Why we should listen to a car boss if we want a GP appointment

The Western world has had a dominant model of how to do things for 40 years and it is clearly failing while China has a different model which very clearly works. It is time we started learning.

I want to tell you two stories about electric car supply chains. Yeah, sounds riveting – but yet these should help to explain why you can't get a doctor's appointment in Scotland. Allow me to elaborate.

First story, why can't Ford make an electric car? This is best explained directly by Ford CEO Jim Farley himself. Talking about the components that go into making a modern car, he says:

"We have about 150 of these modules with semiconductors all through the car. The problem is the software is all written by 150 different companies, and they don't talk to each other. So even though it says Ford on the front, I actually have to go to Bosch to get permission to change their seat-control software."

Here is another story about the Ford CEO. He realised he didn't actually know a lot about the experience of driving a car made by his Chinese competitors (there aren't many Chinese electric vehicles in the US), so he had one imported. He drove it for four months. At the end of the planned period he openly told the world that he didn't want to give it back. It was a Xiaomi SU7.

Who? Well, if you recognise the name at all you recognise it from mobile phones. Xiaomi is a Chinese mobile phone maker. They have less than two per cent of market share in the UK, but in China they sell one out of every five phones. An increasing trend in EVs is to sign deals tailoring onboard software to specific phones – Jaguar has an exclusive deal with Apple.

So Xiaomi decided it wanted to get in on that market – by making its own car. Because it wanted to. It had never produced a car before, yet it took only four years from its decision to make a car to the stage where it was shipping product. Compare and contrast that with Ford's failed decade.

Now let's look at the specs. The SU7 is a beautiful looking car which has an absolutely impeccable internal IT system that runs it (it has its own karaoke mode...). That you might expect. But it has a baseline range of 430 miles, can accept superfast charging which increases range by 220 miles in five minutes, accelerates from 0 to 60 mph in 2.7 seconds and has very strong reviews for handling and performance.

Oh, I should mention – it sells for £26,000 in China. This is the performance and fit of a top-end sports car for the price of a Renault Clio. It isn 't just impressive, it's kind of scary – certainly for the West.

I want to explain that Ford's inability to build an electric car and the insouciant, offhand way Xiaomi just did it in the time Ford was humming and hawing is because the Western world has entirely lost its way and needs a revolution if it is to remain competitive – and this applies to everything that is failing in our society.

For the purposes of this I'm going to refer to the Western Model and the China Model. To illustrate the difference, I want you to think about all the individual tasks and components needed to build a car as dots on a page and the process of acquiring, delivering and assembling those components as lines between the dots so they look like molecular diagrams.

Here is the difference between the Western Model and the China Model. The West sees the dynamism in this system as deriving from friction and play between the dots. The theory is that you increase efficiency and reduce costs by separating the elements in the process and, in effect, making people compete to supply those elements.

The China Model has a very different theory of the dynamic of their system. For them dynamism comes from the rigidity of the system and its ability to transfer energy through the system quickly. For them you can build a better product faster and at less cost if you retain much greater control over its individual parts. Effectiveness does not come from squeezing value from inside the system but from accelerating value across and through the system.

The Western Model seeks value in the lines between the dots. This is where Western wealth is generated. Every process is broken down into as many small processes as possible and these are outsourced so suppliers can be traded off against each other. It's kind of like supply chain Taylorism – no-one controls anything more than a component part and can be replaced by someone else, so only those commissioning have power. In theory.

All the lines between the dots in the Western Model are always jiggling about, being compressed and broken and reformed in the pursuit of profit extraction. The China Model doesn't try to extract wealth from the process, it tries to generate wealth from the efficiency of production. It's supply chains are shorter and more limited and it has much more command and control over every stage.

So no, there aren't sixteen suppliers competing to make the button that rolls the window down, but then the button they make themselves is just as good and they don't waste time and money constantly trying to tender for window buttons to see if there is someone who can save them 45p. The value comes from making a good product quickly and cheaply and efficiently.

“If you’re really bad at something, looking at someone who’s really good at something and learning why they do it better than you is a very good idea”

The West went nuts with this. The idea that brands are just a name, money and a management team became rife in the 1990s. Clever people don't make things, clever people buy components and make someone else make things. Then you scam every transaction to minimise tax, reduce exposure to risk, maximise wealth extraction and so on.

This makes a lot of money for those sitting at the top because the process is literally designed to leak money. The problem is.... it doesn't work very well. It's not just because of wages that we can't make things, it's so long since we've tried that we don't have the infrastructure. I read of an example recently where a US company tried to re-shore the manufacture of a metal straw. They couldn't, because no-one in the US had or made or sold the tooling machines necessary.

China makes things fast and well by keeping it simple, rigid, tightly managed and supervised. The West makes things through a blizzard of outsourced contracts which are never designed to work well with each other so much as against each other. We take value out, China passes value through.

It is slightly concerning that it may now be too late for the West to learn from its mistakes. Ford still doesn't make an electric car, it makes an electric version of its petrol cars. This is a very different thing. Modern electric vehicles are not designed as an afterthought round the chassis of a frame made to transfer petrol engine torque along a central drive shaft running down the middle of the vehicle.

We're now so far behind with integrated supply chain manufacture that it may not be feasible to catch up. But this article isn't really about cars, it's about everything. The Western Model has conquered everything. If you want to know why Scotland is utterly incapable of commissioning a ferry or designing a deposit return scheme or creating a National Care Service, I want you to go back to the Ford CEO quote from the beginning of this article.

Our governmental processes also follow the Western Model. The days of career civil servants designing and implementing policies and then trained professionals delivering them are gone. We now commission elements of policy from lots of sources and a low-power team mushes it together because mostly all policy does is create a structure and 'enable' a management class to run it.

These 'enabling bills' have dominated Scotland. They are made by perhaps three external consultants formulating bits, four or five working groups arguing over purpose, a team in the civil service, a team in whatever quango is going to deliver this, and it's all hacked together during the process of passing the legislation. None of it was ever really designed to work together.

That is then handed over to a management class which repeats the whole process. For them the value in public services also lies in the lines between the dots. It is not the relationship between the GP and the hospital consultant that is important, it is the extent to which a management class can control the relationship between the GP and the consultant. That way the management class can decide what that relationship should be.

The idea that Western capitalism is efficient is patently untrue. It is very profitable, but that is because it is the opposite of efficient. It is very profitable because it is incredibly leaky. Stock market values in the West aren't based on the quality of the product made or sold but on the ability of the company to 'stretch and extract', get in between the units of production and squeeze the value out of them – and not for customers. Never for customers.

We do the same in policy because this same, stupid failed and failing theory has been transplanted wholesale onto the public realm. This works for the finance sector, but not in the manufacturing sector and very much not in the public sector. It produces unrealistic returns on capital by cannibalising itself from the inside, but the cannibalised remains don't work well.

There isn't anything particularly complicated in this. Stop outsourcing policy development. Stop fragmenting public service delivery into isolated component parts. Stop trying to disempower the staff who deliver all the component parts. Stop trying to manage the process in gaps between the actual 'delivery nodes' and instead remember that the 'delivery nodes' are the professionals delivering the service who you should trust because they know more than you.

A Chinese corporation could have had a Deposit Return Scheme designed and running effectively and smoothly in months. They could do this because they would control, coordinate and manage the entire project on an outcome basis not a process disaggregation basis. There is no need to overthink this; it works, because it works. It's that simple.

If you're really bad at something, looking at someone who's really good at something and learning why they do it better than you is a very good idea. Don't be Ford, be Xiaomi. Scotland is really bad at public policy. It's time we understood why.