Apple at 50: the roots of a tech revolution

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 wanted to know “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.

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