KAIZEN - Japanese Strategy of Continuous Improvement

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Kaizen and Corporate Culture Kaizen is an integral part of corporate culture. It requires continuous both conscious and sub-conscious thinking about improvements from everyone. Nurturing and effectively integrating Kaizen into corporate culture is not easy. It requires a sustained effort. But, as Toyota has demonstrated, it offers a more sustained competitive advantage. Kaizen Mindset Customer-driven strategy for improvement – any management activity should eventually lead to increased customer satisfaction. Quality first, not profit first – an enterprise can prosper only if customers who purchase its products or services are satisfied. Recognize that any corporation has problems and establish a corporate culture where everyone can freely admit these problems and suggest improvement. Emphasis on process – establish a way of thinking oriented at improving processes, and a management system that supports and acknowledges people's process-oriented efforts for improvement. Start with scarcity. It's hard to see the need for Kaizen when resources are plentiful. When there is a worker or supplier performance problem, don't replace them. Keep them and help them improve instead. Importance of Proper Motivation You will not be able to generate the desired improvements without the proper motivation. A continuous improvement firm (CIF) "that took on a such major organizational features of continuous improvement as quality circles, suggestion systems, cross-functional teams, job rotation, and permanent employment might fail to motivate the system to achieve a high-level of internal improvements because it failed to articulate a customer-value approach. By adopting the forms of continuous improvement but retaining profit maximization as its raison d'etre, it would operate poorly as a continuous improvement firm, analogous to the football team whose technically astute coach did not inspire or otherwise motivate the players,“ says W.E. Cole.

What is Kaizen? Kaizen means "improvement". Kaizen strategy calls for never-ending efforts for improvement involving everyone in the organization – managers and workers alike. Two Areas of Management 's Job in Total Quality Management (TQM) Thinking 1. Maintenance Management: current business performance for results and profits 2. Kaizen Management: improving processes and systems Kaizen and Management Management has two major components: 1. Maintenance, and 2. Improvement. The objective of the maintenance function is to maintain current technological, managerial, and operating standards. The improvement function is aimed at improving current standards. Under the maintenance function, the management must first establish policies, rules, directives and standard operating procedures (SOPs) and then work towards ensuring that everybody follows SOP. The latter is achieved through a combination of discipline and human resource development measures. Under the improvement function, management works continuously towards revising the current standards, once they have been mastered, and establishing higher ones. Improvement can be broken down between innovation and Kaizen. Innovation involves a drastic improvement in the existing process and requires large investments. Kaizen signifies small improvements as a result of coordinated continuous efforts by all employees. Case in Point: Tôhoku Oki Electric Co. At Tôhoku Oki Electric Co., the suggestion system is the center of their success and leads all of their improvement efforts. The company gets 570 suggestions per employee per year (app. 1.5 written ideas per employee per workday).

Japanese-style Suggestion Systems According to Masaaki Imai, author of Kaizen: The Key To Japan's Competitive Success , Japanese managers have more leeway in implementing employee suggestions that Western counterparts. Japanese managers are willing to go along with a change if it contributes to any of the seven goals of the suggestion system. This is a sharp contrast to the Western manager's almost exclusive concern with the cost of the change and its economic payback. Key Benefits of Suggestion Systems Suggestion systems are a valuable opportunity for worker self-development as well as for two-way communication in the workshop. Case in Point: Aisin-Warner Source: Kaizen: The Key To Japan's Competitive Success, Masaaki Imai Aisin-Warner is a manufacturer of automotive components. “ Positive participation in the suggestion scheme,” says Aisin-Warner managing director Haruki Sugihara, “makes each worker problem-conscious and helps him do a better job.” According to Sugihara, management should encourage participation by making workers feel free to make all sorts of suggestions that do not cost much to implement. Since most workers are not used to writing down their ideas, they need to be encouraged and trained to put down their ideas on a piece of paper (suggestion form) until it becomes habit. At Aisin-Warner, the average number of suggestions per worker per year is over 100. Of these, 99% to 100% are actually implemented in the workplace. Typically, suggestions submitted by Aisin-Warner employees concern: reduction in manhours (40%); quality improvement (10%); safety (10%); facility improvement and maintenance (8%); environment and hygiene (7%); saving materials (4%); improving office work (2%); others (19%). When a worker’s suggestion cannot be implemented, management promptly explains why. Management encourages both individual and group suggestions. Whenever a worker has a suggestion, he writes it down on a suggestion form provided at a workplace and drops it in a box. Many suggestions go through both primary review (by foremen) and secondary review (by section managers). The person who submitted the suggestion receives an award.

