How to Use Kaizen to Grow Your Business

Kaizen is a process developed by the auto industry. Its roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. The word Kaizen is a hybridization of two Japanese words, “kai” meaning “change” and “zen” meaning “good.” Two of the basic tenets of Kaizen involve making small incremental changes – or 1% improvement every day – and the full participation of everyone.

Aspect	Explanation
Kaizen (Continuous Improvement)	Kaizen is a Japanese term that translates to “change for better” or “continuous improvement.” It’s a philosophy and methodology aimed at achieving incremental and continuous improvements in processes, products, or services over time. Kaizen originated in Japan and is widely used in lean manufacturing and other industries.
Key Principles	– Continuous Improvement: Kaizen emphasizes that improvement should be a daily, ongoing activity involving everyone in the organization. – Elimination of Waste: Kaizen aims to reduce waste in processes and operations, including unnecessary steps, delays, and inefficiencies. – Standardization: Creating and maintaining standardized processes is vital for monitoring and improving performance. – Employee Involvement: Kaizen encourages employee involvement at all levels, as they are closest to the processes and often have valuable insights for improvement.
Tools and Techniques	Kaizen uses various tools and techniques such as PDCA (Plan-Do-Check-Act) cycles, Gemba walks (going to the actual workplace to observe and understand processes), 5 Whys analysis (root cause analysis), Kanban (visual management), and value stream mapping to identify, analyze, and solve problems. These tools aid in making data-driven decisions.
Benefits	Kaizen offers several benefits, including increased efficiency, productivity, and quality. It reduces costs, minimizes errors, and enhances employee engagement. Continuous improvement also enables organizations to respond quickly to changing customer needs and stay competitive.
Culture of Kaizen	To successfully implement Kaizen, organizations need to foster a culture of continuous improvement. This involves training employees in Kaizen principles, encouraging open communication for sharing ideas, and celebrating small wins and improvements. A culture of Kaizen empowers employees to take ownership of improvement initiatives.
Long-Term Perspective	Kaizen is not a one-time event; it’s a long-term commitment to improvement. Organizations must be prepared for the investment of time and resources required. The results may not be immediate, but the cumulative effect of continuous small improvements can be significant over time.
Kaizen in Different Industries	While Kaizen has its roots in manufacturing, it has been adapted and applied in various industries, including healthcare, software development, and service sectors. The principles of continuous improvement can be tailored to suit the unique needs of different organizations.
Key Take	Kaizen is a proven approach to achieving excellence through continuous improvement. It promotes a culture of problem-solving, empowerment, and efficiency within organizations. By focusing on incremental enhancements, Kaizen helps organizations evolve and adapt

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WHY DOES KAIZEN MATTER TO YOUR BUSINESS?

Building a business is and will always remain something of a hit or miss process.

While there are obviously many entrepreneurs that have successfully ushered startups into fully flourishing companies, no two have probably ever done it exactly the same way.

This doesn’t mean that there aren’t certain underlying principles that can help guide the process, nor some fairly common obstacles to building most businesses.

They have invested their time and learned all there is about their business segment before taking the leap of faith. To some degree, every business will face competition, financial challenges, skill shortages and opposition to change.

One methodology that can help you address and overcome many of these issues is Kaizen.

HISTORY OF KAIZEN

Kaizen is actually a process that developed out of the auto industry.

Its most infamous roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system.

In the 1930s a team from the Toyota Motor Company visited Henry Ford’s plant. At the time, Toyota was producing just 40 automobiles per day, while Ford was producing 8,000.

Toyota decided to implement many of Ford’s techniques, but a visit by one of the lead engineers to the local Piggly-Wiggly gave him an inspiration that significantly advanced the basics of Ford’s system.

Kaizen didn’t gain international popularity, however, until the 1980s when a Japanese organizational theorist and management consultant named Masaaki Imai founded the Kaizen Institute Consulting Group to help introduce the concepts of Kaizen to western businesses.

