What if there’s a system, a style, or an approach that helps your business do these things?
- Increase productivity
- Maximize efficiencies
- Increase customer satisfaction
- Increase employee loyalty
- Drastically reduce costs
- Significantly lower wastes
- Up your ability to solve problems in the future
Would you be interested?
I’m talking about Kaizen.
Giants of industry the likes of Ford Motor Company, Toyota Motor Corporation, Lockheed Martin, and Pixar Animation Studios have sworn by it. Alan Mulally, Ford’s one-time “big boss,” used it to execute one of the most inspiring turnarounds in history. Pixar and Lockheed Martin employed the system to significantly reduce inventory and delivery time while skyrocketing quality.
I’m talking about Kaizen.
What is Kaizen?
Kaizen is the Japanese philosophy of “continuous improvement.”
In business, it means a company will always be looking for different means to be better. Whether it’s on product development, service delivery, transaction speeds, or the simple task of decreasing waste—Kaizen seeks to optimize every last bit of it.
Broadly speaking, Kaizen is a set of applied practices and processes that ultimately maximize a company’s impact. And in that journey, there’s no such end.
Ironically, an American consultant sent to Japan after the Second World War, W. Edwards Deming, fathered many of its precepts in the 1940s. The idea of little-but-continuous changes appealed to the Japanese people who are widely known to be tenaciously traditional and set in their ways.
The Japanese built on the foundation, ran with it, and made it their own. For example, the Toyota Corporation used the concepts to reduce the defects in their cars—which soon became very competitive in the American market.
Over the years, the concept of “continuous improvement” spawned an array of frameworks and descendant methodologies. You have the Kaizen Cycle, 5S Framework, Lean Production, Agile, etc. It has since grown to a wide selection of methods and techniques applied to a broad range of fields, from self-improvement to large-scale industries.
In this post, we are going to distil all the different approaches and methodologies into 5 core mindsets. These will be the fundamental core principles, (the rationale behind the techniques) that animate every strategy or practice of Kaizen. Knowing these, you can create a set of practices for “continuous improvement” that’s tailor-fitted to your business.
The 5 Core Principles of Kaizen
1) Know Your Customer
If you go about creating value for your customers, which is the foundational reason for a business’s existence, then you better know what your customer wants or needs. This is one of the core principles of Kaizen.
If you seek to improve and be better, in what direction should you be going? And in what aspects should you be improving? You’ll never know these things without listening to the voice of your customers.
And you’ll never get to that point of valuable service without intimately knowing the people who use that service. You can only create value for customers when you know:
- Who they are
- Why do they buy
- How they use your products
If the business is going to improve, you need to know more than you know right now. (You need to know them so much you can start sensing even their unexpressed desires.)
You have ideas and assumptions about your customers, of course. (You started the business with a little idea of who you’re going to sell to.) But you need to back them up with data.
So to “know your customers,” you will need to engage them in all the stages of the buying process—before, during, and after they buy. You need to do things like:
- conducting surveys
- leading focus groups
- combing through social media
- sorting and listing the positive and negative reviews
- studying standard customer interactions
You need to go beyond the purchase. And where possible, you might have to track their real-time behaviour.
Getting to know your customer is like getting your marching orders on how to make your product or services indispensable to a specific group of people.
2) Reduce Waste (Let it flow)
Kaizen is big on optimizing business operations by eliminating any form of waste—whether it’s waste of energy by workers performing no-value added activities or waste of unusable raw materials that have gone bad because somebody overstocked and mismanaged inventory.
The road to “continuous improvement” means looking to weed out any unnecessary form of action, maximizing the bang for the buck, and minimizing waste.
After “knowing your customer” and getting your facts straight, you are now in a much better position to determine what things or processes add real value to your product or service. Anything else that doesn’t add a palpable value to your offering is considered waste and should be skipped.
Each year, billions are lost on unnecessary activities and overdesign of products—adding features that users don’t need. For example, if your customers don’t need a car whose headlights come in different colours, then you don’t spend an iota of energy engineering that feature. It may make your product unique, but it is unique in an attribute that your customers don’t place much value on.
By streamlining your processes, eliminating any form of waste, and squeezing out every last ounce of value, you lower your cost. Those saved dollars can be reinvested into the company to further improve vital features, making your offering much more competitive.
3) Go to Gemba
As a philosophy, Kaizen is both practical and personal. Because it believes that good processes lead to good products, anyone who wants to improve those processes must go to the “shop room floor” where those processes take place.
Gemba means “The Real Place,” the location where value is created. This could be any number of locations: the point of sale, where frontliners and customers interact, the floor where agents are fielding calls from customers, or the product presentation given by their salesperson. Leaders need to listen in, closely observe, ask questions and put themselves in the shoes of their people and customers. This is all in the hopes of getting valuable insight and a unique perspective on things.
Leaders, especially of multinationals, are shielded by layers upon layers of bureaucracy, to a point where they have very little grasp of what is taking place on the frontlines. Taking a Gemba “walk” is leaders coming out of their ruby towers and seeing for themselves what’s going on in the business.
Losing touch is not too big of a problem for small businesses because business owners are more hands-on in the operational aspects of the enterprise. Often, it’s too big of a temptation for small businesses to pattern their modus operandi on big companies, erecting barriers when it is wholly unnecessary, creating functional silos just for the sake of having them and keeping leaders from the living pulse of the business.
Regardless of the size of the company, leaders must have an intimate knowledge of Gemba, “The Real Place.” This is what avoids costly and disastrous management decisions down the line.
4) Empower People
Leaders take a Gemba walk to see where value is created, where service is rendered, and where lessons are learned. The next logical thing to do is to give enough respect and credit to the very people who provide those values.
Empowering people means devolving decisions for them. You set the big picture guidelines, but you allow them to make and be responsible for daily decisions. This makes the company agile and responsive to the contingencies of any day.
If leaders recognize that the actual state of the company is not seen in the lifeless figures printed on a document report but on the sights and sounds of the shop floor, they should also believe that the people who are on the frontlines have an unequal and unique perspective to the business. So you can trust that their decisions come from personal experience from real data.
(Rank and file should be recognized for their efforts, listened to for their inputs, and consulted on any major changes.)
When you empower your people you are tapping into a resource that is creative, committed, and synergistic. By putting the onus on them, you are developing leaders and strengthening their attachment to the company.
5) Be Transparent
Leaders should be transparent enough with their people, thinking them mature enough to handle information. It is with a shared set of information that the whole enterprise moves and acts congruently. This means everybody is on the same page, and nobody is left out of the loop.
Transparency gives people a sense of security. They’re not constantly looking over their shoulders, or imagining what dark schemes are happening behind their backs. When everything is out in the open, when decisions are based on written down criteria, when people know what management is thinking, they work better and get on with the program.
But I will stress here also that openness and transparency do go both ways. Employees, the rank and file, must be honest and forthcoming with information that they hold. One can scarcely fault management for faulty decisions when they’ve withheld critical information from management. (This is how governments, dictatorships, and big companies fall.)
This usually comes from fear of judgment and negative perception. So management, for their part, if they want a culture of openness, must be careful not to shoot the messenger. For example, during a Gemba “walk,” leaders should not openly criticize, lash or nitpick their people and try to keep the interaction positive. This is so that their people don’t clam up and withhold the very information they needed the most.
Kaizen has expanded and developed over the decades, but these are the 5 guiding principles that underpin almost all of them. Businesses, big or small, would do well to observe them.
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