February 2011 Strategic Innovation Newsletter: Kaizen versus Innovation

Welcome to the February 2011 edition of Strategic Innovation newsletter, a free monthly newsletter on leadership, strategy and innovation. Delivered on the first Tuesday of each month.

Back issues are archived for free downloading at www.DanielLockConsulting.com.

Tips for improving

We are now one month into the year. Thinking about your business (and wider life) look at the following list of common wastes in our work, pick one and make plans to improve it this month:

• Excessive transportation.
• Not employing human potential available to you.
• Excess inventory; or not enough to fulfill orders.
• Excess motion; just plan too busy to focus. 
• Too much waiting time; delaying decisions. 
• Overproduction; excess goes to waste.
• Over Processing; when is done, done?
• Defects (Rework); errors.

Kaizen versus Innovation

An ongoing debate is that innovation is better than problem solving. But in reality you cant have one without the other.

Innovation is usually large scope change, kaizen is the small continuous change demanded daily.

Innovation – that is large scale is scary – the smaller low key circumvents the fear mechanisms. It’s the frog boiling in water slowly increasing in temperature – but a virtuous cycle instead.

The rule of 72, dictates that if you improve at 1% per day – compounded – then in 72 days you will have doubled your productivity.

Many managers looking at operations with a continuous improvement culture, will be surprised at how productive it is – and doing so with perhaps older or less technology or machinery.

The difference is the utilisation of human capital to design solutions that require little if any capital. More technology is rarely the answer, and more often the when technologies are introduced only 20 percent of the capability is used in any case.

The question is not innovation or kaizen, but innovation and kaizen. After a dramatic breakthrough occurs kaizen is used to solve the inevitable small problems that come up once implemented.

The law of thermodynamics dictates that entropy degrades any system. In business this is the ‘maintenance gap.’ Kaizen solves this gap, fixing the small problems, continuously resetting the system at an incrementally higher level.

Examples of innovation would be exploring new markets, or new products, whereas Kaizen would look at feedback from salespeople about the particular options and quality of the delivered product and make a plan for improvement.

An improving business can’t have one without the other; kaizen when combined with innovation will improve a company’s strategic agility, enabling businesses to rapidly exploit new opportunities and maintain quality and stability at the same time.

Technique of the month: Seperate Strategy from Planning

As discussed kaizen (team problem solving), is not the same as innovation, as is decision making, strategy formulation and strategic planning. These are separate processes that require different processes.

So first, decide which process you are using, and then adopt the appropriate action steps.

When making decision, ask ‘why’ questions to go up the ladder to the more abstract reasoning. As ‘how’ questions to descend into the more detailed activity steps.

Knowing which process you’re in and asking the appropriate questions will allow for more rapid decisions and improved consensus in your leadership team.