The message in this article is not justanother "take care of your people —they're your most important re-

source" admonition. Building an effectivelean team is much more than just "yourpeople." While the lean agenda is wellknown and widely embraced, it's some-thing special when it penetrates workpractices enough to uplift organizationalperformance. Successive big wins create aglow among those responsible. Plenty ofcompanies are probably at that stage.

The problem is what happens next. Forany number of reasons, the glow dims andthe excitement fades. Big wins becomemodest. The objects of improvement arestale: same products and technologies,same problems but with lessened impact.Senior management is losing interest. Insome cases tough, new competitors arecoming out of the woodwork (these daysfrom anywhere on the globe), and thecarefully husbanded improvement cultureis hit. Instead of continuous improvement,it's outsourcing and downsizing. Or con-solidation — meaning shuttering a plantand disbanding the improvement teams.

Course Correction — New HorizonsBest products, plants, and people

deserve better. We offer positive alterna-tives to serial outsourcing and plant clo-

sures that break up high-performing humanorganizations. The alternatives, in variousforms, require new horizons to keep talent-ed groups of people — lean teams, if youwill — challenged. The company is the win-ner. It gets much more out of existing facil-ities and where market conditions allow,the door opens for expansion externally atacquired or greenfield sites.

In the case of external growth, "homebase" sends seasoned improvement teamson outreach missions, each aimed at build-ing into the resident workforce theimprovement system and culture thatflourish at home base. Each transformedfacility may become a satellite home base.These steps promote internal growth (ele-vated output of existing or new products)through waste removal, with proficiencythen transferred externally. And so theimprovement system migrates progres-sively outward. Dynamic features of thismigration — keeping improvement teamsstimulated and continually learning — pro-vide stabilizing effects that are moreimportant in increasingly turbulent times.(See the box, "Swim or Sink.")

Five case studies treat different aspectsof this problem. Each case demonstrates asolution that expands lean resources byproviding new challenges in different ven-ues. The first example is Freudenberg-NOK, a company familiar to the readers of

FUNDAMENTALS

Your Lean Team: Use It or Lose It1

Learn to recognize the value of collective lean expertise.

Richard J. Schonberger, Karen A. Brown, and Thomas G. Schmitt

13First Quarter 2003

Target and one with a well defined system oftransferring lean expertise from one site toanother. The next two cases, R. W. Lyall andKMC Systems, illustrate applications of thelean-outreach formula in single-plant com-panies. Fourth is a unit of Boston Scientificthat was broken up, with lean expertise lost— a case study of what went wrong andhow it might have gone right. The lastexample comes from Japan: Canon, whichhas many years of experience in migratingimproved processes from development cen-ters to other company sites.2

While the main theme presented in thesepages is preservation of improvement teams,it dovetails with using improvement re-sources in the cause of company growth.Migration of lean expertise thereby helpsavoid the opposite fate: company shrinkage.

Freudenberg-NOK — LeanGrowth Multiplied

Freudenberg-NOK (FNOK) has impres-sive lean credentials: Four of its plants havebeen recipients of Shingo Prizes, namedafter the late Shigeo Shingo, one of the mas-terminds of the Toyota production system.

FNOK is a $950 million, 3500-employeemanufacturer of oil seals and other sealingproducts primarily for automotive applica-tions. A U.S.-based joint venture ofGermany's Freudenberg and Japan's NOKcompanies, the FNOK general partnershiphas more than tripled sales, with largeincreases in asset productivity and marketshare since its establishment in 1989. Acombination of growth-in-place, greenfieldplants, and acquisitions has increased itsmanufacturing facilities from 14 to 24.

