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Leadership: the Force Multiplier of Kaizen

By Kevin Meyer

Jabil's website promotes their commitment to lean, especially their report showing the following:

JabilThat truly is impressive, and I happen to know something about Jabil and know it is real.  Those numbers are driving significant increases in shareholder value - which is a result of creating value for their customers.  They are committed to lean, and it starts at the top leadership levels.

Toyota and other lean-driven companies are similar.  Large numbers of kaizens - or just plain improvements - drive productivity improvements.  In the case of Toyota it helps a labor-intensive factory in a high labor cost country be one of the company's most efficient - without automation.

When I see huge numbers like those at Jabil, Toyota, and elsewhere, I have to wonder a bit.  The average impact of an individual kaizen is presumably fairly small, but the cumulative effect is very large.  It takes serious leadership commitment to create a culture and environment where that can occur.  I'm confident the leadeship of such companies is directly involved in kaizen themselves.

 Think about the other companies just starting down the lean journey, or those struggling to gain momentum.  We know how absolutely critical leadership is at that time.  Lean can start and even blossom from within the organization, but to truly succeed its value must be recognized, embraced, and driven from the top - the CEO, President, owner, or whatever.  If it's not then the tough calls on resource commitments, priorities, keeping the faith when the inevitable early results aren't immediately financially favorable, will not be made.  And the lean transformation will fizzle and stall.

But leadership can also be a force multiplier of the kaizen effect.  While tens or hundreds or even thousands of small kaizens are happening throughout the bowels of an organization, imagine the impact of just a handful of kaizens at the executive and especially CEO level.  Instead of saving a thousand bucks here and there - which can definitely add up - a CEO that effectively practices kaizen can save millions or create millions in customer and shareholder value.  I'm thinking of kaizen events that proactively identify a new market instead of reactively chasing competitors, plug a cash drain at an ineffective operation so the cash can be invested elsewhere, or implement an effective corporate training program that allows the company to better leverage the brains of its employees.

Saving a few minutes or dollars here and there is very important, especially when mutiplied by all of the potential improvements in an organization.  Saving or creating a few million bucks by making the really big improvements is equally important.

And that, just as with driving and cultivating the lean journey itself, takes leadership.  Leadership that commits to lean as a priority, that engages daily with the entire organization, that sets and continually reinforces a clear, concise vision of the ideal future state.  I have come across many companies where the employees get it, and are trying to create a lean transformation, but the executive leadership is disengaged or even overtly skeptical.  It's sad.  I know where those organizations will be in a few years.

Forgetting about the respect for people pillar of lean will cause a lean transformation to fail.  Leadership that doesn't truly commit to and engage with the lean transformation will also cause it to stagnate and fail.  But leadership, top leadership, that truly commits to the lean journey and leverages the power of people can create incredible value.  Just ask Jabil.

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One Response to "Leadership: the Force Multiplier of Kaizen"

  • Mark GRaban
    12 July 2013 - 6:22 am

    The number of Kaizens (not events, but small improvements) is certainly easy to to count. My “Healthcare Kaizen” co-author’s health system in Indiana has tabulated and formally documented 4,000 improvements each of the last three years. Their leaders are not only supporting, encouraging, and recognizing Kaizen on an ongoing basis, they are directly participating. This includes front-line managers and the COO and CEO.
    ThedaCare, a health system in Wisconsin, says the had more than 20,000 improvements in 2012. Again, there’s very strong CEO leadership on Lean.
    When doing lots of small Kaizens, the accumulated impact is large… and occasionally you stumble into a single small improvement that saves $300,000 or generates $3,000,000 in revenue. We recently had a KaiNexus customer implement an improvement that led to more patients getting speciality pharmacy prescriptions filled at the in-house pharmacy instead of an outside pharmacy. That led to about $700,000 in revenue for the first three months… so anticipating $3m for the year.
    Not every Kaizen has that return, but if you encourage all of the small Kaizens that are meaningful in different ways, you’ll also get an occasional “home run.”