§1. Course logistics and teaching philosophy [00:02]
Online, I would like you to show up once to sign up, and the signup sheet is over there. You can attend all the lectures live. There are three of us, as I mentioned yesterday: Steve Lyons, Simone Belmar, myself, and we have three different modules, so you can take almost all of it. You only get 24 of the 36 lectures if you come to the live lectures between now and around March 15th. You'll have to take another 12 lectures online, and there's a whole list. If you go to my website, eagar.mit.edu, and you go to classes, it will list this class and the current lecture videos. It says spring of 2018 — that's now. If you go down, you'll get all the past lecture modules and you can design your own course.
We will videotape each of the live classes, so if you miss a class you'll be able to catch up that way. Since there are no quizzes, you can do whatever you like, but I would encourage you, since there's not much to this class except coming or watching the video, that you actually make up the classes if you miss something. I didn't do half of my presentation from yesterday because it basically talks about my teaching philosophy, and the PowerPoint is on Stellar. It's basically the same stuff as I taught the last three semesters.
One important teaching secret is: why would someone spend an entire lecture doing a derivation on the board? You've all been in an engineering class or a science class where they solve some fourth-order partial differential equation, and they screw it up all the time. Why would they do that? The simple answer is they didn't have time to prepare a lecture. There are some articles to read. I suggest you read "Why Did the World Trade Center Collapse?" — not because I wrote it, but I did. And for nine years I was number one. If you looked up "WTC collapse" on the internet, you would find this paper was number one. The reason was, I wrote it simply. So this is, I think, an example of how I would like you to write your papers. It's also quantitative. I put real numbers in there. I've also become the brunt of all the conspiracy theorists in the world about the World Trade Center. They've had websites against me and they've written to the president of MIT saying I should lose my tenure because I'm a shill for the government. I'm just trying to make America great again. Geez.
I learned to communicate a lot from Lester Thurow. He was Dean of the Sloan School back in the 80s. Slogans without content are not communications — sorry, that's what politics is all about. So today we're going to do: what is total quality management? Does anyone have any questions before we begin?
§2. What is TQM, and where did it come from? [05:21]
I decided to do this because 25 or 30 years ago I was co-director of what we called the Leaders for Manufacturing program, which is now the LGO program in the Sloan School, and it was through that I learned about total quality management. I remember back around 1997 or so I was department head, and I asked a group of undergraduates in the department if anyone knew what total quality management was, and the first answer was — someone in the back of the room says, "It's BS." I said, well, you're probably right about a lot of that, but the CEOs of some of the top companies in the country have given a challenge to universities to learn what total quality management is, because they are using it in their companies and we're not teaching it at the universities.
There is some good to total quality management. There's also a lot that's just exactly what the students said. If you go to a book that was commissioned by the Center for Quality Management — this was a group of 10 CEOs and executives in the Boston area and three MIT faculty, and they wrote this book in 1993 — it says total quality management focuses on customers, continuous improvement, total participation, and societal networking. If you look up other definitions of total quality management, you're gonna find there are as many different TQMs out there as there are people who teach it. But there have become, over the last quarter century, a number of common themes, and some of them are quite useful. We're going to look at some of these and see what their history was, where they came from, and you're gonna find that a lot of these things are not really new.
[Tom holds up the book A New American TQM.] I'll pass this around if you want to flip through it as I'm talking. I'd say it's worth skimming. Professor Shiba was from Tohoku University. They brought him over. He wrote the book. I took the class as one of the MIT faculty who were encouraged in the manufacturing program to take his class on TQM. It was published by Productivity Press, which was established in '89 by ten area executives and three MIT faculty. One of the forewords was written by Ray Stata. Anybody know who Stata is, other than former Analog Devices chairman, founder? You ever seen the Stata Center in electrical engineering? He gave the first 25 million.
There's a number of useful things in the very first chapter. It talks about how originally we used to manufacture as fitness to a standard, and then it became fitness to use, and then fitness to cost, and then there was this thing coming out in the 1980s called fitness for latent requirements. The example was something that most of you have never heard of — the Walkman. You ever heard of the Walkman? It was bigger than a deck of cards, but it basically had a cassette, and you could play your music. You didn't have digital music at the time. Sony came out with the Walkman, and no one knew they had to listen to music while they were walking. That was a latent requirement. But Sony made a fortune off these things. They cost about a hundred bucks, and everybody had one.
