00:00:16
Brian Lamb
Dr. Daniel Roos, co-author of the book "The Machine That Changed the World," what's it all about?
00:00:23
Daniel Roos
It's about making automobiles and more generally it's about making a variety of products.
00:00:30
Brian Lamb
Speaking of automobiles, who was Alfred Sloan?
00:00:37
Daniel Roos
Alfred Sloan was the person who revolutionized General Motors. Years ago General Motors was a group of very disjointed companies. Sloan came in and introduced a management logic that, together with the principles of mass production that had been introduced by Henry Ford, really set the pace for how we make things in the country for the past 50 years.
00:01:09
Brian Lamb
Alfred Sloan at some point gave money to the school you're from, MIT.
00:01:14
Daniel Roos
Yes.
00:01:15
Brian Lamb
MIT is behind this book.
00:01:17
Daniel Roos
Yes.
00:01:18
Brian Lamb
Would he be surprised, if he were alive today, that the money he gave went to a study that suggests that the Japanese have got it all over the Americans when it comes to making cars?
00:01:31
Daniel Roos
Well, I think Alfred Sloan would be pleased because Alfred Sloan was an innovator. Alfred Sloan was somebody who came in an gave a new direction, gave a new philosophy, to not only the automotive industry but to industries in general. This book does not say that the Japanese have it over everyone. What this book says is that the Japanese are responsible for developing a different system, a different framework, for making things. It's very important that the world understand that, but by no means is it a uniquely Japanese phenomenon.
00:02:14
Daniel Roos
One of the things that we point out in the book is that you can now see aspects in the United States and in Europe, and what the book says is, this is how the system works, this is why it's important, this is where the competitive advantage is. Now, the issue is, how do we take these experiences and transfer and translate them to the United States? Sloan gave money to MIT to set up a school of management, the purpose of which was to look ahead, to understand what were important issues to this country. So the book is very much in the spirit of Alfred Sloan.
00:02:56
Brian Lamb
One of the sub-sentences on the cover: "Based on the Massachusetts Institute of Technology $5 million, five-year study on the future of the automobile." First of all, what is MIT?
00:03:09
Daniel Roos
MIT is the Massachusetts Institute of Technology, a university, and as such concerned with three things -- education, research and public service.
00:03:22
Brian Lamb
How big is it?
00:03:23
Daniel Roos
How big is it in terms of students? Roughly about 4,000 undergraduate students and about 6,000 graduate students. It has a faculty of about 1,000. Many people think of MIT as engineering and technology, and without question engineering and technology are the fundamentals of the university. It's a university that really is polarized around science and technology. But it also includes, as we mentioned before, the Sloan School of Management, a humanities department, urban studies and planning. So it very much is a university that is broad-based as well as specialized.
00:04:14
Brian Lamb
How long have you been there?
00:04:15
Daniel Roos
Thirty years.
00:04:16
Brian Lamb
Where is it based?
00:04:17
Daniel Roos
Cambridge, Massachusetts -- physically based in Cambridge, Massachusetts. We like to think of ourselves as an international institution, and therefore we have activities going on throughout the world.
00:04:32
Brian Lamb
And where does it get its money?
00:04:35
Daniel Roos
Its money for education or its money for research? For education we get our money partially from students, although that only covers a small part of their education. We rely on a variety of contributions in terms of providing financial support to supplement the entire cost of the education.
00:04:59
Brian Lamb
It's not a state university?
00:05:00
Daniel Roos
No, it's private. As a matter of fact, I believe it is the only private institution that was a land-grant institution if one traces back its history. Research-wise we receive money from a variety of sources, primarily the public sector but also the private sector.
00:05:20
Brian Lamb
Five million dollars, a five-year study. The list of the number of people involved in this is huge. First of all, is it IMVP?
00:05:31
Daniel Roos
Yes.
00:05:32
Brian Lamb
What does that stand for?
00:05:33
Daniel Roos
International Motor Vehicle Program.
00:05:34
Brian Lamb
Is that an MIT organization?
00:05:38
Daniel Roos
It's a program at MIT. I'm director of the Center for Technology, Policy and Industrial Development. That's the organization that was responsible for carrying out the study.