WHAT IS KAIZEN?

The word Kaizen itself is a hybridization of two Japanese words, kai meaning change and zen meaning good.

As we know, not all change is a good change, and not all change ends up having positive results.

Two of the basic tenets of Kaizen involve making small incremental changes – or a 1% improvement every day – and the full participation of everyone.

Kaizen methodologies allow you to test, tweak, and evaluate consistently while you are making changes to ensure you are actually heading in the right direction. They also help ensure your entire business moves forward as one smooth, seamless unit.

PRINCIPLES OF KAIZEN

Here are the five fundamental principles of Kaizen and how you can use them to grow your business.

1. Small incremental changes

While 1% improvement may not seem like much, over time, it adds up. Imagine putting $1 into savings every day. You would barely notice $1 missing every day, but by the end of the year, you would have $365 saved up.

If you take that $365 and invest it at even a 2% interest rate and then continue to invest another $30 per month, then in just 5 years your $1 a day investment can produce nearly $3,000, thanks to compounded interest. Small changes produce compounded results, the same way interest compounds on your investments.

Every year, millions of Americans make New Year’s Resolutions, and yet only a small fraction of them ever succeed. This may be largely due to setting their initial goals too high and trying to achieve them too quickly.

It’s one thing to set a goal of losing 50 pounds in 6 months if you have already been working on getting more exercise and changing your diet.

It’s a whole other issue if you are an avowed couch potato who hasn’t cooked a healthy meal or eaten a vegetable in years. On the other hand, even the most avowed couch potato can make a 1% increase in their activity each day or a 1% improvement in their diet.

Kaizen doesn’t focus on the results; it focuses on the process. But by investing in the process every day, there is no way not to experience significant results.

For your business, take a long, hard look at your finances, and eliminate expenses that you don’t need. Just make sure to do this gradually.

2. Employees are active participants and provide ideas and solutions

Imagine you need to increase production by 15% over the next 6 months. You could call in some type of expert to analyze your operations and make recommendations.

You could then inform your employees of the changes you are making and the results you expect them to produce as a result.

The likelihood is that at best you are going to get a lot of pushback and at worst may have an outright revolt on your hands.

Conversely, however, you could approach your employees and ask them how they felt production could be improved.

The likelihood is, that they have a very good idea of what is slowing production down in the first place.

By asking the people that are actually boots on the ground, you are far more likely to get a far more accurate picture of where the problems are, versus calling in an outside set of eyes.

3. Accountability and ownership of new processes/changes

Once you understand where your employees feel the problems are, you can problem-solve solutions together. By involving your employees in coming up with solutions, they literally become partners in the solutions.

For instance, let’s say they identify a step in their process that is a huge time-waster, such as getting approval for something from a manager before proceeding.

If you investigate and discover that it is, in fact, a wasted or problematic step, then you can troubleshoot ways of speeding up the process.

From there, you can work with employees to develop new goals based on the newer, more streamlined process and a system of accountability to ensure they are progressing appropriately.

The likelihood is, your employees will participate far more readily if they helped troubleshoot and devise a solution in the first place.

Even more importantly, they will begin to hold each other accountable, relieving you of the burden of doing so.

4. Feedback, dialogue, open communication

Even with employee buy-in and tweaks to the system, it doesn’t automatically guarantee that new goals will be met. Sometimes, solving one problem simply creates another.

This is where constant dialogue, feedback, and communication is important.

For instance, bypassing manager approval at one step might actually lead to a greater number of mistakes being made or create an influx of additional work somewhere down the line.

By keeping lines of communication open and seeking consistent feedback, you can identify these problems early on and take corrective action before they become a major log-jam.

Perhaps the most vital aspect of implementing Kaizen effectively, however, is to avoid playing the “blame game.”

When there is a problem, you can solve it far more effectively by working together to solve it rather than wasting time trying to figure out who is to blame.

The only way employees will feel safe enough to bring problems to the attention of management is if they feel confident that neither themselves nor their colleagues will be blamed for the problems nor “punished” for them in any way.