Growth at FNOK is spelled GROWTTH —Get Rid of Waste Through Team Harmony.Ridding a target facility of waste andimplanting team-based continuous im-provement is the objective, along withcompany growth. The procedure, applied toone and then another existing, acquired, orgreenfield plant, employs a GROWTTHteam made up of GROWTTH managersdrawn from existing "lean" sites. TheGROWTTH team, sometimes including avalued subject-matter expert, facilitateskaizen events, and teaches and certifiesassociates in the new plant in lean toolsand concepts. An overriding objective,according to one executive, is to "get theFNOK philosophy into the facility."Company headquarters (lean central) inPlymouth, MI orchestrates the effort, anddivision offices (home bases) in three statesorganize the GROWTTH teams and carrythe mission forward at plant sites.3

GROWTTH teams typically follow aschedule of three weeks on-site and oneweek off — for five or six cycles. Convertingan ingrained system to lean is not alwaysquick and easy. Sometimes, anotherGROWTTH team from other FNOK facilitiessteps in for a few more weeks or up to sixmonths. (The tough cases are not attributa-ble to diverse technologies: All 24 ofFNOK's plants are focused on its productline of molded rubber and paper seals, gas-kets, o-rings, and similar parts for automo-tive customers.)

A first-order objective is to convert dis-persed shops with batch-and-queue pro-cessing to self-contained work cells andone-piece flow. That emphasis on processimprovement carries with it competitively

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It's a turbulent world. In the 1960s and 1970s even the GEs,3Ms, and Caterpillars of the world knew nothing about leanmanagement — all were big-batch producers. Nor did theypractice such basics of quality as statistical process control.The elite were, by today's standards, not managed muchbetter than those just getting by. Putting it differently, com-panies could survive weak management.

No more. With trade barriers down and trade pactscreating giant markets and new competitive threats, thereare few places for the weak to hide. Stand still, with conven-tional batch-and-queue processes and inspection-basedquality, and your company risks being snuffed out by a com-petitor newly armed with lean credentials. Or by a companyin another part of the world that, in the former trade-con-stricted era, had been excluded as a competitor. To avoidsinking, companies must learn the new swimming strokes,namely, lean management's lessons of continuous elimina-tion of wastes and delays.

14Target Volume 19, Number 1

significant product design advantages. Theplant becomes subdivided into focused"model cells" that are further subdividedinto U-shaped sub-cells, each dedicated toa specific customer. Engineers are assignedto sub-cells so that "each engineer isexpected to learn the applications of only ahandful of customers" and is able to cus-tomize the product's design to those cus-tomers' applications.4 Absent this excep-tional degree of engineering support,FNOK's product line would consist of thesame kinds of commodity sealing productsas competing companies.

Transfer of the company's body of leanexpertise improves the target plant's per-formance to where it can contribute to leangrowth by designating its own GROWTTHmanager, typically an up-and-coming sixsigma-certified engineer. That expertbecomes part of the pool of talent availableto the company for further outreach mis-sions. This migration of expertise perpetu-ates the cycle. The much larger Germanpartner, Freudenberg GmbH, is sufficientlyimpressed that it has imported the processfor its own plants. FNOK has seen enoughoutside interest in its GROWTTH systemthat it has taken the next step: Establish aconsulting division. See the box, "Expertisefor Sale."

R.W. Lyall — First-Step GrowthWhereas FNOK exemplifies advanced

stages of lean migration, R.W. Lyall is at atake-off stage: poised for lean growth. Lyallis a 30-year-old but still small, family-owned, single-plant manufacturer inCorona, CA. Its commodity product lineconsists of plastic and metal connectors,meter boxes, and risers that marry up withnatural-gas delivery equipment at homeresidences. In recent years a remarkablelean team has had standout successes inemploying lean/world class manufactur-ing, placing Lyall in an excellent positionfor growth beyond its own walls.

Although Lyall has successfully simpli-fied the designs of its product, its main fortelies in continuous improvement in opera-tions, driven not so much by professionals

as by production-level employees. Thecompany has achieved a measure of localfame for this proficiency, receiving a paradeof eager-to-learn benchmarking teams.

Without growth, however, Lyall couldfind itself sliding onto a self-destructivecourse of improvement-driven shrinkage ofits human capital: more efficiency, less peo-ple. That would be a shame in light of thevery human dimensions in the company'simprovement story.

