Episode 151 - Quality Circles

Hi, I’m David Veech and this is Elevate your performance.

Let’s talk about Quality Circles; also known as Quality Control Circles or QC Circles.

Quality circles are small groups of employees with cross-functional skills who work together on a problem in the workplace to learn how to solve problems.

This is my definition based on my understanding of the INTENT of quality circles programs at Toyota and Honda.

The key outcome for quality circles is not the solution to the problem, but on having people learn, understand, and use the key problem solving process.  They of course learn by doing, so the solution is the gravy to the meat and potatoes of LEARNING.

I heard a story a long time ago about the birth of Quality Circles.  Let me remind you that Deming initiated the quality movement in Japan in the 1950s through his lecturing with the Japanese Union of Scientists and Engineers.  

Sometime in the mid to late 50s, after Deming had taught another group of managers and engineers the basics of Statistical Quality Control, someone is said to have asked him repeatedly about ways to get more employees involved in solving problems.  

The story says that Deming made a short, off the cuff remark about pulling a group of employees together after they’ve experienced a problem and have them stand in a circle to discuss and solve their own problems instead of calling someone else.

This informal, off-the-cuff comment sparked another movement in Japan that included a series of local, regional, and national QC-Circle conferences where workers who solved a problem through a QC circle would present their findings to an audience of peers, who would then select certain ones for awards and celebrations.

Joseph Juran, a contemporary of Deming’s, wrote several articles on Quality Circles in the mid-1960s, published in Quality Digest and other similar publications in the United States.  All of these were completely ignored, of course, until the 80’s when everything Japanese was duplicated, or at least we tried to duplicate.

I was in Grad School at Clemson in 1991 researching production systems when I first learned about Quality Circles.  I was studying self-directed work teams, but quality circles kept coming up in my research and my discussions with managers.  

A lot of companies tried to install Quality Circles programs in the 80s and 90s.  But as we are wont to do here, we usually mandated that every employee be assigned to a Quality Circle, and they would meet once a week and solve problems to save the company money.

This attitude had to come from Juran’s articles that said Japanese companies who participated in all these Quality Circles conferences reported saving about $10 Million annually through the programs.  

US companies wanted that $10 million bucks and missed the whole point about people volunteering, once a problem had occurred, and that other people would be recruited to join the circle with the full support of the company.  

Needless to say, most efforts in the US failed.  

I started studying quality circles at Toyota after I joined the University of Kentucky faculty in 2001.  Toyota maintained about 150 to 170 active quality circles at any given time.  They reported saving about $10 million from these efforts - a surprisingly consistent number.  

I discovered similar findings at Honda’s facility in Marysville, Ohio when I served on the board of IdeasAmerica.

I found this so cool that I wrote about creating circles in my book Leadersights.  Here, though, I called them Learning Circles in an effort to get the focus on developing people.  

I hope you’ll pick it up, read it and give it a try.  When you do, call me.  I’d love to help make your system more successful.

I hope you’re finding these videos helpful.  

Please like, comment, share, and subscribe to let me know!

Have a great day and I’ll see you next time.

Episode 150 - Deming

Hi, I’m David Veech and this is Elevate your performance.

Last week, I introduced the birth of the Quality Movement which followed W. Edwards Deming’s series of lectures with the Japanese Union of Scientists and Engineers in 1950.

Today, I want to tease out a few more details about Deming, and make the controversial point that PDCA is NOT an effective problem solving methodology.  It’s great for product development and for continuous improvements, but not specifically for everyday problem solving.

I don’t claim to be a Deming expert.  My friend Mark Graban has a far greater understanding of Deming and his key contributions.  Much of what I will share here today came from an article published in Quality Progress in November 2010 by Ronald D. Moen and Clifford L. Norman.  I’ll paste the link in the description box.  http://www.apiweb.org/circling-back.pdf

I have to start the Deming story with Walter Shewhart.  Shewhart earned his doctorate in physics from Berkeley in 1917 and joined Western Electric’s Inspection Engineering Department at the Hawthorne Works in 1918.  You can learn a little more about AT&T, Bell Labs, and Western Electric in my video episodes 134 and 135.

Deming earned his doctorate in mathematical physics from Yale in 1928.  This is around the time when Deming discovered Shewhart’s work and wanted to apply his statistical quality control principles to non-manufacturing processes.  Apparently, they built a close relationship.  In 1939, Deming served as editor for Shewhart’s book 

“Statistical Method from the Viewpoint of Quality Control.”  This is where the “Shewhart Cycle” first appeared, thanks to Deming.  

This 3 step cycle consisted of “Specification - Production - Inspection” but what made it different was that Shewhart insisted that this was circular, not linear as in most production systems.  As Deming continued to evolve Shewhart’s work for non-manufacturing processes, he joined the US Census Bureau and applied his theories there.  

Deming's refined 4-step cycle included "Design – Produce – Sell (Get to market) – Redesign through Market Research.” Deming made this modification in Japan in 1950, at a meeting of the Japanese Union of Scientists and Engineers (JUSE).

It was JUSE who relabeled the steps as Plan - Do - Check - Act and published this widely through Japan.  I don’t know if this was a “lost in translation” thing, or an effort by JUSE to simplify the language, but Deming called this “the corruption.”

Deming eventually warmed to the idea, but insisted that Check was insufficient for a learning cycle and focused instead of Study, giving us the PDSA cycle.  

Toyota still uses PDCA as their main thinking process - to drive continuous improvement.  For problem solving, they built their 7-step problem solving process around the PDCA cycle but had to add more descriptions.

I taught PDCA for years and everyone always struggled with the Plan part.  That’s mainly why I think PDCA is an Launch Cycle and an Improvement Cycle, not a problem-solving cycle to tackle everyday problems.  With lots of help, I created the C4 process to focus directly on problem solving with 4 key steps:  Concern, where you focus on finding, understanding, defining, and breaking down a problem; Cause, where you find the root causes; Countermeasure, where you take action to correct the problem at its root cause; and Confirm, where you study the result, learn, and celebrate.