Does anyone know what the breakthrough in technology was that allowed the Walkman to flourish? It was neodymium-iron-boron magnets. They could have made Walkman in the 1970s, but you had to use the battery power to create a magnetic field to run the little motors. When General Motors developed neodymium-iron-boron magnets in the early 80s, they could downsize the starter motor and all the other motors in your car could be one-third the volume and use one-tenth the power, because you were getting your magnetic field from the permanent magnet, not from an electric current. All of a sudden your Walkman wouldn't have a battery life of five minutes — you could have a Walkman that had a battery life of two or three hours, which people thought was great. How many of you would be happy with two or three hours on a cell phone now? And you want your Walkman also to read your email. So that was one of the things — fitness for a latent requirement, fulfilling requirements that people didn't even know they had. You could go jogging and listen to your music at the same time. That was a big deal back then.
§3. Tom Lee and the TQM challenge at IBM [11:53]
Tom Lee was an interesting person. In 1990 I became director of a Center at MIT, and Tom Lee's office was just on the first floor of Building 10, and I was around the corner. We would meet each other at the restroom from time to time. He was a wonderful person. In 1990 he was a former vice president of General Electric switchgear division down in Philadelphia. When he retired from General Electric, he became a professor of the practice in the MIT Lab for Electromagnetic and Electronic Systems, which is basement and first floor of Building 10. Then in the late 1980s, he was asked to be the chairman of the International Atomic Energy Commission [Agency], so he could go to Iran and say, quit building those nuclear bombs. When he came back from three years at the IAEA, he became the active director of LEES about 1990. It was, I think, in the same Tech Park announcement that I became director of one Center and he became director of another Center.
We saw each other in the hallway, and he was congratulating me, as I was just a 40-year-old pup and he was this seventy-some-year-old distinguished scientist-engineer. He was also a member of the National Academy of Engineering. I said, well, congratulations — what do you think about being a manager at MIT, how does that compare? His answer was: "At GE I had no real authority but everyone treated me as if I did. You really can't force people in a company to do what you want, you really have to do it by consensus. You can order them around, but if you use your authority very much, you lose your authority. At the IAEA I had absolute authority and everyone knew it. At MIT I have no authority and everyone knows it." So that's what managing at the university is all about — herding cats, as they call it.
The TQM challenge was where these six companies, half a dozen Fortune 500 companies, challenged half a dozen elite universities to send 50 of their faculty back for a week to learn about TQM. It turns out at MIT there were 75 faculty that signed up. You can't ever get 75 faculty to agree on anything today. But 75 of us went to the IBM executive training facility on the Hudson. You might have stayed at a Four Seasons Hotel, but you haven't stayed at a nice facility until you stay at the IBM executive training facility. I didn't know what to expect. I drove in, got in late one Sunday night, hadn't eaten dinner, and I thought they're gonna send me out to some McDonald's or something. They said, oh no, the cafeteria is still open. It's like 10 o'clock at night, and you should have seen this buffet. It was fantastic. I'm sitting there thinking, well, they must have had some convention here today. No, it was for us. And everyone had their own motel room.
The next morning we got together, and Chuck Vest, who was president of MIT, had come to welcome us and encouraged us to learn from industry and find out what they're doing on total quality management. Then a senior executive vice president — when you get a couple of modifiers to the term vice president it means you're higher up, and two of them means you're even higher up — welcomed us to learn about customer-driven quality. IBM didn't want to use TQM because other people use that. IBM was special, so they had their own name. They called it customer-driven quality. He explained how they had 380,000 employees ten years before that, and they had eliminated 90,000 of them without eliminating any of their hourly workers who actually built products. Remember this is back when IBM made Selectric typewriters and mainframe computers and things that don't exist much anymore.
