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. 


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.


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.


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.


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:

  1. Transparency – every employee must be able to walk into a workspace and visually understand how it works.
  2. Design for Manufacturing and Assembly (DFMA) – even the best designs are worthless if they cannot be produced cost-effectively.
  3. Process focus – lean manufacturing disproves the assumption that optimization of each task has the same effect on the entire process.
  4. Just in Time (JIT) system – Lockheed’s plants will only produce what is needed when it is needed and in the required quantity.
  5. Process control – this means ensuring the process is correct the first time to avoid inefficiencies later.
  6. 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.

Connected Agile Frameworks


AIOps is the application of artificial intelligence to IT operations. It has become particularly useful for modern IT management in hybridized, distributed, and dynamic environments. AIOps has become a key operational component of modern digital-based organizations, built around software and algorithms.


AgileSHIFT is a framework that prepares individuals for transformational change by creating a culture of agility.

Agile Methodology

Agile started as a lightweight development method compared to heavyweight software development, which is the core paradigm of the previous decades of software development. By 2001 the Manifesto for Agile Software Development was born as a set of principles that defined the new paradigm for software development as a continuous iteration. This would also influence the way of doing business.

Agile Program Management

Agile Program Management is a means of managing, planning, and coordinating interrelated work in such a way that value delivery is emphasized for all key stakeholders. Agile Program Management (AgilePgM) is a disciplined yet flexible agile approach to managing transformational change within an organization.

Agile Project Management

Agile project management (APM) is a strategy that breaks large projects into smaller, more manageable tasks. In the APM methodology, each project is completed in small sections – often referred to as iterations. Each iteration is completed according to its project life cycle, beginning with the initial design and progressing to testing and then quality assurance.

Agile Modeling

Agile Modeling (AM) is a methodology for modeling and documenting software-based systems. Agile Modeling is critical to the rapid and continuous delivery of software. It is a collection of values, principles, and practices that guide effective, lightweight software modeling.

Agile Business Analysis

Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

Agile Leadership

Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles. 

Bimodal Portfolio Management

Bimodal Portfolio Management (BimodalPfM) helps an organization manage both agile and traditional portfolios concurrently. Bimodal Portfolio Management – sometimes referred to as bimodal development – was coined by research and advisory company Gartner. The firm argued that many agile organizations still needed to run some aspects of their operations using traditional delivery models.

Business Innovation Matrix

Business innovation is about creating new opportunities for an organization to reinvent its core offerings, revenue streams, and enhance the value proposition for existing or new customers, thus renewing its whole business model. Business innovation springs by understanding the structure of the market, thus adapting or anticipating those changes.

Business Model Innovation

Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Constructive Disruption

A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.

Continuous Innovation

That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.

Design Sprint

A design sprint is a proven five-day process where critical business questions are answered through speedy design and prototyping, focusing on the end-user. A design sprint starts with a weekly challenge that should finish with a prototype, test at the end, and therefore a lesson learned to be iterated.

Design Thinking

Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.


DevOps refers to a series of practices performed to perform automated software development processes. It is a conjugation of the term “development” and “operations” to emphasize how functions integrate across IT teams. DevOps strategies promote seamless building, testing, and deployment of products. It aims to bridge a gap between development and operations teams to streamline the development altogether.

Dual Track Agile

Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.

Feature-Driven Development

Feature-Driven Development is a pragmatic software process that is client and architecture-centric. Feature-Driven Development (FDD) is an agile software development model that organizes workflow according to which features need to be developed next.

eXtreme Programming

eXtreme Programming was developed in the late 1990s by Ken Beck, Ron Jeffries, and Ward Cunningham. During this time, the trio was working on the Chrysler Comprehensive Compensation System (C3) to help manage the company payroll system. eXtreme Programming (XP) is a software development methodology. It is designed to improve software quality and the ability of software to adapt to changing customer needs.

