The Business Book

308

to remove the divide between
managers and workers, the
underlying philosophy being
that managers, supervisors, and
assembly-line workers should
learn, discover, teach, grow, and
make improvements together.

Kaizen in action
One of the first British companies
to adopt quality circles was the
pottery company, Wedgwood. From
1980 onward, 80 quality circles
representing different parts of the
business met for an hour a week.
Each quality circle was empowered
to identify its own problem, which
it then spent up to six months
solving. The solution devised by
the circle was presented to the
management and most were
approved and then implemented.
Employee motivation improved,
which increased productivity. In
addition, employee ideas reduced
costs by cutting the amount of
clay and paint wasted during the
production process. According to
Dick Fletcher, the man who led
Wedgwood’s quality circle program,

for every $1.60 (£1) the business

spent on quality circles,

Wedgwood’s costs fell by $4.85 (£3).

Another business that has

employed kaizen techniques to

good effect is India-based Tata

Steel. The company made

improvements to the productivity of

its gear-cutting machinery, which

led to increased production.

The antithesis of kaizen

A very different approach from

kaizen is Business Process

Reengineering (BPR). This is based

on infrequent—but very capital-

heavy—investment programs that

are designed to create a great leap

forward in terms of productivity,

reductions in unit costs, or

improvements in product quality.

Unlike kaizen, companies that use

BPR do not endeavor to make

regular small changes. Instead the

goal is to radically rethink the

whole production process every five

years or so to make it more efficient.

Typically, this is in response to

a crisis. Once the company using

BPR has caught up with its rivals,

KAIZEN

a period of stability follows, until

complacency sets in again, and the

next crisis arrives, and prompts

another round of BPR.

Rather than approaching

employees for ideas that lead to

improvements in efficiency,

companies that use BPR only use

ideas that originate from managers

and highly qualified consultants.

The work force is relatively passive:

change is imposed from the top

and often includes large-scale

layoffs. This is because companies

that use this approach often try to

boost efficiency by investing in

automated production systems that

replace labor with capital. Those

that favor kaizen argue that it is

better to try to improve efficiency

by making small but regular

changes, rather than by instigating

less frequent but more radical BPR

changes. In competitive markets,

companies that rely on BPR

struggle to match the less dramatic

but steadier growth achieved by

kaizen. Companies using BPR can

The effects of kaizen and BPR on

productivity are shown here over a

30-year time span. Overall, kaizen

increases output with consistent steady

improvements while BPR brings a series

of sharper boosts to productivity

followed by periods of flat growth.

YEARS

OUTPUT PER WORKER (PRODUCTIVITY)

051015202530

Kaizen

BPR

Investment in robots in the

workplace can be a large-scale, costly

undertaking, which frequently results

in job losses. This sort of BPR activity

can alienate the work force.