Lean Principles and Applications chapter 9

Process Improvement
Introduction
Unlike traditional project-based approaches to business improvement in which changes are
introduced in a single one-off implementation, the Lean approach regards improvement as a
continuing activity. As Lean Thinking extolls, we must strive for perfection. Nothing should ever be
regarded as good enough; achieving excellence is a journey that is never completed.

Process improvements can take place in a single large step or be the result of many small step
improvements. We may follow an initial ‘step-change’ (large project) with subsequent regular small
steps. From time to time we may need to introduce major changes: to accommodate a new
technology or introduce a new product or service. Both approaches have their merits and suit
different environments and situations but Lean, whilst not ignoring the need for occasional large
changes tends to focus more on continuous incremental change or Kaizen (Imai 97).

Continuous Improvement - Kaizen

The Japanese term Kaizen is translated as ‘Continuous Improvement involving everyone’ or often
just Continuous Improvement. The fundamental aspect of this is that change should be made in
small steps that build on previous improvements to create a significant change over time. It also
includes the idea that improvements are made continuously. This does not mean that change is
happening all the time because this would destroy the ability to operate standard work, but rather
that change is something that is continuously in our thinking: it is not something that we only do
when ordered to.

Kaizen is part of everyday thinking and action. As standard work is carried out, all workers - direct
operational workers and their managers - are required to consider what works well and what
doesn’t work so well and bring these to everyone’s attention at regular group discussions. During
these discussions - led by the direct manager or group/team leader- the issues are discussed and
prioritised by consensus and potential solutions are reviewed. These lead to short term actions that
can be implemented quickly usually from within the resources available to the local team and its
direct operational support staff.

Kaizen improvements are often low or no budget solutions: they require little if any expenditure.
Kaizen is not a capital investment approach: it does not rely on spending one’s way out of a problem
by acquiring new equipment. Because the focus of Kaizen is on small incremental improvements
these often only require minor adjustments and re-arrangements of existing resources and standard
work procedures. One might think that the worker would be unlikely to contribute ideas without
also seeking additional payment. However, motivation is not that simple and, in fact, workers can be
motivated by intrinsic rewards as well as extrinsic rewards.

Lean promotes the empowerment of the individual worker and by doing so can exploit their human
problem solving abilities and physical skills to resolve issues that in other systems might require
significant corporate support. For example, a worker might suggest that by installing some shelves
near to their work they could improve their process. A lean manager would be prepared to release
this person for a while to build and install these shelves rather than contract with a specialised (and
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expensive) engineering team to do the same thing. The improvement would be monitored to
confirm that the change yielded a sustained benefit and the worker would be rewarded – financially
or by the admiration of their peers or in building their own self-esteem.

Intrinsic versus Extrinsic rewards

The classical model of motivation suggests a direct relationship between extrinsic reward in the form
of money and performance. By paying people more for the same work they will perform better.
However, extrinsic rewards are not the only type of reward. Intrinsic rewards are those benefits that
an individual receives in the doing of a task and by extension in the outcome of that task on others
(individuals, teams and whole organisations or social groups). There has been a lot of evidence that
shows, that when the nature of a task involves a degree of cognitive function, extrinsic rewards are
ineffective and can even be negative. Extrinsic rewards tend to work when the nature of tasks is
routine and involves physical effort or repetition. Instead, researchers have suggested that
performing cognitive tasks well provides its own reward; that the motivation to engage with this
type of task is associated with the outcome on one’s own self-esteem and in the reflection of one’s
worth in a community.

The theory of self-motivation, intrinsic reward and self-determination has been pursued by Edward
L. Deci and others since the early 1970s. Much of this work is of a general nature and, although there
is some application to specific areas, I have found no examples of this being applied to Lean per se.
That doesn’t mean that it hasn’t been or isn’t applicable. However, the opportunity for self-
determination may be limited in factory* and other operational settings where standard work is
fundamental to achieving organisational aims and satisfying customers.

