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Article

Kaizen: We can see clearly now!

Laoucine Kerbache and his co-authors set out to assess the use of the Japanese concept of Kaizen, considered a key element in the competitiveness of Japanese companies. Their research led them to propose a classification that may help academics and managers to use different Kaizen perspectives and tools more wisely.

words: "kaizen", "philosophy", and others

Kaizen, did you say Kaizen? This term, created by the combination of two Japanese words (Kai and Zen, which respectively mean “change” and “good” in Japanese), is well-known in the management world but its meaning is not always clear. “Masaaki Imai defined it as a means of continuous improvement in work life, as well as in personal and social life,” says Laoucine Kerbache, who decided to find out what Kaizen is really about while he was a visiting professor at ESADE in Barcelona. Regarded as the key to competitiveness of Japanese companies since the 1980s, this gradual and smooth process is based on small, concrete improvements, which are simple, inexpensive, and made continuously on a daily basis.

Kaizen for everyone

Today, in business, Kaizen  comes in a multiple methodologies and techniques such as Gemba Kaizen workshops, Lean-Kaizen in Six Sigma, Office Kaizen, Kaizen Teian, Kaizen Flash, and Kaizen Blitz. Popularized in the West, Kaizen Blitz, for example, aims for radical change in a short amount of time. “With the adoption of Just-in-Time, Lean Production, and Six Sigma, American and European companies copied the concept of Kaizen but with many ambiguities and inconsistencies,” says Kerbache. “The literature review that we carried out reveals the importance of clarifying this concept, especially for operations management of products and services.”

Three perspectives and a few guiding principles

Kerbache and his co-authors identified three different perspectives or visions, which each include a set of principles and techniques. “The first considers Kaizen as a management philosophy and advocates for continuous improvement to enhance organizational performance and progress,” he says. “In the second, Kaizen is a component of Total Quality Management, which focuses on responding to customer needs and business objectives. In the third perspective, Kaizen is considered a series of methodologies and techniques to reduce waste, which is the vision developed by Lean Management.”

By comparing these three perspectives, Kerbache and his co-authors highlight the nuances in Kaizen as well as the overlap and duplication that can exist within and become exacerbated by environment and culture. “When it comes to implementation, some things do not fit neatly into the different perspectives; we do not know if they fall under a management philosophy, total quality, or a methodology like Lean. So, the risk is great to mix approaches and to implement an inappropriate action plan, using ineffective tools. This is the case of most big failures we have seen, especially when Kaizen is used to support a sudden change.”

 

In Kaizen, it is essential to empower and involve everyone.
 

When Kaizen goes wrong

When it is well understood and well managed, Kaizen can give outstanding results. This has been the case with many companies in food, textile, and automotive industries. The most emblematic case is that of Toyota, but companies like Honda and Mazda have also benefited from the concept. Why do some Western companies like Chrysler have difficulties taking advantage of Kaizen? “The results obtained from using Kaizen at Chrysler were disappointing overall, because the method was only partially implemented. Change was supported using just some of the tools necessary for Kaizen. For example, machine and assembly line workers were hardly informed and solicited for the transformation project. But, in Kaizen, it is essential to empower and involve everyone, including operators and specialized workers. That is where most improvements materialize. If you take a ‘top-down’ approach (directional control) to Kaizen, it will never work.” Moreover, since the “bottom-up” approach (participatory control) is often practiced in VSBs and SMBs, the authors are surprised that Kaizen is not more widespread in these companies.

Applications

Focus - Application pour les marques
The methodology could be applied immediately. Professor Pérignon is cautiously optimistic about the Basel Committee adopting the suggested improvement concerning the foreign exchange effect. He is less confident that it will drop the cap system, highlighting the fact that US lobbyists have so far been very good at getting the system to protect their banks: “They decided to lower the capital of the largest custodian banks (high substitutability score), all of them being US banks,” he notes. The researchers put together a website, sifiwatch.org, with all the data they collected about SIFIs. Every year, the website also discloses the new list of SIFIs, several months before the official announcement by the Financial Stability Board, with so far remarkable accuracy. “The economic impact of SIFIs is huge, but the risk data for these banks are not available in a centralized way and sometimes hard to get. Our website provides transparency,” says Pérignon. Last but not least, their methodology is potentially applicable to sectors that require similar risk scoring, such as insurance or asset management.

Methodology

Focus - Methodologie
We designed a theoretical auction model for the trading of artworks. We then tested the predictions coming out of our model on art auction data covering a period of 40 years.
Based on an interview with Laoucine Kerbache, professor of Supply Chain Management in the departement of Operations Management & Information Technology, Associated Dean and Director of the HEC PhD Program, and the article “Thoughts on kaizen and its evolution: Three different perspectives and guiding principles” (International Journal of Lean Six Sigma,  vol. 2, No. 4, pp 288-308, 2011), co-written with Manuel F. Suárez-Barraza and Juan Ramis-Pujol.

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