He told us how they'd been top-heavy with management to prevent problems from rising to the top, so about half their employees were salaried executives, and they eliminated roughly half of those. I was sort of dumb and naive — I raised my hand after he asked for questions. I was the sixth or seventh person, and I said, well, now that you've eliminated half of your salaried staff, are you seeing more problems rising to the surface? He stopped, and he thought, and he says, "No, I think we're seeing fewer." So what I learned that day was, you can have 25 percent of your workforce — and in fact 50 percent probably of your salary — that you give to workers because they usually obey, doing nothing. Actually they're doing worse than nothing, they're doing negative value. They are creating problems rising to the top. Part of what is exciting about TQM is some companies learned they could do without 25 percent of the workforce and do a better job at the same time. That's why CEOs get excited about it.
§4. Shewhart, the management-book economy, and Christensen [18:05]
There are some things that might be worth reading. [Tom holds up a 1985 book.] I'll pass this around. The one I'm passing around is a '91 edition. They give a short history of total quality control. The short history, which is the first chapter, goes back to the 1920s. That will be on Stellar. It's fair use — Steve Lyons will explain to you why fair use at the university means I can copy that ten pages and give it to you. So if I ask you whether you learned anything when you read it, say yes, and I won't go to jail. It'll give you a brief review. It goes back to Shewhart. We're gonna talk later about one of the methods, the Shewhart chart. Anyone ever worked in industry, you ever heard of a run chart or a control chart? First invented by Dr. Shewhart at AT&T Bell Labs in 1923, in a memo. So TQM is not exactly brand new.
We're gonna find a lot of things that are part of TQM are just things that people have renamed. Why is that? Most of TQM has the M word in it, the management word, and so therefore it belongs to the business schools now. Steve Lyons as a Sloan grad, I want you to cover your ears on this. In the School of Engineering or Science, you get your tenure by writing individual research papers. I actually have four volumes which are my research papers over the years, and I haven't put the fifth volume together because I'm too lazy and no one cares. They'll just get thrown away when I die. I could go to the MIT archives, and they will put it in a basement somewhere — actually they'll probably just put everything in digital form nowadays. But I have never written a book because I don't have time, I'm too busy writing papers. If you're in the School of Humanities or the School of Management, you get your tenure by writing a book and becoming famous for that book.
Anybody think of a famous management book? What's the most famous one to come out of Harvard Business School over the last 25 years? The Innovator's Dilemma. Clayton Christensen. If you mentioned that 15 years ago in Washington, everybody thought you were God if you knew about disruptive technology. Have you heard the term "disruptive technology"? That's Clayton's term. I've known Clayton since he was a graduate student. In fact, my daughter worked on part of the book, and you'll find me referenced in the book, because my daughter came home one day — she was working one summer doing some research for Clayton — and she said, "Dad, what's it cost to build a steel mill? I've looked all over and I have not been able to find any number that tells you how much it costs to build a steel mill." Clayton has three examples, and one of them is the steel industry. I think one was the computer industry, and the other might be healthcare. But he talked about disruptive technologies.
I said, well, Rebecca, I've got a slide I put together. I was sitting in the Saginaw, Michigan airport with one of my graduate students one day. Plane was late, so I scratched this slide that had the cost of building steel mills — integrated steel mills and mini mills and micro mills — and how things had changed. I'll bring you a copy of the slide. It's just one PowerPoint slide and didn't have a lot of content, but it had some numbers. I had estimated, sitting there in the Saginaw airport, that it costs 15 billion dollars to build an integrated steel plant. I actually had a basis for saying that. The last integrated steel mill ever built by a company rather than a country was Bethlehem Steel Burns Harbor Indiana plant from 1965 to 1971 or so. Cost Bethlehem Steel five billion dollars to build that steel mill. That was in the late 60s. Bethlehem, which was the second largest steel company in the world at the time after US Steel, almost went bankrupt. Then they hired me in '74. That's not why — they actually started doing better. In fact, they started going down after they hired me, but nonetheless.
Bethlehem had invested five billion dollars back in 1970. Five billion dollars was a lot of money. Today it would be equivalent to someone wanting to build a new semiconductor fab. What's a new semiconductor fab cost today? Maybe fifteen or twenty billion. Or designing a new commercial airliner from scratch — fifteen or twenty billion. Boeing can do it, but just barely, only with a little help from the Air Force, and Airbus can do it with a lot of help from a lot of countries. No other company has built an integrated steel plant since Bethlehem Steel in the late 60s. We've built dozens of integrated steel plants since then, but they are all built by countries. They didn't have the backing of a measly little corporation that had fifty billion dollars worth of sales — it was a whole country.