Employee Empowerment: the Suggestion System The suggestion system is an integral part of an established management system that aims at involving employees in Kaizen. The number of worker's suggestions is regarded as an important criteria in reviewing the performance of the worker's supervisor and the manager of the supervisor. The Japanese management encourages employees to generate a great number of suggestions and works hard to consider and implement these suggestions, often incorporating them into the overall Kaizen strategy. Management also gives due recognition to employee's efforts for improvement. An important aspect of the suggestion system is that each suggestion, once implemented, leads to an upgraded standard. Quality control (QC) circles can be viewed as a group-oriented suggestion system for making improvements. QC circle is a small group that voluntarily performs quality-control activities in the workplace. Total quality control (TQC) involves everyone in the organization and is aimed at improvement of managerial performance at all levels. Three Stages of the Suggestion System 1. Encouragement. In the first stage, management should make every effort to help the workers provide suggestions, no matter how primitive, for the betterment of the worker's job and the workshop. This will help the workers look at the way they are doing their jobs. 2. Education. In the second stage, management should stress employee education so that employees can provide better suggestions. In order for the workers to provide better suggestions, they should be equipped to analyze problems and the environment. This requires education. 3. Efficiency. Only in the third stage, after the workers are both interested and educated, should management be concerned with the economic impact of the suggestions. You'll encounter difficulties if you try to skip stages one and two and move straight to the third stage.

6 Guidelines of Canon's Suggestion System 1. Always show a positive response to suggestions for improvement. 2. Help workers to write easily and give them helpful suggestions about their work. 3. Try to identify even the slightest inconvenience for the workers. (This requires very good superior-subordinate communication.) 4. Make the target very clear. Example: How many suggestions do we need this month? Which area (quality, delivery, manpower, etc.) do we need to work on now? 5. Use competition an games to arouse interest, such as displaying individual achievement charts. 6. Implement accepted suggestions as soon as possible. Give awards before payday. Award System Canon employees are offering around 50 improvement ideas per year per employee. Canon provides awards for individuals, small groups and workshop units. These awards are intended to show management's appreciation for the efforts and the results. A unique feature of Canon's suggestion system is the lifetime cumulative award system. Each suggestion is given a certain number of points, and every year President's Awards are given to the 20 people who have accumulated the most points since the system's inception. Each recipient receives a certain amount of money and a gold medal. Since this can get a bit repetitious, there are also Presidential Awards for the most points in a given year, the top 30 people receiving a smaller amount of money and silver medals. The list of Annual Awards provided at Canon includes: Model Workshop Award, Runner-up Model Workshop Award, Award for Eliminating 9 Wastes, CPS Performance Award, Excellent Small-Group Activities Award, Cumulative-Point Presidential Award, Annual-Points Presidential Award, Special Presidential Award. Canon gives also Gold, Silver, and Special awards to their suppliers that have built promising systems for Quality, Cost, and Delivery.

