Hansei, Kaizen, and why the Japanese are 'better' at innovating

In the 1980's, Japan overtook America in automotive and electronics manufacturing. This was not due to low labor costs or natural resources (Japan was actually at a disadvantage here), but rather due to their manufacturing philosophy. Based on the principles of W. Edward Deming, the Japanese approach put a heavy emphasis on introspection and ongoing improvement. As one of the first and most successful adopters of the new approach, Toyota became one of its namesakes.

From wikipedia's entry on the Toyota Production System: "The Toyota Production System (TPS) (トヨタ生産方式) is the philosophy which organizes manufacturing and logistics at Toyota, including the interaction with suppliers and customers. TPS is known more generically as Lean manufacturing. It was largely created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno; they drew heavily on the work of W. Edwards Deming and the writings of Henry Ford."

Two of the key ideas behind TPS are Hansei (relentless reflection) and Kaizen (continuous improvement). Several Japanese and Korean companies adopted TPS after its success at Toyota, leading to their eventual overtake of much of what was left of American manufacturing.