Så formades Apple av idéer från efterkrigstidens Japan

How a little-known yet highly influential management course in postwar Japan paved the way for Steve Jobs’ obsession with quality.

Winston Churchill called it “the most daring and courageous act of the entire war”. On August 30 1945, General Douglas MacArthur landed in Atsugi, south-west of Tokyo. He wore aviator sunglasses, a corncob pipe dangled from his lips, and he was unarmed. A man of war was arriving to make peace.

Over the next six years of allied occupation, MacArthur would demilitarise Japan, enfranchise women, oversee the writing of a new constitution and decree democracy. But first, he faced a more prosaic problem: Japan’s communications industry was in such shambles that he could barely issue commands.

Solving this challenge turned out to have enormous consequences, not only reshaping Japan in the 1940s but upending global manufacturing in the 1980s and, by the 2000s, revolutionising the way products would be built at Apple, a company that did not exist at the time.

Apple, which turns 50 years old on Wednesday, is arguably the world’s most iconic company. It is also notoriously opaque and secretive. In virtually all accounts of how Steve Jobs transformed Apple from near-bankruptcy in 1997 to the world’s most valuable company by his death in 2011, product vision and design get all the credit.

But what actually makes a $1,200 iPhone possible at global scale with vanishingly few defects is a manufacturing philosophy that traces back not to Silicon Valley or southern China but to war-devastated Japan.

This is a story about how ideas travel — across oceans and factory floors, and sometimes through a single person changing jobs. It is a story about how America invented a manufacturing philosophy, exported it to Japan, forgot it, relearnt fragments of it through a handful of companies and then re-exported the whole synthesis to Asia. The story leads us to the present moment, with the US spending vast sums trying to bring it all back, southern India investing to be the next global tech hub and China fighting to hold on to its manufacturing dominance.

It is, above all, a story underscoring that what Apple started to build in Shenzhen, China a quarter century ago is not merely an assembly line. It is the endpoint of a multi-decade chain of civilisational knowledge transfer, a feat of enormous complexity that cannot be replicated with tax breaks in Karnataka or a ribbon cutting in Texas.

The whole chain begins with a question. In occupied Tokyo, a 33-year-old engineer named Homer Sarasohn stood before a group of Japanese executives and asked: why does any company exist?

When the telegram arrived from General MacArthur, Sarasohn initially thought it was a prank.

A physicist by training, the paratrooper-turned-radar-engineer was working on a transcontinental microwave relay system in the US when it arrived. He dismissed it, only realising his error when an indignant colonel called him back a few weeks later. Then he was dutifully off to Tokyo for what was supposed to be a nine-month stint.

Sarasohn’s mission was to “re-establish and rehabilitate the communications industry”. But he found there was nobody to work with. American bombers had devastated industry and MacArthur had abolished the zaibatsu, the massive prewar corporate cartels.

“We had to start from scratch,” he recounted in 1988. “When we looked around, not only did we see no facilities but we could find no managers. We had to find lower-level people, second-level managers . . . And I said, ‘As of today, you’re going to start up this new company and you’re going to run it.’”

The quality of manufacturing in Japan was shoddy, even before the war. But as Sarasohn began learning the language and immersing himself in Japanese culture, he realised the root of the problem was not technical, it was managerial.

When he asked a group of employees how they might improve quality, they murmured among themselves about what answer would please him, rather than answering directly. They had been taught to be deferential, he concluded, not to question authority. So Sarasohn set out to teach them a philosophy of management.

Despite initial opposition from MacArthur, the need for economic stabilisation meant that Sarasohn got his wish. He and another engineer, Charles Protzman, went off to an Osaka hotel for a month to write a textbook on industrial management. They designed a rigorous eight-week course and made it compulsory for top managers.

The seminars began on the importance of quality as “a guiding state of mind, a devotion and dedication”. After asking “why does any company exist?” Sarasohn encouraged his disciples to draft a mission statement by invoking a motto from a shipyard in Newport, Rhode Island: “We shall build good ships here; at a profit if we can, at a loss if we must — but always good ships.”

Manufacturing, he taught, had to be considered a “total system”, its disparate parts orchestrated with such repetitive precision that defects could approach zero.

He inculcated in his students a sense that quality was foundational to the whole enterprise, empowering workers close to production and telling managers they needed to understand the details. “Quality control is not a ‘band-aid’,” Sarasohn later recounted. “To be effective as a control, the total process to which it is applied must be well designed to begin with.”

When Sarasohn left Japan in 1950, he recommended his successor be the academic W Edwards Deming, an advocate of statistical process controls. He would prove so influential that the Union of Japanese Scientists and Engineers would name its coveted annual award for quality the Deming Prize.