5. Active monitoring and measuring of changes – positive or negative impact

The one thing Kaizen is not is a “set it and forget it” type of system.

While 1% daily improvements are entirely achievable, the whole point of making small, incremental changes is that they allow you to make adjustments and course corrections as you go.

Think of it as the difference between making course adjustments when moving 5 mph versus making course corrections doing 70 mph. Just because you are only moving 5 mph doesn’t mean you don’t need to be constantly vigilant.

The point of moving at 5 mph rather than 70 is to give you ample time to discuss and implement solutions when you start to realize you are getting off course.

One of the biggest reasons many startups fail is that they simply try and grow too fast. Small businesses, in particular, can benefit from Kaizen because it will help slow their growth to a more manageable pace.

In addition, incorporating Kaizen principles into your business when it is small, will help ensure they become a part of your business development. That way, they will still be there when your business is grown when you might just need them the most.

Kaizen examples

Below we will discuss two real-world examples of kaizen at work.

Herman Miller

American furniture manufacturer Herman Miller has a core focus on contemporary interior furnishings, healthcare environment solutions, and related services and tech.

During the 1990s, the company was looking to reduce costs to remain competitive at a time when Toyota wanted to establish a presence in the United States.

Sensing an opportunity, EVP of operations Ken Goodson convinced Toyota that Herman Miller should be one of the first American companies to incorporate Japanese manufacturing principles.

Toyota sent representative Hajime Oba – a kaizen genius whose reputation in Japan preceded him – who immediately set about introducing small, incremental improvements across the company’s manufacturing processes.

One of these improvements included moving a bin of washers so that an employee did not have to reach more than six inches.

When the bin was placed at the correct height, Herman Miller saved a fraction of a second that had been spent by the employee having to bend over.

Herman Miller employees now initiate an average of 1,200 PDCA cycles each year, with this culture of improvement resulting in impressive process efficiencies.

The Aeron office chair, for example, takes only 17 seconds to construct and box. Ten years ago, this process required 82 seconds.

Lockheed Martin

Aerospace company Lockheed Martin is another early proponent of kaizen principles.

Back in 1991, the production standards of the F-16 had dropped considerably with frequent quality control issues and late deliveries.

Recognizing a need for change, kaizen principles were applied to reduce manufacturing costs by 38% between 1992 and 1997.

Delivery times for its military aircraft were also reduced by almost 50% from 42 months to 21.5 months.

Lockheed Martin was also constrained by government initiatives that needed to minimize costs for new weapons systems.

The company won an important contract for a new aircraft in 2001 by adopting a complete lean supply chain approach across program management, design, engineering, suppliers, and production.

Based on kaizen ideas, the company developed its own six-point system:

Transparency – every employee must be able to walk into a workspace and visually understand how it works.
Design for Manufacturing and Assembly (DFMA) – even the best designs are worthless if they cannot be produced cost-effectively.
Process focus – lean manufacturing disproves the assumption that optimization of each task has the same effect on the entire process.
Just in Time (JIT) system – Lockheed’s plants will only produce what is needed when it is needed and in the required quantity.
Process control – this means ensuring the process is correct the first time to avoid inefficiencies later.
Standard work – task standardization ensures the work is done properly and within the desired timeframe.

Lockheed’s interest in kaizen continues to this day with multiple kaizen events held at its factories in Florida and Alabama. Kaizen has also been more recently used during the development of the company’s Joint Air-to-Ground Missile (JAGM) system.

Lastly and in recognition of its good work, the company won the Shingo Prize for Excellence in 2000 for its meticulous application of kaizen principles to lean manufacturing.

