Monday Mornings with Madison

To Develop the Most Successful Business, Embrace Kaizen – Part 1

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Kaizen is the Japanese word for ‘Improvement’.  Generally, it is said that Kai means change and zen means good or better.  But it actually translates roughly into ‘to break apart and investigate’ and ‘to improve upon the existing situation’.  It embraces the idea that even good things can be made better… improved in small ways.[1]

Having already looked at how small actions can have big consequences over time – known as the Butterfly Effect — Kaizen adopts a similarly related concept.  Kaizen is the idea that small, incremental improvements accumulated over time can have a huge effect.  Many Japanese see this as a way of life, and infuse Kaizen in everything they do.

Applying Kaizen to Business

Kaizen has evolved into a business philosophy focused on activities that continually improve all business functions and involve all people from entry level to C-Suite.  It runs contrary to the idea that any process or program is “good enough” or even “perfect.”  And it opposes the management approach of “leaving well enough alone” or that “the leader knows best.”.[2] The Kaizen concept has been adopted by and effective in all types of organizations from banking and manufacturing to logistics and government. 

In Kaizen, the first step toward improvement begins by admitting that every organization has problems and recognizing those as opportunities for change.  Because Kaizen involves everyone in the organization, cross-functional teams are then empowered to challenge the status quo.  Kaizen says that a person who performs a particular task is the most knowledgeable about that task.  That is true for every task.  Consequently, ownership of the process is raised to its highest level by involving everyone and showing confidence in the employees’ capabilities.

So, in Kaizen, the process of improvement is never finished and the status quo is always challenged.  For those reasons, Kaizen can only work in organizations where the leadership and all staff embrace the philosophy.  There has to be a fundamental shift in the company’s DNA where the mindset is one of analysis and improvement over ego and control or quotas and profits.[3]

The Focus is on “How” not “Who”

How does a Kaizen approach compare with a conventional management approach?  Conventional managers view employees as the source of problems.  Each employees does a job and understands his/her job.  He/she is evaluated on how he/she did the job.  If there is an issue, the goal is identify who made the error, change the person in order to correct the error.

Using Kaizen, improvements are process-focused.  This generates process-oriented thinking directed at people’s efforts, not the people themselves.  Employees are never seen as “the problem.”  Instead, by putting the emphasis on the process, the function of employees is to provide improvements by understanding how their jobs fit into the process and changing it.  The emphasis is not on the ‘who’ but on the ‘how’ of achieving the required results.  However, it goes well beyond just designing effective processes.  It requires teams to understand why a process works, if it can be modified or replicated elsewhere in the company and how (not if) it can be improved.[4] Each employees is helping get things done and understands how his/her job fits into the process.  The goal is to measure performance, not evaluate people.  If there is an error, the goals is to identify what allowed the error to occur, reduce variations, and change the process.

Toyota and the Effectiveness of Kaizen

What does that look like in reality?  One of the best-known companies to fully embrace Kaizen was Toyota over a half century ago.   In the 1970s and 1980s, American automobile manufacturers had an affinity for making ugly, uninspiring cars with faulty engineering.  They prioritized quantity over quality as the focus of their car-building process.  Impressively bad cars appeared and disappeared on the market including the Pontiac Lemans, Ford Aspire, Chevrolet Vega, Chevy Chevette, Geo Metro, Chrysler K, Chevy Citation, and the Cadillac Cimarron.  And, let’s not even mention the Ford Pinto, which exploded in rear-end collisions. These cars were so bad that none of them exist anymore… rejects of automotive history.  Even the “better” American cars broke down so often that people jokingly said that FORD stood for “Fix or Repair Daily.”

The field was wide open for a car company that could reinvent the process of building cars in a better way.  That better way had been invented years before in Japan.  It was The Toyota Production System (TPS) referred to as The Toyota Way.[5] Using Kaizen, Toyota disrupted the automotive industry long before “disruption” was even a buzz-word.  You see Toyota knew something American car companies did not know.  They knew about achieving quality through continual improvement.  Thanks to Kaizen, they were brilliant at assembling the 35,000 high quality parts that make up a great car.  Toyota built inexpensive cars that were highly reliable. Although Toyota cars were not fancy or cutting edge initially, they were built with a high level of precision and quality.

