xxiv •
Editor’s Introduction
be earned. The chapter then warns against letting the cost accounting
system run the factory, and concludes with the need to pay attention to
even seemingly insignificant forms of waste. This chapter also shows that
the Ford organization was ahead of Mary Parker
Follett in the identifica-
tion (and implementation) of “the law of the situation,” and also ahead
of Burns and Stalker (1961) in the definition of mechanistic and organic
management systems.
Chapter 7: “The Terror of the Machine” describes the characteristics of
the ideal industrial leader.
Chapter 8: “Wages” is among the most important in the book. It
teaches almost everything that anybody needs to know about industrial
and labor relations: “It ought to be the employer’s ambition, as leader,
to pay better wages than any similar line of business, and it ought to
be the workman’s ambition to make this possible.”
Labor unions as
well as employers must understand and internalize this chapter’s mate-
rial because no system can pay more in wages than it creates in value.
The system can and must pay higher wages only when its stakeholders
improve its productivity.
Chapter 9: “Why Not Always Have Good Business?” is of particular
interest because Ford proved that a business can prosper even during eco-
nomic downturns. There is always a market for high quality and low-cost
goods, and it is the job of management to get the price down to what cus-
tomers are willing to pay.
Chapter 10: “How Cheaply Can Things Be Made?” picks up where
Chapter 9 leaves off by showing how to use Lean manufacturing to reduce
costs and, therefore, prices. It describes just-in-time manufacturing very
explicitly, as well as the need to eliminate variation
from material transfer
times. Achievement of the latter, along with elimination of variation in
processing times, allows a factory to operate with almost no inventory
whatsoever. This chapter is a particularly important element of Henry
Ford’s thought process.
Chapter 11: “Money and Goods” reiterates the basic fact that prosper-
ity begins in what modern practitioners call gemba, or the value-adding
workplace. An excessive focus on finance can lead to very dysfunctional
results, and borrowing (and by implication government subsidies) cannot
compensate for processes that simply cannot deliver value.
Chapter 12: “Money: Master or Servant?” underscores the dangers
inherent in the management of any business by people whose eye is on the
dollar as opposed to the job that produces the dollar.
Ford contends that
Editor’s Introduction • xxv
abuses of the financial system, including speculation in money, under-
mine the creation and distribution of genuine wealth. This leads in turn to
poverty. Chapter 13 then picks up where this chapter leaves off.
Chapter 13: “Why Be Poor?” exposes waste as a principal source of pov-
erty, and revisits the dysfunctional effects of finance on the creation of
wealth. It also raises very serious questions as to the desirability of con-
tinuing to locate business in large cities. The role of the city as a center of
commerce has declined enormously since the development of the Internet,
so the high cost of an urban presence is almost certainly waste or muda.
Chapter 14: “The Tractor and Power Farming” is primarily of historical
interest. It does, however, show the enormous influence
of the application
of mechanical power to farm productivity.
Chapter 15: “Why Charity?” contends very convincingly that charity
should be unnecessary, and Ford’s industries abolished poverty wherever
they appeared. The idea is to treat the root cause of poverty rather than
its symptoms, and this chapter’s material applies to many of today’s social
welfare programs.
Chapter 16: “The Railroads” shows how elimination of bureaucracy
and restrictive job classifications turned the Detroit, Toledo, and Ironton
Railroad from a money loser into a profitable high-wage enterprise.
Chapter 17: “Things in General” contends
very credibly that national
and international prosperity can remove the economic root causes of most
wars. It also describes the dangers of war propaganda, such as the kind
that fomented the Spanish–American War and the United States’ entry
into World War I. This material is very applicable to today’s events.
Chapter 18: “Democracy and Industry” has particularly important
material on labor relations. It condemns impartially so-called labor
leaders who foment and then exploit worker dissatisfaction, along with
managers who look for ways to pay workers as little as possible. It also
touches on the issue of groupthink, and reiterates the principle that the
law of the situation and the requirements of the job are paramount. The
rightful leader is the one who can lead the
organization to the achieve-
ment of its goals.
Chapter 19: “What We May Expect” reiterates Ford’s basic management
principles, and also introduces the concept of sustainable manufacturing.
Examples include biofuels, and the need to find substitutes for nonrenew-
able resources.
The Conclusion summarizes the book’s key elements and learning
objectives.