Lyall was barely breaking even in 1996.That changed when Jon Slaughterback, vet-eran of lean implementations in other com-panies, hired on as general manager (nowchief operating officer) in 1997 and oversawthe company's new, lean journey. Sincethen, Lyall has upped its inventory turnoverfrom 4.7 to 17, lowered employee turnoverfrom 80 percent (in 1996, its worst year) totwo percent, and cut absenteeism from 13.1percent to 1.7 percent.

Following a save-the-company 42-per-son layoff shortly after his arrival,Slaughterback announced to all that there-after the fruits of success (savings fromwaste elimination and process improve-ment) would be invested in training thepeople, improving the equipment, andincreasing revenue by bringing in newproducts and lowering prices. Trainers fromthe California Manufacturing Technology

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FNOK's finely-tuned system of growth through waste elimina-tion has become a profit center — and another rewarding wayfor the company's experienced, motivated lean teams to applyand expand their expertise. In September 2001 the companylaunched The Lean Center LLC (www.theleancenter.com), asubsidiary dedicated to helping other automotive-industry com-panies purge costly wastes from their supply chains until theybecame too busy with internal work to continue.

15First Quarter 2003

Center (CMTC) ran a series of weekly classeson-site over 12-week spans. (CMTC is one ofthe nation's 400-plus government-supportedManufacturing Extension Partnership organ-izations.) One of the trainers, EduardoFreiwald, teaching in Spanish to the mostlySpanish-speaking workforce, didn't flee afterthe training sessions. He and his traineeswould march right to the shop floor and startmoving equipment. Three weeks into theclasses and applications, according toSlaughterback, the training had paid foritself. The plant is cellular; many machinesare on wheels; kanban and quick-changeapparatus are everywhere; dozens of simple,homemade and low-cost innovations pepperthe plant; and, hanging here and there, arenew layout plans on large sheets of butcherpaper signed by every affected operative.

Front-line associates are heavy contrib-utors to these innovations, with a few keymanagers as mentors. Two of the latter areMoises "Mo" Vasquez, plant manager, andGerry Vargas, lean manufacturing coordi-nator. Neither is college-educated, but bothhave skills and enthusiasm that can't betaught in a classroom. (A Vargas comment:"It's exciting. I like to come to work everyday. My wife thinks I'm nuts.") The plant'simprovements keep opening up resources.Half the production space had been emp-tied and six people freed up by early 2001.Those six had joined Vargas to devote timeto improvement projects, except when theywere needed somewhere in a productioncapacity.

The base of Lyall's gas company cus-tomers and potential market for its low-tech product line are decidedly limited. Andwithout growth, the Vargas team will findfewer and fewer worthy targets forimprovement projects. Resolution of theselimitations seems to point squarely in thedirection of acquiring first one, and thenanother small company with a related, oreven different, product line. For this com-pany, such an acquisition could be special:Lyall could migrate core team members —people from the improvement group, withor without COO Slaughterback as headcheerleader. Their job at the acquisition

would be to build the new workforce intothe same kind of improvement engine thathas matured at home base. Though theowners had formerly been reluctant togrow by acquisition, exposure to the gist ofour model has altered opinions in the com-pany, which is now pursuing acquisitionnumber one.

KMC Systems — Lean ContractServices

Our third case example is KMC Systems,a highly flexible, responsive contractproducer of short-life-cycle medical devices.Like R.W. Lyall, KMC is a one-plant company, its development and productionfacilities residing together in a single south-ern New Hampshire facility owned by itsparent, Kollsman, Inc. An FDA-certifiedassembly facility, KMC does not, on its own,develop products. Rather it produces medical electronics on a contract basis forcompanies that have not yet developedtheir own manufacturing capability fornewly-approved products. This kind ofbusiness, contract manufacturing services,has grown dramatically in electronics, withmanufacturers such as Solectron andFlextronics buying many whole plants fromOEM customers, especially in computers andtelecom. The movement to outsource med-ical devices to contract manufacturers is atan earlier stage but may develop similarly.

