The History of Kaizen

Wednesday, August 5, 2020
Christopher Sirk
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What is Kaizen?

Kaizen is the core concept underpinning modern lean and agile business practices.

The Japanese word kaizen (改善) means “improvement.” That’s the most basic definition of kaizen.

As a business concept, the Japanese term kaizen refers to improvements that are incremental and ongoing.

Continuous improvement

Kaizen refers to continuous changes made to boost business efficiency. Kaizen aims to reduce inefficiency in its 3 major forms. These are muda (waste), muri (overburdening work), and mura (inconsistency of work).

Tweaks are made to better operations all the time. And the small step improvements are holistic. Kaizen is directed at processes, products, work environment, and the individual people at work.

Kaizen is synonymous with 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 philosophy is all about making small changes for the greater good. This decision-making is inclusive and participative.

In the kaizen management system, everyone at a company is involved. Regardless of position.

It takes advantage of the brainpower and intrinsic psychological motivations of team members. From frontline workers up to the CEO.

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

Kaizen is different from Six Sigma. The latter focuses on quality control of the final product. Kaizen is for improving the whole business.

 

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

The story of kaizen begins in pre-WWII America. It travels on to post-war Japan. And ends with spreading global adoption.

In the 1930s, American engineer and statistician Walter Shewhart was at Bell Labs. There he worked on Plan-Do-Study-Act (PDSA), also known as the ‘Shewhart Cycle’ or PDCA (Plan Do Check Act). It was a system 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 a PDSA or PDCA cycle, you first ‘Plan’ what you need to do. Analyze 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. Otherwise it's time for adjustment of your plan, so you can retest it with a better baseline.

PDSA promotes problem-solving through employee engagement and critical thinking. It harnesses an organization’s collective brain power.

For the last 50+ years, it’s been adopted by clinical laboratories as a standard procedure for testing quality control.

Shewhart happened to mentor a fella named W. Edwards Deming. He was an engineer and statistician. And he took these ideas further in the 1940s.

One of Deming’s basic concepts was “Total Quality Management.” Which is to say 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 much more money and get a bigger market share.

Key to attaining better quality management 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, 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.

Root causes of variation are often visible only to workers. Those 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. This is because they didn't pay 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 to start with.

That's because there was a “get a lot of stuff out there fast” mentality in America during World War II. And the postwar consumer boom years followed the same ethos. America was just not in sync with calls for iterative, careful quality control.

However, Deming was able to implement his ideas in Japan. There 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 greatly 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 that Japan already had a reputation for craftsmanship. And detailed production techniques. All prior to Deming.

That's true, of course. But the point is Deming-initiated improvements allowed Japanese companies to supersede Western ones. In quality of modern manufacturing process, supply chain, and cost of production.

 

Taiichi Ohno’s Toyota Production System

Enter businessman and industrial engineer Taiichi Ohno. He was the first Japanese business figure to parlay Deming's formula into world-leading results.

Ohno started developing the Toyota Production System (TPS) in 1945. He refined it until roughly 1965.

TPS is also known as “just-in-time” manufacturing. It's a system for reducing waste and maximizing efficiencies through continuous improvement. In other words, a textbook kaizen system.

It is also identified as a major case study for Lean manufacturing. And lean business strategy in general.

When it was first devised, TPS was essentially a last-ditch survival strategy. The automaker was in dire straits, navigating the scraggly postwar years.

Toyota’s future viability as a company was questionable at best. Resources were scarce.

Some of the postwar equipment their plants used had been written-off. It was taken from the junk heap and returned to service. Through a combination of technical ingenuity and sheer necessity.

Materially lacking, Ohno tried to make the best of his best assets. Employees with brains and skills, who weren’t averse to hard work.

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. In general, he preferred to be “where the action is.” He foisted this philosophy on others in oversight positions.

TPS promoted thoughtful process visibility.

Meaning checking out the nitty-gritty details of actual manufacturing on the factory floor. Asking a lot of questions to assembly line workers and others. 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. It then 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.

TPS and derivative systems at other automotive companies worked, and worked well. Honda, Suzuki, and Nissan achieved dramatic results in quality, output, and costs.

This is an uber-tangible example of how kaizen can achieve dramatic results.

 

Masaaki Imai brings kaizen to the West and the rest

Masaaki Imai is a Japanese management consultant. He's 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). It helps organizations to implement kaizen practices. And so within the context of local cultural and business practices.

Imai’s concept of kaizen is focused on both improving and maintaining operations. It's about 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 after all, 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. They must look into the small aspects of their business. And ask what may well 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.

He broke down Japan’s success in quality control and improvement. And he found that process-oriented thinking promotes transparency. 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 kaizen principles kept being applied year-on-year at major firms.

The prestige of the nation's products morphed. By the 1980s, "Made In Japan" was synonymous with consistent high quality.

Simply put, kaizen project management got results. Major Japanese firms like Fuji-Xerox, Toyota, Canon, and Honda all used it. And by the 1980s they 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, Deming was hired by Ford. The old automaker was struggling with $3 billion in losses in 3 years.

He 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.

The kaizen process is premised on tweaking your existing asset base to deliver better performance. It saves you the time, costs, and potential backfire of a dramatic overhaul.

On an elemental level, there's a few things you can do up front. This will help integrate kaizen activities into your business.

For starters, you will need to document your standardized work processes. This means adopting a step-by-step approach that shows your workflow. 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. They can do this by behaving as they’d like everyone else to behave. Setting high personal and group behavior standards promotes an atmosphere of openness.

People are motivated by positive reinforcement. So 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 suggest small improvements, but actually want to. Because they feel valued, and personally invested in the company’s continued success.

Kaizen can be a rewarding process in-and-of-itself. But it becomes self-supporting when team members see it as aligned with their 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 improvement to product development. All 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.

Take contemporary Africa, for example. Kaizen approaches are being applied. And businesses are achieving modest but sustainable entrepreneurial successes without “big bang” ideas.

It's a strategy for competing 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. And foster a business culture of learning.

Through kaizen, 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 has short-term innovation cycles geared towards long-term prosperity. It's thus well suited to this status quo.

A way to get Out of the Crisis and into real profit, kaizen helps companies stabilize, find elemental value, and grow. By cutting through the layers of system-building and then cutting out waste.

Plus 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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