Name: Strategic Kaizen™
Rating: 4.5 (73 reviews)
Author: Masaaki Imai

What’s in it for me? Learn the secrets of lean production.

Building cars is an expensive business that requires lots of capital, materials, machines, and space.

None of those things existed in postwar Japan, so Toyota needed an alternative approach. It streamlined production, cut waste, and built cars to order rather than manufacturing them in bulk.

In a word, it went lean. This was the Toyota Production System – a revolutionary approach emphasizing efficiency and timeliness. At its heart is a principle known as kaizen, meaning “continuous improvement.”

It’s a great way to make cars, but it’s also more than that. As you’ll see in these blinks, Toyota’s philosophy provides the conceptual tools to improve pretty much any business process.

In these blinks, you’ll learn

how to handle a corporate PR nightmare – and how not to;
what supermarkets can teach us about building cars; and
how lots of small changes can transform an operation.

Short-term profitability doesn’t guarantee long-term success.

On April 20, 2010, the Deepwater Horizon oil well operated by BP exploded in the Gulf of Mexico, killing eleven workers and discharging just under five million barrels of oil into the ocean.

BP’s CEO, Tony Hayward, was unapologetic.

It wasn’t BP’s fault, he said, but the rig owners’. And anyway, it was a big ocean – the amount of oil BP was pumping into it was nothing compared to the total volume of water.

Hayward’s bullish stance provoked a media backlash. When he was finally forced to apologize, he used the opportunity to complain about how tired he was of being attacked.

From a PR perspective, BP’s response was a disaster. Hayward wasn’t acting on a personal whim, though – his actions reflected a widely accepted idea of the role of corporate leaders.

Here’s the key message: Short-term profitability doesn’t guarantee long-term success.

BP’s entire crisis response plan after the Deepwater Horizon explosion served a single goal – protecting the interests of its shareholders.

Tony Hayward was merely the face of that plan. He downplayed the seriousness of the incident, deflected blame, and claimed to be the real victim – anything to prevent BP’s shares from tanking.

The plan didn’t work, and BP lost over half its market capitalization over the summer of 2010. It’s an extreme example, but it neatly illustrates a widespread problem among today’s corporations.

In modern corporate management systems, a CEO’s highest priority and responsibility is to provide shareholder delight – that is, to guarantee profits for the people who have invested in the company.

Isn’t that just capitalism, though? Not really. The exclusive fixation on shareholder returns is a relatively recent development, and it often means leaders overlook another vital facet of capitalist enterprises: customer satisfaction.

It’s hard to put a number on how satisfied customers are with what you produce. Unlike profits, customer satisfaction doesn’t appear in monthly, quarterly, or annual reports – but it’s just as important when it comes to measuring the health of a company.

If customers aren’t happy, after all, they tend to just go and find somewhere else to spend their money. That doesn’t happen all at once, of course; by the time shareholder-obsessed leaders notice what’s going on, it’s often too late. And the result? The company goes under, and everyone suffers.

So, if you want to guarantee the short-term interests of shareholders, you must look to the long-term satisfaction of customers.

Serve your stakeholders – and you’ll be serving your shareholders.

Business theorists often talk about what they call the separation thesis. It states that business and ethics are two separate areas of life which have very little to do with each other.

If you say that “X is a business decision,” according to this idea, you’re effectively saying that it has no moral implications. Similarly, to say that “X is a moral decision” is to say it’s irrelevant to business.

Second-guessing customers is expensive.

Today’s customers are savvy. They operate in a global marketplace and have the tools to instantly compare dozens of competing products. If they don’t like what you’re offering, they’ll go somewhere else.

The problem is, they’re passive stakeholders – meaning they don’t participate in management’s decision-making processes. How, then, do you know what they want if they’re not telling you directly?

Waste comes in different forms – but it’s always costly.

If there was one thing Taiichi Ohno loathed, it was muda – the Japanese word for “waste.”

Muda is everywhere. As we’ve seen, when one widget-making machine works more slowly than another, unfinished widgets can pile up on the factory floor. That’s a waste of space and capital. A worker watching a metal press stamping a car bumper might feel like he’s working, but he’s actually wasting time.

Key ideas in Strategic Kaizen™

What is Strategic Kaizen™ about?

Strategic Kaizen (2021) examines the principles and practices of corporations that have embraced lean thinking – a paired-down, customer-oriented production process pioneered in postwar Japan. Also known as the Toyota Production System, this managerial philosophy is all about maximizing efficiency and reducing waste by making many small changes.

About the Author

Masaaki Imai is a world-renowned advocate of continuous improvement, a management consultant, and a best-selling author. A long-time associate of Toyota’s Taiichi Ohno, the mind behind the Japanese car company’s famous production system, Imai is credited with introducing lean strategy to the Western world. His previous books include Kaizen: The Key to Japan's Competitive Success and Gemba Kaizen.