kaizen continuous improvement for creating business advantage · kaizen – continuous improvement...

© 2016 Lean Business

Kaizen – Continuous

Improvement for Creating

Business Advantage

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Table of Contents Kaizen Overview .......................................................................................................................................... 3

Cultural Influence ..................................................................................................................................... 3

Inhibitors to Forward Movement .................................................................................................................. 5

Business Culture ....................................................................................................................................... 5

Kaizen and Innovation .............................................................................................................................. 6

Success Inhibitors ..................................................................................................................................... 6

How Come We Are The Way We Are? ........................................................................................................ 7

Kaizen vs. Innovation ............................................................................................................................... 7

How Come Every Business Doesn’t do This? .......................................................................................... 7

The End Game .............................................................................................................................................. 8

Hi Level Steps to Kaizen .......................................................................................................................... 9

Kaizen Benefits ........................................................................................................................................... 10

Kaizen Metrics ............................................................................................................................................ 12

Bibliography ............................................................................................................................................... 13


Kaizen Overview

Kaizen means improvement. It doesn’t specify large or small improvement, just constantly

changing for the better. Everyone is the expert at their job. Ask yourself: “If all your workers

are focused on the betterment of the business, wouldn’t this move business in an upward

direction, constantly?” Great companies do great things but not always in one fell swoop. Often

Kaizen companies constantly experience small changes intermixed with large changes.

Eiji Toyoda, former chairman of Toyota said, “Our workers provide 1.5 million suggestions per

year, and 95% of them are put into practical use. There is an almost tangible concern for

improvement in the air at Toyota. ” Ideas could be large and complicated or small and easily

implemented. Kaizen teaches employees to constantly think about how things could be changed

for the better every day. Not all improvement ideas are put into suggestions but form the basis of

conversation underpinning future improvement suggestions.

Imai, Masaaki (1986) states that engineers at Japanese plants are often warned, “There will be no

progress if you keep on doing things exactly the same way all the time.” He also relates the

following story about Toshiro Yamada, who said he had recently been back to the United States

in a sentimental journey to some of the plants he had visited, among them the River Rogue steal

works in Dearborn, Michigan. Shaking his head in disbelief, he said, “You know, the plant was

exactly the same as it had been 25 years ago.” If you are operating today the same as they were

yesterday, you have made no progress.

Kaizen constantly has us asked the question “How could this process operate more efficiently

and is it necessary?” If you are not adding customer value then what is the point?

Cultural Influence

Luck is not an accident and every business should focus on enabling their business to become as

lucky as possible. Is that in your culture? It said that luck is a matter of “timing meets

preparation”. Most of the time we have very little control over timing but preparation is totally

under business control. As business moves towards becoming highly adaptive it becomes more

capable of responding positively to unanticipated opportunities.

Some of the best businesses do not focus on quarterly returns. They focus on what enables

successful businesses and then let’s that drive quarterly business. Financials that businesses must

report, all look backwards. Looking forward is great but, can businesses react forward?

“Change is constant.” Heraclitus

Culture is important for a company. It’s funny that one of the major innovative companies in the

world, that introduced manufacturing philosophy to the world, also had expertise on building


culture in the company. Samuel Marquis (Grandin 2010) was the head of Ford’s employee

relations department and stated: “It isn’t true. Mr. Ford shoots about 1500 cars out the back door

of his factory every day just to get rid of them. They are the byproducts of his real business

which is the making of men.” Having a culture that puts the focus on individuals’ leads to a

company that is adaptive and strong.

There is a vicious cycle that exists in companies that have not implemented Kaizen. This cycle is

one of workers accepting substandard quality. A simple example is what I noticed when visiting

a local grocery store. The plastic bag dispenser located in the produce department was installed

upside down thus eliminating its ability to automatically deliver one bag at a time.

Photo 1: Grocery store plastic bag dispenser installed upside down (the metal U will not catch

the plastic bag roll and hold it to separate bags):

I brought this to the attention of the individual in the produce department and he stated that if he

told his manager about the situation his manager would say “don’t worry about it.” Though this


is not Continuous Improvement, nor is it warusa-kagen, which is something that is not really a

problem but still not quite right. But a Kaizen culture would not let this happen.

This highlights up the greatest challenge of implementing a Kaizen program: Business Culture.

Kaizen requires a significant culture shift.

The best way to start a Continuous Improvement are Kaizen program is to institute a top down

policy of never passing or accepting a problem.

“A problem is a guidepost to improvement” – FitzGerald

The Kaizen culture requires complete employee commitment (including management). A new

environment exists where people share ideas and care about company success.