§5. POSCO, Baosteel, and the tragedy of the commons [24:56]
I used to be the POSCO professor in the 1990s. In 1978 the premier of Korea — Park — went to Colonel Park, who was his chief of staff, and said, we want to build a steel mill in Korea so we can be rich like the Japanese. Colonel Park became, overnight, from being a military attache, head of this new steel company in Korea. By the time I went over there as the POSCO professor to give a talk, it was the world's largest steel company. They basically hooked up with US Steel, who sold them the technology, and built the world's largest steel company in Pohang, Korea — that's why it's POSCO. Except it's not the world's largest anymore. Anybody know the world's largest steel company today? It's Baosteel. It's Chinese. They make twice as much steel as the entire United States. And we were the big guys. After World War Two we made seventy-five percent of the world's steel. Anyone figure out why? Because we bombed out the competition. A world war is a wonderful thing for rising to the top if they're not dropping bombs on your country.
Student: [inaudible question about facility size]
It's not small, and it's not one facility either. That's one of multiple facilities. There are certain industries that cannot bite off these fifteen-billion-dollar, twenty-billion-dollar development costs today. Aerospace, semiconductor, steel. A company can't do it because they could be like Bethlehem Steel and go nearly bankrupt — just like MIT almost went bankrupt when they built these buildings in 1917. You can't bite off too big a lump. It's much better to have the nation support you. That's what's happened to the world steel industry, and people build steel mills not for business economic reasons. You cannot justify building a new steel mill based on business economics. We have a glut of steel mills. But if you want to be selling steel as opposed to buying steel, your country will have a steel mill whether there's a glut or not.
Anybody know what the tragedy of the commons is? This guy talked about how everything reduces down to the lowest common denominator. So China builds a huge steel industry, they can't eat all the steel themselves, they want to export it, it goes off into the market, and the government's backing it so they lower the prices. I read about the unfair competition of the Chinese steel this morning in The Boston Globe — it's on page two, or in the business section somewhere. So, getting back to the lecture, total quality management.
I was actually telling the story because of Clayton. That's why Rebecca couldn't find a company that invested — these are countries that are investing, and they don't want to publish that they had invested. It would be against the International Trade Organization guidelines for a country to give that much of a subsidy to a company. When they do all the time. Whether it's building semiconductor fabs — Intel gets help various ways, Taiwan Semiconductor, you name it. Countries are betting to get jobs and investing in these things. So if you look in Clayton's book, which made him the number one professor at Harvard Business School, there's a little thing referencing my cost: "Tom Eagar." I knew what it cost in the late 1960s to build a steel mill, and I multiplied by three, because this was 30 years later, so I figured inflation was a factor of three roughly. So I said 15 billion. And Rebecca quoted my slide. Now you know the research that went into it.
I have another example from my own personal experience. Around 1980 I was up for tenure in welding, and I decided, well, how many welders are there in the United States? I thought of a way to estimate it. I knew how many pounds of stick electrodes they made, and 70 percent of the welding back then was stick electrodes, and I knew how much someone could use in an hour. I could divide that number and get a total number of people, and estimate how many were full-time and how many might be part-time. I came up with half a million full-time welders in the United States and another half million part-time welders. I said this at some conference. About 10 years later, about 1990, they come out with another edition of the Welding Handbook, and I'm flipping through it, and there it says, "Department of Labor Statistics, there are a million welders in the country." I called up my friend at the American Welding Society — hey, where'd you guys get this number? He says, "Well, that's your number, Tom." I said, what? "No, it's in the book, it's referenced." No one has a clue except me where it came from. It was a very simple estimate. A high school student could have done it. But there is the Bureau of Labor Statistics as a reference to me. I didn't get any royalty on that. Well, Steve, we should talk.
There's a lot of facts out there that are of questionable origin. That's the point. Something else worth reading — there's a 1994 article on "TQM challenges management theory and in practice," and it gives some of the history. Anybody have any questions?