Sarasohn also recommended the work of Joseph Juran, a consultant who during the war had managed a programme shipping war materials to Allied nations. Juran’s work in Japan would go on to earn him the highest honour from Emperor Hirohito.

Deming and Juran are today two of the most celebrated names in the 20th-century quality movement; Sarasohn is largely forgotten. Yet his seminars were still being taught in Japan a quarter of a century after he left and his students today read like a roster of corporate Japan’s most talented business elites — executives from Fujitsu, Hitachi, NEC, Mitsubishi Electric, Toshiba, Sanyo and Sharp. Sarasohn even held private classes, in Japanese, for Masaru Ibuka and Akio Morita, founders of a small start-up they would later name Sony.

Bunzaemon Inoue, a Sumitomo Electric executive who later chaired the boards of companies in Japan’s quality-control movement, called the seminars “the light that illuminated everything”.

In postwar America, the concepts seemed irrelevant. Far from needing to rebuild from scratch, the US emerged from the war boasting half of the world’s manufacturing capacity. As global demand for cars, radios and other goods surged, factories could not churn them out fast enough. Productivity and profits became everything, while quality was relegated to inspection departments.

By contrast, in Japan the importance of quality diffused across society. Quality for Foremen became the most popular Japanese radio programme in the 1950s. Quality was not some separate department; quality was everyone’s job. The Japanese adapted, refined and systematised these ideas — then applied them at scale.

By the late 1970s Japan was building companies that humiliated American industry. As people started joking that Ford stood for “Fix Or Repair Daily”, the Toyota Production System made quality cars efficiently with “just in time” inventory controls. Sony moved from well-designed transistor radios in the 1950s to introducing the Walkman in 1979. Significantly, five of the Japanese companies Sarasohn taught entered a small but fast-growing sector: semiconductors.

Sarasohn died in September 2001, a few weeks before Jobs unveiled the iPod — the very device that would exemplify his ideas of how to build a product.

A few years before he died, he spoke of his pride in the work he and his contemporaries had done in Japan. But he had never imagined that his fellow Americans would forget all the lessons he considered so foundational. “Somewhere along the line we lost our way,” he said. “We forgot the very lessons we taught the Japanese.” He critiqued American companies for get-rich-quick schemes, for elevating MBAs, sales, marketing and finance, and most of all for denigrating engineers and forgetting the factory floor.

“Where is quality today in American business?” Sarasohn lamented. “It can’t be Donald Trump, can it?”

Steve Jobs “what all the ballyhoo about quality was”.

It was early 1990, and Jobs was half a decade into leading NeXT, the start-up he had founded after being ousted from Apple. NeXT’s first product, a cube-shaped workstation costing $6,500, had already been a much-hyped flop.

The team’s goal had been to make a great computer their friends could afford; by the time it shipped, the joke goes, “the only friends that could afford to buy it were Steve’s”.

Japanese quality ideas had been all the rage for a decade. The superiority of Japanese production had become clear in March 1980 when Richard W Anderson, a Hewlett-Packard executive, famously discovered that the best Japanese memory chips performed 1,000 per cent better than their American equivalents at initial inspection, and 500 per cent better over time.

The so-called “Anderson Bombshell” made HP start to obsess over quality. Its Japanese joint venture, Yokogawa Hewlett-Packard, won the Deming Prize in 1982 and became the foundation for rigorous standards applied across the whole company. HP aspired to improve quality 10-fold within a decade, and when that looked to be failing it adopted a Japanese step-by-step approach to quality known as Plan, Do, Check, Act.

Jobs was clearly taken by the ideas of quality Silicon Valley was beginning to import from Japan. Having set out to build a computer company that would create better products, he commissioned an automated factory in Fremont inspired by the plants of Japanese electronics manufacturer Alps Electric.

He spent millions of dollars on the Fremont facility, even lavishing attention on things like the colour to paint the machinery. His favourite thing about the NeXT Cube, he told reporters, was that “it’s not made in Osaka”.

To lead the plant he stacked NeXT with HP talent including Randy Heffner, its VP of manufacturing, and Jon Rubinstein, who was recruited to run hardware engineering in 1990 having studied quality control techniques at HP.

But Jobs was sceptical of all this process talk. Vicki Amon-Higa, whom Jobs hired in early 1990 from the power utility Florida Power & Light, characterises his approach at the time as “brute force and great people”.