Here’s what I want you to be thinking about:  Japan initiated their quality focus in the 1950’s.  I grew up in the 60’s and Japanese products were cheap crap.  In the 70’s, Japanese products were cheap, but they were no longer crap, particularly with electronics.  

By the mid 80’s, US Electronics and Automobile manufacturers were collapsing under the onslaught of high-quality, affordable Japanese products.   Thanks to an old NBC News documentary called “If Japan can, why can’t we?” America “discovered” Deming and launched our own quality revolution in the 80s.

The Quality movement in Japan took 30 years to shake the market.  It was a generational change.  Lean is also a generational change.  It will not succeed if we decide to focus on “implementation” of our favorite parts and ignore the rest; or if we change initiatives with every new leader.

Next up, I have a few stories about Deming, Juran, and the Quality Circles movement of the 1960s in Japan.  Subscribe, like, and comment!

Have a great day and I’ll see you next time.

Episode 149 - The Quality Movement

I’m David Veech and this is Elevate Your Performance.

I’ve been making my way through the history of events and people who have shaped Toyota, enabling them to become the great company they are.

It started with Sakichi Toyoda, who’s known in Japan as the King of Inventors.  His Automatic Loom changed the game for the textile industry and provided seed money to start the Toyota Motor Company.

Sakichi’s son, Kiichiro and nephew, Risaburo focused on the passenger car business, first with an Automotive Division within the Toyoda Automatic Loom Works and later as the Toyota Motor Company.  They struggled to reengineer cars and engines from Ford, General Motors, and Chrysler.

Japan’s government asked them to design and build a truck for the military, which they did throughout World War II.  After the war, Kiichiro wanted to get back into the passenger car business as soon as possible, but the restrictions of the occupation government prevented them from achieving his goal of catching the Americans in 3 years.

Before I get too far away from the Automatic Loom Works, I want to point out that in 1949, an engineer from Toyoda Boshuku, named Taiichi Ono was promoted to General Manager of the Koromo Plant Machining Plant.  This facility integrated the engine and Powertrain plants.  Ono noticed that operators worked at a single machine, often just watching the machine as it ran.  The way that the automatic loom changed the game in textiles was instead of having one or more operators working each loom, now one operator could run a room full of looms, often up to 20.  Ono wanted to bring that practice to Koromo and initiated programs to add simple automation to machine tools so they could start and finish without human action, allowing one operator to work several machines.

1950 would turn out to be a significant year with labor disputes and turmoil, a tie-up agreement with Ford that allowed Eiji Toyoda to study their processes and facilities as well as those of dozens of other suppliers, and the Korean War, which actually hampered the Ford agreement and passenger car production.

Toyota did receive orders for 4,679 Model BM trucks to support the war and those orders stabilized the company financially.

In the late 1940’s, the United States sent representatives from the US Census Bureau to help prepare Japan for a 1950 census.  One of these representatives was W. Edwards Deming who had joined the Bureau in 1939 and applied statistical process control to their processes, significantly improving their productivity.

The Japanese Union of Scientists and Engineers invited Deming to speak at one of their conferences, and as a result, he lectured in Japan for ten years teaching statistical process control and total quality management to as many as 20,000.  JUSE named their top national quality prize after Deming in 1951.  The quality movement had officially begun.

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Have a great day and I'll see you tomorrow.

Episode 148 - Post-War Labor disputes in Japan

I'm David Veech and this is Elevate Your Performance

I've been focusing these past couple of months on the historical activities that got manufacturing and business to where we are today.

I've been focused on Toyota lately because of the impact they have had on bringing improved methods to our attention.  After all, they are the Poster Child for Lean Organizations.

When I first started teaching TPS and lean, I read everything I could get my hands on about Toyota and lean manufacturing.  I learned a ton, but I wasn't always diligent about keeping track of what source said what thing.

The delays I'm experiencing this month are all related to research.  I've been re-reading those older works primarily in an effort to validate the truth of what I've been teaching.  Sadly, I've also validated that some points I make in courses I teach are wrong, historically.  

These would be details like lifetime employment contracts in Japan.  I was taught (again, I was remiss in keeping track of the source) that Japanese companies were ordered to provide lifetime employment contracts to their employees as a result of labor disputes and protests in 1950.  

This week, after re-reading Eiji Toyoda's Fifty Years in Motion, Taiichi Ohno's Toyota Production System, and a scholarly research article on Japan's Lifetime Employment, here's what seems to have really happened.

In December 1948, the occupation government, known as SCAP for Supreme Command, Allied Powers in Japan, imposed austerity measures to bring inflation under control in Japan.  The biggest piece was known as the Dodge Line, named after Joseph Dodge, chairman of the Detroit bank and special ambassador and financial advisor to SCAP.  

These measures fixed prices on certain products like trucks and passenger cars, but not on others, like raw materials.  Many Japanese customers suffered as they lost jobs, or their profits vaporized.  

Their inability to collect installment payments for vehicles they sold drove Toyota Motor Company and many others to the brink of bankruptcy, requiring them to secure significant loans that came with strict conditions on the operations of the company.

As the economy grew more volatile, the union movement in Japan flourished.  Initially, this was encouraged by SCAP until they learned that the largest union was backed by the Communist Party.

To meet the regulatory requirements and to survive, Toyota was ordered to reduce its labor force, already relatively small compared to their pre-war staffing, by 1,600 staff.   Toyota offered early retirement buyouts, but also were forced to reduce wages across the board by 10%.  As a result, Toyota President Kiichiro Toyota resigned from the company, accepting responsibility for the turmoil.

The same was happening to other companies as well and the labor unions exploded with strikes, protests, and often violence. 

The most violent labor disputes in Japanese history took place between 1949 and 1954, involving major companies, such as Toshiba, Hitachi, Toyota, and Nissan.  The working days lost in 1952 alone reached unprecedented 15 million days involving 1.6 million workers.

Lifetime employment was never mandated by the state, but as a long-time philosophy of Japanese employers, this was a goal that most large companies held very dear.  Japanese workers, accustomed to this, were particularly devastated when the staff cuts were required by the economics of the Japanese Market, pushing them into the streets in protest.

According to Ohno, a key goal Kiichiro shared with Toyota leadership was that Toyota needed to catch up with the productive capability (if not the volume) of US passenger car manufacturers within 3 years of the end of the war.  