KMC's reputation rests solidly on itsability to ramp up production quickly andcreate simple, lean, effective, exportableprocesses. The reason is that many of itscustomer companies ultimately build theirown assembly plants and rely on KMC toprovide processes that are likely to bebrought in-house after six to 12 months.Even those that use KMC on a continuingbasis for all their production needs are sub-ject to short product lives and demandquick turnaround capability from KMC. Thecompany's key enablers are twofold: 1) anenergetic, innovative culture that givesdirect-labor employees major control overprocess design and improvement, and 2) aphysical facility that accommodates fre-quent equipment rearrangements.

16Target Volume 19, Number 1

In this kind of business, the potential fordeveloping lean teams and keeping themchallenged has three sides to it:

1. One is to do as FNOK has done: Develop lean teams and apply their expertise for growth in place and by replication at new business units. KMChas not yet expanded externally. In part, the reason may be that outsourc-ing in medical devices is still in an early state of development. If the trendfollows that of electronics, before longend-product companies will be bent on selling whole plants to manufactur-ing specialists like KMC — and KMC will be well prepared.

2. The second, which keeps KMC's people in a constant applied-learning mode, revolves around the nature of contract manufacturing itself — namely,mastering the challenging diversity of products and demands coming to the company from its customers.

3. The third relates to the common situa-tion where, after some months of preparation, the KMC customer bringsmanufacturing back to its own facili-ties. For the sake of future growth, it behooves KMC to make these kinds oftransfers back to customers go as smoothly as possible. Here, lean fits the need: well-packaged product-process specifications — everything simplified, standardized, and charac-terized — complete with training documentation. KMC does this well, which further polishes its reputation and growth potential.

Northwest Technology Center —Lean Product Migration

The fourth example is Boston ScientificInc.'s (BSI) now-shuttered NWTC. BSI's keybusiness strategy is acquiring medicalproducts companies and their product linesin preference to developing products inter-nally. For such acquisition-minded compa-nies, a corollary strategy would surely be tocapitalize upon rare finds among the acqui-sitions — just as an oyster shucker wouldupon finding the rare fine pearl. NWTC was

a pearl whose value was compromisedwhen, in 2001, the facility was closed withits products dispersed to other BSI plants inIreland and Florida.

At the time of acquisition in 1995, theNWTC was Heart Technology Company, aprivately-held producer of rotational angio-plasty products for cleaning out cloggedarteries. The company had its own R&Dgroup as well as manufacturing resources.Not content with its multiply-patented "cashcow" product, called the Rotolink, R&D hadassorted other product ideas in variousstages of development. The authors werewell acquainted with the facility, consider-ing it a showcase of excellence in lean man-ufacturing coupled with continuous productimprovement.

It's ironic. All that excellence made theNWTC's that much more transferable:everything highly characterized, standard-ized, and documented, along with leanequipment and fixtures. In effect, the peopleat the NWTC improved themselves right outof a job. To aspiring lean teams at othercompanies, the lesson may seem to be, Becareful of what you aspire for. (Nor is whathappened to the NWTC unique. The authorsare familiar with two Boeing aircraft com-ponents plants that were recognized as thecompany's first notable lean manufacturingsuccesses. Both have been outsourced. Thesimplicity, visual excellence, and standoutimprovement metrics at those two plantsmade them attractive to potential buyers —and thus attractive for Boeing to get rid of.)

Could lean growth, with retention of thestrong R&D group and multifunctional leanteam, have been a viable alternative to clo-sure of the NWTC? We think so. A tailor-made version of lean migration would takefull advantage of BSI's excess productioncapacity at other company sites. The strate-gy would have R&D continually turning outnew vascular health-care devices, and,working closely with the lean team, simpli-fying, improving, characterizing, and docu-menting the product and process for easytransfer to other sites for volume produc-tion. With key people accompanying eachproduct to ensure successful migration tothe new site, they broaden their knowledge

17First Quarter 2003

and skills, which improves the entireprocess in the next iteration. The examplesuggests how this variant of lean migrationmight save plants in similar situations fromclosure while providing a strong, talent-preserving roadway to growth.

