Mini Company and Kaizen

Continuous improvement and the mini-company concept Jan de Leede and Jan Kees Looise University of Twente, The Netherlands Keywords Continuous improvement, Teamwork, Organizational design, Case studies, Kaizen Abstract The key issue of continuous improvement (CI) seems to be the problem of combining extensive employee involvement with market orientation and continuation of CI. In this article we review some existing organisational designs for CI on these three essential characteristics of CI.

As an alternative to the shortcomings of current organisational designs for CI we present the mini-company concept, related to the sociotechnical concept of the self-managing team.

The minicompany concept incorporates the three key issues: it has a self-propelling capacity for CI, involving everyone on the shop floor. A constant and market-oriented source for improvement is found in the clients and suppliers of the mini-company. Results of an in-depth case-study are presented, showing some strong effects of the mini-company concept. 1188 International Journal of Operations & Production Management, Vol. 19 No. 1, 1999, pp. 1188-1202. # MCB University Press, 0144-3577 Introduction Continuous improvement (CI) is viewed as vital in today’s business environments.

CI is one of the core strategies towards manufacturing excellence, as it appears, for example, within the context of “world-class manufacturing” (Schonberger, 1986; Schonberger, 1996) or “total quality management” (Hackman and Wageman, 1995). Furthermore, CI as a concept is nothing difficult to understand or new. Bessant and Caffyn (1997) define the concept as an organisation-wide “ process of focused and sustained incremental innovation Many tools and ”. echniques are developed to support these processes of incremental innovation. However, the difficulty lies within the consistent application of the CI-philosophy and the CI-tools and -techniques.

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As an organisation-wide process, CI requires the efforts of employees on all levels. Here, the CI-approach can be linked with long established traditions of employee involvement and employee participation. This line of research showed that the involvement of employees is not just a matter of the application of tools and techniques alone (among many others: Cotton (1993)).

Other organisational elements such as organisational frameworks, leadership and management styles, culture, employee needs, values and norms are needed as well. Only an integrated approach will lead to lasting results. The key problem of CI seems to be the issue of employee involvement (Bessant and Caffyn, 1997; Berger, 1997). How to involve the employees of all levels in the process of market-oriented continuous improvement? What motivational aspects have to be taken into account in making CI a lasting routine? It is our statement that existing organisational frameworks do not address this issue to a satisfying extent.

In spite of the recognition of the “people orientation” of kaizen (Imai, 1986) and the “broad participation” and “high involvement” of CI (Bessant and Caffyn, 1997; Berger, 1997), CI still needs thorough elaboration on organisational designs in which these aspects are realised. Especially, the problem is how to direct the CI activities to customer requirements and business strategy, while maintaining true employee involvement. In this article we want to contribute to this issue. We focus on the organisational aspects of employee involvement in CI.

Therefore, the focus of this article is the shop floor. We present a concept that is derived from sociotechnical systems theory but is enriched by principles from Shop Floor Management (Suzaki, 1993). This concept is called “the mini-company”. The most important characteristic of the mini-company concept is the integration of the customer in operations. An interesting example of the mini-company concept is presented in the case of a manufacturing plant. We show its organisational aspects and its effects on the contribution of the operators in improvement activities. This article is structured as follows.

First, we present a framework in order to identify the links of the core principles of CI with market orientation and employee involvement. Second, a brief review is presented of organisational designs of CI. We present another organisational design in the next section: the mini-company concept. This concept entails some strong points in which the reviewed organisational designs are weaker. The case of Philips CMA is an illustration of the mini-company concept and shows some good results with respect to the contribution of operators in product and process improvement.

Finally, some conclusions are drawn from the case discussion. CI, market orientation and employee involvement We view organisations as configurations of at least three domains. Every domain is related to the outside world. Products are related to the market place, processes are related to technology and human capital is related to labour. The three domains are interrelated. Innovation occurs in each of these domains when we look at product innovation, process innovation and social innovation, but are interrelated as well (Looise, 1996). In Figure 1 this framework is presented in a schematic way.

Based on this general framework, one can analyse the strengths and weaknesses of various new production concepts. Some concepts start from the interaction of market and technology, while others are rooted in the interaction between market and labour or technology and labour. For instance classical sociotechnical systems design talked about “the joint optimisation of the social and the technical system” (Trist, 1981). This is exactly the interaction of technology and labour. The modern sociotechnical approach is aimed at reduction of complexity, and tries to create efficient product flows (De Sitter et al. 1997). The concept of the autonomous group is still very important in modern sociotechnical theory. The main contribution of sociotechnical thinking is to design a structural basis for enhancing the quality of the organisation in line with an increase in the quality of working life and the quality of the industrial relations. However, this approach too is one-sided. It is too much of a design approach stressing the technological and the structural aspects of organising, but to some extent neglecting the market perspective and the social-dynamical aspects of organising. On company level a sociotechnical

Mini-company concept 1189 IJOPM 19,11 1190 Figure 1. Organizations as configurations of product, process and personnel (after Looise, 1996) structure intends to enhance the company’s responsiveness to the market, but a closer look at the design principles reveals that on the shop floor level the market or even the customer focus is far away. Let us return to CI and characterise CI using this framework. Following Berger (1997), we distinguish some core principles of CI by using the ideal characteristics of Imai’s kaizen (Imai, 1996). The first principle is processorientation.

Before results can be improved, it is the central tenet of CI that processes must be improved. Good results will follow automatically when processes are both understood and controlled. The orientation is towards the activities and work methods and not towards the outcomes. The second principle is small step improvement of work standards. Imai states it very decisively: “There can be no improvement where there are no standards” (Imai, 1986, p. 74). For all major operations Standard Operating Procedures (SOPs) are formulated and improved in an ongoing process of small improvements.

One requirement of these SOPs is discipline. All employees have to comply with the established standard operating procedures. Adherence to standards is also stressed in a tool for CI called CEDAC (Fukuda, 1989). