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Kaizen

A Japanese term for “improvement” or “to improve”

What is Kaizen?

Kaizen is a Japanese word (改善) that means “improvement” or “to improve.” When applied to the world of business, kaizen refers to every action, operations, or rule employed to implement changes within a company that makes it operate more efficiently and effectively.

 

Kaizen

 

Breaking Down Kaizen

In terms of improving a business, kaizen is meant to affect everyone, from the common employee to the CEO. In most cases, it means a literal change or implementation of procedures, hours, standards, rules, codes of operation, and processes or ideas that affect how the business functions.

Kaizen was first widely practiced in Japan after World War II, being heavily influenced by American business practices and coaches who worked to help Japan rebuild its business marketplace, including the quality and quantity of goods and services provided within the country and abroad. Today, it is now a worldwide standard that businesses in every sector seek to employ, as well as environments outside of the standard business world, such as in schools and universities.

 

The Duality of Kaizen

Kaizen is ultimately a two-part concept, with action being a major portion, and philosophy or way of thinking being the other.

First, let’s consider the action piece. Kaizen, while it can be done on a much smaller scale, is often event-centric. Most businesses seeking to institute kaizen create in-company events focused on areas within the company that can or need to be improved and go about finding the best ways and means to implement the change. Teams of employees from every level of the company are involved in such events because the changes are meant to affect and benefit everyone.

The philosophy aspect of kaizen is really all about building a specific type of company culture and way of thinking that encourages all employees to be actively involved in the company’s success and productivity, as well as looking out for the best interests of one another. The goal of kaizen philosophy is to foster a work environment that breeds positivity to be reflected in the way employees work together and alone, and how dedicated they are to their place of employment.

 

Kaizen - Continuous Improvement

 

Events

Kaizen events follow the PDCA pattern: Plan, Do, Check, Act. To break it down further, a typical kaizen event begins by gathering all employees, or, at least a few employees, from each department of the firm and establishing goals and standards that benefit everyone and the company as a whole. During these events, a thorough review of the company’s current practices is important to identify areas that need significant change to facilitate new or reaffirmed goals that aren’t being met adequately.

Once the planning portion of a kaizen event is through, it’s time to implement the changes that have been agreed upon during the planning stage. The process enables employees to actively participate in new procedures, follow new rules, and see how they affect the work environment, morale, and if they are successful or not in helping to reach the newly outlined goals.

Ultimately, it is just the first phase of implementation to determine whether the new plan is working or not. It also allows company management and executives to obtain feedback from other employees and find what isn’t working so that it can be tweaked. This series of actions and checks should continue until the ideal balance is reached or it is determined that new goals need to set and achieved.

 

Kaizen - Plan Do Check Act

 

Summary

Kaizen, once a uniquely Japanese concept, has spread around the world, helping companies and their employees reach higher levels of productivity while improving working conditions and company morale. As a business grows and changes, goals and the actions needed to achieve them should change. It enables each company to grow and operate efficiently, benefiting every employee from the CEO down.

 

Additional Resources

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)   certification program, designed to help anyone become a world-class financial analyst. The following resources will be helpful in furthering your financial education:

  • Brand Equity
  • Management Theories
  • Opportunity Cost
  • Time Management

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