Henry Ford's core business principles from "Today and Tomorrow"

Executive overview

Ford's 1926 book argues that most businesses fail because they confuse the purpose of a company with the mechanics of running one. Serving the customer — not maximising profit — is the only foundation that sustains a business long-term. Low prices, high wages, and relentless cost reduction are not competing goals but the same goal expressed differently.

The wage motive: an underpaid worker is a customer you destroyed.

Opportunity and ideas

• Every new idea creates more opportunities than the idea's creator can capture.
• Ford employed 600,000 people directly and indirectly from a single idea developed in 18 years.
• The world shackles itself with "outworn notions" — opportunity is always expanding, not shrinking.

Service vs. profit as the organising principle

• A corporation must follow the service; the service does not follow the corporation.
• Putting profit above service narrows your market and eventually strangles the business.
• A business that exists only to enrich its founders has no reason to exist once that goal is met.
• "Business never fails. Only men do that."

The wage motive

• An unemployed man is an out-of-work customer — he cannot buy.
• An underpaid worker is a customer reduced in purchasing power.
• Cutting wages cuts demand, which cuts work — a self-defeating loop.
• High wages require first getting the structure of the business right, not just wishing to pay them.
• If an employer does not share prosperity with those who create it, there will be no prosperity to share.

Debt and financial discipline

• Debt divides allegiance: the business must serve both the public and the financier, and the public loses.
• Predatory finance targets businesses through debt — loading companies with it to strip and sell them.
• Keeping the business within its own earnings preserves independence and long-term viability.

Focus and purpose

• Ford's entire operation centred on one objective: making motors and putting them on wheels.
• "We have built nothing for the sake of building. We make nothing for the sake of making."
• Methods are formed by your objective — do not put method ahead of purpose.
• Distraction by adjacent opportunities is how focused companies lose their edge.

Continuous improvement and the meaning of time

• The past is only something to learn from — never proof of what can be done in the future.
• Every process in manufacturing should be treated as purely experimental.
• New operations should be led by people with no prior knowledge of the subject — experts know too many things that "can't be done."
• Waste of time is the hardest waste to correct because it leaves no visible litter.
• Ford cut the production cycle from 14 days to 81 hours through relentless iteration.

Management principles

• Real leadership is unobtrusive: arrange material and machinery so practically no orders are needed.
• Each man and each machine should do only one thing.
• Cleanliness and well-maintained tools teach workers to respect their surroundings and themselves.
• Hiring two men to do the job of one is a crime against society.

On work and industry

• There is no way out of poverty except through work; the world has tried everything but work.
• Industry exists to make things that people use — nothing more, nothing less.
• The true end of industry is to liberate mind and body from drudgery by filling the world with well-made, low-priced products.