In 1950, Eiji went to the US to study the automobile industry.  When he returned, he said he was asked "how long until we catch up with Ford?" 

 He answered that Ford was not doing anything that Toyota didn't already know about, 

but it is very difficult to say how long when you consider that Toyota's passenger car output at the time was a mere 40 vehicles per month, while Ford was making over 8,000.

Next up we'll touch on the birth of the quality movement and how Toyota was able to respond to the 1973 oil crisis, which is the event that actually made people start studying how Toyota was doing things.

Have a great day and I'll see you soon.  Don't forget to subscribe!

Episode 147 - Kiichiro Toyoda's challenge to his team

I’m David Veech and this is Elevate your Performance.

Post WWII, Japan was under the control of the US Military.  Our objectives were to remove war-making capability from Japan, and to restore it’s economy so it can rejoin the world in open trade.

Dozens of measures were put in place that would freeze prices on most commodities, and remove subsidies the government had been paying for critical raw materials and resources like coal and iron.

These economic controls, along with breaking up of Holding Companies in an Anti-monopoly measure, had a devastating impact on Japanese manufacturers, and Toyota was no exception.  This move effectively stripped Toyota from its sales organization.  To keep people working, including the returning soldiers, Kiichiro launched several other businesses, from a chinaware franchise to fish paste, to clothing and dry cleaning. 

To relaunch the automobile business, Kiichiro first had to study what was happening elsewhere.  They had time, since Japan was not allowed to produce cars immediately after the war, and the volume of trucks and busses it was allowed to produce was too low to fuel any growth.  He sent people to the US and to Europe to study the post war automobile business and learned that they would need to improve productivity significantly to stay in that business.  His 4-point plan for recovery included:

1. In order to repair and renew machinery that has undergone heavy use or deteriorated, establish a Temporary Reconstruction Office to comprehensively promote the restoration of the plant's equipment.

2. Change the company's parts manufacturing policies to establish and develop a specialized parts plant equipped with independent capacity.

3. Implement improvement and remodeling of the company's vehicles (which was stagnant during the war), plans for design changes, and establishment of a system for the steady supply of previous model parts for repairs.

4. Change from a company that supplied and maintained automobiles under a controlled economy to establish a sales system that will better and more fully reflect users' wishes, requests and opinions.

The overwhelming concern Kiichiro expressed was toward the livelihood of his people.  His efforts to create work for people and to focus on food, clothing, and shelter, produced some moderate effect and some businesses that still linger - including a business that makes prefabricated components for concrete houses.

All this effort still nearly failed completely when the Dodge Line came into effect in Japan.  This strict austerity initiative to control spiraling inflation, sparked a deflationary trend that resulted in some devastating decisions Kiichiro would have to make.  

More on that when I see you tomorrow.

Episode 146 - Training Within Industry

I’m David Veech and this is elevate your performance.

Sorry about the long break.  I had knee replacement surgery for my left knee and the recovery isn’t going as smoothly as I’d like.  It’s going well, but I’m in a hurry and some things you just can’t rush along.

Before the break, I’d been talking about Toyota.  I shared a little about their founding and growth and I want to complete that picture now with a few additional stories.

During World War II in the United States, the War Department created the Defense Production Board to monitor the production of military equipment and supplies.  With so many men volunteering for military service early on, and the draft a little later on, a consistent problem was quality because new workers lacked the skill necessary.

To counter this problem, they created the Training Within Industry program.  This program had 3 key components:  Job Relations, Job Instruction, and Job Methods.  Job relations taught leaders how to interact with employees.  Job instruction taught supervisors how to teach the work techniques to employees.  Job methods taught supervisors how to engage the employees in improving the way they did the work.

These were built on sound principles of educational psychology and were scripted so the teaching was consistent.  It was very effective.

After the war, we provided all the TWI documentation to Japanese industries as part of our reconstruction effort.  At home, companies were rehiring their former employees as they returned from the war.  Since they all knew the work before the war, the figured there wasn’t a real need to keep the program and so it faded into oblivion.

Japan, however, made good use of those materials and continues to use the methodology.  In the late 80’s, as manufacturers in the US were scrambling to learn all they could about Japanese Management Techniques, we rediscovered TWI and it has since become a movement of it’s own.  

I’ll talk about some details of the program in a couple of future episodes.  This week we’ll cover Kiichiro’s challenge to his manufacturing team, a period of labor unrest in the early 50s, some lessons from Deming and Juran, how Toyota weathered the oil crisis in 1973, and the growth of their business in the United States.

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Have a great day and I’ll see you tomorrow.

Episode 143 - Toyota in World War II

I’m David Veech and this is Elevate Your Performance

Best of intentions - I wanted to get back to daily production of these, but there are so many other things going on that I can’t seem to make the time to finish the research necessary to make these historical posts.  

I have been teaching a historical timeline for years.  These are all things that drove Toyota to create the systems  they created.  I point these out to tell people that applying lean thinking doesn’t mean you have to be exceptionally creative or innovative.  Toyota did the things they did out of necessity rather than innovation.  From the start, Toyota copied parts for Ford trucks and Chevrolet cars, but out of necessity built a system for delivering materials Just-In-Time using a Kanban system.

Access to raw materials and the industrial capacity to convert them into useful products is the winner of wars - This is what feeds the size and strength of the military.  This is what won the US Civil War, World War II, and the Cold War.  

Raw materials have always been Japan’s Achille’s Heel.  Raw materials drove Japanese colonialism in the 19th century.  The first Sino-Japanese war, which was 1894-95, was fought in Korea, with China losing badly.  As a result, Japan gained control of the Korean Peninsula, Taiwan, and the Liaodong Peninsula, which is where Shanghai sits.  This is where Sakichi Toyoda built a large plant to manufacture his automatic looms that I mentioned in episode 141.   

As Japan’s industries grew in the late 20s, materials ran short, so in 1931 Japan invaded Manchuria.  As China began to shift from provincial to National governance, Chinese tolerance with Japan’s interference vaporized and in 1937, Japan provoked China to war.  The Nationalist Chinese put up a strong resistance, drawing more and more resources from Japan.  Japanese atrocities from this war turned other nations in the region solidly against Japan and led to US embargoes of Japanese goods and eliminated US exports to Japan.  

