Kaizen, Japanese for ‘small, incremental, continuous improvement’, in its contemporary form is used to improve and streamline corporate processes. Kaizen refers to activities that continuously improve all functions and involve all employees from the CEO to the assembly line workers. According to Masaaki Imai, the father of Kaizen strategy, it is the single most important factor contributing to Japanese business success.
The Kaizen philosophy lies in a simple and clear underlying axiom: what you need to do is improve the processes around to make things more efficient.
The main difference between Japanese and Western management is in its focus on all improvement of all components of production and business processes. The Kaizen business strategy has been one of the key components of the competitive advantage of Japanese industry in the world markets (manufacturing through high quality and low costs). Admittedly, in the1980s, with the globalization of Japanese businesses, Kaizen became globally known. Kaizen was originally developed in Toyota and spread among other Japanese manufacturers as they gained fame in the world markets for higher quality products. Following their expansion worldwide, even the Japanese International Cooperation Agency (JICA) began to rely on the Kaizen management style to transform the industrial activities of a number of developing countries.
Understanding the approach
Organizations that follow the principle of Kaizen are better at things involving skill development and talent development. No high-impact learning organization is built overnight, it requires a commitment to learning. Success comes from carefully commitments, management processes, and cultivated attitudes that accrue slowly and steadily.
According to a study by Bersin & Associates, titled "High-Impact Learning Culture: The Best 40 Practices for Creating an Empowered Enterprise", HILOs that have a strong foundation of learning in their culture tend to outperform their peers in several areas:
They are 32 percent more likely to be first to market.
They have 37 percent greater employee productivity.
They have 34 percent better response to customer needs.
They have 26 percent greater ability to deliver quality products.
They are 58 percent more likely to have skills to meet future demand.
They are 17 percent more likely to be the market share leader.
Peter Senge, who popularized learning organizations in his book The Fifth Discipline, described them as places "where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together."
Companies use metaphors and organization redundancy to focus thinking, encourage dialogues, and make
In the absence of learning, companies and individuals simply repeat old practices. Change remains on a superficial level, and improvements are either short-lived or fortuitous.
In rapidly changing industries such as technology, these ideas are fast-taking hold.
Using the scientific method, rather than guesswork diagnosing problems.
Using data, rather than assumptions, for decision making.
Using simple statistical tools, i.e. histograms, Pareto charts, correlations, cause-and-effect diagrams) to organize data and draw inferences.
In 1983, senior managers launched a companywide Leadership Through Quality initiative, which has since become institutionalized over the years. The result of this process has been a consistent companywide approach to decision making. Once the employees have been trained in the six-step problem-solving process, they are expected to use the approach at all meetings. (The diagram below explains the steps and the associated activities that need to be undertaken.)
Experimentation involves a systematic searching for and testing of new knowledge. Unlike problem-solving, experimentation is motivated by the opportunity and expanding horizons, not by present hitches. This activity takes two main forms: on-going programs and one-of-a-kind demonstration projects.
On-going programs involve a continuing series of small experiments, designed to give incremental knowledge gains. Successful on-going programs share several characteristics:
They require a steady flow of new ideas.
They ensure managers and employees who are trained in the skills to perform and evaluate experiments. These experiments cover a broad range of experiments, including statistical methods (e.g. design of experiment), graphical techniques (e.g. process analysis), and creativity techniques (e.g. storytelling that keeps innovative ideas flowing).
Demonstration projects involve rather large and complex on-going experiments. These are undertaken with the objective of developing new organizational capabilities. Successful demonstration projects, share several characteristics:
They embody axioms and approaches that organization hopes to adopt later on a larger scale.
They subliminally establish policy guidelines and decision rules for later projects.
They are developed by strong multifunctional teams reporting to higher level executives.
These characteristics appeared during a demonstration project launched by Copeland Corporation in the mid-70s. Matt Diggs, then CEO of Copeland, wanted to transform the company’s approach to manufacturing. Previously, the company had machined and assembled all products in a single facility, resulting in high costs and marginal quality.
In order to remove the complexity, Diggs assigned a multifunctional team the task of designing a focused factory for narrow product line. An investment of $30 million yielded significant breakthroughs in automatic tool adjustment, reliability testing, and programmable control. Moreover, the first focused factory yielded 25% of the market in the first two years and held its ground on reliability while Copeland went on to build more factories in quick succession.
Learning from the past experience:
Companies must review their successes and failures, assess them systematically, and record the lessons in a format that employees are able to learn more. Unfortunately, too many managers today are ignorant of the past, by failing to introspect on it.
Take for example, IBM’s 360 computer series, one of the most profitable pieces of technology ever build. It was based on the technology of the failed Stretch computer that preceded it. Very few companies establish processes that require their managers to think about the past and learn from their mistakes.
British Petroleum has established a post-project appraisal unit to review major investment projects, derive lessons for future projects, and write-up case studies. A five-person unit reports to the board of directors and reviews projects annually. The review is conducted regularly at a project level, and at the heart of this process is a mind-set that allows the company to recognize the value of productive failure instead of unproductive success.
Learning from others:
Learning from others requires contemplation and self-analysis. The most efficient managers know that even companies in completely different businesses can be rich sources of ideas and motivation for creative thinking. At these organizations, benchmarking is an ongoing investigation and learning experience that helps companies make sure that best industry practices are covered, analyzed, adopted, and implemented.
This helps organizations benefit from studying the way their work gets done, rather than results, and involving line managers in the process. This is because benchmarking is a great way of gaining an outside perspective, especially from a fertile source such as customers. Conversations with customers stimulate learning. Customers can provide competitive comparisons, up-to-date product information, immediate feedback on service, and insights into changing preferences. Companies using such insights, at all levels (from the CEO to the shop floor) can put them to good use by developing ideas for further improvement.
Learning must spread quickly and efficiently throughout the organization. Ideas and insights that carry maximum impact, when shared, can help with problem solving, improvement, and even peer review.
In the 1980s, when Xerox introduced the problem-solving technique to its employees, each group (small departmental to divisional) applied what they learned from real-life work experiences.
Similarly, AT&T developed a unique approach that combined information sharing with strong incentives. AT&T called this the Chairman’s Quality Award (CQA), an internal quality competition similar to the Baldrige prize, where awards are given not just for incredible performance but also for improving scores. Gold, silver, and bronze Improvement Awards are given to groups that have improved their scores by 200, 150, and 100 points respectively. Pockets of Excellence, an accompanying program, invites groups that have scored at least sixty percent of the points in each category and then publicizes the names of these groups in company reports.
The ultimate goal of high-impact learning is to promote a strong dialogue, not critique. Organizational learning is not a report card, but a diagnostic tool that leads to substantial achievements, allowing workplaces to be more convivial and innovative.