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Japanese Innovation: Kaizen and Kakushin

Written on July 22, 2007 by Dr. Lauchlan A. K. Mackinnon in Uncategorized The CEO of Toyota, Katsuaki Watanabe, was recently interviewed and written up in an article in the Wall Street Journal . Watanabe was also recently interviewed in the July-August edition of the Harvard Business Review. In the interviews, Watanabe talks about radical innovation: he describes the idea of building a dream car that cleans the environment, prevents accidents, can travel the world on a single tank of gas, and of course is cheap and high quality. Watanabes talk of innovation and his use of the Japanese word Kakushin for it has triggered some discussion on the blogosphere. In particular, there has been interest regarding the relationship of Kaizen (continuous improvement) to Kakushin (innovation) and Kaikaku (revolutionary change). In his book Kaizen, Imai described innovation as more of a Western approach. Japanese innovation is often described in terms of Kaizen only, so it is interesting to see radical, breakthrough innovation described from the Japanese perspective by the company that made Kaizen famous.
Toyota Questions Kaizen

A front page story in today's weekend edition of the Wall Street Journal, titled As

Rivals Catch Up, Toyota CEO Spurs Big Efficiency Drive, does a good job of
describing Toyota's "culture of worry"... always worrying that they aren't good enough even when they're on top. Although their sales, profits, and market share are increasing at the same time GM and the rest of the big three are in a tailspin, there is reason for them to be

concerned. Over the past ten years they have reduced the average number of hours it takes to build a car from 21.6 to 21.3 while GM has reduced from well over 30 to about 23. Rapid global growth has led to design flaws leading to quality problems. An internal study a couple years ago found that Toyota paid more for almost half its parts than other car companies, a conclusion that Mr. Watanabe found "outright humiliating" and "unacceptably mediocre." The rise of inexpensive Chinese automakers and suppliers is creating an even more formidable threat. They really know how to beat themselves up when they are succeeding like no other company can. But that's one of the keys to their success. We've often talked about how that "presumption of imperfection" helps generate levels of improvement, often created directly from incredibly productive employee suggestion programs, orders of magnitude greater than what exists at most companies. You can get a sense for how much they worry when they are willing to question and change - even the most fundamental reasons for their success:

Within the company , he [CEO Katsuaki Watanabe] has even questioned a core tenet of Toyota's corporate culture - kaizen, the relentless focus on incremental improvement.
Mr. Watanabe wants kakushin, or revolutionary change. He wants to cut the number of components in a car by half and create a new generation of fast and flexible factories to build these cars. Just think about that challenge for a moment... cutting the number of components by half. Think about your factory's products, or even the computer you're reading this on, and contemplate what that means. Basically a reinvention of the car itself. This new initiative is called "VI" or "Value Innovation." This initiative builds on the CCC21 (Construction of Cost Competitiveness for the 21st Century) program that improved the way 173 components and systems were designed, which already reduced procurement costs by almost 30% over the five years ending in 2004. Also around 2002 Toyota began rethinking parts of its Toyota

Production System, lean manufacturing, itself. "Simple and slim" teams looked at all processes to see where they could be simplified. Oversized monolithic equipments such as aluminum casters were redesigned into much smaller units. Paint lines, often the largest part of an auto factory, were reduced by two-thirds. The VI program is radical. Cut the number of components by half. Create factories and processes that can pump out one of about a dozen different car models in any sequence... every 50 seconds. Ford, GM, and the others also have lofty goals. The difference is that Toyota knows how to execute. That seemingly simple ability will keep them ahead of the pack for a long time to come.

Toyota Questions... Everything

Saturday's post of Toyota Questions Kaizen, which commented on the As Rivals

Catch Up, Toyota CEO Spurs Big Efficiency Drive article in Saturday's Wall Street
Journal, generated a lot of traffic and emails from readers asking if Toyota was really questioning lean manufacturing itself. The answer is: "Yes, of course." But not for the reason that lean skeptics would like to hear. There is nothing that a traditional gutless executive would like to hear more than Toyota realizing that lean has run its course. For that would give him an excuse to fall back on the tired old traditional management theories that have eliminated so many knowledge workers, aptly managed so many short-term objectives tied to so many incorrect (but GAAP compliant...!) financial assumptions, and thereby destroyed so many potentially great companies.