* refer to Volvo’s experiments at Kalmar and Uddevalla, see ch. 10 Lean Management

The focus of Kaizen is on Muda. Given an understanding that Lean is more than just Muda then it
should become apparent that kaizen does not encompass all and must be seen as only one
component of Lean improvement that deals with a subset of the issues associated with more
general process improvement. Kaizen will not resolve answers to questions about what the
customer values and whether the things we choose to do are the right things, the things we should
do. Nevertheless, Kaizen is important and for some firms is a key strategy.

Management Involvement
Although Kaizen can be considered as ‘normal business’ because it is a continuing daily activity, this
doesn’t mean that it doesn’t need managing. It must be actively supported by management. This
means that management must recognise that it has a strategic role (even though its individual steps
may have little apparent impact when taken in isolation), that it requires some resourcing (in terms
of time allocated to it) and that it requires correct application and consideration to be effective.

Improvement in general and Kaizen in particular is something that requires participation from all
levels within an organisation. The extent to which an employee’s role is given to improvement will
depend on their job as shown in fig 1. This shows that improvement activities and thinking are more
within the remit of increasing management responsibility, whereas operating staff – whilst having
some responsibility – should be more focussed on what Imai terms ‘maintenance’ and what these
notes have tended to refer to as ‘standard work’.
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Figure 1. Management Involvement in Kaizen (source: Imai 97)

Kaizen Focus
“The right process will produce the right results.”

Liker J. The Toyota Way

The focus of process improvement is, by definition, on the process itself rather than its results. In
other words, Kaizen focusses on the input rather than the output. This doesn’t mean that the output
or result is unimportant, it is, but by focussing on results alone we do not necessarily achieve the
quality or cost minimisation that a lean approach is looking for. By focussing on results we may often
find that people adopt short-term practices that lead to increased costs (through wastes) in the long-
term.

Making process the focus rather than results may be challenging within a traditional management
context. In this traditional environment, short-term measures of results – often financial- tend to
dominate. In a way, this approach runs against traditional thinking (particularly in production) but in
fact is quite normal in others. For example in healthcare, doctors focus on the proven processes of
surgical techniques and protocols rather than prioritising meeting targets for the number of
procedures in a day1.

The principles of kaizen include:

 Putting quality first: the process must be effective in delivering quality products/ services.
 Management Involvement: it requires effort and support.
 PDCA: There should be a formal process for planning, doing, checking and revising/acting
 Using data appropriately: we should be seeking to base action on evidence, using a scientific
approach.

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This is not to say that they cannot and should not improve these processes/procedures or look for
improvements to those aspects of the overall patient ‘pathway’ that are non-clinical. Neither does it mean that
healthcare managers are wrong to set challenging targets. Both are needed in order to make improvements,
remove waste and ultimately add value (or ‘value for money’ ref chapter 2).
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 Regarding the next process as our customer – even though this may not be the final
customer, operationally the next process is who we must satisfy immediately. We are reliant
on the final process meeting the customer’s needs and every link between upstream
processes communicating this effectively to its supplier.

A number of supporting systems help to deliver and sustain process improvements; it becomes
harder to achieve the aims of kaizen quickly and effectively without these. TQM and TPM help
support the quality principle in particular. The remaining systems help provide mechanisms for
involving management, using data effectively and ensuring that the direction of change aligns with
an organisation’s policy. These systems include Just-in-Time methods, Policy Deployment (also
known as Hoshin Planning) and various methods to engage operational staff including suggestion
schemes and group working.