00:05:51
Brian Lamb
When did the study start?
00:05:53
Daniel Roos
1985.
00:05:56
Brian Lamb
How did you get the $5 million, and who was involved in it?
00:05:59
Daniel Roos
The purpose of the study was to be as broad based as possible, and that meant to involve organizations that are concerned with automobiles. The organizations are industrial organizations. They are not only the nameplates that you see on cars, like GM and Ford, but there are lots of organizations, supply organizations, that work with your GMs and your Fords.
00:06:29
Brian Lamb
Like Motorola.
00:06:30
Daniel Roos
That's right. TRW. The study, because of its international nature, involved participation from outside the U.S., so our support included all the major manufacturers of automobiles throughout the world and many of the principal government organizations as well. In the United States we received support from the U.S. Department of Transportation and the U.S. Department of Commerce.
00:07:02
Daniel Roos
In Europe we had support from the EEC, the European Community. We had support from the government of Canada. The objective was broad based. We also had participation from organized labor. The objective was that no one organization would provide more than 5 percent of the total support so that there could be no question in terms of bias.
00:07:33
Brian Lamb
One interesting thing is that most American car manufacturers -- I think they all are; Chrysler, General Motors and Ford -- are listed. But when it comes to Japan, it's the Japanese Automobile Manufacturers Association and the Japan Automotive Parts Industry Association. How come no Toyota, Honda, Nissan and that kind of thing?
00:07:52
Daniel Roos
Well, Japan Auto Manufacturers Association represents Toyota, Honda, Nissan and about eight other companies, and that's one reason why. Japan has on the order of 11 manufacturers of automobiles. It didn't matter to us how the support came. For example, it could have come in this country through the Motor Vehicle Manufacturers Association, which is similar to the Japan Auto Manufacturers Association. As a matter of fact, we did have support in this country from an organization called MEMA -- Motor Equipment Manufacturers' Association -- which represents all the suppliers. It was not an issue as to how it came. The issue was to make sure that there was broad-based participation. The feeling was that if people had a financial stake in this, then they would be more apt to participate in the study. That was really important because we did not want this just to be an academic study. It was extraordinarily important that it be an objective look at a serious set of questions but that it have the test of industry relevance. So throughout the five years we were constantly interacting with industry to say, "Do we have it right? Do you see any problems here? What more would you like us to do?" That was part of the nature of it -- that interplay between university, industry and government.
00:09:32
Brian Lamb
How many people were involved in gathering information?
00:09:35
Daniel Roos
I'm not sure I've ever made a count. In the book there's a list in the back, but I would estimate well over a hundred directly involved. Directly involved in terms of researchers.
00:09:52
Brian Lamb
Paid researchers.
00:09:54
Daniel Roos
Paid and volunteer researchers. Let me point out that although this is a study that was coordinated by MIT with a fair amount of the research being performed by MIT, another important aspect was to set up an international network of researchers throughout the world, so that we were working with people from Europe, from Japan, in terms of carrying out the work. MIT was just responsible for one portion of it.
00:10:27
Brian Lamb
This is what the book looks like, and one of the co-authors is with us. The automobile. I think somewhere I read in your book that there are 50 million automobiles produced in the world every year?
00:10:39
Daniel Roos
Yes, roughly.
00:10:40
Brian Lamb
But there is a statistic that kind of stuck out that says, "Toyota manages to produce 4 million vehicles per year with only 37,000 employees." Let me repeat that -- 4 million vehicles a year with 37,000 employees. "General Motors produces 8 million vehicles a year" -- that's twice the number that Toyota does -- "worldwide, and it needs 850,000 employees to do it." Why?
00:11:06
Daniel Roos
The principal reason that we put forward in the book is that Toyota is using the lean production system, and that's what the book is all about.
00:11:17
Brian Lamb
Lean, L-E-A-N.
00:11:19
Daniel Roos
L-E-A-N, yes.
00:11:20
Brian Lamb
Versus what?
00:11:21
Daniel Roos
Versus mass production, which is a system that we are familiar with which has guided American industry since the turn of the century.
00:11:30
Brian Lamb
All right. There's a lot to talk about with lean production, but let me ask you . . .