ICE Scoring

The ICE Scoring Model is an agile methodology that prioritizes features using data according to three components: impact, confidence, and ease of implementation. The ICE Scoring Model was initially created by author and growth expert Sean Ellis to help companies expand. Today, the model is broadly used to prioritize projects, features, initiatives, and rollouts. It is ideally suited for early-stage product development where there is a continuous flow of ideas and momentum must be maintained.

Innovation Funnel

An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Innovation Matrix

According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).

Innovation Theory

The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Lean vs. Agile

The Agile methodology has been primarily thought of for software development (and other business disciplines have also adopted it). Lean thinking is a process improvement technique where teams prioritize the value streams to improve it continuously. Both methodologies look at the customer as the key driver to improvement and waste reduction. Both methodologies look at improvement as something continuous.

Lean Startup

A startup company is a high-tech business that tries to build a scalable business model in tech-driven industries. A startup company usually follows a lean methodology, where continuous innovation, driven by built-in viral loops is the rule. Thus, driving growth and building network effects as a consequence of this strategy.


Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.

Rapid Application Development

RAD was first introduced by author and consultant James Martin in 1991. Martin recognized and then took advantage of the endless malleability of software in designing development models. Rapid Application Development (RAD) is a methodology focusing on delivering rapidly through continuous feedback and frequent iterations.

Scaled Agile

Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.

Spotify Model

The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.

Test-Driven Development

As the name suggests, TDD is a test-driven technique for delivering high-quality software rapidly and sustainably. It is an iterative approach based on the idea that a failing test should be written before any code for a feature or function is written. Test-Driven Development (TDD) is an approach to software development that relies on very short development cycles.


Timeboxing is a simple yet powerful time-management technique for improving productivity. Timeboxing describes the process of proactively scheduling a block of time to spend on a task in the future. It was first described by author James Martin in a book about agile software development.


Scrum is a methodology co-created by Ken Schwaber and Jeff Sutherland for effective team collaboration on complex products. Scrum was primarily thought for software development projects to deliver new software capability every 2-4 weeks. It is a sub-group of agile also used in project management to improve startups’ productivity.


Scrumban is a project management framework that is a hybrid of two popular agile methodologies: Scrum and Kanban. Scrumban is a popular approach to helping businesses focus on the right strategic tasks while simultaneously strengthening their processes.

Scrum Anti-Patterns

Scrum anti-patterns describe any attractive, easy-to-implement solution that ultimately makes a problem worse. Therefore, these are the practice not to follow to prevent issues from emerging. Some classic examples of scrum anti-patterns comprise absent product owners, pre-assigned tickets (making individuals work in isolation), and discounting retrospectives (where review meetings are not useful to really make improvements).

Scrum At Scale

Scrum at Scale (Scrum@Scale) is a framework that Scrum teams use to address complex problems and deliver high-value products. Scrum at Scale was created through a joint venture between the Scrum Alliance and Scrum Inc. The joint venture was overseen by Jeff Sutherland, a co-creator of Scrum and one of the principal authors of the Agile Manifesto.

Stretch Objectives

Stretch objectives describe any task an agile team plans to complete without expressly committing to do so. Teams incorporate stretch objectives during a Sprint or Program Increment (PI) as part of Scaled Agile. They are used when the agile team is unsure of its capacity to attain an objective. Therefore, stretch objectives are instead outcomes that, while extremely desirable, are not the difference between the success or failure of each sprint.


The waterfall model was first described by Herbert D. Benington in 1956 during a presentation about the software used in radar imaging during the Cold War. Since there were no knowledge-based, creative software development strategies at the time, the waterfall method became standard practice. The waterfall model is a linear and sequential project management framework. 

Related: MVP, Lean Canvas, Scrum, Design Thinking, VTDF Framework.

Read More: Business Models

Read Next: Business AnalysisCompetitor Analysis, Continuous InnovationAgile MethodologyLean StartupBusiness Model

Read Also: Business AnalysisCompetitor Analysis, Continuous InnovationAgile MethodologyLean StartupBusiness Model InnovationProject Management.

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