Chapter 18: Japan's Secret Weapon

1. Since few journalists bother to adjust for inflation when making historical comparisons, the public is thoroughly convinced that real prices keep rising.

2. Only in brand-new industries, where explosive experience growth overwhelms inflation's distorting effects, does the price-cutting power of the learning curve become obvious to the average consumer.

3. Only Japan was prepared to exploit the incredible economic opportunities presented by the microchip. At a crucial moment in economic history, only the Japanese pursued policies that took full advantage of the learning curve's central lessons.

4. According to adherents of the "tilted-playing-field" argument, the blame for America's competitive collapse can be pinned on the machinations of the Japanese government.

5. Partisans of the "nuts-and-bolts" perspective tend to ignore the intrigues of Washington and Tokyo. Instead they focus on the workday details of life inside Japanese companies. These experts argue that the unmatched rigor of Japan's manufacturing is the ultimate source of Japan's economic might.

6. Only after the reality of the learning curve is accepted do the two paramount principles of economic competition become obvious.
   • Gaining an efficiency advantage by accumulating experience faster than competitors is the key to long-term growth and survival

   • If two firms are accumulating experience at the same pace, the more intelligent firm will prevail in the contest for economic survival.

7. Japan's triumph is partly because the Japanese government encourages smaller firms to merge and form larger firms. Also, because the Japanese live by the learning curve, they flatly reject the idea that "predatory" pricing is harmful.

8. The ultimate goal of Japanese management techniques is to create superior learning organizations. Japanese managers recognize that if two competing firms have the same rate of experience growth, the more intelligent companies will have a steeper learning curve and reduce unit costs faster.

9. In America, a favorite expression is "If it ain't broke, don't fix it." In Japan, a similarly popular saying is, "Pursue the last grain of rice in the corner of the lunch box."

10. While American employees are paid a straight salary or an hourly wage, the typical Japanese worker takes home about one-third of his or her annual compensation in the form of profit-sharing bonuses.