Employee Ownership Fidelity fundamentally believes that employees practice Kaizen most enthusiastically when they feel a deep sense of ownership in the work. Fidelity fosters this feeling of ownership by dividing power in the company among small divisions (each called a company) with aggressive entrepreneurial leadership. Each of these Fidelity companies is responsible for its own management systems, its own strategies and activities – and its own results. Employee Motivation Anybody at Fidelity who discovered a way to improve the business gets the same level of support and respect – whether they're a company president or a frontline representative. "We value good ideas and constant forward momentum here – not titles and ranks," says Johnson, CEO of Fidelity. At year-end, employees receive bonuses that – depending on their compensation package and their success in implementing Kaizen – could range from 10% to over 100% of their base salary A corporate newspaper, called The Fidelity Exchange, often features articles and photographs about people who have made improvements in their work. CEO hosts special lunches for best storytellers – employees who discovered remarkable ways to improve business. and wrote a story about it for the corporate newspaper. Value Network Fidelity leverages the fact that it has thousands of representatives on the phone every day talking with customers – and getting good ideas from them. Through a system called Value Network, Fidelity gives its phone representatives a tool for providing the organization with unsolicited customer feedback. Representatives are encouraged, but not required, to submit issues they recognize as relevant by recording customer suggestions and requests into a central voice-mailbox. These comments are transcribed and passed along to the managers responsible for various aspects of Fidelity's service. The transcriptions are also analyzed by a central quality staff and discussed at monthly executive meetings to make decisions about improvements that cut across functional and organizational lines.

Quick and Easy Kaizen Quick and easy Kaizen is aimed at increasing productivity, quality, and worker satisfaction, all from a very grassroots level. It empowers employees, enriches the work experience and brings out the best in every person. It improves quality, safety, cost structures, delivery, environments, throughput and customer service. Quick and Easy Kaizen recognizes that the person doing a job is the best expert on that job. It encourages everyone to make small improvements that are within their power to implement. Over time, these thousands of small improvements result in major effects. Every company employee is encouraged to come up with ideas – however small – that could improve his/her particular job activity, job environment or any company process for that matter. The employees are also encouraged to implement their ideas as small changes can be done by the worker him or herself with very little investment of time. Quick and easy Kaizen helps eliminate or reduce wastes, promotes personal growth of employees and the company, provides guidance for employees, and serves as a barometer of leadership. Each kaizen may be small, but the cumulative effect is tremendous. Three Key Characteristics 1. Permanent method changes. Change the method. Once the change is made, you can’t go back to the old way of doing things. 2. Continuous flow of small ideas. The smaller ideas, the better. Kaizen is small ideas. Innovation takes time and is costly to implement, but kaizen is just day-to-day small improvements that when added together represent both enormous savings for the company and enormous self-esteem for the worker. 3. Immediate local implementation. Be realistic. Kaizen is done within practical constraints. Case in Point: Japan Human Relations Association (JHRA) The Japan Human Relations Association (JHRA) is leading the quick and easy kaizen efforts throughout Japan with its training programs, workshops, and publications. JHRA only promotes quick and easy kaizen. They dropped all of the other HR functions for they believe that quick and easy kaizen is the best way to develop human resources within a company.

What is TQM Concept in Japan? TQM, also known as Total Quality Control (TQC), is a management tool for improving total performance. TQC means organized Kaizen activities involving everyone in a company – managers and workers – in a totally systemic and integrated effort toward improving performance at every level. It is to lead to increased customer satisfaction through satisfying such corporate cross-functional goals as quality, cost, scheduling, manpower development, and new product development. In Japan, TQC activities are not limited to quality control only. Elaborate system of Kaizen strategies has been developed as management tools within the TQC approach. TQC in Kaizen is a movement aimed at improvement of managerial performance at all levels. It deals with quality of people. It is the fundamental concept of the Kaizen-style TQC. Building quality into its people brings a company a half-way towards producing quality products. According to the Japan Industrial Standards, "implementing quality control effectively necessitates the cooperation of all people in the company, including top management, managers, supervisors, and workers in all areas of corporate activities such as market research and development, product planning, design, preparation for production, purchasing, vendor management, manufacturing, inspection, sales and after-sale services, as well as financial control, personnel administration, and training & education. Quality control carried out in this manner is called company-wide quality control or total quality control (TQC).“ The Seven Main Features of the TQC Movement in Japan 1. Company-wide TQC, involving all employees, organization, hardware, and software 2. Emphasis on education and training for top management, middle management and workers 3. Quality control (QC) circle activities by small groups of volunteers 4. TQC audits 5. Application of statistical methods 6. Constant revision and upgrading of standards 7. Nation-wide TQC promotion