When you open your mind to Kaizen you take more interest in your job. You become more

interested in what is happening upstream of your job and what happens downstream of your job.

This more holistic approach or vision allows your mind to expand Kaizen.

Do not fear that Kaizen will inhibit innovation as it puts no limit on the size of improvement.

The Kaizen culture is an adaptive culture. Futurist Alvin Toffler (1984) wrote that to avoid what

he called “future shock,” we must become “infinitely more adaptable and capable than ever

before. We must search out totally new ways to anchor ourselves, for all the old roots - religion,

nation, community, family or profession - are now shaking under the hurricane impact of the

accelerative thrust. It is no longer resources that limit decisions, it is the knowledge that makes

the resources.”

As you move forward and become more efficient the output increases and productivity increases,

thus generating hard dollar savings.

Inhibitors to Forward Movement

Business Culture

Does your business adapt quickly to changes in the market?

Is your business caught off guard by disruptions?

When someone comes up with a great idea how quickly is it brought to fruition?

The benefits of an adaptive business are many more than just answering the above three

questions in the affirmative. Adaption requires a business culture that embraces change.


As with most business requirements strategies are forever moving forward. If business is to

change the management must change and the people must change. This is succinctly stated by

futurist Alvin Toffler (1991) who stated that the illiterate “of the 21st century are not those who

cannot read and write but those who cannot learn, unlearn and relearn.” That changes where the

bar is set.

Management culture must change for Kaizen success. Manager must look down for

improvement guidance. The employees closest to the process will have the best ideas on how to

improve the process. A supportive and receptive management staff enables this.

What will inhibit success more than big ego managers, lack of vision, and psychotic CEOs –

nothing. Non-adaptive cultures are filled with individuals that are concerned about themselves.

They are adverse to taking risks and fall back on “this is the way we’ve always done it “.

Southwest Airlines and Lockheed Martin are just two of the companies that have opened up the

whole company to supporting their futures.

Kaizen and Innovation

Miller, Wroblewski, and Villafuerte (2014) proclaim if asked to name the most important difference

between Japanese and Western management concepts, I would unhesitatingly say “Japanese Kaizen and

its process oriented way of thinking versus the West’s innovation – and results oriented thinking.”

Kaizen is a long-term strategy as the Continuous Improvement ideas start to pileup and accelerate it takes

a top management desire to stay the course. A requirement is that management has a strong focus on the

long-term health of the company. Management must not waver to make this successful.

Success Inhibitors

Results are the only thing that count in a result focused business. Many businesses believe that

their responsibility to their customers ceases the moment the product or service goes out the

door. Does the responsibility end when the money is transferred from the customer to the

business? There are two ways to answer this question, one being much more thoughtful than the

other.

Projects. Many businesses correlate projects with moving forward. Kaizen introduces an

alternate viewpoint. What if you are executing so many projects that you don’t have the

bandwidth to determine the root cause analysis of your problems? Root cause analysis removes

errors from your business. And yes, performing root cause analysis may be a project, but how

many of those projects are going on? Are the ‘accelerate us forward’ projects squeezing out the

ability to determine what is causing problems in your business?


One way to assess the adaptability of your management is to determine whether their focus is on

results or process. Everyone will be a mixture of those two but is the mixture right to become an

agile business? Another way to look at this is if your customers criticize you for poor quality is

that an individual’s problem, everybody’s problem or a process problem?

How Come We Are The Way We Are?

Kaizen vs. Innovation

What happens if you don’t adopt Kaizen? You become GM. It takes 8 hours to change from one

car model to another at GM and 47 sec at Toyota.

There are many reasons that businesses are the way that they are. Different businesses have

different requirements for change. One example is a business that made a product for the Navy.

This product was produced for 25 years. The Navy’s requirement was reliability. This was by far

the most important requirement. The result was that this business focused much more on

reliability than anything else. Over 25 years this created an interesting dynamic in the business

because all managers promoted during this time had a strong focus on reliability. One of the

byproducts of a manager focused on reliability is that they are inherently risk adverse. The

challenge came when the business decided that they wanted to sell this product on the

commercial market. Reliability was not the same focus for the commercial environment.

Reliability also comes with a cost. The managers in this company did not know how to adjust

how they ran their business to address cost and deemphasize reliability. This business was not

adaptable.

How Come Every Business Doesn’t do This?

Business may already have a strategy called “Innovation”. This is very popular with Western

companies and has been in use for decades. So, if this is so great, how come manufacturing is

going overseas? Kaizen does not preclude innovation, it just adds to the number of your

innovators.