Canon — Migrating ProductionThere are precedents for and other

examples of what we've suggested —strategies that might have saved the NWTC.One study suggests that three Japanesemanufacturers — Sony, Matsushita, andCanon — have been following, to someextent, the lean migration model proposedfor NWTC/BSI.5 In the case of Canon, oneof the authors of this article, on a trip toJapan, saw first-hand evidence of the modelin action. It was on a visit to Canon'sKanagawa development plant south and abit west of Tokyo. By the date of the visit, itsproduction line making Sure-Shot range-finder cameras had been perfected to thepoint of transfer. Production was moving toa Canon plant some 100 miles north ofTokyo. There it would tap a hard-working,lower-wage, rural workforce for volumeproduction. Kanagawa would then moveon to develop, simplify, standardize, andmigrate the next camera model. It couldretain some production just for the purposeof sustaining engineering.

For Canon, a clear advantage was stabi-lizing the mission and resources of thetechnology center. It was a revolving kindof stability that extended to Canon's high-volume production sites — recipients of thestreams of new products from the tech cen-ters.6

Canon at that time, though, did not lookbeyond its own domestic plants in executingthe strategy. These days, even Japanesemanufacturers, including Canon,7 have beenforced to think globally in selecting potentialsites for production, notwithstanding disrup-tions to that country's cherished jobs-for-lifepractices. Today's environment of wide-open commerce — with much elevated per-formance standards in which costs keepdropping — requires that the migration teamscan a wide set of alternatives.

Outsourcing production (or other func-tions, including R&D) is becoming com-monplace. For example, Intel, the world'spremier semiconductor producer, sendsmuch of its production to subcontractors —the so-called chip foundries. Even Sony,long-time believer in producing in its ownfactories, has begun to outsource somemanufacturing.8 These, however, appear tobe defensive tactics, mostly to tap lowercosts at the outsource and in the process todownsize.

We are proposing an offensive strategyfor leveraging talent, best illustrated by theway FNOK acquires and systematicallyimproves one business after another whilekeeping its lean teams challenged.

Why Change?Why should manufacturers extend

themselves as suggested in the precedingexamples — especially small companiessuch as Lyall and KMC, which tend to stickto their knitting? Each company cited has arare set of skills and unique opportunities totake its knitting sticks beyond its own walls.From the standpoint of owners and profit-sharing managers, there is personal wealthinvolved. Aside from that, manufacturersdependent on one product line are at risk. Itis too easy these days for a competitor toemerge somewhere on the planet andknock off the existing local or global marketleader. The new rival might do so based oncost, technology, geography, size, or geopo-litical connections. Best protection is tobuild the company: upgrade weak productsand processes at existing sites, and extendthe same treatment to new sites. Each ofthe five companies presented has themeans — exceptional continuous-improve-ment capabilities. Companies that havesuch resources but limit their horizons aresure to lose them, along with ability to staycompetitive.

Can these ideas really work? Can theyspark competitive superiority for more thana cycle or two? There is a point of view thatsays no: Continuous improvement is too easyto do. Industry has already implemented leanmanufacturing. Various studies of the devel-

Best protectionis to build thecompany:upgrade weakproducts andprocesses atexisting sites,and extend thesame treatmentto new sites.

18Target Volume 19, Number 1

opment of the Toyota system dispute thatviewpoint (see box, "Improvement as aManaged System”). By itself, sustainedprocess improvement is difficult to master.If all rivals somehow were to gain parity inmastery, there would be no competitiveadvantage. But the goal is not merely tobecome lean, and not a check-off sheet ofdefined methods. Given a starting point ofbuilt-up expertise in process or product-process improvement, the strategy ampli-fies itself. Along the way it offers intrinsicrewards and learning to its growing num-bers of improvement teammates. That ben-efit, along with a built-in bias for businessgrowth, add up to a unique combination ofdynamism plus human resource stability —just what the doctor ordered in this era ofhigh uncertainty.