The Problem Addressed Adapted from Gemba Kaizen, Masaaki Imai One of the most difficult aspects of introducing and implementing Kaizen strategy is assuring its continuity. When a company introduces something new, such as quality circles, or total quality management (TQM), it experiences some initial success, but soon such success disappear like fireworks on summer night and after a while nothing is left, and management keeps looking for a new flavor of the month. This if because the company lacks the first three most important conditions for the successful introduction and implementation of Kaizen strategy: (1) Top management commitment; (2) Top management commitment; (3) Top management commitment. Top Management Commitment Top management may express commitment in many different ways, and it must take every opportunity to: 1. preach the message, 2. become personally involved in following up the progress of Kaizen, and 3. allocate resources for successful implementation. Case in Point: Fidelity Investments Fidelity Investments is the largest and best-known mutual fund manager in the United States. Fidelity’s practice of Kaizen began with the company’s Chairman and CEO, Edward C. Johnson III. A long-time student of eastern philosophy and religion, Johnson became interested in Japanese management practices and discovered Kaizen. “Kaizen means,” he said, “ that if you sweep the building you always want to try to do a better job – and in a shorter time.” Johnson applied the philosophy to his company as a basic way of doing business. He took every opportunity to communicate his belief in Kaizen to Fidelity employees to make it a corporate religion and create an environment of continuous improvement. In particular, Johnson hosted special lunches for employees who discovered remarkable ways to improve business.

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KAIZEN - Japanese Strategy of Continuous Improvement - Presentation Transcript

