharing information with w^orkers: “One of our most important jobs is to make all of our employees willing to cooperate fully, and to make them want to continually improve themselves. To achie\’e this, it is necessary for us to provide all kinds of information equally to everyone. . . . Every employee has the right of access to ‘all’ computerized information with-in the company.”^^
Unlike the older corporate model of management, where decision making is continually being pushed up higher on the managerial hierarchy, the Japanese teamwork model attempts to push decisionmaking authority as far down the managerial ladder as possible so as to be closer to the point of production. This creates a more egalitarian atmosphere v\1thin the factory and far less friction betw^een management and workers. In most Japanese autom-otive factories, workers and management share a common cafeteria and parking lot. Managers as well as workers wear company uniforms. To encourage further openness and a closer working relationship, manag-ers sit at open desks on the factory floor next to the production facility. Because most managers are recruited dir-ectly from the workforce, they are far more likely to understand the special needs of the employees in their work teams and better prepared to cement strong personal bonds with members of their work teams. In the Japanese system workers even meet in special ^’quality circles” before or after regular work hours to discuss improvements in the production process. In a recent survey, 76 percent of Japanese workers were found to take part in quality circles. ^^
The Japanese production model also places a high priority on what is called “just-in-time” production, or stockless production. The idea behind just-in-time came from a visit to the United States by Taiichi Ohno of Toyota Motors in the 1950s. Ohno was far more impressed with Americas giant supermarkets than with its automotive plants. He later recounted his surprise at the speed and efficiency by which the supermarkets kept shelves stocked with exa-ctly the products customers desired in just the amount needed: “A supermarket is where a customer can get (1) what is needed, (2) at the time needed, (3) in the amount needed. . . . We hoped that this would help us appro-ach our just-in-time goal and, in 1953, we actually applied the system in our machine shop at the main plant.”^^
Womack, Jones, and Roos tell of being stunned by the difference in physical appearance on the factory floor at a General Motors plant they visited in Framingham, Massachusetts, and a Toyota plant in Japan. At the General Motors facility, parts of the production line were down, workers were milling around with nothing to do, weeks’ wor-th of inventory were piled up in the aisles, and trash cans were filled with defective parts. In stark contrast, at the Toyota plant the aisles were clear and “the workers were all at their workstations performing their tasks. No works-tation had more than an hours worth of inventory piled up. As soon as defective parts were discovered they were immediately tagged and sent off to a quality control center for replacement.”^^
The American manufacturing philosophy is based on “just-incase” production. Automobile manufacturers store large and redundant inventories of materials and equipment along the entire production line in anticipation of having to replace defective parts or faulty equipment. This process is viewed by Japanese management as costly and unne-cessary. The Japanese system of just-in-time production is based on exacting standards of quality control and cris-is management designed to ferret out potential problems before tlie>’ force a major breakdoNMi in tlie production process.
The radical differences in production philosoph\- at General Motors and To>ota showed up in tlie bottom-line figur-es for botii companies. In a MIT stud\ of die t\\ o plants, researchers found diat at the Toyota facilit>’, Tt took 16 hours to build a car in 4.8 square feet of work space per \ehicle per \ean with .45 defects per car At GM-Framin-gham it took nearh diirt\ -one hours in S.15 square feet widi 1.3 defects.”^^ To>ota was able to build a car quick-er, in less space, with fewer defects, and with half die labor
In recent \ears. Japanese manufacturers ha\e combined the new lean-management techniques widi increasingh so-phisticated computer and odier information technologies to create die “factor) oi tlie future”—automated production facilities \\i\h few workers, which more iiearK’ resemble a laborator\ dian a factor>. Social scientists Martin Keiiney and Richard Florida talk of die new lean factories tliat are more cerebral diaii physical in appearance: “Under past fonns of industrial production, including mass-production Fordism, much of work was pliNsical. . . . The emergence of digitization increases die importance of abstract intelligence in production cUid dius requires diat workers acti\el\- undertake what were pre\iousl\ diought of as intellectual activities. In diis new emironment. workers are no longer covered widi grease and sweat, because die factor) increasingh resembles a laboratorv for experimentation and te-chnical ad\ :mce.”^’^
The operating assumptions of lean management, widi dieii strong emphasis on “process” radier diaii “stnicture iiiid function.” made Japanese manufacturers idealK” suited to take advantage of tlie new computer-based infoniiation technologies.

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