So how do you know whether you're always improving if you don't measure your performance at consistent points along the way? Just ask everyone if it felt like you improved, followed by a group hug and mutual back-patting?
Going by his theory... If you say, "I am paying you to produce 1,000 cars per month" then that's what you'll get. If instead you rely on intrinsic motivation, and improve the system, you will get more than 1,000, and they'll be higher quality.
This doesn't work everywhere. (Certainly not with Sales commission!) But it is worth thinking through the logical implications of it.