The idea was that you hire geniuses, lock them in a room and apply pressure until brilliant products emerge. Process, by contrast, sounded bureaucratic and stultifying. Process was not just absent from Jobs’ thinking; it was antithetical to it. Amon-Higa says Jobs understood “small q quality” (a narrow focus on product) but did not grasp “big Q quality” (how to enforce standards across the entire organisation).

Amon-Higa, who had first visited Japan as a 15-year-old, had studied the country intensely and even wrote her PhD thesis in Japanese. Then she started her career by researching and translating everything in the quality movement. It was her work at the Florida utility that helped it become the first non-Japanese company to win the Deming Prize.

Jobs, proud of his company’s computer designs and the automated factory that made them, figured that if a utility could win such an award then NeXT could, too. So he hired Amon-Higa to help NeXT apply for the Baldrige Award — America’s counterpart to the Deming Prize.

Jobs told her he could “see the cake”, witnessing the fruits of the quality push, but he wanted to “eat the cake” by experiencing it in action. She organised a trip for NeXT’s top executives to visit Milliken, a textile manufacturer which had just won the Baldrige Award.

But he still wasn’t convinced. Amon-Higa recalls walking into his office to say that NeXT had great people and great products, but for the organisation to keep going it would need a cross-functional team to build a process end-to-end, the way the Japanese do. Jobs listened but showed little interest. Finally, he replied: “Go find someone who cares.”

So she did. She invited her mentor, Noriaki Kano, a quality expert who emphasised customer satisfaction, and Juran — the so-called “architect of quality” whose writings had been promoted by Sarasohn — to speak with NeXT. The impact was profound.

Jobs tended to think that talent was innate, but Kano taught him that people needed to be coached and developed, to bring out their best. Juran, then in his eighties, convinced Jobs to empower the individuals actually doing the work to make improvements and taught him the value, Jobs later said, of “seeing everything as a repetitive process, and to instrument that process, and find out how it’s running”.

He particularly liked that for Juran, quality was just one aspect of a broader system that did not sound stifling. “Dr Juran was one of the few people that I met that had a real down-to-earth approach to it, that didn’t think that quality was the second coming,” Jobs said for a Juran documentary, in late 1991. “He approached it much more scientifically.”

Jobs called Juran’s philosophy “a radically different approach to business processes than the traditional one” — but it was too late for NeXT. Their pipeline of products had no market fit and, by 1993, Jobs was forced to abandon manufacturing.

However, his realisation that his “great people and brute force” approach was no longer good enough became plain a few years later when he needed to institute reforms at Pixar, the animation start-up he acquired from George Lucas.

Pixar’s problem was that it had a culture of A-team players who would work to exhaustion on a single project. While that delivered Toy Story, a smash success, it also resulted in a team of burnt-out superstars and a B-team lacking experience. Consequently, the company had no ability to work on multiple films at once. “Having two different standards of quality in the same studio was bad for our souls,” co-founder Ed Catmull would later write.

So Jobs called up Amon-Higa and hired her to adapt Japanese process ideas into making animated films. Creating such a process and enabling any employee to metaphorically “pull the cord” on the production line, Catmull wrote, became “the defining moment for Pixar”.

Success had been a terrible teacher to the young Jobs, but the big failures at NeXT and quality problems at Pixar helped him evolve into a visionary leader.

Meanwhile, the HP manufacturing DNA was being carried forward by Rubinstein, the head of hardware engineering at NeXT. His division was spun out into a new company and acquired by Motorola, itself a major advocate of absorbing Japanese quality control methods since the early 1980s.

In 1997, after Jobs returned to Apple as CEO, he hired Rubinstein and the quality-obsessed people from Motorola, layering their hard-won quality lessons with those from Pixar and NeXT.

(Motorola, meanwhile, would go on to bring these learnings to scaling cell phones into major volumes in the early 2000s, via a little-known company north of Shenzhen called Foxconn.)

Finally, Jobs was back in control of what he loved most — hardware — and he could implement the Japanese quality ideas he had been digesting for a decade.

Except for an inconvenient fact: Apple was nearly bankrupt and could not even support its own manufacturing. Instead, Apple trained workers in Korea and Taiwan — Japan’s former imperial colonies, where similar ideas about quality had also been percolating.

The quality revolution at Apple would take years to evolve, as the teams synthesised myriad lessons from competing paradigms and merged them into something novel that bridged quality with breakthrough design.

The success of this endeavour would have global consequences. Apple, a single company, would not just compete with the Japanese but swallow them whole. In less than a decade Japan’s top consumer-facing brands — Sony, Panasonic and Sharp — would become mere subcontractors to the Apple empire.

But what was clearly a victory for the company was not so clearly a victory for America, because it would all take place in China.

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