Japan’s steel industry was small and dependent upon scrap metal from the US as it’s main raw materials, producing questionable quality in sheet steel needed for cars.  Toyota built it’s own steel mill but output from this was low.  When Japan nationalized for World War II, all raw materials were stockpiled by the military, which assigned them to companies to fulfill orders for trucks, airplanes, and ships.  

The peak production of trucks for Toyota occurred in December 1941, when they built about 2,000 trucks.  Because of scarcity of raw materials and constant reduction in manpower as men were called to the front lines to fight, their production levels continued to remain low. (From Eiji Toyoda’s Autobiography, Fifty Years in Motion.1985)

Toyota made it through the war largely undamaged.  One plant had been hit in a bombing run on August 14, 1945, just one week after Nagasaki had been destroyed with our second atomic bomb.  Toyota City was targeted for August 21 with a conventional bombing raid designed to reduce the entire facility to rubble.  But with the Japanese surrender on August 15, the war ended.

In the next episode, I’ll talk about peak production in the US during the war.  This was the truest lean production since the assembly line.  I’ll explain how we got there with a bunch of workers who had never worked in factories before.

Don’t forget to subscribe to my mailing list and my YouTube channel.  Connect with me on LinkedIn as well.  

Have a great day and I’ll see you tomorrow.

For more, see: 

1) https://slate.com/human-interest/2014/07/what-prompted-japan-s-aggression-before-and-during-world-war-ii.html 

2) https://www.toyota-industries.com/company/history/toyoda_sakichi/ 

3) https://www.toyota-global.com/company/history_of_toyota/75years/text/index.html

4) Toyoda, Eiji (1985), Toyota, Fifty years in motion

Episode 142 - Timelines for Toyota - Part 2

I'm David Veech and this is Elevate your performance.

With Sakichi Toyoda's death in 1930, his Son Kiichiro and nephew Risaburo were left to run his businesses.  As a result of a great earthquake in 1923, which destroyed significant pieces of Japan's railways, demand for automobiles soared.

Ford built a plant in Yokohama in December 1924, beginning production in March of 1925.  In 1927, General Motors began assembly operations in their plant in Osaka.  The surge of vehicles produced by these two plants effectively destroyed Japan's domestic automobile makers at the time.

It wasn't until 1933 that Kiichiro established an Automotive Production Division within the Toyoda Automatic Loom Works.  It began prototyping parts and designs which were reverse-engineered from a 1934 Chrysler DeSoto and a Chevrolet Engine.  Kiichiro had to establish his own steelmaking department as well, because their expected demand from existing steel mills was too low.

They purchased some machines, and converted others from the Loom works to begin making parts.  Kiichiro also sent an engineer to the US from January to July of 1934 to learn more.  That engineer visited 130 plants, 7 research facilities, and 5 universities to study the automotive and machine tool industries.

The Japanese government asked Toyoda to develop a truck as well, so Kiichiro bought a 1934 Ford Truck to use as the model, similar to how he used the DeSoto as the model for their first car.  That first car, the Model A1, was finally finished in May 1935.  The first truck prototype, the G-1 was finished in November that year.  Both were prone to serious defects.

With promising developments in the domestic manufacturing capability, the Japanese government changed the licensing rules, restricting licenses to manufacturers owned by a majority of Japanese citizens, effectively restricting Ford and GM from continuing operations there.  This, despite low output of the 2 domestic manufacturers, Toyoda and Nissan.  By September 1936, Toyota's volume had grown to just 100 vehicles per month.

In 1936, Toyoda hosted a contest to design a new Logo for the company, and changed the name from Toyoda with a D to Toyota with a T, as Industry leaders recommended.  People submitted 27,000 entries with the winner announced in the October 10, 1936 issue of the Toyota News.

They established the Toyota Motor Company in August 1937 and saw their dealer network grow to 22 outlets.  These dealers became significant investors in the new company.

We'll pick up here tomorrow and talk about Japan's entry into World War II.

Give me some feedback.  Let me know what you'd like to know more about.  Post a comment or send me an email.

Have a great day and I'll see you tomorrow.

https://www.toyota-global.com/company/history_of_toyota/75years/text/index.html

Episode 140 - A little on Toyota

I’m David Veech and this is Elevate Your Performance.

I have been a lean teacher, coach, and consultant for over 20 years.  Lean is coupled closely with the Toyota Production System, often simply TPS.  Why?

That goes back to the mid-1980s when the US Auto Industry was struggling to retain market share in the face of a tsunami of imports from Europe, to some extent, and Japan in particular.  MIT launched a project called the International Motor Vehicle Program - IMVP - in 1985.  

The IMVP charter directed it to study not only the automobile industry, but also “…to go beyond conventional research to explore creative mechanisms for industry-government-university interaction on an international basis in order to understand the fundamental forces of industrial change and improve the policy-making process in dealing with change.”  

This quote is from “The Machine that Changed the World - The story of lean production:  How Japan’s secret weapon in the global auto wars will revolutionize western industry.”  The book was the report of the research from the IMVP.

Keep in mind that the IMVP was sponsored and funded by 136 separate companies, universities, and governments.  None was able to individually influence the research.  The researchers went in to study the systems in different companies with as few preconceived notions as possible for regular human beings.

Their analysis, reported in the book I just mentioned, highlighted the radically different approach employed by Toyota in producing automobiles, but also explained it in terms of principles that are universally applicable.  Any business can benefit by understanding the principles of lean production whether you're treating patients, selling insurance, running a supermarket, or even making coffee.

I will spend the next few videos sharing a little about the history of Toyota and how they got to be where they are, and how you can too.

If you need a boost to your lean transformation efforts, or if you recognize that your culture isn't delivering the results you need, maybe I can help.  Send me an email or give me a call.  The contact information is in my profile.

Make today the day you began a transformation to excellence and greatness.

Have a great day and I'll see you tomorrow.