One of the first techniques of Japanese process improvement to become visible in the West was the
Quality Circle and although the focus on these is now diminished they are still employed. Quality
Circles introduced the idea of improvement being a team effort carried out by the people involved in
the process itself (rather than something done by engineers in remote offices). For operational staff
to make sensible suggestions that align with the needs of the organisation they need to be equipped
with appropriate diagnostic and problem solving techniques. Examples include: Ishikawa diagrams
(fish-bone diagrams), Statistical Process Control (SPC) and the 5 Whys (a verbal analogue of Ishikawa
and root cause analysis). Without suitable training and support in such relevant techniques (from
trainers, often the immediate supervisor), effective participation is limited and workers are likely to
feel frustrated and critical. Quality Circles are self-organising and self-motivating although
management usually stipulate a fixed time for this on a regular periodic basis. Proposals arising from
the circles are made directly to the immediate supervisor who is responsible for determining the
priority for implementing change. In most cases one would not expect change to require additional
significant resources. The team is responsible for suggesting and implementing change rather than
any individual so there are no extrinsic rewards: the motivation is intrinsic.

In Western organisations, the concept of extrinsic motivation is long established as a means of

incentivising action even though there is considerable evidence that it often doesn’t achieve what it
sets out to, particularly when the task being incentivised requires thinking. However, this has been
the foundation of Suggestion Schemes in traditional organisations. Financial rewards are given to
individuals (most often) or groups if they can identify process or product/service improvements that
will reduce cost (typically). In recent years however, organisations increasingly realise that financial
rewards are less significant in motivating participation than other more human-centric actions. The
process of selecting suggestions and authorising rewards is often bureaucratic and slow, going
through various technical and management committees and as a result is not very efficient. If a
suggestion scheme is in use then it is important to track the participation rate as a measure of its
success in getting significant contributions from employees.

In Lean organisations management target the focus of suggestions onto process improvement and
are supervisor authorised. This illustrates the ethos of quality circles. Improvements bring intrinsic
rewards and target job simplification, the removal of mind-numbing work, the removal of obstacles
to the flow of people, material and products and, of course, to quality, productivity, time and cost.

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Critical Observations of Kaizen and Motivation at Toyota.

Some authors (Hancke 98, Shimizu 98) have suggested that worker-developed improvements have
little impact and have also noted that payment for improvements played a significant part in
motivating workers to participate. In Toyota itself (in Japan during the 1980’s at least) the really
significant improvements were led by the technical department and manufacturing engineers. They
argue that the real role of Kaizen in the past in Toyota was to give little more than an illusion of
empowerment: it didn’t produce and in fact wasn’t expected to produce significant or radical change
but to build morale and develop a team ethos (to break down ‘them and us’ attitudes).

The Toyota Management System – a complementary system to the Toyota Production System –
made explicit the pay reward for individual’s whose improvement suggestions were implemented.
This used a complex set of equations based on their basic pay and a number of performance factors
to increase wages but only for a limited period; for example, six months and then pay would return
to the basic level. Teams as well would benefit from Kaizen as an element of the productivity
improvement arising from Kaizen was reflected in a team-based productivity factor included in wage
calculation. Competition between teams was encouraged and formalised within the wage system:
teams that exceeded the average of the top 30% of production units would after a period of extra
pay would have their standard work time reduced so that they became average again; in time they
would fall behind average and this would be reflected in them falling back towards basic pay …
which would then stimulate them to perform more Kaizen. So, rather than being motivated by
intrinsic reward and the strive for perfection, worker participation was remuneration led, much like
the classical approach taken by conventional management.

Radical Change - Kaikaku

At times, an organisation may need to make much more radical change in a short time than is
possible using Kaizen. This may be to support the introduction of a new product and new
technologies (either ‘hard’ equipment and material technologies or ‘soft’ management techniques)
or may be driven by the need to catch-up with a competitor who has developed an advantage. A
radical change process may also be used when Kaizen has failed or is failing i.e. the rate of process
improvement or employee participation has stalled. Kaikaku is the Japanese term given to express
the notion of radical change.

Kaikaku is management initiated and led by a dynamic results-driven change agent. This person is
likely to be an expert or ‘sensei’ in the application of lean techniques and may come from outside
the organisation. They are more likely to dictate the solutions to process improvement than the
more consultative/consensus approach favoured in Kaizen but this is often required when major
improvements have to be implemented in a short time.

