Another area in which U.S. firms have often lagged behind their overseas competitors is in exploiting the potential for continuous improvement in the quality and reliability of their products and processes. The cumulative effect of successive incremental improvements and modification to established products and processes can be very large and may outpace efforts to achieve technological breakthroughs.
—Made in America
MIT Commission on Industrial Productivity1
CONTINUOUS IMPROVEMENT Programs (CIPs) unleash employee experience and I creativity to improve both products and processes. They are often cited as the most important difference between the Japanese and Western management styles and as a major factor in Japan’s economic success.2Yet the CIP was conceived, developed, and brought to maturation in the United States. After World War II, the U.S. government helped to export it to Japan, where it was well received and promptly flourished. Despite the long history and well-documented benefits of such systems, few U.S. companies have invested effort in CIPs equivalent to that of their Japanese competitors. Japanese companies have put almost forty years into the development and refinement of CIPs, or kaizen programs as they are known in Japan, and have brought the art and science of managing them to new levels of sophistication. The aim of these programs is precisely to design and implement a system whose natural equilibrium is constant improvement and change. How can a company that does not have such a program compete with one that does?
In this paper we give the historical background of CIPs, which we believe is essential for a useful understanding of these programs. We document their export across the Pacific immediately following World War II and illustrate their power as a competitive weapon when fully and properly deployed. We then identify and discuss requirements for successful implementation and suggest reasons why many U.S. firms find them difficult to start and maintain. We conclude by arguing that what is commonly perceived to be the “best practice” of CIP management is itself open to improvement. Throughout the article, we identify promising directions for companies to pursue so that all minds in the company, not just those of a few at the top, are actively solving problems, reducing costs, and eliminating waste.
The Industrial Revolution
For most of its history, manufacturing was a craft performed by skilled artisans. Apprenticeships were used to pass production methods and skills onto the next generation.
1. MTT Commission on Industrial Productivity, Made in America (Cambridge, Massachusetts: MIT Press, 1989).
2. See, for example:
M. Imai, Kaizen: The Key to Japan’s Competitive Success (New York: Random House, 1986);
Japan Human Relations Association, The Idea Book: Improvement through Total Employee Involvement (Cambridge, Massachusetts: Productivity Press, 1988);
MIT Commission on Industrial Productivity (1989); and S. Shingo, Non-Stock Production: The Sbingo System for Continuous Improvement (Cambridge, Massachusetts: Productivity Press, 1988).
3. For an extensive and thorough analysis of the early history of this phenomenon, see:
R.C.Tucker, The Marx-Engels Reader (New York: WW. Norton and Company, 1972), pp. 277–305.
4. H.L. Gantt, “A Bonus System of Rewarding Labor,” Transactions of the American Society of Mechanical Engineers (1901), pp. 341–360. Reprinted in Classics in Management, ed. H.F. Merrill (New York: American Management Association, 1960).
5. See W. Denny and Bros. Ltd, Denny Dumbarton (London: E.J. Burrow and Company, 1932); and
Japan Human Relations Association (1988).
6. Denny (1932), p. 80.
7. See I.F. Marcosson, Wherever Men Trade: The Romance of the Cash Register (New York: Dodd, Mead, and Company, 1945).
8. In 1929 one of Patterson’s mid-level executives was earning 550,000 per year, a huge sum for that time.
9. M. Bernstein, “John Patterson Rang Up Success with the Incorruptible Cashier,” Smithsonian, June 1989, pp. 150–166.
10. J.F. Lincoln, Lincoln’s Incentive System (New York: McGraw-Hill, 1946).
11. Job rates could be altered only when a major improvement in the basic process was made such as the introduction of a new piece of equipment, or a major procedural change devised by management. If the worker believed the new standard to be too tight, he could request a re-evaluation.
12. During the industry recession of 1982–1983, for example, company sales dropped 42 percent. No employees were in voluntarily laid off and bonuses, although much smaller, were still paid. The excess workforce on the shop floor was reduced when fifty shop floor workers volunteered to become sales representatives to help introduce a new welder. Lincoln stayed profitable through the recession and even emerged with an increased market share.