Inspirational micro-course (10 slides) by Vadim Kotelnikov Founder Inspirational Business e-Coach We don’t teach, we inspire! 1000ventures InsBeCo 1000advices success360 fun4biz Kaizen The Japanese Strategy of Continuous Improvement
Inspirational Business e-Coach The World’s #1 Source of Inspiration and Innovation! Enterprises: 3M, ABB, Adidas, Alcatel, Bayer, Boeing, BAT, BP, Canon, Cisco, Corning, GE, HP, Hitachi, Hyundai, IBM, Intel, J&J, Microsoft, Motorola, Nokia, Oracle, Philips, Samsung, Shell, Siemens, Sony Banks: Citicorp, Goldman Sachs, JP Morgan Chase, Standard Chartered Consultants: Deloitte, Ernst & Young, KPMG, McKinsey Customers in 100+ countries Customer segments Enterprises – 43% Consultants – 25% Individuals – 16% Universities – 12% Government – 4% North America 51% Europe 2 1 % Asia-Pacific 2 0 % Africa 5 % South America 3 % Different industry leaders choose InsBeCo Welcome to the world of inspirational micro-courses! We help new business champions grow! InsBeCo
Kaizen Definition and a Case in Point Case in Point: Tôhoku Oki Electric Co. At Tôhoku Oki Electric Co., the suggestion system is the center of their success and leads all of their improvement efforts. The company gets 570 suggestions per employee per year (app. 1.5 written ideas per employee per workday). Kaizen means “ continuous improvement". Kaizen strategy calls for never-ending efforts for improvement involving everyone in the organization – managers and workers alike. Best practices InsBeCo
Kaizen – Japanese Strategy for Continuous Improvement Job Functions as Perceived by Japanese Managers Top Management Middle Management Supervisors Workers Innovation Kaizen Maintenance More information at 1000ventures.com: “ Kaizen ” activities directed to maintaining current technological, managerial, & operating standards Maintenance small continuous improvements in current processes Kaizen drastic improvements in current processes Innovation
Kaizen Mindset Setting the Right Business Culture
- Kaizen's Starting Point: Setting the Right Mindset
- Everything can and should be improved.
- Not a single day should go by without some kind of improvement being made somewhere in the company.
- Imagine the ideal customer experience and strive to provide it.
- Don't just criticize, suggest an improvement.
- Think of how to improve it instead of why it can't be improved.
- Think beyond common sense. Even if something is working, try to find the ways to make it work even better.
- See problem solving as cross-functional systemic and collaborative approach.
InsBeCo
Japanese Suggestion System Goals and Benefits
- Seven Goals
- Making the job easier
- Removing drudgery from the job
- Removing nuisance from the job
- Making the job safer
- Making the job more productive
- Improving product quality
- Saving time and cost
- Three Key Benefits
- Make employees Kaizen-conscious
- Provide an opportunity for the workers to speak out with their supervisors as well as among themselves
- Provide an opportunity for management to help the workers deal with problems
InsBeCo
Continuous Improvement Firm (CIF) Japanese-style Individual-based Suggestion System Source: Japan Human Relations Association
- Improvement in one's own work
- Savings in energy, material, and other resources
- Improvement in the working environment
- Improvements in machines and processes
- Improvements in jigs and tools
- Improvements in office work
- Improvements in product quality
- Ideas for new products
- Customer services and customers relations
- Others
- The American-style suggestion system stresses the suggestion's economic benefits and provides economic incentives.
- The Japanese-style suggestion system stresses the morale boosting benefits of positive employee participation.
Main Subjects (in order of importance) InsBeCo
Canon Production System (CPS) 9 Wastes To Be Eliminated Best practices
- Benefits of 9-part Classification of Wastes
- Helps employees become problem-conscious
- Helps them move from operational improvement to systems improvement
- Helps employees recognize the need for self-development
InsBeCo A slow start in the production of a new product New-product run-up Producing products with more functions than necessary Product Design Not working according to the best work standards Motion Employing people for jobs that can be mechanized or assigned to less skilled people Talent Excess personnel due to bad indirect labor system Indirect labor Overinvesting for required output Expenses Idle machinery and breakdowns, taking too long for setup Facilities Producing defective products Quality Stocking items not immediately needed Work-in-process
Fidelity Investments: Practicing Kaizen Employee Empowerment Best practices
- Good ideas and constant forward momentum are valued, not titles and ranks
- CEO hosts special lunches for people who made improvements in their work
- Corporate newspaper writes about best Kaizen practitioners
- Performance bonuses range from 10% to over 100% of their base salary
Motivating employees to pursue continuous improvement InsBeCo Power in the company is divided among business units with aggressive entrepreneurial leadership. How? Employees practice Kaizen most enthusiastically when they feel a deep sense of ownership in the work. Why? Employee Ownership
Continuous Improvement Firm (CIF) Quick and Easy Kaizen InsBeCo Supervisor posts the form to share with and stimulate others and recognizes the accomplishment 6 The idea is written up on a simple form 5 The employee implements the idea 4 The supervisor reviews the idea within 24 hours and encourages immediate action 3 The employee develops an improvement idea and discusses it with his or her supervisor 2 The employee identifies a problem, waste, or an opportunity for improvement and writes it down 1
Quality Management Kaizen and Total Quality Management (TQM) More information at 1000ventures.com: “ Kaizen and TQM ”
- The West:
- deals with quality of products
- manufacturer-oriented
- downstream
- product-oriented, aimed at detecting and eliminating defective parts
- responsibility of quality control managers
- Japan:
- deals with quality of people
- customer-oriented
- upstream
- process-oriented, aimed at improving the total performance
- company-wide, everybody's responsibility
Main Differences between TQM Practices in Japan the West
Kaizen Strategy Seven Conditions for Successful Implementation
- Top management commitment
- Top management commitment
- Top management commitment
- Setting up an organization dedicated to promote Kaizen
- Appointing the best available personnel to manage the Kaizen process
- Conducting training and education
- Establishing a step-by-step process for Kaizen introduction.
All conditions are important. Without top management supporting every move, however, the trial will be short-lived regardless of other preconditions. Adapted from: Kaizen , Masaaki Imai InsBeCo
Kaizen Inspirational Micro-course Thank You! Vadim Kotelnikov We don’t teach, we inspire! 1000ventures InsBeCo 1000advices success360 fun4biz Would you like to discover more? Click here! InsBeCo