Episode 141 - A brief timeline for Toyota - Part 1

The story of Toyota begins with Sakichi Toyoda who was born in 1867 and began his working life as a carpenter like his father.  

I heard a story once, though, about Sakichi's curiousity.  The story was that he once spent an entire day watching his neighbor's grandmother make a quilt.  In his search for meaningful work, he let the textile industry lead the way.  

What set Sakichi apart is that he wasn't content to be a regular worker.  He keenly observed the functioning of various machines, then set out to make them better.  He got his first patent in 1891 for the Toyoda Hand Loom.  

Through a variety of companies he started, he continued to research and create better and better spinning and weaving equipment.  In 1918, he established Toyoda Boshuku, or Toyoda Spinning and Weaving Company, Ltd. He built a huge plant in Shanghai in 1919 to manufacturer the automatic looms he invented.

In 1924, he completed the Type G Toyoda Automatic Loom that featured an automatic shuttle-changing mechanism, weft-break auto-stop and warp-break auto stop mechanisms and other devices to provide automation, protection, health, and safety.  In 1926, Sakichi incorporated the Toyoda Automatic Loom works to manufacture the Type G.

This loom caught the eye of the world and was licensed to Platt Brothers & Co. Ltd of England in 1929.  The money from this Patent Rights Transfer Agreement was used to launch the Toyota Motor Company.

Sakichi died in October 1930, leaving behind 8 Toyoda companies employing more than 13,000 workers.  Toyota's first set of guiding principles were derived from Sakichi Toyoda's working philosophy and consisted of these 5 points.

1. Always be faithful  to your duties, thereby contributing to the Company and to the overall good.

2. Always be studious and creative, striving to stay ahead of the times.

3. Always be practical and avoid frivolousness.

4. Always strive to build a homelike atmosphere at work that is warm and friendly.

5. Always have respect for God and remember to be grateful at all times.

Simple guidelines are always best.  What about you and your company?  What are your guiding principles?

We'll continue on Toyota timeline over the next few days.  Let me know your questions and I'll do my best to answer them.

Have a great day and I'll see you tomorrow.

Episode 135 - The Telephone

I’m David Veech and this is Elevate Your Performance.

We’ve been looking at the historical progression from craft manufacturing to mass manufacturing and ultimately to lean manufacturing, and drawing connections to a variety of technology - and demand - issues that forced so many of these decisions.

Last time, we discussed the telegraph and the birth of Western Union.  Today, I want to share some discoveries about the telephone and the founding and growth of the American Telephone and Telegraph Company.  Within that story, we want to discover the birth and contributions of Bell Labs for research and development of new technologies, and Western Electric for the manufacturing of those new products and innovation in manufacturing processes.

Western Electric grew from a small shop in Cleveland, first acquired in 1856 by George Shawk to produce telegraph parts.  He partnered with Enos Barton, then sold his own shares to Elisha Gray around 1870.  Elisha Gray was working on a technology to transmit voices over telegraph wires.  Gray and Barton moved the business to Chicago in 1872 and incorporated under the name of Western Electric Manufacturing Company.

Alexander Graham Bell gets credit for inventing the telephone, making it work in 1876 with the now famous line “Mr. Watson, come here, I want to see you.”  This was three days after his patent was issued on March 7, 1876 despite a caveat being filed in the Patent Office by Elisha Gray in 1875, the same year Gray sold his rights to Western Electric to Western Union.

During the summer of 1876, Bell and Watson demonstrated the telephone to the rest of the world at the Centennial International Exposition in Philadelphia, alongside dozens of inventions that demonstrated the value of mass production.

Bell’s work had been funded by Thomas Sanders and Gardiner Greene Hubbard, the fathers of two pupils from his School of Vocal Physiology and Mechanics of Speech in Boston, where he taught deaf and mute children how to communicate.  Incidentally, one of his other students in 1872 was Helen Keller.

After Western Union refused to accept their offer to sell the telephone patent for $100,000, Sanders, Hubbard, and Bell incorporated the Bell Telephone Company in 1877.  In 1881, Bell Telephone Company acquired Western Electric and by 1886, over 150,000 telephones were in service.

As with every other invention of this magnitude, there were hundreds of claims contesting Bell’s patent, many from Western Union.  None was able to withstand the evidence and vigor brought by Bell Telephone, however, so the company continued to grow.

As lines expanded across the country, Bell’s management formed a new company to handle long distance, naming the company the American Telephone and Telegraph Company in 1885.  In 1899, in response to restrictive laws, the assets of Bell’s companies were consolidated under the AT&T banner, creating a monopoly called Bell System, affectionately known as Ma Bell.  

In 1905, they opened a new manufacturing facility in Cicero, Illinois and named it after the original name of the town - Hawthorne.  The Hawthorne Works became one of the largest single-site employers in the country, with over 45,000 employees at its heyday.  It also hosted dozens, if not hundreds of innovative studies in manufacturing processes and socio-technical systems, including the studies surrounding the famed Hawthorne Effect, which we’ll get to a little later.

More to follow!  I hope you stay with me as I try to keep up with these.  If you’d like to know more about how I use these history lessons to make practical improvements in today’s technology driven companies, book a call with me and let’s have a chat.  I’d be happy to hear about some of the problems you’re experiencing and how we might work together toward effective solutions.

Have a great day and I’ll see you tomorrow. 

134 - Communication Revolutions

I'm David Veech and this is Elevate Your Performance.

I intended to share some thoughts about the birth of aviation today, but I didn't want to neglect a very important late 19th century set of developments that rapidly accelerated the growth of the economy of the United States and fed a second industrial revolution that further enabled the success of Henry Ford and other automobile manufacturers at the dawn of the 20th century.

I hear a lot of talk today of disruptive technology.  But every useful technology has its own ability to disrupt the lives of people everywhere.  The one I want to focus on today is the telegraph.

Most of us are familiar with the name Samuel F. B. Morse.  He is the inventor of a particularly successful type of telegraph machine.  What's strange, though, is that up to this point in his life, he was an accomplished artist, having painted several portraits of prominent people in American history such as John Adams and the Marquis de LaFayette.

