# Process power *You can study the system. You still can't replicate it.* --- You've just acquired a factory. Operating margins are 4%. On-time delivery is below 20%. Inventory turns twice a year. The equipment is fine. The products sell. The business is simply run badly. You bring in process consultants, trained in the Toyota Production System. They walk the floor, watch where materials wait, track how operators move between stations. One of them writes two words on the whiteboard: "NO GOOD." They're not wrong. But they also know what's possible. --- Over the next year, the consultants run kaizen events: week-long bursts of focused improvement on one process at a time. Rearrange the factory floor so materials flow without backtracking. Reduce changeover times from hours to minutes. Cut batch sizes so defects are caught immediately rather than discovered in a warehouse full of finished stock. The results accumulate. Margins climb from 4% to 15%, then to 25%, then above 30%. Inventory turns go from 2x to 25x. On-time delivery rises from under 20% to over 99%. Productivity goes from 3 units per man-hour to 35. None of this required new technology. The same machines, the same people, the same products. What changed was how the work was organised. --- So you codify it. You document the tools, the training programmes, the metrics. You build a system: training in the first week after an acquisition, a kaizen event in the second, a 100-day improvement plan, then monthly tracking for three years. You acquire another factory. The system transforms it. Another. Same result. You do this four hundred times over four decades, compounding at roughly 20% annually. --- Competitors notice. They visit your factories. They hire the same consultants. They send executives to the same training programmes. Articles get written. Case studies get published. The system is fully visible. Anyone can study how it works. Their margins don't move. --- The practices are copiable. The accumulated learning is not. Your people have been running kaizen events for twenty years. They see waste that a newcomer doesn't recognise as waste. The culture expects every person on every floor to identify improvements every day, not because they're told to, but because that's what working here means. A consultant can install the tools in a week. The culture took decades to build, and the culture is what makes the tools work. Hamilton Helmer calls this process power in [[7 Powers]]: an organisation embeds improvements into its operations over such a long period that the accumulated advantage becomes unreplicable. The system is visible. The depth of execution is not. --- That's [[Danaher]]. From a collection of industrial businesses in the 1980s to a focused life sciences company worth over $200 billion including spinoffs. The Danaher Business System, learned from direct disciples of the Toyota Production System's architect, applied across more than 400 acquisitions. The consultants who wrote "NO GOOD" on that whiteboard were right about the starting point. They were also right about what was possible. --- But an operating system this powerful creates its own risk. Each acquisition adds a business to transform. At some point you're running 800 divisions. The system that lifts each individual business to 25%+ margins is being diluted by the sheer number of businesses demanding attention. Margins stall at 16%. The machine that built the company is now the thing holding it back. A new CEO arrives and does something nobody expects. He stops acquiring entirely. Not a slowdown, a halt. For seven years. Instead, he applies the operating discipline to the portfolio itself. The same question the system asks of a factory floor, which 20% of activity generates 80% of value, gets asked of which businesses deserve to exist. Eight hundred divisions become 83. Five billion dollars in revenue is divested. Seven hundred and fifty million in underperforming product lines is cut. Margins go from 16% to above 25%. Return on invested capital doubles to above 30%. Market cap triples. --- That's [[ITW]]. Six hundred acquisitions over twenty-five years, then seven years of nothing. The pause proved that the operating system was more valuable than the acquisition engine that fed it. When ITW started acquiring again, it was one to three deals per year instead of fifty, each chosen to strengthen an existing division rather than create a new one. --- Same foundation: continuous improvement, decentralised operations, disciplined metrics. Danaher kept acquiring because the system needed businesses to transform. ITW stopped because the system needed room to work. Both compounded for decades. Neither could adopt the other's approach without breaking what makes theirs work. The system can tell you how to improve what you have. It can't tell you whether it needs more to transform or less to focus. That question sits above the system itself. ---