How Kaizen evolved from total quality management to enabling growth

Kaizen, also known as continuous improvement, was born in Toyota after World War Two by the company’s founders, the Toyoda family. There was a need to catch up with the West economically and Kaizen started as a company improvement effort, born in production before expanding into supply chain. Nowadays, it is entering the business growth areas of sales, marketing and innovation.

The pioneer of ‘growth Kaizen’ is the Danaher Corporation, which strongly developed Kaizen in growth areas, an expansion of the initial operational Kaizen.

Figure 1: The evolution of Kaizen since 1950 (Source: Kaizen Institute)

Today, technology, digitalization and the internet revolution are receiving a lot of attention. In industrial companies, the term ‘Industry 4.0’ is commonplace, while in service areas the term ‘digital transformation’ has become ubiquitous.

Technology needs to be integrated with the Kaizen management methodologies while growth Kaizen is intimately linked to digital transformation.

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Kaizen Generation One (1950-80): Total quality as the birth of Kaizen

After World War Two, Japan was devastated and the US Army offered help to rebuild industrial companies. US experts such as Joseph Juran and William Edwards Deming taught the Japanese how to improve quality. Kaizen Generation One had a focus on total quality management (TQM), with the publication of the first book about Kaizen, written by Masaaki Imai (founder of Kaizen Institute) in 1984, being on the TQM movement in Japan.

It was the time of quality control (QC) circles, total productive maintenance (TPM) and the start of Six Sigma. Although the term ‘Six Sigma’ would came later, at this time it was known as statistical process quality control.

Meanwhile, technology also developed a lot. In terms of automation, this was the era of Industry 3.0 (see Figure 2) and the focus was on how to automate the machine cycle time to free operators, so that they could work on more than one machine. This was also the time of enterprise resource planning (ERP) software based on manufacturing resource planning (MRP) algorithms.

The connection between Kaizen and technology is that the former deals with how to organize people and processes, while technology deals with how to do things faster and simpler. Technology is an enabler of people and process and should always be designed after the Kaizen of people and process.

Figure 2: The timeline of Industry 1.0 to Industry 4.0 (Source: Kaizen Institute)

Kaizen Generation Two (1980-2000): The Lean operations Toyota production system (TPS)

By the 1980s, Toyota had perfected Kaizen to focus on the creation of flow with Kanban and pull flow algorithms. This was the work of Taiichi Ohno who invented a new way to organize production and internal logistics. Kaizen was by then a new production system where the emphasis was on small batch agility and all automation was secondary to this principle. A Kaizen book explains what Lean Kaizen is and the difference between resource efficiency and flow efficiency.

It was also at this time that a study by MIT about the automotive industry showed the superiority of the TPS (“the machine that changed the world”) where some of the authors coined the term Lean to describe the TPS.

This was the time of operational excellence based on the TPS principles of flow and resource efficiency and incorporating all the improvement tools used in Kaizen Generation One.

Because of the success of the TPS many companies started implementing a similar operational efficiency system that usually took the name of the company, an example including the Bosch production system.

Kaizen Generation Three (2000-20): How Kaizen evolved to Lean transformation

Soon it was clear for many companies that Kaizen could not only be a production system. For it to succeed, leadership teams and the chain of command needed to be completely engaged.

The term ‘Lean transformation’ was being used to implement Kaizen in natural teams for the implementation of world class Kaizen leadership behaviors. This is also called daily Kaizen for natural teams and the aim is to move to a ‘command and control’ leadership style to a coach and empower individuals.

During this time we also witnessed the rise of the internet. We entered the era of connected machines and customers with Industry 4.0 and more powerful digital solutions started to appear. But Kaizen and the management culture of continuous improvement continued to develop.

We also saw Kaizen being expanded to service companies, offices and other transactional areas including government and shared service centers.

Kaizen Generation Four (2020 – today): The era of growth Kaizen

The goal of Kaizen is to change the company for the better, so it must be a business-wide effort. When we talk business, we cannot only consider the operational side of the business, the supply chain. Therefore, it became clear that Kaizen should be expanded to growth areas (departments and processes that impact more direct sales), and the profitability and attractiveness of the value proposition (product and service).

The Danaher Corporation was the first company to understand that Kaizen is a business-wide effort. There is an insightful case study on the Harvard Business Review that explains this very well.

The era of growth Kaizen started with management systems and tools that can streamline and improve sales and innovation. It is herein that Kaizen can help organizations better understand markets and consumers, how to attract greater interest, how to convert more leads into customers, and how to generate more innovative ideas and accelerate time-to-market.

Growth Kaizen as a continuous tool for growth and profitability

The KPIs of growth Kaizen are sales, marketing/sales conversion rates, customer retention rates, customer satisfaction, time-to-market, sales of new products, innovation and all funnels related to growth (marketing, sales and retention).

The goal is to improve with Kaizen and have a continuous impact on growth and profitability together with operational excellence.

This article was originally published as From Total Quality to Business Excellence – KAIZEN™ Evolution.

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