Henry Ford invented the Toyota Production System 100 years ago when Toyoda Automatic Loom Works was still a dream. His book, My Life and Work (1923) describes all the major components of what we today call TPS. It is a shame we lost our way and it took the Japanese to show us how again.

One reason for Ford’s success was his insistence on precise measurement. He was so fanatical about tolerances, he bought CE Johansson company so he could get access to Carl Johansson and his high precision gauging system. You can read Henry Ford’s thinking on measurement in “A Millionth of an Inch” at www.changeover.com/fordmetrology.html.

Ford was also fanatic about financial measurement. He required all costs to be calculated to 1/100th of a cent. If the cost of a washer was expressed as 2 cents, it would be difficult to fire up any enthusiasm for cost reduction. This lack of enthusiasm would be partly due to the lack of visible cost reduction. The 2 cent washer on which 15% is saved, is still 2 cents. The 2.00 cent washer now has a visible savings of 0.30 cents. A third of a cent may not sound like much until you multiply it by 25 million washers annually. Now you start talking about real money ($75,000/year). That gets people’s attention especially when you repeat that $75,000 over and over again with every cost in the company.

This concept of precise expression of costs seems a pretty simple and powerful way to increase cost awareness and resulting attention to cost reduction. How many companies practice it today? Do you?

You need the macro view of your company, the big picture, to operate. Focusing only on the details will lead to strategic failure. But, focusing only on the big picture will also lead to failure. You need to zoom in on the details as well.

Ben Franklin may have said, “Watch the pennies and the dollars will take care of themselves.”

Henry Ford lived it.