Personal reflections on the impact of “The Machine That Changed the World” in Brazil – 30 years later

October 1989. I was in my office at the Center for Policy,  Technology and Industrial Development of the Massachusetts Institute of  Technology (MIT), in Cambridge, USA, continuing my  research work on the Brazilian automotive industry and also  carrying out more theoretical studies on organizational culture and its impact  on company performance. 

It was my third year on the International Motor  Vehicle Program research project. I had already published a few “papers” on the Brazilian automotive sector as part of the set of studies being  carried out on various aspects of this industry around the world. 

To my surprise, I began receiving phone calls from  Brazilian journalists interested in learning about my work. 

At the time, it is worth remembering, communications were not as easy as they are today,  when we can get in touch with people very easily in  any part of the planet. Phone calls were not that simple to  make. 

I began receiving inquiries in particular about a specific  paper I had written on the “design age” of the Brazilian automotive  industry. 

Design age represents the level of modernity of the products being  manufactured in the different countries. What we did at the time was to identify how long ago, on average, the products in production had been designed. This meant that the lower this indicator, the more  modern and up to date the product portfolio would be. 

My study at the time showed that the design age of the cars produced in  Brazil was “+ 24 years”, while the world average was around 4 years, and in some more advanced countries it was 2.5 years. A huge  gap!!! 

This meant that the cars produced in Brazil were very old in their  design conception, they were being produced year after year, and this had  implications for safety, for manufacturability (how easy they are to  produce), technological content, comfort, etc. 

Brazilian consumers had very  outdated products at their disposal. The cars being produced in Brazil at the end of the 1980s had been designed in the 1950s or 1960s. At the time, for  example, the Kombi, the first mass-produced vehicle made in the 

country, was still being produced. This meant that consumers did not have access to the most modern product  technologies in the world  

At first, I did not understand why that particular “paper” had caught the journalists’ attention. I was not following events in Brazil  closely. Brazilian newspapers arrived sporadically and late.  We were in an election period, with the first direct elections for  president coming up soon. 

Some time later, I learned that one of the presidential candidates at the time  had uttered a phrase during the presidential campaign that caused a great deal of  discussion by referring to the cars made in Brazil as “carroças” (horse-drawn carts). 

This reportedly sparked a major debate about the level of technology and efficiency in Brazil. And above all about Brazilian industrial  policy, which for decades had protected the local market and had not  allowed Brazilian consumers to have access to products  made in other countries. 

In effect, the cars made in Brazil were horse-drawn carts, vehicles that did not  incorporate the most modern and advanced technology  available in the global automotive industry. 

This interest in my research work highlights a first impact of the study in “The Machine...” – on industrial strategy and public  policy. Copies of my work were sent to Brazilian magazines and  newspapers, automotive industry associations and government agencies. 

“The Machine...” inspiring a new strategy and policy for the Brazilian  automotive sector 

After returning to Brazil, I began to understand the new industrial policy of  market opening that was being implemented by the newly inaugurated government and that was aligned with one of the papers  I had written on “Strategic Alternatives” for Brazilian industry. 

The final edition of the book was being completed to be launched a few months  later. And I had gone back to my academic life. 

Over time, I wrote other papers on the automotive  industry. And I was invited to give some presentations to automotive industry  associations such as Anfavea and Sindipeças, which represent the  automakers and the auto parts sector. 

The first reactions to my studies were generally defensive. The  associations seemed to want to justify the protectionist policies that were  being questioned by saying that it was very important to protect jobs  through local production.

For example, one of the parameters for comparing international competitiveness was the degree of automation and robotization of the industry. In the Brazilian case, it was one of the lowest in the world. Anfavea defended, at the time, a position that said that if there were more automation and more robotization  there would be massive unemployment. 

I countered by saying that the industry had been stagnant for more than  a decade, with the same production volume of 1 million units. 

Increased efficiency could reduce costs and prices. That would expand  the market and production volumes, therefore generating more jobs in the  end. 

This defensive stance prevailed for some time.  

In 1992, the Ministry of the Economy asked me for a study on policies for the  automotive sector adopted by other countries. I had had the opportunity to  learn about this in detail when visiting companies in South Korea, Australia,  Mexico and Canada, and I had a view of the kind of framework that could be  used in Brazil.  

Based on this study, the government decided to create the Automotive Sector  Chamber, a tripartite organization involving industry, labor  unions and government to rethink the industry in light of the need for  modernization and a substantial improvement in productivity and  quality levels. 

I was the technical consultant to this Chamber, whose work culminated in a  major agreement in March 1993 with an immediate decision to reduce  vehicle prices by 22%, driving strong growth in sales and production  volume, with the creation of new jobs, the attraction of new  investment and the modernization of the industry 

The initial success of that new policy for the automotive sector encouraged the  government to also launch a broad National Productivity and  Quality Program for all sectors of the economy. 

“The Machine...” inspiring the transformation of management at companies in the  automotive sector 

“The Machine That Changed the World” was officially launched in Portuguese in  mid-1991. In addition to doing the technical review, I also wrote an  additional chapter on the Brazilian industry to be included with the appendix  for that edition. 

One of the translation difficulties concerned the new term coined in the book  – the word “lean” to characterize this new production and  management system that originated in the Toyota model.

I did not know whether the term lean would “stick”, whether it could capture people’s  imagination and adequately represent the set of changes in  concepts and practices that it brought. 

I had serious doubts about whether I should use the term lean as in the original or whether I  could look for a new word in Portuguese. There was still no clarity about the reaction of the public in the US, Europe and Japan, or whether the term lean would  catch on. 

So I thought of using a word to try to explain to Brazilian  readers what this meant and, at the time, I thought that translating “lean” as  “enxuto” or “produção enxuta” (lean production) would be an adequate way to represent  this new concept, despite the connotation it was given of  cutting people.  

