The History of Kaizen

Friday, July 12, 2019
Christopher Sirk
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Kaizen is the core concept underpinning modern lean and agile business practices. It’s the little things that count. And let me tell you, kaizen is all about the little things. But what is it exactly?

What is Kaizen?

The word kaizen (改善) means “improvement” in Japanese.

As a business concept, the Japanese word is identified as the practice of continuous, incremental improvements, a constant striving for better efficiency and quality of work. Change takes place in an iterative way, rather than through “big moves,” like a top-down reorganization or technological change. Kaizen is also participative, incorporating the brainpower and intrinsic psychological motivations of both team members and the highest levels of management. 

There’s also the associated concept of kaizen blitz (also known as kaizen events), which refers to the idea of a scheduled, super-focused period of attention directed on a single business process. 

The story of kaizen begins (oddly enough) in America, travels on to Japan, and ends with spreading global adoption.

Plan-Do-Study-Act and W. Edwards Deming 

Once upon a time, in the 1930s, American engineer and statistician Walter Shewhart developed Plan-Do-Study-Act (PDSA) at Bell Labs. Also known as the ‘Shewhart Cycle’ or PDCA (Plan Do Check Act), the system was designed to honestly test organizational changes to see if they deliver improvement. It is the direct ancestor to kaizen as we now know it. 

In PDSA, you first ‘Plan’ what you need to do, analyzing the core problem you need to solve, the best solution for fixing the problem, and the resources required to fix it. Then you ‘Do,’ i.e. take action and apply the plan. 

When the dust has settled, you ‘Study’ your plan to see if it worked, identify what aspects could have performed better, and what tweaks could be made. The final step, ‘Act,’ involves the implementation of the plan, assuming that it delivered the results you were seeking, or else adjustment of your plan in order to re-test it with a better baseline. 

PDSA promotes problem-solving through employee engagement and critical thinking, harnessing an organization’s collective brain power. For the last 50+ years, it’s been adopted by clinical laboratories as standard procedure for testing quality control. 

Shewhart happened to mentor a fella named W. Edwards Deming, an engineer and statistician who took these ideas further in the 1940s. 

One of Deming’s basic concepts was “Total Quality Management,” which is to say that if you focused on product and management quality, costs would drop over time, and productivity would go up. In Deming’s view, it was always better to focus on running a better system, rather than trying to push down costs by “being cheap.” In the long-term, you would make exponentially more money and get a bigger market share.

Key to attaining better quality management, in Deming’s view, was understanding information in variation. Deming distinguished between ‘special’ causes of variation and ‘common’ causes of variation.

‘Special’ causes are the result of ‘big change’ events outside the existing system, like management altering procedures, or external events including natural disasters, changes in international trade policy, and so on. 

‘Common’ causes of variation take place within the existing system. These are everyday events, small and hard to see in detail without getting deeply involved in business processes. Common causes of variation are often visible only to workers directly engaged at the nitty-gritty micro-level of a business’s operations, day-in-and-day-out. 

Consequently, Deming suggested management caused 85% of all problems by not paying attention to workers’ identification of common variation issues. 

In a strange quirk of history, his ideas didn’t get off the ground in the United States, at least initially. The “get a lot of stuff out there fast” mentality of America during World War II and the postwar consumer boom years was not in sync with iterative, careful quality control. However, Deming was able to implement his ideas in Japan, where he worked as part of the American occupation government starting in 1945.

The United States had a vested geopolitical interest in Japan’s speedy economic recovery. To that end, they dispatched brainy, visionary business and academic figures to the country to get it back on track. 

Deming was probably the most important of the bunch. So much so that in 1960, Japan’s Prime Minister Nobusuke Kishi awarded Deming a top honor, the Order of the Sacred Treasure, Second Class. Japan even has a prize named after him

The Japanese Economic Miracle was thus secretly aided and abetted by an American economist. Given free rein to try new ideas outside the controlled milieu of postwar-USA, he delivered a smart way forward. Japanese managers worked with his ideas and spun them into the ethos known as kaizen.

