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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. 

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:

  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.

Other frameworks

Continuous Innovation 

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Growth Hacking

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Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing, product, data analysis, and engineering work together to achieve rapid growth. The growth hacking process goes through four key stages of analyzing, ideating, prioritizing, and testing.

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