00:11:35
Daniel Roos
Let me just make one other point -- because I suspect we'll spend a fair amount of time on lean production -- in terms of the difference between GM and Toyota. GM is responsible for building a much larger portion of the car in-house than
00:00:16Brian LambDr. Daniel Roos, co-author of the book "The Machine That Changed the World," what's it all about?00:00:23Daniel RoosIt's about making automobiles and more generally it's about making a variety of products.00:00:30Brian LambSpeaking of automobiles, who was Alfred Sloan?00:00:37Daniel RoosAlfred Sloan was the person who revolutionized General Motors. Years ago General Motors was a group of very disjointed companies. Sloan came in and introduced a management logic that, together with the principles of mass production that had been introduced by Henry Ford, really set the pace for how we make things in the country for the past 50 years.00:01:09Brian LambAlfred Sloan at some point gave money to the school you're from, MIT.00:01:14Daniel RoosYes.00:01:15Brian LambMIT is behind this book.00:01:17Daniel RoosYes.00:01:18Brian LambWould he be surprised, if he were alive today, that the money he gave went to a study that suggests that the Japanese have got it all over the Americans when it comes to making cars?00:01:31Daniel RoosWell, I think Alfred Sloan would be pleased because Alfred Sloan was an innovator. Alfred Sloan was somebody who came in an gave a new direction, gave a new philosophy, to not only the automotive industry but to industries in general. This book does not say that the Japanese have it over everyone. What this book says is that the Japanese are responsible for developing a different system, a different framework, for making things. It's very important that the world understand that, but by no means is it a uniquely Japanese phenomenon.00:02:14Daniel RoosOne of the things that we point out in the book is that you can now see aspects in the United States and in Europe, and what the book says is, this is how the system works, this is why it's important, this is where the competitive advantage is. Now, the issue is, how do we take these experiences and transfer and translate them to the United States? Sloan gave money to MIT to set up a school of management, the purpose of which was to look ahead, to understand what were important issues to this country. So the book is very much in the spirit of Alfred Sloan.00:02:56Brian LambOne of the sub-sentences on the cover: "Based on the Massachusetts Institute of Technology $5 million, five-year study on the future of the automobile." First of all, what is MIT?00:03:09Daniel RoosMIT is the Massachusetts Institute of Technology, a university, and as such concerned with three things -- education, research and public service.00:03:22Brian LambHow big is it?00:03:23Daniel RoosHow big is it in terms of students? Roughly about 4,000 undergraduate students and about 6,000 graduate students. It has a faculty of about 1,000. Many people think of MIT as engineering and technology, and without question engineering and technology are the fundamentals of the university. It's a university that really is polarized around science and technology. But it also includes, as we mentioned before, the Sloan School of Management, a humanities department, urban studies and planning. So it very much is a university that is broad-based as well as specialized.00:04:14Brian LambHow long have you been there?00:04:15Daniel RoosThirty years.00:04:16Brian LambWhere is it based?00:04:17Daniel RoosCambridge, Massachusetts -- physically based in Cambridge, Massachusetts. We like to think of ourselves as an international institution, and therefore we have activities going on throughout the world.00:04:32Brian LambAnd where does it get its money?00:04:35Daniel RoosIts money for education or its money for research? For education we get our money partially from students, although that only covers a small part of their education. We rely on a variety of contributions in terms of providing financial support to supplement the entire cost of the education.00:04:59Brian LambIt's not a state university?00:05:00Daniel RoosNo, it's private. As a matter of fact, I believe it is the only private institution that was a land-grant institution if one traces back its history. Research-wise we receive money from a variety of sources, primarily the public sector but also the private sector.00:05:20Brian LambFive million dollars, a five-year study. The list of the number of people involved in this is huge. First of all, is it IMVP?00:05:31Daniel RoosYes.00:05:32Brian LambWhat does that stand for?00:05:33Daniel RoosInternational Motor Vehicle Program.00:05:34Brian LambIs that an MIT organization?00:05:38Daniel RoosIt's a program at MIT. I'm director of the Center for Technology, Policy and Industrial Development. That's the organization that was responsible for carrying out the study.00:05:51Brian LambWhen did the study start?00:05:53Daniel Roos1985.00:05:56Brian LambHow did you get the $5 million, and who was involved