The story is interesting.  Apparently, while away from his Connecticut home, Morse received word, presumably through the Post Office, that his wife was gravely ill.  He immediately left to return home only to arrive well after his wife's death and burial.  The delay in receiving the message became a burning interest for him.

On a ship returning from Europe in 1832, Morse met Charles T. Jackson and shared conversations about electromagnetism and wire transmission signals.  From this encounter, Morse had the idea of the single-wire telegraph and got busy trying to make it work.  

Over the following few years, several inventors in Europe were developing telegraph machines and trying to figure out how to transmit signals over longer distances.  In 1837, working with Leonard Gale (a chemistry professor) and Alfred Vail (a wealthy and enthusiastic young man), Morse was finally able to array the right switches and relays to transmit a signal further than ten miles.

On January 11, 1838, they made their first public demonstration of the telegraph at the Speedwell Ironworks in Morristown, New Jersey to a small and mostly local crowd.  

Morse went to Washington DC  to try to get federal funding of a larger telegraph line, but it wasn't until 1843 that Congress granted funding of $30,000 to build a telegraph line from DC to Baltimore, Maryland, about 38 miles along the right-of-way of the Baltimore and Ohio Railroad - What Monopoly game fans will recognize as the B&O Railroad. 

On May 1, 1844, the first impressive demonstration occurred when the results of the Whig Party Convention in Baltimore were transmitted to the US Capitol.  Henry Clay was their nominee for president.  

The Official opening of the line was on May 24, 1844 when, in the presence of VIPs, Morse transmitted the words "What hath God wrought" from the Supreme Court chamber in the basement of the US Capitol building to the B&O's Mount Clare Station in Baltimore.

Morse received a patent in 1840 for the electric telegraph, and a second patent in 1846 for local circuits, but these were aggressively contested by several parties, despite being renewed in 1848.  It wasn't until a supreme court case - O'reilly v. Morse in 1853 that definitively identified Morse as the inventor granting full royalties and license fees owed in the interval...a sum of almost $2 million dollars.

Over 20 companies raced to string telegraph cable across the northeastern US and further west.  In 1852, the New York and Mississippi Valley Printing Telegraph Company began consolidating these companies and in 1856, acquired the bankrupt New York and Western Union Telegraph Company and created the new and current Western Union Telegraph Company.

By the end of 1861, telegraph wires ran from coast to coast and rendered obsolete the 5-year-old Pony Express (from St. Joseph, Missouri to Sacramento, California) the US Postal Service had established.

About 15 years later, Western Union was offered a new technology for sale by a young inventor, but refused, leaving the rights to the Telephone to what would become the American Telephone and Telegraph Company, or AT&T.  More on the telephone tomorrow!

Have a great day and I'll see you tomorrow.

133 - The Birth of the Auto Industry

I'm David Veech and this is Elevate Your Performance.

The automobile industry literally changed the face of America.  This single enterprise led to more technological innovations in manufacturing, metallurgy, electronics, oil refining, distribution systems, road construction, labor relations, and management practices than any other in the history of the world.  Until the dawn of the computer age, the automobile industry was the absolute technological driver for the United States.

 

We can't talk about cars without talking about Henry Ford, but he certainly wasn't the first or the only person focused on mass producing cars.  Leonardo da Vinci designed a self-propelled wagon way back in the 15th century.  A steam-powered "road locomotive" was invented in England in 1801, but it really took the internal combustion engine to make an automobile economically feasible.  

The Otto engine was the first patented 4-stroke internal combustion engine, back in 1867.  Karl Benz and Gottlieb Daimler each developed practical cars in Germany in 1885 and 1886.  Shortly after that, in 1893, Ford finished his own internal combustion engine and then in 1896 built a steel frame around it, added 4 bicycle tires, and the Quadricycle was born.  When he tried to get it out of his shed to take it for a test drive, it was too wide to fit through, so he had to bust down a brick wall to get it out.

His first auto venture was as mechanical superintendent of the Detroit Automobile Company, formed in August of 1899.  By this time, there were 60 automakers in the US, a number that would grow to 253 by 1908.  This early competition killed the Detroit Automobile Company, but in 1901, with the same financial backers, he started the Henry Ford Company which also failed.  Finally, in 1903, and the Ford Motor Company launched with a simple car called the Model A that eventually morphed into the Model T.

In 1908, Ford produced 10,607 Model Ts.  In contrast, Daimler, working in the most integrated factory in Europe, with 1,700 workers, produced fewer than 1,000.  

In 1908, Ford’s Model T cost $850, which was more money than his workers made in a year of labor.  Ford’s vision was to build a simple but durable car at the lowest possible cost, then pay his workers high enough wages to allow them to afford the very cars they built.  At the root of this vision was a core value that a corporation exists to serve society (Henry Ford, Today and Tomorrow).  

 

To accomplish his vision, Ford needed to do something dramatic and revolutionary.  While all the other automakers employed teams of fitters working in dozens of workshops, custom shaping standard components to make them fit together, Ford, inspired by a visit to Chicago Meat Packers, decided to divide the labor involved among his entire workforce.  

 

In 1910, he built a new factory in Highland Park, Michigan and began work on a moving assembly line.  In 1913, the assembly line began operations.  It relied on each worker specializing in one small area of work and bringing the work to the worker by moving the car from station to station on a moving conveyor belt.  This single innovation resulted in a 900% improvement in productivity over the craftsmen fitters.  

 

In 1914, in response to high turnover rates and low morale, Ford began paying his workers $5 per day when the rest of the industry was paying $11 per week.  By 1916, Ford was making over 730,000 cars a year and selling them for about $350 each.   

 

The Government recognized the need for new roads and passed the Federal Aid Road Act in 1916, and the Federal Highway Act in 1921.

 

Several factors combined to enable this revolution in the auto industry, which essentially saved two other industries.  

 

First, the price of steel was low thanks to the construction of the nation-wide railroad.  But the railroads were no longer expanding at the same rate as through the last part of the 1800’s.  A reduction in the demand for steel may have forced some steel mills to close, but now they had another primary customer, the auto industry.  

 

The oil industry was about to fall victim to electricity until the automobile created the demand for a modified version of kerosene called gasoline.  