Case Studies

Apple Inc.: Apple is known for its regular software updates that include bug fixes, security enhancements, and performance improvements. These incremental changes are based on user feedback and help maintain the reliability and user satisfaction of Apple products.
Google: Google encourages its employees to spend 20% of their work time on personal projects. This practice fosters innovation within the company, allowing employees to experiment with new ideas and features. Many of Google’s successful products, like Gmail and Google Maps, originated from these personal projects.
Amazon: Amazon is dedicated to optimizing its operations continually. The company conducts frequent A/B tests on its website, altering page layouts, button placements, and more to enhance the user experience and drive more sales. Additionally, Amazon constantly refines its delivery and logistics processes to improve efficiency.
Meta Platforms, Inc. (formerly Facebook): Facebook (now Meta Platforms, Inc.) follows a continuous improvement approach by iteratively updating its social media platform. They regularly roll out new features, design changes, and privacy enhancements based on user feedback and evolving trends.
Netflix: Netflix relies on data analytics and user behavior analysis to make small but significant changes. Their algorithms for content recommendations, user interface design, and streaming quality are continuously optimized to keep subscribers engaged and satisfied.
Tesla: Tesla leverages over-the-air software updates to improve the performance, safety, and user experience of its electric vehicles. These updates can include enhancements to autopilot functionality, battery efficiency, and entertainment features.
Microsoft: Microsoft encourages cross-team collaboration to create seamless user experiences across its product suite. Frequent updates to software like Windows and Office are designed to address bugs, introduce new features, and enhance overall usability.
Adobe: Adobe’s Creative Cloud software suite undergoes regular updates that introduce new tools and features for creative professionals. These updates are driven by customer feedback and evolving industry standards, ensuring Adobe’s software remains competitive.
Airbnb: Airbnb uses A/B testing extensively to optimize its platform for both hosts and guests. By making small changes to listing displays, search algorithms, and communication features, Airbnb enhances user engagement and trust in its platform.
Spotify: Spotify continuously refines its music recommendation algorithms to offer users more personalized playlists and content. They analyze listening habits, user-generated playlists, and feedback to fine-tune music curation, leading to higher user satisfaction and longer retention.
IBM: IBM’s Continuous Engineering approach emphasizes ongoing improvement in product development. They use data analytics and customer feedback to refine software and hardware solutions continually. This helps IBM stay competitive in various industries, including cloud computing and artificial intelligence.
Twitter: Twitter frequently updates its platform to enhance user engagement and combat issues like spam and misinformation. These incremental changes include interface updates, algorithm improvements, and new features like Twitter Spaces for audio conversations.
Uber: Uber uses Kaizen principles to optimize its ride-hailing platform. They make small adjustments to algorithms for pricing, routing, and matching drivers and riders to improve the overall experience and maintain driver-partner satisfaction.
Salesforce: Salesforce, a leader in customer relationship management (CRM) software, regularly releases updates to its platform. These updates address user needs, industry trends, and technological advancements, ensuring Salesforce remains a valuable tool for businesses worldwide.
Slack: Slack focuses on user-centric improvements by rolling out frequent updates to its team collaboration platform. They listen to user feedback and iterate on features related to communication, file sharing, and integrations to enhance productivity.
Zoom Video Communications: Zoom became a household name during the COVID-19 pandemic due to its video conferencing platform. Zoom consistently improves its platform’s security, performance, and user experience based on feedback and changing work patterns.
Shopify: Shopify’s e-commerce platform empowers businesses to sell online. They continuously introduce new features, payment options, and integrations to help online retailers adapt to evolving market demands and technology trends.
LinkedIn: LinkedIn uses Kaizen principles to refine its professional networking platform. They make incremental updates to features such as job listings, networking recommendations, and content sharing to enhance user engagement and career development.
GitHub: GitHub, a platform for version control and collaborative software development, encourages developers to contribute to open-source projects. This collaborative approach results in continuous code improvements and bug fixes across millions of repositories.
Atlassian: Atlassian, known for software tools like Jira and Confluence, regularly releases updates based on customer feedback. These updates aim to improve team collaboration, project management, and software development processes.

