We all have growing expectations about the future, being better people and taking advantage of the time available. The same is true for companies, which also aim to be more efficient in existing markets, reach new markets, and who knows, even transform the market as a whole. It so happens that, between the current stage and the desired one, there is always an inconvenience to go through, the change. There is no improvement without change. the japanese philosophy Lean reflected on two possible paths in the search for a change for the better: one is quite famous, the other Kaizen, the so-called “continuous improvement”, the other is much less known, but equally potent, the Kaikai, which means the “radical change” of the value-adding system.
Despite the similarity of the names, Kaizen and Kaikaku represent quite different, and sometimes contradictory, forms of transformation. Kaizen is associated with incremental and continuous changes, a diligent effort to reflect on how the current stage is and what would be the main small actions to leave the current system marginally superior, the most appropriate word to characterize Kaizen would be “evolution”. But sometimes, what companies need is not a small evolution, but a “revolution” in their operations, and from there comes Kaikaku, which represents a form of radical, sudden, and transformational change, usually in the form of a project, which may leave the future stage in a very different way than the initial stage. Such an approach emerged in Japan at a time of crisis, reflecting the need for drastic transformations to solve problems and innovate.
Figure 1 – Kaizen and Kaikaku
Source: Oliver Wyman
Kaikaku starts from the assumption that if a productive system is organized in a sub-optimal way, incremental improvements, even continuous ones, are not enough to provide it with all its potential productivity. Also why, there are certain moments in which incremental actions seem to go wrong, with stagnation of the results. In these cases, the most indicated would be a structural modification of the currently existing one. It would be, instead of minimally adjusting a process, rearranging activities, to question its very existence, seeking other viable means; it would be, instead of adjusting parameters of a given procedure, to rethink its policy as a whole; it would be, instead of improving a certain resource, to implement a new technology capable of replacing the existing resource. By now it should have been clear that while Kaizen is something more specific and focused, Kaikaku is something more general, involving a greater collective effort.
As with any new approach, there are some basic principles to follow when conducting a Kaikaku radical change project: (i) Challenge the current situation, just because it is being done this way does not mean it is the most efficient way, ( ii) look for the root issues of the value-adding process; (iii) don't stick to preconceived ideas as a solution, creativity is needed to raise the current level; (iv) there are no limits to ideas, so discussions should be focused on how to make the new one work; (v) work as a team, it is very common that each one has only a portion of the solution by the principle of wisdom of crowds; (vi) optimize what already exists, additional resources are not always necessary for the transformation, the way to execute it makes all the difference; (vii) it is not always possible to implement everything, but even if only a part is implemented in an agile way, it may already be enough and (viii) always correct the identified errors.
But not everything is as simple as it seems. After all, for radical transitions a longer learning curve is natural, which postpones the return of proposed changes. In addition, seeking innovation through Kaikaku is a double-edged sword, as it can lead to surprising benefits, it also has associated risks: If there is no improvement without change, not every change generates improvements, and in the end there may have been an effort transformational project, with meager or even non-existent results. The big question is to use the right approach for the right problem.
The two approaches, Kaizen and Kaikaku, not only can, but must go hand in hand. The Kaikaku approach is very useful for breaking paradigms and raising the organization's understanding, and is often used as a precursor to the Kaizen approach, which understands the new system and seeks to continuously improve it. There is a lot of synergy in the two approaches and each needs the other to ensure a solid foundation.
Figure 2 – Integrating Kaizen and Kaikaku
Source: Oliver Wyman
Conclusion
In today's world, markets and technologies are changing very quickly (and ever faster…), and this will inevitably force us to radically rethink operations. This time the impacts will be much greater.
While in the past the technologies were focused and used to improve some particularity of the business, such as the APS used in Manufacturing, the WMS for Warehousing operations, and the routing for Transport; Currently, new technologies such as Blockchain, have the potential to transform the business world as a whole. Disruptive and radical innovations are a matter of time.
In this new environment, more integrated and changeable, small, incremental and localized improvements in operations are not enough. The companies that will prosper will be those that make radical changes, that will be tough (but necessary), those that conduct their Kaikaku projects in the most appropriate way.
References
HAYES, R.; PISANO, G.; UPTON, D.; WHEELWRIGHT, S.: Operations, strategy, and technology – pursuing the competitive edge. Hoboken: Wiley & Sons, 2004.
OHNO, T. Toyota Production System – Beyond Large Scale Production. Porto Alegre: Bookman, 1997.
TAYLOR, FW: Principles of Scientific Management. 1911. 7th ed., São Paulo: Atlas, 1987.
WOMACK, J. & JONES, D.: 'Beyond Toyota: How to Root Out Waste and Pursue Perfection', Harvard Business Review, 74(5), 1996.
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