Toyota manufactured low maintenance cars that outlasted American automobiles because they applied Kaizen to every aspect of the business.  From management and design to production and service, Kaizen was (and still is) practiced by everyone who works there and by all of their part suppliers. They understood that Kaizen is incremental by nature and has many facets that build upon one another.

So what did that look like in practice?  Toyota employees were encouraged and respected for suggesting improvements.[6] That meant every employee on the production floor was empowered with decision-making authority, tasked with pointing out quality issues rather than hiding them, and invited to assist in implementing improvements.  Every employee was encouraged to stop the assembly line if a defect was observed.  By triggering the Andon System production stopped in that station. When the Andon button was pushed, management converged and, with the help of the employee, performed “problem solving at the source.”  Sounds simple?  Hardly.  Getting to the root cause of a problem was achieved by asking “Why?” five times, going to a deeper level with each “Why?”.  They believed most problems revealed themselves superficially but the core problem was hidden deeper beneath the surface. The “5 Whys” were intended to dig deep into the problem to identify the root cause. Production did not resume until the core issue was defined and then solved. This prevented a defect from continuing to the next production station.[7]

In this way, quality control was infused into every detail of Toyota’s manufacturing process.  They saw it as an investment with a long-term payoff at the expense of short-term gain. This was in stark contrast to other assembly lines where halting production was taboo. At Toyota, calling out problems was an essential part of every employee’s job. The assembly line stoppage and containment procedure ensured the observed defect did not continue down the line.  This focus on small issues resulted in big improvements long-term… an example of the Butterfly Effect in action.

Moreover, by encouraging employees to stop the assembly line, every employee felt important.  This meant that an employee was not just someone who put parts together with no real role in the overall quality of the car, but someone respected and powerful.  This resulted not just in higher levels of quality but also in more productive and loyal employees.

Kaizen transformed Toyota into the number one automobile manufacturer on earth, which continues to be true today.[8] The company has a market cap of $214 Billion as of May 2018.  There are many reasons Toyota succeeded as quickly as it did but most agree that making quality as the means towards profitability was the paramount reason.

Surely, all companies strive for a certain level of improvement, but it is not easy to replicate a deeply-ingrained philosophy such as Kaizen and make constant improvement the very essence of the business.  The good news, though, is that while the Kaizen philosophy may not be easy to implement, it can and has worked in a variety of other businesses and industries.

In our next issue, we will look at companies in other industries that have nothing to do with manufacturing have implemented Kaizen and transformed their business model and elevated their success.  Stay tuned.

Quote of the Week

“Strive for continuous improvement, instead of perfection.” Kim Collins


[2] December 17. 2014, Henry, Alan, Get Better at Getting Better:  The Kaizen Productivity Philosophy, LifeHacker, https://lifehacker.com/get-better-at-getting-better-the-kaizen-productivity-p-1672205148 

[3]Ibid

[4] October 15, 2013, Baxter, Flora, The 5S of Kaizen for Team Success, TeamBonding, https://www.teambonding.com/5s-kaizen-team-success/ 

[5] May 31, 2013, Kaizen – Toyota Production System, http://blog.toyota.co.uk/kaizen-toyota-production-system 

[6] July 20, 2012, Balasubramanyam, K.R., How Toyota Uses Kaizen for Effiiciency, Business Today, https://www.businesstoday.in/sectors/auto/toyota-kaizen-methods/story/186340.html

[7] Ibid 

[8] February 7, 2010, Kelleher, James B., Toyota Stumbles but its Kaizen Cult Endures, Reuters, https://www.reuters.com/article/us-toyota-us-manufacturers-analysis/toyota-stumbles-but-its-kaizen-cult-endures-idUSTRE6161RV20100208 

 


© 2018, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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