Key Highlights of Kaizen in Business:

Origin: Kaizen is a process developed from the Toyota Production System, influenced by Henry Ford’s assembly line system.
Meaning: Kaizen is a combination of two Japanese words, “kai” (change) and “zen” (good).
Principles: The key tenets of Kaizen involve making small incremental changes (1% improvement every day) and encouraging the full participation of everyone in the organization.
Benefits: Kaizen helps businesses address obstacles, overcome challenges, and achieve continuous improvement.
Small Incremental Changes: Making small daily improvements leads to compounded results over time, similar to compound interest.
Employee Involvement: Employees actively participate, provide ideas, and contribute to problem-solving and decision-making.
Accountability and Ownership: Involving employees in the problem-solving process leads to a sense of ownership and responsibility for implementing changes.
Feedback and Open Communication: Continuous dialogue and feedback are essential to identify and address problems promptly.
Active Monitoring: Kaizen requires constant vigilance and adjustments to ensure the organization stays on course.
Real-World Examples: Companies like Herman Miller and Lockheed Martin have successfully implemented Kaizen principles to improve efficiency, reduce costs, and achieve better results.

Related Frameworks, Models, or Concepts	Description	When to Apply
Continuous Improvement	Continuous Improvement is a systematic approach to enhancing processes, products, or services over time through incremental changes and refinements. It involves identifying opportunities for improvement, implementing small-scale changes, measuring outcomes, and iterating based on feedback. By fostering a culture of continuous improvement, organizations can drive efficiency, quality, and innovation across all aspects of their operations.	Consider Continuous Improvement when seeking to optimize processes, eliminate waste, and enhance performance within your organization. Use it to empower employees to identify and implement improvements at all levels of the organization, driving ongoing efficiency gains and operational excellence. Implement Continuous Improvement as a framework for fostering a culture of innovation, learning, and adaptability within your organization to drive sustainable growth and competitive advantage.
PDCA Cycle (Plan-Do-Check-Act)	The PDCA Cycle is a four-step problem-solving and improvement methodology that emphasizes iterative learning and experimentation. It involves planning a change, implementing it, monitoring results, and then adjusting the approach based on feedback. By following the PDCA Cycle, organizations can systematically identify and address issues, improve processes, and achieve better outcomes over time.	Consider the PDCA Cycle when tackling complex problems or implementing process improvements within your organization. Use it to structure improvement efforts, test hypotheses, and iterate on solutions based on real-world feedback. Implement the PDCA Cycle as a framework for driving continuous improvement, problem-solving, and innovation within your organization to achieve better results and outcomes.
Total Quality Management (TQM)	Total Quality Management (TQM) is a management approach that focuses on achieving quality excellence in all aspects of an organization’s operations. It involves continuous improvement, customer focus, and employee empowerment to meet or exceed customer expectations consistently. By embracing TQM principles, organizations can enhance quality, reduce defects, and drive customer satisfaction and loyalty.	Consider Total Quality Management (TQM) when seeking to improve quality and customer satisfaction within your organization. Use it to establish a culture of quality excellence, empower employees to identify and address quality issues, and continuously improve processes and products to meet customer needs and expectations. Implement TQM as a framework for driving quality improvement, customer focus, and organizational excellence within your organization to achieve sustainable competitive advantage.
Six Sigma	Six Sigma is a data-driven methodology for process improvement and variation reduction that aims to achieve near-perfect quality. It involves defining, measuring, analyzing, improving, and controlling processes to minimize defects and errors. By applying Six Sigma principles and tools, organizations can achieve higher levels of performance, efficiency, and customer satisfaction.	Consider Six Sigma when seeking to reduce defects, errors, and variation within critical processes or operations. Use it to identify root causes of problems, implement data-driven solutions, and measure performance against established standards. Implement Six Sigma as a framework for driving process excellence, quality improvement, and operational efficiency within your organization to deliver consistent and reliable results.