in it?00:05:59Daniel RoosThe purpose of the study was to be as broad based as possible, and that meant to involve organizations that are concerned with automobiles. The organizations are industrial organizations. They are not only the nameplates that you see on cars, like GM and Ford, but there are lots of organizations, supply organizations, that work with your GMs and your Fords.00:06:29Brian LambLike Motorola.00:06:30Daniel RoosThat's right. TRW. The study, because of its international nature, involved participation from outside the U.S., so our support included all the major manufacturers of automobiles throughout the world and many of the principal government organizations as well. In the United States we received support from the U.S. Department of Transportation and the U.S. Department of Commerce.00:07:02Daniel RoosIn Europe we had support from the EEC, the European Community. We had support from the government of Canada. The objective was broad based. We also had participation from organized labor. The objective was that no one organization would provide more than 5 percent of the total support so that there could be no question in terms of bias.00:07:33Brian LambOne interesting thing is that most American car manufacturers -- I think they all are; Chrysler, General Motors and Ford -- are listed. But when it comes to Japan, it's the Japanese Automobile Manufacturers Association and the Japan Automotive Parts Industry Association. How come no Toyota, Honda, Nissan and that kind of thing?00:07:52Daniel RoosWell, Japan Auto Manufacturers Association represents Toyota, Honda, Nissan and about eight other companies, and that's one reason why. Japan has on the order of 11 manufacturers of automobiles. It didn't matter to us how the support came. For example, it could have come in this country through the Motor Vehicle Manufacturers Association, which is similar to the Japan Auto Manufacturers Association. As a matter of fact, we did have support in this country from an organization called MEMA -- Motor Equipment Manufacturers' Association -- which represents all the suppliers. It was not an issue as to how it came. The issue was to make sure that there was broad-based participation. The feeling was that if people had a financial stake in this, then they would be more apt to participate in the study. That was really important because we did not want this just to be an academic study. It was extraordinarily important that it be an objective look at a serious set of questions but that it have the test of industry relevance. So throughout the five years we were constantly interacting with industry to say, "Do we have it right? Do you see any problems here? What more would you like us to do?" That was part of the nature of it -- that interplay between university, industry and government.
00:09:32
Brian Lamb
How many people were involved in gathering information?
00:09:35
Daniel Roos
I'm not sure I've ever made a count. In the book there's a list in the back, but I would estimate well over a hundred directly involved. Directly involved in terms of researchers.
00:09:52
Brian Lamb
Paid researchers.
00:09:54
Daniel Roos
Paid and volunteer researchers. Let me point out that although this is a study that was coordinated by MIT with a fair amount of the research being performed by MIT, another important aspect was to set up an international network of researchers throughout the world, so that we were working with people from Europe, from Japan, in terms of carrying out the work. MIT was just responsible for one portion of it.
00:10:27
Brian Lamb
This is what the book looks like, and one of the co-authors is with us. The automobile. I think somewhere I read in your book that there are 50 million automobiles produced in the world every year?
00:10:39
Daniel Roos
Yes, roughly.
00:10:40
Brian Lamb
But there is a statistic that kind of stuck out that says, "Toyota manages to produce 4 million vehicles per year with only 37,000 employees." Let me repeat that -- 4 million vehicles a year with 37,000 employees. "General Motors produces 8 million vehicles a year" -- that's twice the number that Toyota does -- "worldwide, and it needs 850,000 employees to do it." Why?
00:11:06
Daniel Roos
The principal reason that we put forward in the book is that Toyota is using the lean production system, and that's what the book is all about.
00:11:17
Brian Lamb
Lean, L-E-A-N.
00:11:19
Daniel Roos
L-E-A-N, yes.
00:11:20
Brian Lamb
Versus what?
00:11:21
Daniel Roos
Versus mass production, which is a system that we are familiar with which has guided American industry since the turn of the century.
00:11:30
Brian Lamb
All right. There's a lot to talk about with lean production, but let me ask you . . .
00:11:35
Daniel Roos
Let me just make one other point -- because I suspect we'll spend a fair amount of time on lean production -- in terms of the difference between GM and Toyota. GM is responsible for building a much larger portion of the car in-house than
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