The Business Book

304 KAIZEN

I

n Japan, kaizen is an ancient

idea that has become part of

the culture. In its everyday

usage, the word means an

enhancement or a change for the

better. In a business context,

kaizen is more of a philosophy;

according to the kaizen way of

thinking, companies should strive

to increase efficiency through a

process of continuous improvement.

The majority of kaizen advances

are built around people and their

ideas, rather than investment in

new machinery. Employees use

kaizen to produce hundreds of

new ideas every year, aimed at

improving the efficiency of the

business. In isolation, each kaizen

idea might only have a marginal

effect on productivity and general

efficiency, but together these

changes add up, creating a critical

competitive advantage. Ideas for

continuous improvement should

come from all quarters—from

managers and employees alike.

The Toyota Way

Kaizen was first deployed on an

industrial scale by car manufacturer

Toyota in the 1950s, as part of the

now famous Toyota Production

System (TPS). This system was

designed to reduce muda—the

Japanese word for waste. One of

the forms of muda identified by

Toyota was wasted employee

talent; Eiji Toyoda wanted more

from his work force than just blind

obedience and hard work. At Toyota

employees were valued and

trusted—so much so that the

company expected their factory-

floor workers to fix problems

associated with quality, and come

up with ideas to improve efficiency.

According to the Kaizen Institute,

founded by Masaaki Imai to

implement the philosophy, the goal

of any kaizen plan should be to

IN CONTEXT

FOCUS

Improving efficiency

KEY DATES

1882 Scottish shipbuilders

William Denny and Brothers

Ltd. becomes the first company

to use a suggestion box to

garner ideas from its work force.

1859 English naturalist

Charles Darwin publishes On

the Origin of the Species, and

outlines his theory of evolution

as a process of gradual changes.

1990 In “Re-engineering work:

don’t automate, obliterate” in

the Harvard Business Review,

MIT professor Michael Hammer

argues that to stay ahead,

companies need to periodically

redesign production methods.

1997 Japanese founder of the

Kaizen Institute, Masaaki Imai,

writes Gemba Kaizen, stressing

that kaizen works best when

factory-floor workers provide

ideas for ongoing improvement.

Toyota

The Toyota Motor Company

(TMC) was established in 1937. It

produced several models of sedan

cars at its Honsha production plant

following business precepts set

down by founder Sakichi Toyoda,

which included, “Always strive to

build a homelike atmosphere at

work that is warm and friendly.”

Following World War II, the

company faced a financial crisis

and, for the first time in its history,

had to layoff employees. In 1951,

Toyota implemented a creative

ideas suggestion system based on

the principles of kaizen. This,

along with its principles of

“customer first” and “quality

first,” helped the company

thrive, and they began exporting

their first cars to the US in 1957.

In 1962 management and

unions signed a joint declaration

stating that their relationship

should be based on “mutual

trust and respect.”

By 1999 production in Japan

had reached 100 million

vehicles. Today the company

continues to be guided by the

twin pillars of continuous

improvement and teamwork.

Before you say you can’t

do something, try it.

Sakichi Toyoda