Another reason may be that managers think they know best. This is borne out by Neil Rockham

who found that American managers dominate meetings and advocate their ideas at a 9 to 1 ratio

over others ideas. Do you promote improvement by shutting down discussion or opening it up?


The End Game

Implementing Kaizen is not a simple straightforward process but the payoff is huge. One

business implemented Kaizen and found it gave them a competitive advantage in hiring because

individuals that were looking to improve themselves were attracted to the Kaizen culture. Culture

is usually the largest change to occur.

To get a feel for how a Kaizen culture differs from an innovation culture it is worthwhile to look

at Kaizen core beliefs. The steps to transformational change are well documented and have been

used successfully for decades. Lastly, it is important to make your Kaizen program your own.

The following portions of this section address these concepts.

FitzGerald “Kaizen teaches people to think big.”

Characteristic Kaizen core beliefs:

Servant Leadership

A long-term view

Appreciation for standards

Everybody involved

Understand processes drive errors, not people

Respect for people

Curiosity

Managers become conduits not barriers

o Team members take responsibility for a problem and managers are responsible for

lowering the barriers for the team member to solve the problem

o Emmanuel Dujarric of Medtronic has found in his company: “When we look back

on results, it’s been proven over and over again that the biggest breakthroughs we

have had at Jacksonville came from line employees.”

“Plan slowly and act quickly” principle from the Toyota Way

o Eastern saying: “Plans don’t always work out the way you imagined, but they

always work out the way you implemented.”

The CEO or COO introduces and monitors the program

o Management must be committed

o Henry Ford said: “You can think you can, or you can think you can it, and you

will be right.”

Evaluate Value Stream Management

Scientific problem-solving

A change to a culture is successfully implemented by repeating success.


Hi Level Steps to Kaizen

Overview Kotter’s well-known eight steps for transformational change. Make sure the Kaizen

program encompasses all eight steps. Some of the steps can be done in parallel.

Kotter’s 8 steps for transformational change:

1. Create Urgency – competition or the desire to be great

2. Form a Powerful Coalition – start at the top

3. Create a Vision for Change - management must be committed

4. Communicate the Vision – get it out there and let everyone know it’s a different game

5. Remove Obstacles – this shows commitment and makes life better for everyone

6. Create Short Term Wins – easy to do and publicize

7. Build on the Change – build momentum

8. Anchor of the Changes in Corporate Culture – communicate, communicate, communicate

“The secret of getting ahead is getting started. The secret of getting started is breaking your

complex overwhelming tasks into small manageable tasks, and then starting on the first one.”

Mark Twain

Dedicate and spend the time that demonstrates real commitment to making your business great.

A new way of thinking is triggered by doing. In other words, have your managers get down in

the trenches with your workers.

Nemoto (1983) created these 10 aphorisms geared towards building a strong Kaizen program:

1. Kaizen and Kaizen again.

2. Coordination between departments is an essential skill of managers.

3. Everyone Speaks up.

4. There Is a Reason I Do Not Scold.

5. When the Learner Does Not Understand, Try Another Way of Teaching.

6. Give up Your Best Person When Doing Job Rotation.

7. If My Orders Don’t Have Due Dates, Ignore Them.

8. The Rehearsal Is an Ideal Place for Training.

9. Company Audits That Result in No Top Management Action Are Useless Audits.

10. Top Management must ask, “What can I do to help?” During audits.

The obvious first Kaizen targets are the current processes with an eye towards increasing

velocity, quality, and efficiency. As time goes on individuals will start to notice less obvious

improvement areas until you’ll notice a leaning towards proactive prevention. Different parts of

the organization will progress at different rates depending on current states and acquired

knowledge, but everyone in the organization will be moving forward.


Nissan Motor puts their Kaizen into a company program says Imai, Masaaki (1986): “Seven-Up

Campaign,” and improvements were sought in the seven areas of standard time, efficiency, costs,

suggestions, quality assurance, safety, and process utilization. The campaign chosen for 1978

was the “3-K 1,2,3 Campaign,” the 3-K stands for the hop-step-jump sequence of thinking,

acting, and improving.

Toyota looks at improvement as the attainment of leadership as the large aggregate of small and

large steps. The smallest unit of time of improvement in their manufacturing line that they will

accept is 1/100 of a minute or 0.6 seconds. Of course, this continuously ramps up over time.

Kaizen Benefits

What should the Kaizen rate be? If you focus on improving every day mature Kaizen

organizations, see about $3000 of savings per year per person. These are just savings but what

value can you put on being the best in your business!

Kaizen projects are large and small. Small projects are executed with minimal risk.

