Looking at Kaizen and Kaikaku

Knowing when to plod and when to sprint

Published: Monday, March 12, 2018 - 13:02

In today’s column, I will be looking at kaizen and kaikaku through the lens of the explore/exploit model. Kaizen is often translated from Japanese as “continuous improvement” or “change for better.” Kaikaku, another Japanese term, is translated as “radical change or improvement.” Kakushin is another Japanese word that means “innovation” and is used synonymously with kaikaku.

Kaikaku got more attention from lean practitioners when Katsuaki Watanabe, Toyota’s former president and CEO, said in 2007, “Toyota could achieve its goals through kaizen. In today’s world, however, when the rate of change is too slow, we have no choice but to resort to drastic changes or reform: kaikaku.”

The explore/exploit model is based on a famous mathematical problem. I will use the example from Brian Christian’s and Tom Griffith’s wonderful 2016 book, Algorithms to Live By: The Computer Science of Human Decisions (Henry Holt and Co., 2016). Let’s say that you are very hungry and do not feel like cooking. Which restaurant should you go to? Your favorite Italian restaurant or the new Thai place that just opened up? Would your decision capabilities be affected if you are traveling? Sticking with what you know and being safe is the “exploit” model. Trying out new things and taking risks is the “explore” model. The dilemma comes because you have to choose between the two. The optimal solution depends on how much time you have on your hands.

If you are traveling and you are at a new place for two weeks, you should try out different things at the beginning (explore). As days go by and you only have a few more days left, you should definitely stick with what you know to be the best choice so far (exploit). Christian and Griffith state, “Simply put, exploration is gathering information, and exploitation is using the information you have to get a known good result.”

From an organization’s standpoint, the explore/exploit dilemma is very important. The exploit model is where the organization continues to focus on efficiency and discipline in what it already manufactures. The explore model, on the other hand, focuses on innovation and breaking new ground. The exploit model doesn’t like risk and uncertainty; however, it doesn’t necessarily mean maintaining the status quo or not rocking the boat. The exploit model implies getting better at what you already do.

One explanation I’ve heard for how the two concepts differ is this: Exploitation is like playing in the same sandbox and getting better at the games you play there. Exploration is like venturing outside of your sandbox and finding new sandboxes to play in and creating new games.

Some strategies used for the exploit model are:
• Optimizing the organization for current organizational rules and structure
• Making sure standards are in place, and the established rules are followed in order to achieve efficiency
• Making incremental improvements for existing processes and still staying within the current organizational structures
• Making more of the current product portfolio

The explore model is about breaking new ground. Some strategies used for this model are:
• Breaking away from the current organizational rules and structure
• Developing new structures to allow for diversity and discovery
• Making radical improvements to overhaul current processes, rules, and structures
• Adding new product portfolios

The exploit model relies on current constraints, rules, and structures. The explore model relies on a willingness to break away from the current constraints, rules, and structures. A perfect balance between the two models, when an organization can oscillate between both or engage in both simultaneously, is important for an organization to thrive. Those that can do both are called “ambidextrous.”

The explore/exploit model has some similarities to kaizen and kaikaku. Kaizen is about getting better incrementally at what we do. It is a personal development model. Kaikaku, on the other hand, is about breaking the mold and overhauling the organization in some cases. Launching a lean initiative can be viewed as kaikaku. Kaizen could be an ideal strategy for exploitation, and kaikaku for exploration.

I came across a paper from Yuji Yamamoto titled, “Kaikaku in Production in Japan: An Analysis of Kaikaku in Terms of Ambidexterity” that sheds further light on this. The paper is part of the collection called Innovative Quality Improvements in Operations (Springer, 2017). Yamamoto points out that while kaizen is incremental, kaikaku entails large-scale changes to both the social and technical systems of an organization. Kaizen is often viewed as an opportunity, and kaikaku may sometimes be viewed as a necessity. Kaizen is also viewed as a bottom-up activity with autonomy, while kaikaku, on the other hand, can be viewed as top-down activity with direction from the top management. Kaikaku may be continual (with definite timelines and stops), but kaizen is continuous. Kaizen is described as engaging everybody in improvement every day, everywhere in the organization.

Yamamoto discusses data from 65 case studies where kaikaku activities were implemented at Japanese manufacturing companies. He notes that the defining characteristic for kaikaku, based on the studies, was that it requires everybody’s exploration effort. In the 65 reports, the importance of everyone in the organization having a specific mindset related to exploration—for example, being interested in overcoming challenges, having a give-it-a-try mentality, and willing to unlearn—is frequently mentioned. During the kaikaku activities, managers often encouraged everyone in the organizations to think and act in more explorative ways than they were used to. Apparently, companies used kaikaku as a way to make managers and employees aware of cultivating this mental stance toward exploration.

Yamamoto uses the exploit/explore model to further differentiate between kaizen and kaikaku. The figure below is adapted from him. It shows different degrees of exploitation and exploration activities.

Some key takeaways from Yamamoto’s paper are:
• Kaikaku and kaizen are complementary and reinforce each other. Effective kaizen often has a positive influence on kaikaku, and kaikaku can stimulate kaizen.
• Employees engaged in iterative problem-solving activities in kaizen and kaikaku develop exploitation and exploration abilities as part of a learning cycle. The beginning of this cycle focuses on making problems and challenges visible to increase the sense of urgency. Once they are resolved, the results are made visible throughout the organization. The organizations in the case studies created an environment for keeping the learning cycle going with opportunities to engage in improvement and innovation.
• Participants in kaikaku activities reflect on and learn from their successes and failures. They achieve a sense of achievement and are motivated to tackle challenges that are even more difficult.
• Problem-solving activities often lead to identifying further improvement opportunities.
• Some companies in the report used kaikaku to enhance kaizen because kaizen had been slow and reactive. Alternatively, other companies initiated kaikaku to make employees more competent in innovation.

I will end with a Zen quote with a focus on when we should be doing more: “You should sit in meditation for 20 minutes a day, unless you are too busy. In that case, you should meditate for an hour a day.”

Always keep on learning.

About The Author

Harish Jose

Harish Jose has more than seven years experience in the medical device field. He is a graduate of the University of Missouri-Rolla, where he obtained a master’s degree in manufacturing engineering and published two articles. Harish is an ASQ member with multiple ASQ certifications, including Quality Engineer, Six Sigma Black Belt, and Reliability Engineer. He is a subject-matter expert in lean, data science, database programming, and industrial experiments, and publishes frequently on his blog Harish’s Notebook.