The country’s GDP grew year-on-year at a great pace in the immediate postwar decades, and so did the quality of exports. By the 1970s the Japanese economy was really taking off, and by the 1980s Japan was a preeminent global economic power with the world's second largest GDP.

One might argue, with significant merit, that Japan already had a reputation for craftsmanship and detailed production techniques prior to Deming. That's true, of course, but Deming-initiated improvements allowed Japanese companies to slowly but surely creep past Western countries in quality of modern manufacturing process, supply chain, and cost of production. 

Taiichi Ohno’s Toyota Production System

Businessman and industrial engineer Taiichi Ohno was the first Japanese business figure to parlay Deming-style quality control into incredible, world-leading results. Ohno started developing the Toyota Production System (TPS) in 1945 and refined it until roughly 1965. 

TPS, also known as “just-in-time” manufacturing, is a system for reducing waste and maximizing efficiencies through continuous improvement. It is also identified as a major example of Lean business strategy.

When it was first devised, TPS was essentially a last-ditch survival strategy for the automaker to navigate the scraggly postwar years. Toyota’s future viability as a company was questionable at best, and resources were scarce; some of the postwar equipment their plants used had been written-off, taken from the junk heap and returned to work through a combination of technical ingenuity and sheer necessity. 

Materially lacking, Ohno tried to make the best of the best assets he had⁠—employees with brains and skills.

Ohno’s philosophy is encapsulated in his “Ten Commandments” for thinking and winning:

1. Seek to eliminate waste, and recognize that you yourself are a cost.

2. Say “I can do it” and try hard.

3. The workplace is your teacher. You can only find your answers there.

4. If you’re going to do anything, do it right away. The only way to win is to start now.

5. Once you start something, never give up. Persevere until it’s finished. 

6. Explain complex concepts in a simple way. If a concept is simple to understand, repeat it.

7. Bring your problems out into the open. 

8. Realize that actions without value are bad.

9. Keep improving productivity, and improving what has already been improved. 

10. Practice and share wisdom, don’t just hoard it. 

Ohno was by all accounts a reluctant white-collar manager, who in general preferred to be “where the action is,” so he foisted this philosophy on others in oversight positions. His TPS promoted thoughtful process visibility, meaning checking out the nitty-gritty details of actual manufacturing on the factory floor, asking a lot of questions, and finding the small, hidden processes that are concealing an enormous amount of waste. 

The TPS system worked well; Toyota grew year on year and sales went up consistently. By 2008, Toyota surpassed General Motors in global sales, a position GM had been holding onto for 77 years (!). 

TPS was promoted person to person by Ohno’s mentorship. He coached students who became mentors, who taught other students, and so on until TPS became a ubiquitous concept within Toyota and spread outwards to other Japanese companies. 

Ohno’s innovations (eventually) gave rise to the cliche of Japanese cars that are cheap and refuse to die, passing from owner to owner over the course of many decades. This is an uber-tangible example of how kaizen, as embodied in TPS and derivative systems at other automotive companies like Honda, Suzuki, and Nissan, can achieve dramatic results.

Masaaki Imai brings kaizen to the West and the rest

Masaaki Imai, a Japanese management consultant, is almost single-handedly responsible for bringing kaizen to the West. Since the 1960s, he’s worked with hundreds of foreign and joint-venture companies inside and outside of Japan.

Imai is the author of the best-selling 1986 book Kaizen: The Key to Japan’s Competitive Success. He followed that up in the 90s with Gemba Kaizen: A Commonsense, Low-cost Approach to Management (1997). Imai also started the Kaizen Institute (founded in 1986), which helps organizations to implement kaizen practices within the context of local cultural and business practices. 

Imai’s concept of kaizen is focused on both improving and maintaining operations, moving up the field gradually rather than gunning for the Hail Mary touchdown play. In particular, he emphasizes the “value-added” component of your business, because delivering value is everything.

Also important for Imai is gemba, meaning the actual place where the work takes place—whether that be a doctor’s office, a shop room floor, or a converted loft office space. He believes managers must dedicate a meaningful amount of time to gemba, instead of focusing on the “glamour” and prestige of R&D and marketing. 