Shouldn't Everybody?Lean migration in its various forms is

not for every company. For one thing, themodel applies well to organizations bent ongrowth. While one could say, "Shouldn'teverybody?" the reality is that many compa-ny owners and executives are too risk-averse to view growth as a priority. A sec-ond limitation is that the company musthave a sizeable, well-developed, and func-tioning lean team with superior abilities toimprove products and processes.

The number of companies qualifying,though by no means the majority, should belarge inasmuch as lean management hasbecome a sizeable "industry," now inits third generation: first generation,origination in Japan, 1960s and 1970s;second generation, known as just in

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The Toyota production system offers a general model for lean migration. Toyota's record of profitable growth,

spanning decades, is compelling. Each new Toyota facility with new people gets the full treatment and becomes its

own improvement engine and contributor to further outreach efforts. The underlying lore is a base of applied

knowledge that prominently includes just-in-time, total quality, focused teams and facilities, process simplification

and standardization, visual management, and continuous improvement. The formula is well known and widely

admired.

Dynamic application of lean leads to improvement and growth of the system itself. A research report,

"Decoding the DNA of the Toyota Production System," discussed a study of 40 plants to discover the system's inner

workings. 9 The main finding is the importance of an improvement system — more than performance numbers,

flow patterns, etc. alone indicate. Fujimoto echoed the point in his detailed history of development of Toyota's man-

ufacturing system. He concluded that lean is a long-term proposition, not a whirlwind program, 10 becoming, in his

words, a "post-lean system" or "Toyotism II." 11

In times of global excess capacity, coupled with investment community pressures for short-term results,

companies may under-appreciate such capabilities — the way that human expertise becomes interwoven through -

out the organization. Such capability, including applied team-based knowledge of how to achieve lean results, is

less easy to see, measure, and appreciate than the tangible assets on the balance sheet. These resources are easily

lost if there's no system for retaining them.

19First Quarter 2003

system suggest that world-class levels ofcontinuous improvement require develop-ment of lean management as a system, notjust a technique, program initiative, or evenstrategy. So does this article — for FNOK,R.W. Lyall, KMC Systems, the NWTC, andCanon. In strategically managing a com-plex business — in this era of hyper compe-tition — awareness of the need to look foras well as develop and exploit such systemsmay make the difference.

Richard J. Schonberger, Schonberger &Associates, is based in Bellevue, WA; he is theauthor of Let's Fix It! Overcoming the Crisisin Manufacturing and other books, and amember of the Target editorial board. Karen A. Brown is Professor of Business,University of Washington, Bothell, WA. Thomas G. Schmitt is Associate Professor ofOperations Management, University ofWashington School of Business, Seattle, WA.

Footnotes1. Portions of the article are adapted from Schonberger,Richard J., Let's Fix It! Overcoming the Crisis in Manu-facturing, Free Press, New York, 2001, pp. 148-160.2. Hewlett-Packard would have been added as a sixthcase study, except that strategic shifts at HP seem tohave taken the company in other directions. Four casestudies detailing HP's lean/just-in-time implementa-tions, which migrated from plant to plant in the 1980s,are presented in Schonberger, Richard J., WorldClass Manufacturing Casebook: Implementing JITand TQC, Free Press, New York 1987, pp. 7-14,15-17,65-76,95-106.3. Interviews with Bill Purslow, FNOK president andchief operations officer; Tom Faust, GROWTTH vicepresident; and Richard Clarke, former FNOK plantmanager, spring and summer 2002.4. Hall, R. W., "Long Road to Shingo Prize," Target,Fourth Quarter, 2000, pp. 22-27.5. Helfat, Constance E., and Ruth S. Raubitschek,"Product Sequencing: Co-Evolution of Knowledge,Capabilities, and Products," Strategic ManagementJournal, 21, pp. 961-979.6. Canon's migration package, however, had beenstrong on product but less so on process. A recent ini-tiative at the company has been to convert traditionalproduction lines to multiple, small work cells — a basicpractice in lean manufacturing: Kunii, Irene M., "He Putthe Flash back in Canon," Business Week, September16, 2002.