 

The availability of cheap raw materials, a shortage of skilled labor, and the high demand for cars drove Ford to mechanize the manufacturing process.  This in turn drove the consolidation of the automobile industry so that those 253 independent auto makers of 1908 turned into 44 makers in 1929.  

 

Of those 44, the big three (Ford, General Motors, and Chrysler) accounted for over 80% of 

new car sales in America.

https://www.history.com/this-day-in-history/henry-ford-leaves-edison-to-start-automobile-company

132 - Industrial Revolutions

Today I want to pick up from the last episode, where I talked about the birth and growth of Iron and Steel, railroads, and the oil industry through the early 1800s; evidence of the first industrial revolution in the US.

There's no real date for when the "revolution" occurred, but the biggest enablers of that first industrial revolution were:

 

• coal-fired furnaces to convert iron ore to finished metals, 

• the steam engine and steam driven equipment, and 

• Eli Whitney’s milling machines which established the American System of Manufacturing, where machines would produce parts in volume to be assembled into products sometime later.

In the last decades of the 19th century, three more technological advances fueled a second industrial revolution:

 

• the completion of modern transportation and communications networks

• electricity 

• “the scientific method.”

 

The modern communication networks began with Samuel Morse's invention of the telegraph in 1837.  But it wasn't until 1844, when Congress finally financed the construction of the first telegraph line from Washington DC to Baltimore, Maryland, that the revolutionary nature of this invention was realized.  Within 10 years, 23,000 miles of cable connected the country.  As railroads expanded westward, and eastward from California, the telegraph went along with it.

In 1856, the development of the “Bessemer” process for making steel dramatically reduced the time, energy, and money required for this task.  Since steel lasts longer and is much harder than iron, it became the substance of choice for making railroad rails.  

 

From 1864 to the end of the century, Bessemer converters produced millions of tons of steel rails as the nation expanded westward.    

The expanding steel market, driven by the demand of railroad networks, led to more efficient production methods and to the discovery of new deposits of coal and iron ore, dramatically reducing prices.  In 1880, Andrew Carnegie’s companies could produce a ton of steel for about $67.  By the turn of the century, a ton of steel cost only $17.  Steel mills ultimately exceeded 10 million tons annually.   J.P. Morgan, Elbert Gary, and Charles Schwab built the US Steel Corporation into the largest industrial enterprise on Earth.

 

The discovery of new oil reserves and more efficient refining reduced the cost of producing a gallon of kerosene from 54 cents to less than ½ cent.  

 

The deployment of electrical power generation provided a much more flexible power source to businesses than steam.  Factories had also relied on kerosene lamps for illumination for years.  With Edison's perfecting of the incandescent lightbulb, factories began converting to electricity and adding better illumination, achieving higher production rates both day and night along the way.  

 

Electricity provided the power behind exciting developments in chemistry and metallurgy, which were integrated into manufacturing operations.  Engineering emerged as a dominant skill for manufacturing companies as they began to apply the scientific method (controlled experimentation) to solving problems with products and processes.

 

Companies operated with high levels of capital equipment and relatively low levels of labor (high capital to labor ratio for you economists) which resulted in economies of scale and lower unit costs.  But sustaining those lower costs required operation of the equipment at near full capacity.  

 

This strain on resources gave birth to the science of management and to mass production systems.  These developments were put to use in two new industries born from the desire of Americans to have more control over getting around.  As the railroads, the telegraph, the steamship, and long-distance cable networks brought more people together, the turn of the century witnessed the birth of the automobile industry and the aviation industry.  

We'll talk about these industries more in the next episode.

Have a great day and I'll see you tomorrow.

131 - Developments through the 19th Century

As we're moving through our American timeline from craft manufacturing to mass production, I've rarely studied the period between Eli Whitney's milling machine and Henry Ford's assembly line.

The 19th century seemed to hide great strides in manufacturing because of the magnitude of other changes.  

Most notably, the 19th century in America is about expansion and about exploiting rich natural resources.  In 1803 alone, we doubled the size of the nation with the Louisiana Purchase, but even in the east, in Virginia, Maryland, and Pennsylvania, Iron Ore was abundant and became a huge export for the US.

But it also provided rails to connect the expanding country.  Further deposits discovered throughout the great lakes region, with easy transportation routes on those great lakes, accelerated growth.  J. P. Morgan, then Andrew Carnegie were able to make great use of the Bessemer process to refine iron ore into steel.

We also saw the development and growth of the Oil industry as we learned how to refine the crude oil discovered in Pennsylvania.  J.D. Rockefeller built his first refinery in Cleveland and took advantage of the wealth he generated to consolidate hundreds of players in the oil business into Standard Oil.

Cornelius Vanderbilt created a shipping and railroad empire that enabled us to reach further westward toward our "Manifest destiny."

But it was our manufacturing capability that produced the iron, the drilling rigs, the mining equipment, the steamships, and the locomotives.  Our first integrated factory opened in 1814, a textile mill.  By the middle of the century we're a leading exporter of all kinds of goods.  

Of course, with all this prosperity on one extreme, the downside was just as significant.  The expansion of slavery, the Indian Removal Act, and oppressive working conditions are all dreadful events we wish we could forget, but we're compelled to never forget.  

In the second half of the century, new technologies emerged with the wider availability of electricity, which was a much better power source for equipment in factories, and the light meant we could now exploit workers 24 hours a day.  

Electricity, the telephone and telegraph, are two keys to the second major industrial revolution.  More on that tomorrow.

Have a great day and I'll see you tomorrow.

130 - Interchangeable parts

I'm David Veech and this is Elevate Your Performance

We're continuing the conversation about the industrial revolution, bringing us from the craft manufacturing age to the mass manufacturing age.

The most significant enabler of mass production is the concept of interchangeable parts.  Throughout history to this point, craftsmen created individual parts for something, by forging or by milling, and then by filing and fitting two or more parts together.  You can imagine the extra time this takes to make things fit together precisely enough to function.

In 1785, a gunsmith from Avignon France named Honore Blanc built 50 Locks - the firing mechanism for a Flintlock Musket - the most advance firearm of the day and put on a demonstration for a small group of people where he quickly disassembled half of them, tossing each component part into separate boxes, mixing them all together.  