This means managers must overcome the implicit fear of being exposed as ignorant, looking into the small aspects of their business and asking what may come off as elementary questions.   

In Kaizen: The Key to Japan’s Competitive Success, Imai noted how Japan’s companies were process-oriented, and so fundamentally opposed to America’s results-oriented culture. Breaking down Japan’s success in quality control and improvement, he found that process-oriented thinking promotes transparency and a holistic systems view that is not biased by “carrot and stick” thinking. 

Japan had a reputation for cheap but “not so great” products in the 1950s and 1960s. But with kaizen principles applied year-on-year at major firms, the country’s products morphed steadily towards a reputation for consistent high quality by the 1980s. 

The philosophy was backed up by the results of kaizen project management at major Japanese firms like Fuji-Xerox, Toyota, Canon, and Honda, which by the 1980s consistently outperformed their American counterparts. 

American industry paid a dear price for not paying attention to Deming at home. 

Then, in 1980, NBC aired an hour-long segment called “If Japan Can, Why Can’t We?” seen by millions, introducing many Americans to Deming for the first time. In 1981, he was hired by Ford, which was struggling with $3 billion in losses in 3 years, and basically saved the company. In 1987, President Reagan gave him the National Medal of Technology.

Deming’s teachings had returned stateside and helped facilitate an economic comeback. 

In 1997, the Lean Enterprise Institute was founded, taking Deming’s ideas into new areas. 

Kaizen practices are context-specific

“Kaizen evolves uniquely within each organization, following changes to the organization’s business environment. Detailed implementations vary considerably…”

— Adam Paul Brunet and Steve New, Kaizen in Japan: an empirical study.”

Kaizen is a philosophy that produces better long-term results, a way to continuously improve slow and steady. Once again, the tale of the Tortoise and the Hare finds contemporary relevance.

It’s always more cost effective to work on retaining the customers you already have, rather than go out and try to win new ones. Similarly, the technique of kaizen, premised on tweaking your existing asset base to deliver better performance, saves you the time, costs, and potential backfire of a dramatic overhaul.

On an elemental level, in order to properly integrate kaizen practices into your business, you will need to document your standardized work processes through a step-by-step approach that shows your workflow. For this, a kanban board or other easy-to-understand work visualization tool will do nicely. 

Meanwhile, people in leadership positions need to set the tone of corporate culture by behaving as they’d like everyone else to behave. Setting high personal and group behavior standards promotes an atmosphere of openness. 

Since people are motivated by positive reinforcement, it is necessary to foster a culture of intrinsic incentives, not to mention respect, and this needs to be made clear from the top-down (even if your organization is a small group without a clear hierarchy). Your team members should not just be willing to make suggestions, but actually want to, because they feel valued, and consequently personally invested in the company’s continued success.

While kaizen can be a rewarding process in-and-of-itself, it becomes truly self-supporting when team members see participation as reflecting their own self-interests. That means kaizen needs to be built around solving problems that are satisfying to solve, and as a consequence boost morale. These problems will entail anything from process refinement to product development to fundamental workplace issues. 

This is tricky, to a point, because kaizen works best when your goals are modest. For most of us, modest does not usually equal excitement, yet long-term improvement needs to be measured to prevent big false steps. 

In Africa, for example, kaizen approaches are being applied to achieve modest but sustainable entrepreneurial successes without “big bang” ideas. Rather than try to compete with the big-spend R&D of economically endowed Western and East Asian counterparts, African companies are seeking to adapt existing technology to solve unique local issues. By fostering a business culture of learning, African companies hope to increase local productivity and thus improve local welfare.

When it comes to today’s product development game, speed is a vital asset in the quest to survive an increasingly competitive environment. Kaizen, with its short-term innovation cycles geared towards long-term prosperity, is well suited to said status quo.

A way to get Out of the Crisis and into real profit, kaizen provides the foundation for competing in an increasingly complex environment by cutting through the layers of system-building, finding elemental value and then cutting out waste. It’s a very human way of running a system, putting faith in your team on the level of the individual. 

And, after all, we humans really do sweat the little things, so why not invest in perfecting them?

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