§6. Where TQM came from: Japan, Made in America, and the Cold War economy [32:32]
Where did TQM really come from? So far as I can tell, the TQM terminology came out of the 1980s, but some things, like the Shewhart charts, came out of Bell Labs in the 1920s. If you go to Wikipedia, the source of all knowledge, it will tell you that the TQM manufacturing revolution — and one of those books I passed around basically calls it a revolution in manufacturing. Whether it's a revolution or not, this revolution has been going on for a couple hundred years.
Wikipedia says the revolution started in Japan, and if you were living in the 1980s, you would say it started in Japan because the Japanese were beating our socks off in manufacturing. So much so that I remember sitting in a little engineering council meeting in the 1980s, and Jerry Wilson was the Dean of Engineering at MIT. Kent Bowen had been assigned in 1984 to start a manufacturing program at MIT, which he finally got four years later. He had raised about twenty-five million dollars, and they started the Leaders for Manufacturing program, which at Sloan is now the Leaders for Global Operations. They decided in that meeting in 1986 or '87 that they should commission a book, and a bunch of MIT faculty — the MIT Commission on Industrial Productivity — should write a book, which they ended up calling Made in America. The three authors were Michael Dertouzos, Richard Lester (who's now provost), and Bob Solow, who was Nobel laureate at the time. I like to quote the first page of the introduction: "To live well, a nation must produce well." That's why China built Baosteel, that's why Korea built Pohang steel, that's why people in Qatar built their own steel mill — because they had all this natural gas, and one way to ship the natural gas is to turn it into steel. It's easier to ship steel than it is to ship gas.
Where did TQM come from? The Wikipedia article says it started in Japan. The Japanese had a plan. They have a Ministry of Trade and Industry that gives a strategic vision for the country in lots of different fields. The Japanese were very hurt once when one of them in the 1950s — after we had devastated them in World War 2, and Japan was a very poor country in the 1950s — asked John Foster Dulles, or some secretary of state of the United States when he was over there, "Mr. Secretary, we need to get some revenue. What can we export to the United States?" And whoever it was — I think it was John Foster Dulles — said, "Well, there's nothing you make that we would want." Sort of like the famous quote, "there's nothing left to be invented." Steve will tell you about that. Back in the 1870s the head of the US Patent Office said, "We might as well shut down, there's nothing left to invent." Everything's been invented.
The Japanese took that sort of personally, and they started improving things. They started with steel mills, then they went to shipbuilding, then they went to automobiles. When I spent my year in Japan in the mid-80s, 75% of the Japanese economy was based on shipping automobiles to the United States. In the early 1980s, Ronald Reagan decided he was going to have a Star Wars initiative. We were in the middle of the Cold War, and he was going to beat those Russkies by building an international Star Wars missile defense and offensive threat, and it was going to cost 500 billion dollars, which was a lot of money back then. We didn't have the money. The Japanese were more than happy to loan us the money so we could buy their Toyotas.
Anybody know why World War 2 started? One of the reasons — the Japanese didn't have scrap steel, they didn't have a big industry, and one of the things we did in the late 1930s was cut off all steel scrap shipments to Japan. We were trying to keep them — they raped and killed 30 million people in China, the Nanking stuff, and we were trying to appease them, like Chamberlain. By the way, has anybody seen Darkest Hour, the movie? It's very good, it's worth seeing. It's where Churchill took over from Chamberlain.
Getting back to Japan: they started building steel mills in the 50s, shipyards in the 60s, automobiles in the 70s. A Honda Civic was a joke in 1975. You'd buy a Honda Civic and it would be rusty twelve months later. People made jokes about Honda Civics. They don't do that today. The Japanese, again, were so offended — or contrite, maybe a better word — that they decided they were going to make the car that would never rust, and that's the Honda Civic today. We embarrassed them into doing it. But in any case, we won, we beat the Soviet Union economically because we bankrupted them — they wanted to keep up with Star Wars and couldn't afford it. They weren't making anything. The Japanese were. We won the Cold War.
