MT Magazine May/June 2025

FEATURE STORY

MAY/JUNE 2025

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isn’t the most valuable vehicle manufacturer in the world. Not by a long shot. That market cap leader is Tesla, which surpassed Toyota in July 2020 and hasn’t looked back. So, is Toyota’s continuous improvement approach being eclipsed by Tesla’s strategy of disruptive improvement? Just as “The Machine That Changed the World” caused companies to reconsider their processes, Clayton Christensen’s “The Innovator’s Dilemma” made companies rethink their product development practices. Christensen pointed out that companies tend to focus on “sustaining innovation.” This is fundamentally continuous improvement, tweaking and adjusting the product and the process, but essentially doing the same thing in the same way it has always been done. It causes a company to think, “So, why change?” Disruption Isn’t Smooth One of the examples Christensen uses in the book is the disk drive industry. A few of you will remember the 8-inch floppy disk. It was introduced in 1971 and was followed by the 5.25-inch floppy disk

in 1976, the black, flexible disk you slotted into your desktop PC that ran MS-DOS. (In 1982 the 3.25-inch disk was introduced, which had a rigid plastic case, but that is post-“Dilemma.”) Christensen points out that the floppy disk manufacturers were good at producing disks, had high technical competency, and were making money from this approach. Why would they change? The thing about disruptive innovation is that the disruptive product typically underperforms existing technology, which doesn’t make a whole lot of sense. However, it is also generally simpler and less expensive than established products, and it may address a market niche. Said another way: If you continually improve a product, the transitions are comparatively smooth. But if you take a disruptive approach, things are jarring – but very well may address a new or growing market demand. When was the last time you saw an 8-inch floppy disk? When did you last buy a computer with a disk drive? These days, you’re

lucky if you find a USB-C port. This brings us back to Tesla.

The powertrain of a Model 3 has fewer parts by several orders of magnitude than the internal combustion engine in a Toyota

The original moving assembly line in the Ford Highland Park plant in 1913. Yes, there have been significant changes since then. But now companies are rethinking this sequential approach to assembly, which may achieve huge savings in manufacturing operations. (Image: Ford)