Lean Manufacturing	Lean Manufacturing is a production philosophy and management approach that focuses on eliminating waste, optimizing processes, and maximizing value for customers. It involves principles such as value stream mapping, just-in-time production, and continuous flow to drive efficiency and quality in manufacturing operations. By adopting lean principles, organizations can reduce lead times, improve resource utilization, and enhance overall productivity and competitiveness.	Consider Lean Manufacturing when seeking to streamline production processes and eliminate waste within your organization. Use it to identify and eliminate non-value-added activities, optimize workflows, and create a culture of continuous improvement and efficiency. Implement Lean Manufacturing as a framework for driving operational excellence, cost reduction, and quality improvement within your manufacturing operations to achieve higher levels of productivity and customer satisfaction.
5S Methodology	The 5S Methodology is a systematic approach to workplace organization and standardization that aims to improve efficiency, safety, and productivity. It involves five key principles: Sort, Set in Order, Shine, Standardize, and Sustain. By implementing 5S, organizations can create a clean, organized, and efficient work environment that supports operational excellence and continuous improvement.	Consider the 5S Methodology when seeking to organize and optimize workspaces within your organization. Use it to eliminate clutter, improve visual management, and standardize processes to enhance efficiency and productivity. Implement 5S as a framework for creating a culture of cleanliness, orderliness, and discipline within your organization to drive operational excellence and continuous improvement.
Gemba Kaizen	Gemba Kaizen is a Japanese term that refers to continuous improvement practices implemented at the workplace (Gemba). It involves empowering frontline employees to identify and implement small-scale improvements to processes, equipment, and workflows. By engaging employees in Gemba Kaizen, organizations can tap into their expertise, creativity, and problem-solving skills to drive bottom-up improvements and achieve operational excellence.	Consider Gemba Kaizen when seeking to involve frontline employees in continuous improvement efforts within your organization. Use it to empower employees to identify and solve problems at the source, foster a culture of ownership and accountability, and drive incremental improvements in quality, efficiency, and safety. Implement Gemba Kaizen as a framework for building employee engagement, promoting teamwork, and driving continuous improvement initiatives within your organization.
Kanban	Kanban is a visual management tool and workflow system that helps organizations visualize work, optimize processes, and improve flow efficiency. It involves visualizing work items on a Kanban board, limiting work in progress (WIP), and using feedback loops to continuously improve processes. By implementing Kanban, organizations can reduce bottlenecks, improve throughput, and enhance overall productivity and responsiveness.	Consider Kanban when seeking to manage and optimize workflows within your organization. Use it to visualize work, identify bottlenecks, and establish flow-based processes that promote transparency and collaboration. Implement Kanban as a framework for driving continuous improvement, agility, and responsiveness within your organization to achieve higher levels of productivity and customer satisfaction.
Quality Function Deployment (QFD)	Quality Function Deployment (QFD) is a structured approach to translating customer needs and requirements into product or service design specifications. It involves capturing customer voice, prioritizing requirements, and aligning design features with customer preferences. By applying QFD, organizations can develop products or services that better meet customer expectations and drive satisfaction and loyalty.	Consider Quality Function Deployment (QFD) when designing new products or services within your organization. Use it to capture customer needs, prioritize features, and ensure that design decisions align with customer expectations. Implement QFD as a framework for driving customer-centric innovation, improving product quality, and enhancing overall customer satisfaction and loyalty within your organization.
Hoshin Kanri (Policy Deployment)	Hoshin Kanri is a strategic planning and management methodology that aligns organizational goals, objectives, and initiatives with frontline activities and actions. It involves cascading strategic objectives down through the organization, establishing clear priorities, and deploying resources effectively to achieve strategic goals. By implementing Hoshin Kanri, organizations can improve alignment, execution, and performance across all levels of the organization.	Consider Hoshin Kanri when seeking to align strategic objectives with day-to-day operations within your organization. Use it to translate strategic goals into actionable plans, allocate resources effectively, and monitor progress towards key objectives. Implement Hoshin Kanri as a framework for driving strategic alignment, execution excellence, and organizational performance improvement within your organization to achieve long-term success and sustainability.