But we had this tremendous debt to Japan. Now I'll give you Tom Eagar's lesson of economics. The Japanese had like a trillion dollars worth of American debt. This is when we only had a gross national product of a trillion or something. Today it's $15 trillion or so. Anyway, maybe two or three trillion in the mid-80s. They were accumulating dollars, and they were loaning them to us for Star Wars. But eventually you can't eat dollars, and eventually you have to start selling them. When I was in Japan in 1985, the exchange rate was 240 yen to the dollar. What has it been since about 1990? Around a hundred yen to the dollar. What does that mean in common-sense terms? We borrowed money at 240 yen to the dollar, and we're paying it back at a hundred yen to the dollar. We are paying the Japanese back the trillion dollars we borrowed for Star Wars and to buy Toyotas in the 1980s at 40 cents on the dollar. Pretty good deal, huh?
Who are we doing that to right now? China. China is manufacturing — that was in the paper this morning, about Trump not having reduced the Chinese trade deficit. The Chinese will loan us money so we'll buy their goods. Right now China has about two trillion dollars of US dollars, and they still haven't found out how to eat it. Some day the Chinese are gonna have to let their currency float, and we will pay them back on all those video recorders and cameras at 20 cents on the dollar, because they are resisting letting the dollar float. Why can we do this? The fundamental real good, the fungible commodity that everybody trades in, is called energy today. It used to be steel back in the 1950s.
When the US controlled 75% of the world's steel economy — 50% by 1960 — and US Steel wanted to raise the price of steel 10%, President Kennedy said no, because it would have been worldwide inflation. He stared them down and forced US Steel not to raise prices in the early 60s. US Steel will blame that decision of the president with their demise. But by the 70s, Saudi Arabia and others learned, hey, we've got something the world wants, and we're going to put an embargo on oil. Somewhere between '60 and '75, energy became the new commodity that controls the world economy. What is energy sold in? What do they price a barrel of oil in? Dollars. Because we are the country that controls the currency that energy is sold in. We're the gold standard, we are the dollar standard. So people can loan us money when we need it, and they end up with too many dollars, and we pay them back at cents on the dollar. It's a great place to be — except unfortunately in the last ten years some of the Europeans have been looking at this and saying, we wish we controlled things. Some people are trying to change the sale of energy to some other currency. If you look at constant-value studies, the price of a barrel of oil has been fairly constant. A hundred and fifty years ago it was a gold standard. I've digressed quite a bit.
§7. The USS Thresher, SUBSAFE, and the Navy origins of TQM [44:39]
It was the US Navy in the 1980s that coined the term total quality management and good manufacturing practices in some of their memos in the mid-80s. I think the origins of that went back to the US Navy Thresher disaster on April 10th, 1963. The Thresher sank right off Cape Cod here, about 600 miles off Cape Cod. How did it sink? It was super-classified at the time. I lived in Virginia Beach, Virginia, the world's largest naval port in Norfolk. Half of my neighbors — one of my classmates' father was head of the brand-new John F. Kennedy aircraft carrier. He was a captain, which meant he was one of the top officers in the US Navy at the time. The Navy was devastated. They were on their first controlled deep dive, and the ship had been built in Portsmouth Naval Shipyard up here in Portsmouth, New Hampshire.
They've declassified a lot of this stuff. They think it was a sea water piping valve, where they brazed a steel pipe where the seawater came in to help cool the nuclear reactor, and it let go. It's like a six-inch pipe, and all of a sudden you've got a six-inch hole, and you're on a controlled deep dive. They tried to blow their ballast tanks. My Navy guys, when they take this course during the summer, I've heard the Thresher story five or six times. You can go on Wikipedia and read about it. They had a tender, a ship right above, because it was a controlled deep dive, and they could hear the men screaming on their sonar. They went up, they'd blown their ballast tanks, but because they had a freeze-up in the valve — when you expand gases, they clogged the valve and they didn't blow the tanks completely. So it started heading up to the surface, then it was just too heavy, and it sank and collapsed in about 6,000 feet of water.
It was a big deal for the US Navy, and Admiral Rickover basically shut down all submarine production for about three years. They instituted, with W. Edwards Deming — one of the quality gurus who had taught statistics to the Japanese in the 1950s — they brought him in, and they upgraded in a program called SUBSAFE. This comes from the US Nautilus, which is a blog of Navy people: "The first loss of a nuclear-powered submarine devastated the naval community. The tragedy prompted the Navy to re-examine deep-diving submarine design, institute a quality assurance program known as SUBSAFE." That's how the subs are still built today. Take my welding course and I'll tell you how they made the joints. They redesigned the joints so they would have a robust process — if you know the term Six Sigma, there would be high quality, although they didn't call it Six Sigma back then.