He then pulled parts at random from the boxes and began reassembling the locks, all of which worked perfectly.  This is apparently the first demonstration of the feasibility of interchangeable parts.  If all the parts were uniform, think how much more quickly we could repair damaged firearms, or sewing machines, or harvesters.

In the audience that day, among the angry gunsmiths (who's livelihood was clearly threatened with this new way of manufacturing) was the Minister to Paris from the newly established United States of America, Thomas Jefferson.  Jefferson wrote to the continental congress about this exciting new possibility and was promptly ignored.  Those angry gunsmiths, by the way, made sure that Blanc's workshop was destroyed when his patrons were killed during the French revolution in 1789.  He died in debt.

In the US, Eli Whitney invented the cotton gin in 1793.  According to the Patent Act of 1793, the US Department of State was responsible for processing patent applications.  In 1793, Thomas Jefferson was the US Secretary of State who received Whitney's first patent application letter.  Jefferson, whose plantation in Virginia produced a significant amount of cotton, was so interested in the cotton gin patent that he sent a letter back to Whitney asking for details and a model, or perhaps could he purchase a small gin for use on his "family farm."

Fast forward a few years.  It's 1797.  France is making noise about war with the US.  President Washington is concerned that the two national armories have only been able to produce 1,000 muskets in the last 3 years.  So the government solicits 40,000 muskets from independent gunsmiths in the US.  26 contractors bid on 30,200, and Eli Whitney gets a contract for 10,000, without a factory, a design, or any history of making firearms.  I guess then as now it pays to have a customer in the Vice President's office.

Where Blanc spent extra time hand finishing all the locks he made so they were as close to identical as possible, Whitney planned to build a machine that would produce identical parts.  His contract required delivery of the 10,000 muskets in 2 years, but it actually took him 10 years, but the significant result was Whitney's Milling Machine.  Because of his legal experiences with the Cotton Gin, Whitney never patented the milling machine or any other of his inventions.  

Stick around for how this had a significant impact on manufacturing throughout the 19th Century and even contributed to the second industrial revolution.

129 - Industrial revolutions and Eli Whitney

I'm David Veech and this is Elevate Your Performance.

Last time I offered some thoughts on the craft age.  Today, I want to start talking about how we ended up mastering mass manufacturing.

As I mentioned last time, shifting population patterns, from rural setting to urban settings increased demand for manufactured goods.  Textiles were in high demand since everyone still needed clothing, so the first industrial revolution really begins with inventions to increase the productivity of spinning yarn and weaving material.

In England, the Spinning Jenny was invented in 1764 followed in 1769 by the Water Frame, the first fully automatic and continuously operating spinning machine.  The water frame was large and required a water wheel driven by a running stream.  These were the first factories, since before now, most spinning wheels were in individual homes.  

All this automation boosted the demand for cotton, creating a market for cotton grown in the US.  There are a couple of strains of cotton that grew in the south.  There was a black-seeded long-staple variety that grew well in coastal areas and a green-seeded short-staple that grew well in the interior areas of the south.  

The long-staple variety was relatively easy to brush out, but the short-staple was very labor intensive.  The economics of cotton made owning slaves not only morally repugnant, but also unaffordable, so in the mid 1700s, slavery was actually declining in the US.

That changed in 1793.  That's when Eli Whitney invented the cotton gin.  This was a machine that was so simple to make and to operate that it changed the economics of the south and perpetuated slavery for another 70 years.

While Whitney patented the cotton gin in 1794, he was unable to profit from it because planters would just copy the design and build their own rather than pay the license fees he was asking.  When he was unable to successfully sue the planters, he sued the states and was able to win and receive payments from South Carolina, North Carolina, Tennessee, and Georgia.  

Tomorrow, we'll talk about what happened next for Eli Whitney.

I have partnered with Dr. Gleb Tsipursky and Hiitide and we're doing a book review online of his book "The Blind Spots Between Us:  How to Overcome Unconscious Bias & Build Better Relationships".  It begins on February 1st.  

Here is the registration link:  https://api.hiitide.com/api/v2/email/click/?cid=David&ea=click&el=click-to-learnmore&cn=david_&cm=social&cs=campaign&redirect_url=https://hiitide.com/crews/the-blindspots-between-us&ci=david

Have a great day and I'll see you tomorrow

128 - The Craft Age and craft culture

While this segment is called The Craft Age and craft culture, I’m not sure that "Craft Age" is an appropriate term.  Since the very first human struck two rocks together to make a sharp edge, we've been making things by hand.  

Craft manufacturing is just that.  Making things by hand, with or without the aid of tools.  Crafts people are often called artisans and they make unique pieces of work to trade.  

The success or failure of a crafts person depended upon functional quality.  If the product didn't do what the customer needed it to do, or if it failed to last as long as the customer thought it should, then the craftsman probably couldn't stay in business.  

In the middle ages, when more people began migrating and congregating in villages, towns, and cities, the craftsmen would band together to form a guild, whose purpose was to protect the craft.  They would restrict entry into certain professions, and define training requirements, from apprentice, to journeyman, to master.

The culture surrounding this economic system depended heavily on understanding value from the customer's perspective, and on development of expertise by the craftsman.  That's the only way to guarantee quality.  

These three characteristics - value, mastery, and quality - live on today.  A quick visit to Etsy.com will show you how strong craft manufacturing remains.

On the down side though is availability.  When your business model focuses on making exactly what the customer wants, and your financial situation doesn't allow you to speculate it's impossible to have a product "in stock." 

When today we have Amazon Now delivering products to us in 2 hours, that tells you that people have lost patience except for some special purposes.  While once we were content to wait for that customized quality good to be made just for me, now we're not.  

And the cost doesn't help.  Manufacturing products by hand is expensive.  

As population centers grew and taxed the capacity of the craft guilds to satisfy the demand of the population, inventive people go to work to speed production and lower costs.  We’ll talk about a few of them over the next couple of days.

Now the challenge is to get exactly what we want and at the cost we're willing to pay - the value problem; and to get it to work just as we need it to work - the quality problem.

Have a great day and I'll see you tomorrow.