time/total quality, 1980s; third generation,lean management, 1990s to the present.The message here is directed especiallytoward that sizeable number of companiesthat have lean aspirations. Growth throughcontinuous lean-team development andchallenging applications offers, for suchcompanies, a rationale and guide-paths forthose aspirations.

Aside from those two caveats, webelieve the growth model is fairly robust.Size doesn't matter; we've illustrated themodel for large, medium, and small compa-nies. In addition, our examples include lowto high technologies, and scope rangingfrom customer-imposed to develop-your-own products. Whatever the combinationof these factors, lean migration may be thesurest way to provide protection from riskin the global economy while retaining con-tinuous-improvement talent.

ConclusionLean migration is dependent on the

existence of an uncommon set of humantalents and knowledge for its execution.While all companies perhaps should devel-op such talents, we are content to recom-mend the formula for those that alreadyhave them — and to prod those that don'tto see the light. Acquisition-focused com-panies, such as Illinois Tool, Dover, andEmerson Electric, along with more aggres-sive ones might, like Boston Scientific, findspecial nuggets of lean-based human capi-tal among their acquisitions. If so, theyshould be exploited for dynamic, stablegrowth. (Boston Scientific had its chanceand muffed it.)

The lean-team strategy is proactive, andrelies on sending teachers and doers oneach outreach mission. Their expertise isless about tasks and specifications, nor is itabout financial controls. It is continually tochallenge and grow the knowledge andbreadth of application expertise of the leanteam, thus avoiding loss of valued humanresources, and to transfer to other companysites the same kind of proficiencies that existat the home base.

Aforementioned studies of the Toyota

20

Target Volume 19, Number 1

7. Canon's current CEO, Fujio Mitarai, "is now embark-ing on Stage Two of Canon's makeover: the shift tooverseas production, much of it in China:" Kunii, IreneM., "Canon's Cutting Edge," Business Week, February11, 2002.8. Landers, P., "Foreign Aid: Why Some Sony Gear isMade in Japan — By Another Company. SolectronSucceeds in Selling an American Idea: Let a SpecialistTake the Risk," Wall Street Journal, Thursday, June14, 2001, p. A-1.9. Spear, S., and H.K. Bowen, "Decoding the DNA ofthe Toyota Production System," Harvard BusinessReview, September-October, 1999, pp. 97-106.10. Fujimoto, T., The Evolution of a ManufacturingSystem at Toyota, Oxford University Press, New York,1999. In contrast, W. F. Roth and M. Potts offer aninsightful look at, in their view, the wrong-headed, top-down way that most companies try to build a workforcededicated to continuous improvement: Roth, W. F., M.Potts, "Doing It Wrong: A Case Study," QualityProgress, February 2001, pp. 63-66.

© 2003 AME® For information on reprints, contact:Association for Manufacturing Excellence847/520-3282

11. Fujimoto, Takahiro, "An Evolutionary Process ofToyota's Final Assembly Operations: The Role of Ex-post Dynamic Capabilities," unpublished paper,Faculty of Economics, University of Tokyo, January1996. A supporting study, comparing the foundation ofU.S. and Japanese automakers in the context of aresource-based view (RBV) of the firm, concludes:"The RBV implies that differences in firms' perform-ance are most likely to be determined by differencesin organizational capabilities, which are hard for rivalsto replicate:" Lieberman, M.B., and R. Dhawan,"Assessing the Resource Base of U.S. and JapaneseAuto Producers: A Stochastic Frontier ProductionFunction Approach," unpublished paper, UCLA,August 4, 1999.

21First Quarter 2003

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