Since that time, the Navy started instituting SUBSAFE in the shipyards, and other people started picking it up. There are various terms, one of which is lean manufacturing. If you look up lean manufacturing on Wikipedia, this is a figure. Sometimes people call this the house of quality. Quality at the top, stability of your foundation. You've heard of Kaizen and all these little terms, a lot of which come out of the Japanese. Lean manufacturing — where did the term "lean" come from? Came out of this book right here, The Machine That Changed the World, based on the MIT five-million-dollar five-year study on the future of the automobile.
§8. MIT's manufacturing turf wars [49:03]
Dan Roos was a professor of civil engineering. Dan Roos used to teach the introductory computer science course that I took as a freshman to learn how to program a mainframe computer with punch cards. Dan used to teach that core course that had a couple hundred students in it. But then he got to the point where he knew most of the CEOs of most of the automotive companies in the world, and he sold them in the 1980s on a million-dollar-a-year program, which was a pretty good-sized research program. They were trying to figure out why Toyota was beating everybody's socks off in the marketplace. They had quality, and General Motors and Ford and Chrysler turned out junk. All the quality-measure people were quitting buying US cars and buying Japanese. James Womack was the guy who really wrote the book and did most of the study. Dan Roos at that point was a guy who wanted the title of Dean. He didn't care, he was Dean of Engineering, he wanted the title of Dean at MIT, and he didn't teach in classrooms anymore. And he had irritated some people.
We had manufacturing before that. This is my sordid story of MIT and big-M Manufacturing, which I'll have to finish next time. Back in the late 70s, I had gotten a half-million-dollar contract of my own as an assistant professor without tenure to study welding for the Navy. The Navy said, "We would give you a half million dollars, but you have to get some other people at MIT excited about welding." So I went over to see Nate Cook and Nam Suh. Nate Cook was an expert on machining in mechanical engineering. Nam Suh headed the Lab for Manufacturing and Productivity, and he was a mortal enemy of Merc Flemings, who had started the Materials Processing Center in 1980. One was the Lab for Manufacturing and Productivity, the other was the Materials Processing Center. They both still exist, and they both hated each other and were trying to do the other one in.
I had a half million dollars. Flemings came to me and said, "Tom, will you put your money through my Center? That way we can show our research volume." I said, okay, Merc. Then I wanted to get some people involved, so I went over to see a brand new assistant professor named Dave Hardt in mechanical engineering, because Nate Cook told me to go see him — this new young guy, he's looking for research money. I gave Dave Hardt his first research contract out of my Navy money. Dave and I are still good friends today. Nam Suh and Merc Flemings would just sue and kill each other if they saw each other. Nam Suh is retired now — he went off to be president of the university in Korea. Merc Flemings got whitewashed by some things that happened with a woman who didn't get tenure. It's a long story. He never went any further, except that the administration loved him because he brought in a lot of endowed chairs.
Kent Bowen in 1984 was asked to take over this new program to get industrial money from manufacturing. He called me up in 1984, the night before I was leaving for Japan on my sabbatical, and said, "Tom, I've gotten a new job." I said, well, that's nice, Kent, why are you telling me? He says, "I'd been the director of Flemings's laboratory." Flemings had stepped down and Bowen had taken over. He says, "I've got to step down from that. I wanted to nominate you to take it over." I was a 34-year-old just-tenured professor. I said, well, I guess I'm glad I'm going to Japan for a year, and I don't have to be the head of the Materials Processing Center and be in this fight with all these big shots.
He and Tom Magnanti from the Sloan School started the Leaders for Manufacturing program in 1989 with about 35 million dollars. Overnight they bought respectability at MIT manufacturing. Dave Hardt and I would look at each other in 1989 — we'd go to these meetings and say, these people never knew how to spell manufacturing before there was 35 million dollars, and now everybody was coming out of the woodwork saying, oh, I'm a manufacturing expert. All of a sudden manufacturing got a big name at MIT, and a big name everywhere else, because when MIT says something is important, people listen. We'll tell some more of this, but it gets worse and worse as these powerful people at MIT battle one another.