Kaizen as a business philosophy made Japanese industry famous in the 1970’s and 1980’s helped to make Japan the second largest economy in the world at the time. Translated as ‘continuous improvement’ the Kaizen approach turned Japanese manufacturing and Japanese brands into world beaters and the envy of the world. But as the Japanese economy remains sluggish after three decades of lacklustre performance, is Kaizen still useful today?

The Origins of Kaizen

In the later part of the 19^th century, following the Meiji restoration when Japan swiftly transitioned from its feudal, samurai tradition, Japan sent students all around the western world to bring back innovation in industry, printing, political theory and military know-how. The Japanese learned how to take smart thinking and make this uniquely their own.

After their defeat in WW2 and requiring massive reconstruction, Japan again responded well to western innovation. Particularly influential was the work of W. Edwards Deming, an American statistician who taught Japanese companies how to use statistical methods to improve quality control. Deming’s ideas were combined with traditional Japanese values such as respect for workers and a commitment to continuous improvement to create the Kaizen philosophy.

Kaizen was seen as a way for Japanese businesses to compete with their Western counterparts, and it quickly became an integral part of Japanese culture. Readers of a particular age will recall when Japanese production was not seen as particularly high quality, but that has long since changed.

In the 1980s Kaizen began to gain attention in the West, due in part to the success of Japanese companies such as Toyota, which were using Kaizen principles to produce high-quality products at competitive prices. Books and articles on Kaizen began to appear in Western publications, with Kaizen workshops and seminars becoming popular around the world.

Today, Kaizen is used by businesses of all sizes in both the public and private sectors. It is also used in a variety of other settings, such as education, healthcare, and government. Kaizen has been credited with helping to improve quality, productivity, and profitability in a wide range of organisations.

The Principles of Kaizen

Kaizen is based on a number of key principles, including:

• Continuous improvement: Kaizen is not a one-time event. It is an ongoing process of making small, incremental changes that add up to significant results over time.
• Everyone’s involved: Kaizen is not something that is done to employees. It is something that employees do, together with their managers. Everyone in the organization is responsible for identifying and implementing improvements.
• Focus on the process: Kaizen focuses on improving the processes that create products or services, rather than on the products or services themselves. This approach helps to identify and eliminate waste and inefficiency at the source.
• Use data to drive improvement: Kaizen relies on data to identify areas for improvement and to measure the results of those improvements. This data can be collected through a variety of means, such as surveys, observations and statistical analysis.
• Make it easy to change: Kaizen changes should be easy to implement and sustain. This means that they should be simple, practical, and cost-effective.
• Celebrate success: Kaizen is aiming for improvement, not perfection. It is about making progress and celebrating successes along the way. This helps to keep employees motivated and engaged in the continuous improvement process.

As Kaizen was introduced back to western companies through business schools, complimentary business philosophies emerged such as Total Quality management (TQM) and Lean manufacturing. These similarly emphasised the importance of continuous improvement, waste reduction and consumer satisfaction.

The Benefits of Kaizen

Kaizen offers a number of benefits to organisations, including:

• Improved quality: Kaizen works to improve the quality of products and services by identifying and eliminating defects.
• Increased productivity: Kaizen works to increase productivity by streamlining processes and eliminating waste.
• Reduced costs: Kaizen works to reduce costs by eliminating waste and inefficiency.
• Improved employee morale: Kaizen helps to improve employee morale by allowing employees a measure of ownership and empowerment.

So, is Kaizen still Useful Today?

The workplace has changed a great deal since the times when Kaizen represented real innovation.  With recent technologies has come a level of discomfort with ‘the way things are’ and newer generations of consumers have become familiar with disruptive technologies and market strategies with the unprecedented rate of change that is common in this 21^st century. Consumers now expect ongoing incremental improvement in consumer technology with the resulting shorter life-cycles of manufactured goods. With automation, digitisation and recently, artificial intelligence, is incremental improvement as a business philosophy sufficiently innovative in these rapidly changing times?

At the very least, businesses needs to adapt Kaizen principles to incorporate technological and digital advancements, while ensuring that employees (and the schools) are able to stay abreast of the necessary skills and mindset.

Kaizen has received some criticism in that its overly focused on the granular level and where continuous improvement there does not translate well at enterprise level. As senior management in Japanese corporations remain focused on Kaizen as the accepted approach to business, does this prioritise short term improvement over long-term enterprise-wide success? Does this allow Japanese companies to compete effectively with revitalised western companies empowered by the latest technical, digital innovations? Is Kaizen now so normalised that it no longer offers competitive advantage?

There is no doubt that the Japanese economy has struggled over the past three decades but this has more to do with an aging population and unfavourable demographics, lower consumer spending and the turbulence of nearby China’s rapid rise and change than with anything that Japanese industry is doing wrong. More recently the very strong Japanese response to the pandemic has significantly harmed the economy but the country remains the third largest economy in the world where inflation remains low, the Nikkei is up and Japanese banks are stable. Further, with several nuclear plants being brought back on line, energy costs are low and not subject to the price surges of elsewhere in the world. Communications and logistics work in Japan – superbly.

Perhaps a more holistic view of Kaizen is at play now in Japan. More than simply an approach to business, Kaizen can be seen to encompass economic, political and even social life in Japan. Tourism is increasing, the stock market is growing and while investment in Japan will never be as exciting as it was in the 1980’s Japan still represents steady and continuous improvement. In a country as at peace with itself as Japan, immaculate and well served with both a functioning infrastructure and a comprehensive consumer-focused service mindset, incremental and continuous improvement may well be the ideal environment for international business. Perhaps therefore, Kaizen still is useful today.

Asian Insiders is very active in Japan and available to discuss business opportunities with interested clients. For a no obligation call to discuss working together in the Japanese market please contact Managing Partner Jari Hietala, jari.hietala(at)asianinsiders.com.