Unfortunately that is what a lot of traditional Wall Street Journal readers thought when they read the article. Many of us in the real lean world didn't even grasp this potential misunderstanding until we talked to people struggling with a fundamental understanding of the concept itself. Real lean means to focus on an entire culture of continuous improvement, not just the tools. Real lean means respecting and valuing people, not getting rid of them as soon as some of the lean tools create a minor improvement in efficiency. There are plenty of companies and executives that don't have the guts to implement real lean. Of course Toyota is questioning kaizen, one of the core underpinnings of their Toyota Production System. Just like they question every single aspect of their business, all the time. There is no resting and no plateau. There is always a fear of danger, that they are vulnerable. Charles Fishman does a great job of showing us that mentality in the latest Fast Company magazine with an article titled No

Satisfaction at Toyota, which we commented on in A Presumption of Imperfection. Toyota's competitiveness is quiet, internal, self-critical. It is rooted in an institutional obsession with improvement that Toyota manages to instill in each one of its workers, a pervasive lack of complacency with whatever was accomplished yesterday. At Toyota there is a presumption of imperfection. No one at Toyota Georgetown can talk about his work without explaining how it has just changed, or is about to change.
Dan Markovitz realized this potential misunderstanding quicker than most of us, and emailed myself and others. As he noted in an addendum on our friend Mark's Lean Blog,

Constant re-thinking, continual improvement, relentless striving for increased efficiencies and reduced waste -- that's EXACTLY what Lean is all about. As long as US companies and the US media continue to think of lean production as simply a

matter of eliminating muda, or enabling workers to switch between different tasks, efforts to catch up to Toyota will come to naught. People need to understand Lean as an entire system, predicated upon respect and empowerment of the individual, that leads to increased efficiencies.
Lean is built on two pillars: continuous improvement and respect for people. Continuous improvement is a focus on every aspect of the business, all the time. Even the most fundamental components. Respect for people is often forgotten, and sometimes many of us need to be reminded how important it is.

Muda means waste, where waste is any activity that does not add value. Reducing or
eliminating muda is, of course, one of the fundamental objectives of any qualityoriented person. Taichi Ohno of Toyota identified what are called the seven wastes or seven mudas, being the most common form of muda found:

Waste from overproduction


Which leads to excess inventory, paperwork, handling, storage, space, interest charges, machinery, defects, people and overhead. It is often difficult to see this waste as everyone seems busy. People may be waiting for parts or instructions. Mostly they are waiting for one another, which often happens because they have non-aligned objectives.

Waste of time in waiting

o o

Transportation waste

Poor layouts lead to things being moved multiple times.

o o

If things are not well placed, they can be hard to find. It can aggravate alignment of processes. Additional effort may be required in an inefficient process. Excess buffer stocks a whole host of sins, which will be uncovered by gradually lowering inventory (doing it all at once will cause total breakdown!).

Processing waste

Inventory waste

Waste of motion

This includes movement of people, from simple actions when in one place to geographic movement. Having everything to hand as it is needed reduces motion muda.

Waste from product defects


Defects cause rework, confusion and upset a synchronized set of processes.

A simplified view of muda is:

Wasting time. Wasting a consumable resource, such as materials. Causing dissatisfaction (including incomplete satisfaction).

Muda is one of the '3Ms': muda, or waste, mura, meaning irregular, uneven or inconsistent, and muri, meaning unreasonable or excessive strain. The acronym 'DOT WIMP' can be used to remember Muda wastes (Defects, Overproduction, Transportation, Waiting, Inventory, Motion, Processing). A variant on Mudas is sometimes called the '8 Wastes of Lean', changing 'processing' to 'over-processing', and adding under-use of skills. This has the acronym 'TIM WOODS' (Transport, Inventory, Motion, Waiting, Over-production, Over-processing, Defects, Skills).