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Kaizen and Innovation

Michael Ballé
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Dear Gemba Coach,

Can kaizen stifle breakthrough innovation?

Are we talking about just any kind of breakthrough innovation? Or successful breakthrough innovation? Hopefully, kaizen will stifle the former and sustain the later.

First, we need to distinguish what kind of Gemba conditions we’re looking at. Every situation is different and specific, of course, but for argument’s sake we can broadly distinguish market-creating innovation from mature markets innovation. When a new technology creates a market whole piece, such as we’ve seen with Microsoft in its heyday, Google or Facebook, or the recent run of killer products from Apple, this is clearly a case of having a revolutionary vision, working hard at making things work, throwing it at the market, and hoping that it will stick, which is essentially about letting creative destruction do its work of picking the winners from the losers. In this case, breakthrough innovation is clearly needed, and adhering too strictly to the rather “100 times 1% than 1 time 100%” kaizen attitude is probably not helpful. Having said that, I’ve talked to Google execs, and although they propose new services frequently (breakthrough), they also have huge problems stabilizing their new offerings and fixing the glitches or adjusting to customers usages, which calls for kaizen. Indeed, Google has invested massively in creating a testing culture that is very close to Toyota’s approach to andon, for precisely that reason. Still, industry-creating environments clearly require bold moves and risk taking, no debate.

But most companies I come across operate in very different settings. They’re usually in mature industries, where technologies and competitors are well established, and since reality exists and reality resists, coming up with a completely new way of doing things would require a fundamental research breakthrough, or someone having the kind of genius idea that we don’t see every day. Certainly, there are regular reports of some such large companies giving employees “free thinking time” hoping that they’ll come up with breakthrough ideas, but the actual effectiveness of these practices is still unproven (yes, I’ve heard all about the Post-It example, again and again: any one know a second case?) and not very practical in medium size companies that tend to be typically stretched for resources.

In my Gemba experience (and I claim no industry-wide research insights), in such companies product innovation questions are usually posed in terms of “new product releases.” A typical industrial manufacturer’s engineering department is under pressures from all sides:

  • Marketing wants the new product that will enthuse the sales force.
  • Key accounts want specific new features for their largest customers.
  • Service wants customer complaints fixed.
  • Management wants cost reductions.

Restricting Innovation to Foster Innovation

When it comes to new products, marketing will typically have identified all the new features in competing products and specify them in the “new product” in the hope that this new baby will take the entire market. Unfortunately, engineering life is never easy and new technologies are hard to master, or new features rarely work well first time around: engineers need to learn to do it right. I’ve personally witnessed a few new product introduction disasters caused by:

  • Misunderstanding customer usage, such as when the manufacturer of heating and plumbing widgets comes up with a great new product which no installer buys because it involves learning a new set of installation procedures (without a significant cost incentive)
  • Technologies not yet mastered, such as when an industrial equipment manufacturer introduces many new electronics-driven features which then glitch frequently.
  • Misunderstanding customer preferences, such as when marketing pushes hard for specific options for its key customers, which they never bother to purchase, and so on.

For instance, as we speak, in a company that makes testing equipment for the pharmaceuticals industry, the CEO refocused from adding bells and whistles to his current machines to testing for one aspect of the drugs that his customers where asking for and his current machines couldn’t see. Rather than push this through the engineering department, he asked his two best engineers to set-up a separate “skunk works” office and come up with something.

At first, they played with many new technologies until the CEO restricted innovation again by asking them to jury-rig a machine from elements already existing in industry. They grumbled, but they put together an ugly looking contraption that sort of did the job.

And then the light came on.

They realized that they could kaizen the brute they had into a smart new product. It’s too early to tell yet whether customers will actually buy it, but the unexpected consequence of this effort is that it has led the engineers to challenge two of the core technologies (one in software, the other in mechanical movement) the company currently uses. In this case, kaizen is unexpectedly fostering breakthrough innovation – the company has now a joint-venture with a local university to make these ideas work.

Purposeful kaizen

From the lean perspective, innovation for innovation’s sake is not taken for granted. Our aim is to create products that are leaders in their markets because they become a standard for customers (the default option and customers have to justify internally when they want to switch to another product). So lean innovation needs to:

  1. Serve a specific market purpose: what problem customers are experiencing now that can be solved by new tech.
  2. Be reliable: if we use this new tech, how do we guarantee that it will work reliably when the customer uses the product.

Both of these criteria are, in practice, extremely hard to uphold, particularly when you have scarce engineering resources already stretched by day-to-day work.

Clearly, an obsession with kaizen will hinder casino-like innovation. Clearly as well, uninspired leaders can hide behind kaizen to argue against every kind of innovation. But just as clearly this is not the lesson Toyota taught us. The Toyota Way rests on a spirit of challenge, courage, and creativity. So, once again, we’re down to the attitude of the company’s leaders. If the leader understand his or her customers well and is determined to improve his or her products on one aspect at a time, and to use new technology to do so, carefully and safely then kaizen can lead to breakthrough innovation, just as Toyota has shown us with Lexus, Prius and now iQ.

As John Shook often points out, the key is purpose. Direction-less kaizen has indifferent results and can, in the extreme be stifling (as well as confusing and distracting as many companies have unfortunately found out in conducting kaizen blitzes). To deliver it’s full power, kaizen needs strong purpose expressed as clear improvement dimensions and constant challenge to keep the improvement pace. And then, out of the thousand kaizen ideas, a few will open doors you never knew where there, and lead you into a completely different room – true innovation.

3 Comments | Post a Comment
Matt Spielman June 13, 2012
Since you asked...the Facebook "Like" button is a result of a hackathon.  Although this might not qualify as open time, and I can't identify if that hackathon had something like this as a specific goal, it is certainly an unstructured way of innovation.
Michael Ballé June 13, 2012
Good one Matt, thank you. Guys, if you've got some more good accidental innovation stories, please send. This is one topic where I'd love to be proved wrong! Cheers.
Matt Spielman July 9, 2012
OK, I have one more if nobody else does.  This one goes back some time.  I tried to research the story again to refresh my memory, but alas it has not yet reached the point of digitization--the only actually copy I could find was at a university library...on VHS.

The story was chronicled on the Nova episode "Race for the Superconductor," and aired in March 1988.  It told the story of two groups of scientists (one in the U.S., the other in Japan) trying to find superconductors that would operate at temperatures achieved by cheap liquid nitrogen, rather than expensive liquid helium.  What stuck with me was how the U.S. team decided to use yttrium in their alloys.  (what eventually was the key to their breakthrough discovery--winning the proverbial race)  The Japanese team had skipped yttrium, because the alloy was green.  This was "known" not to conduct electricity, and so ruled out.  The U.S. team, however, was testing *everything*--operating under the assumption that they were exploring new ground, and perhaps old rules should not apply.

As an example of unstructured innovation, I keep coming back to the point that these were two groups of *scientists,* all of whom were versed in the scientific method.  The difference was whether the teams assumed that they were making an incremental change, or a breakthrough to a new discovery.