13. This tradition continues today. The highest paid worker in 1988 was an equipment boxer, who received $107,000.
14. Lincoln (1946).
I5. Japan Human Relations Association (1988).
16. S. Watanabe, The Peasant Soul of Japan (New York: St. Martin’s Press, 1989).
17. Japan Human Relations Association (1988).
18. E. Toyoda, Fifty Yean in Motion (New York: Kodansha International/USA Ltd., 1987).
19. See International Economic Services, Ltd., Report on Training Within Industry in Japan (Tokyo: 1951); and A.R. Zipser, “Japan’s Feudalism Yields in Industry,” Wall Street Journal, 23 September 1951.
20. SeeJ.W. Dietz, Learning by Doing (Summit, New Jersey: J.W. Dietz, 1970); and
Training Within Industry Service, The Training Within Industry Report: 1940–1945 (Washington, D.C.: War Manpower Commission Bureau of Training, 1945).
21. Dietz (1970), p. 14.
22. L.O. Mellen, personal communication.
23. See Imai (1986);
Japan Human Relations Association (1988); and
S. Katsuizumi, A Japanese Sees the United States (Tokyo: Japan Publications, Inc., 1968).
24. Japan Human Relations Association (1988), p. 202.
25. R. Hall, Zero Inventories (Homewood, Illinois: Dow Jones-Irwin, 1983).
26. Japan Management Association and C.E. Dyer, Canon Production System: Creative Involvement of the Total Workforce (Cambridge, Massachusetts: Productivity Press, 1987).
27. Canon employees submitted a total of 893,301 suggestions in 1985, or an average of 70.2 per employee. Even this proposal rate, unheard of in any U.S. company, left Canon thirteenth out of all Japanese companies with kaizen programs. First place went to Matsushita Electric Industries with 6.5 million proposals. Matsushita was also the first Japanese company to successfully achieve zero defect manufacturing, a feat accomplished in 1977 at one of its washing machine division plants, which produced no defects for a seven-month period.
28. We recently had personal experience with this phenomenon while working on a case study of DCM-Toyota Ltd., an Indo-Japanese joint venture in Surajpur, India. Toyota required that all workers be under twenty-three years of age and have no prior experience when hired.
29. NUMMI-UAW contract, 1987, pp. 1–2.
30. M. Brody, “Toyota Meets U.S. Auto Workers,” Fortune, 9 July 1984.
31. M. Damer, NUMMI Public Relations, personal communications, November 1989–January 1990.
32. D. Buss, “Gung Ho to Repeat Assembly-Line Errors,” Wall Street Journal, 27 March 1986.
33. Japan Human Relations Association (1988).
34. S. Shingo, The Sayings ofSbigeo Sbingo: Key Strategies for Plant Improvement (Cambridge, Massachusetts: Productivity Press, 1987), p. 152.
35. Shingo (1987).
36. Imai (1986).
37. See R.H. Hayes and W.J. Abernathy, “Managing Our Way to Economic Decline,” Harvard Business Review, July–August 1980, pp. 67–87.
38. Imai (1986), p. 23.
39. M.E. Porter, “The Technological Dimension of Competitive Strategy,” in Research on Technological Innovation, Management, and Policy, ed. R.S. Rosenbloom (Greenwich, Connecticut: JAI Press, 1983).
40. Imai (1986), p. 174.
41. J.C. Abegglen and G. Stalk, Kaisba: The Japanese Corporation (New York: Basic Books, 1985).
42. See Shingo (1987); and Shingo (1988).
43. Marcosson (1945).
44. Shingo (1988), p. 193.
45. T. Yamashita, The Panasonic Way: From a Grief Executive’s Desk (New York: Kodansha International/USA Ltd., 1989).
46. FW. Taylor, The Principles of Scientific Management (New York:Harper and Brothers, 1911), p. 129.
47. P.C. Reid, Well Made in America: Lessons from Harley Davidson on Being the Best (New York: McGraw-Hill, 1990).