Today, I would possibly have done it completely differently. I would leave the term lean  as in the original because nowadays that is how people understand it and  are able to grasp its meaning. 

The publisher responsible for the Portuguese edition of “The Machine...” was under pressure from an automaker that had already ordered 500 copies.  This company was holding an event with its suppliers and was going to  give a copy to each of them. 

This automaker had already done work to attract and develop its  supplier base and wanted to take a step forward, boosting its  competitive capability by using lean practices. 

However, at that moment, it was more a case of “do as I say, not as I do”.  This automaker had great difficulty understanding and practicing lean concepts in its manufacturing and in the rest of the organization. Only more  recently has it managed to make a leap in its performance by  maturing its understanding and through many changes in its leadership and  management. 

The other automakers (at the time we had three car makers and three  commercial vehicle makers) also began to take an interest in lean concepts and  tools. Top executives at the headquarters began to react to the  data and facts shown in the book. Although, even before the book was published, a small group of executives had already had access to the initial  research data, since the International Motor Vehicle Program had the practice of  sharing preliminary data with the companies and organizations that  funded it, the need for some kind of response had not yet been  recognized at most companies. The internal repercussions in the  organizations reached the level of the CEOs, who wanted to know more details.  The initial reaction was to challenge the companies’ technical teams to explain the  huge performance gap. 

The repercussions of the book’s publication led companies to begin to outline a  response. Although the research did not single out individual organizations, it was clear that the performance of the American and  European industries fell far short of most Japanese companies, in  particular Toyota, the performance leader. 

They began to challenge their teams to really undertake an effort  to close this gap. The reaction was uneven. Not all companies  actually took this stance. Many companies tried to justify themselves or  look for alternative explanations, almost always about factors external to the management  of the organizations. 

It took a decade until there was no longer any doubt that lean was a  paradigm that led to superior results and was the way forward for  companies in the automotive sector. And that if they did not do something quickly, they would  lose more and more ground to a company that, when the book was  published, was not dominant in market share. 

The automakers here in Brazil began to outline a response, albeit a  very faint one, still aimed at trying to understand what was happening. Not least  because the presence of Toyota and the other lean companies in the automotive  market was of little relevance. The biggest success story in the lean journey in the  early 1990s was an automaker that started it at its Brazilian  plant, without, at first, having the engagement of its headquarters. 

Today, all automakers in all countries have some program or  initiative aimed at applying lean concepts broadly across the organization. Some of them with great success, so much so that the performance  gap between them and Toyota has narrowed considerably. 

Therefore, the story told in “The Machine...” aroused the curiosity and  interest of companies in the automotive sector by showing the existence of a  far superior paradigm, which served as a wake-up call. 

At the same time, Toyota’s rise around the world took it to a position of  leadership in market share and profitability, reinforcing the book’s analysis and  conclusions. 

In Brazil, Toyota has invested in expanding its production  and distribution capacity. It brought new products and became the leading company in  quality and customer satisfaction. And increasingly, it serves as a benchmark  in performance and management. 

Thus, the recognition that there was a huge performance gap between  Brazilian industry and the rest of the world, and of the need to do something,  was strongly grounded in the data the book provided. 

After the strategic reorientation of Brazilian industry combined with  improvements in company management, the automotive market began to grow  exponentially, reaching 1 million vehicles in 1993, after having remained stuck below that volume for 12  years, and then tripling that number in  2008.

In 2010, Brazil came to be among the five largest automobile producers in the  world, the result of a combination of greater competition, including from  imported products, more investment, modernization of products and  processes, etc. All of this increased vehicle consumption in the  country and gave us better and more modern products to choose from. 

“The Machine...” had a great influence on the transition from a closed, protected  market to a more open and more competitive industry that was born  out of that rupture in the 1990s. 

Lessons for other sectors 

The book also had repercussions on other industrial sectors in Brazil, as  several companies began to take an interest in lean concepts. 

The first industrial companies outside the automotive sector to take the  first steps in their lean journeys in the early 1990s  frequently referred to the case of the automotive industry reported in the  book as a source of inspiration. And some leaders suggested that the same  could happen in the economic sectors their organizations belonged to.  

As these initial steps began to bring  concrete results, the “not invented here” syndrome was overcome – the idea that the  concepts did not apply to companies outside the automotive sector. 

Thus, the initial impact of “The Machine That Changed the World” went far beyond the  automotive sector (automakers and auto parts) and began to spread  to others such as steel, machinery, glass, aluminum, electronics, home appliances, etc. 

It was also used as a reference for research in other areas of  Brazilian industry, in several series of studies on competitiveness. 

“The Machine...” was much more than a book, a study or a piece of academic  research. It helped inspire the transformation of Brazilian manufacturing at a time of transition in industrial and economic policies. And it became a classic. 

Out of this interest, aspirations and isolated initiatives on lean emerged in the  1990s, following the book’s profound repercussions, with some  initial success but great difficulty in deeply understanding  lean principles in practice, not least because the book, although it has some  descriptive elements of certain practices, does not set out to “teach” its readers as such. 

However, at the end of that decade, even with the interest shown and the  pioneering initiatives of some companies, we noticed that the difficulty with 

practical knowledge about lean management and transformation limited the  chances of success. 

In view of this need, in 1999 we decided to create Lean Institute  Brasil (www.lean.org.br), following the initiative of James Womack, coordinator  of the MIT research and lead author of “The Machine That Changed the World”, who  had recently founded the Lean Enterprise Institute (www.lean.org) in the US, with the  purpose of documenting lean knowledge, encouraging and helping companies to  carry out experiments and learning, share these experiences and thus create a lean community of practitioners.