Various types of Kaikaku have been identified as shown in Fig 2. They can either introduce change
that is innovative within the local environment (new to the area but not necessarily new to the
organisation) or change that is radical (previously unknown to the organisation or others within the
same sector). They can also be implemented using resources that are close to the process and
accessible without significant investment, or require new capital intensive resources such as robots
or new process technologies.

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Figure 2. Types of Kaikaku

A Kaizen-Blitz is an Americanisation of kaikaku. Its name is taken from American Football where a
‘blitz’ is a very aggressive tactic to tackle the quarter-back (the ball thrower who drives the
opposition attack). This form of kaikaku is team driven mixing people from the process with external
experts and specialists drawn from a number of relevant functions. The work involved is often very
intensive with demanding schedules and long working hours. The stimulus as before comes from
senior management and is often as a consequence of the business fighting for its survival; it is this
that helps motivate people to put in the effort. However, just like kaizen, it does not seek to buy its
way out of problems: it does not seek solutions in capital investment although sometimes this is a
valid solution (the problem is that capital investments take time to plan, authorise and implement).

Note: Within the UK National Health Service the term RIE (Rapid Improvement Event) is used to
describe what is, essentially, a Kaizen–Blitz although the level of effort and intensity of these is
significantly lower than found in industry and the rate of implementation is low.

Low Hanging Fruit: It is easy to pick the apples in an orchard that are within arm’s reach but there
are apples at the top of the tree as well.

The initial attempts to identify process improvements when making the first steps towards Lean are
often very rewarding and produce significant financial rewards. This is because there is so much
waste in a non-improved system and some of this is very obvious and easy to remove. This yields
quick gains that are important (because they help quickly generate a return) but their very speed can
lead to complacency: people think that all process improvement will be this easy and it isn’t.
Furthermore, in a culture where just doing enough is regarded as acceptable, once this low hanging
fruit is achieved further improvements stop. But, the goal of process improvement is long-lasting
improvements to process not just one-off savings in inventory levels, floor space or the release of
capital.

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Conclusion
Both Kaizen and Kaikaku may be used at different stages in the life of a process as shown in Fig 3.
Kaizen produces many small incremental improvements but the opportunity for improvements and
their effect gradually diminish over time. In order to continue improving we require occasional
radical changes to create step changes which can then be gradually improved by a following period
in which Kaizen is the primary focus of process improvement.

Figure 3. Kaizen and Kaikaku working together

The pace with change is identified and implemented affects the methods that are used, the level of
detail and depth of analysis and also the opportunity to build consensus and ‘buy-in’. Therefore,
with Kaizen we tend to see greater detail and more consensus because change is an on-going
process that evolves during the course of months and even years of operation. Kaikaku, being more
sharply focussed in time and driven by senior management, engages fewer of the operational staff
and gives them less involvement and opportunity to comment. Thus, radical change using Kaikaku is
likely to suffer to some extent, the same issues of (non) acceptance as traditional project-based
change initiatives. The role of the team leader is therefore critical in coaching operation teams in the
new methods that Kaikaku may bring and Kaizen gives the team the opportunity then to take
ownership of the new process and make it their own, and - in so doing - help to sustain the process
improvement in the long term.

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Figure 4. Comparison of Kaizen and Conventional process improvement characteristics

References
Berggren C., Volvo: A Comeback or a Farewell, in One Best Way, ch. 16, pp418-439,1998

One Best Way? Trajectories and Industrial Models of the World’s Automobile Producers, Freyssenet,
Mair, Shimizu & Volpato (eds), Oxford University Press, 1998.

Hancke B. "Technological Change and Its Institutional Constraints." CSIA Discussion Paper 93-05,
Kennedy School of Government, Harvard University, September 1993.

Imai M. Gemba Kaizen: a common-sense low cost approach to management, McGraw Hill 1997. HO
3000.I6

Shimizu K., A New Toyotaism?, in One Best Way, ch.3, p63-81

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