Implementation is inexpensive and risk of failing large is small and either way it is a learning

experience.

Miller, Jon, Wroblewski, Mike, and Villafuerte, Jaime (2014) relate the saga of Southwest Airlines as

follows: Southwest’s outstanding performance has lasted. In 2012, the company was the only US

airline with 40 consecutive years of profitability. The same year, it was ranked again number one

with the lowest number of customer complaints of all US airlines by the Department of

Transportation, a position that it has had since 1987 when the DOT started publishing airline

customer satisfaction data. Pfeffer’s well-documented analysis concludes that Southwest’s

competitive advantage in productivity and exceptional service level “comes from its very

productive, very motivated, and by the way, unionized workforce.” Pfeffer recognizes that “the

culture and practices that enable Southwest to achieve its success” are sustainable and difficult to

imitate by competitors. Pfeffer also provides more examples of successful companies achieving

superior performance by putting people first rather than looking outward for the winning

strategy. He provides relevant data to make the case that “senior managers of the most successful

firms worry more about their people and about building learning, skill, and competence in their

organizations than they do about having the right strategy” and warns that “the conventional

wisdom about sources of sustained success is wrong. Companies do not have to be large, do not

have to go through waves of downsizings, and do not have to be technologically sophisticated,

the market share leader, or even global to enjoy substantial economic returns.” Pfeffer provides

seven dimensions that constitute key people centered management practices for sustainable

economic performance.


Kaizen creates a culture that adopts change as a positive event. This enables the business to

become adaptive. The business becomes responsive to changing business requirements and

responds quickly.

Kotter and Heskett (1992) studied the advantages of an adaptive company. They found after

reviewing results of 207 companies in 11 years:

Culture Adaptive Non-Adaptive

Revenue Up 682% Up 166%

Net income Up 756% Up 1%

Stock price Up 901% Up 74%

FitzGerald: “Are you proud enough of the output of your process that you would meet your

customer for lunch?”

Kaizen Implementation Benefits

Employee Satisfaction Benefits:

Shows respect

Increases communication between employees and management

Employees and management continue to learn

Even failures add informational value

Broad employee participation

Business Benefits:

Educates all to problem solve scientifically

Everyone feels they are in the same boat

Important problems/issues surface

Think out of the box”

Changes the culture to problem exposure

More eyes means more problem detection

Business focuses on real issues

Fact-based decisions

Enabling Business Benefits:

Creates a positive vision

Business people understand the value of process

Risk is understood and evaluated

Allows broad thinking

The importance of planning is promoted

“Plan slowly and act quickly” principle from the Toyota Way


Miller, Wroblewski, Villafuerte (2014) relate these additional benefits at FastCap but are much harder

to quantify, such as:

A positive, fun, engaged workforce in a family atmosphere

Prevention of errors, avoidance of repeated errors, a quality mindset

Ease of gaining top talent by becoming an employer of choice in the region

Development of future leaders with deep knowledge of the company

increasing international exposure for FastCap and its products through excellence in

Kaizen

Kaizen Metrics

Kaizen metrics are part of the Control phase of your Kaizen project. Metrics are meant to

monitor the health of your program and notify you of back slippage. Metrics are customized to

for each organization because what is cared about is different. Listed are some prototype metrics

meant to stir your imagination:

Average Kaizen meetings per Kaizen group per month, the participation rate

The number of improvement areas (with ideas) identified

The number of improvements in process

The number of improvements completed this month

Hard dollars saved

Soft dollars saved

Kaizen reports submitted this month

Generally, the first identified problems are easy and small. As time goes by expertise and vision

improve and the problems identified for Kaizen become more insightful. Either they are more

impactful as vision increases or proactive as expertise increases.

Good luck on your program and as you

accelerate excellence in your business.

Lean and adaptive is the goal.


Bibliography

Grandin, Greg (2010). Fordlandia: The Rise and Fall of Henry Ford’s Forgotten Jungle City. New York:

Picador.

Imai, Masaaki (1986). Kaizen: The Key to Japan’s Competitive Success. New York: McGraw-Hill.

Kotter, John and Heskett, James (1992). Corporate Culture and Performance. New York: Free

Press.

Miller, Jon, Wroblewski, Mike, and Villafuerte, Jaime (2014). Creating a Kaizen Culture. New York:

McGraw Hill Education

Nemoto, Masao (1983). TQC to toppu bukacho no yakuwari: taishitsu kaizen do doukizuke no youtnen.

Tokyo: Nikka Giren.

Toffler, Alvin (1984). Future Shock. New York: Bantam.

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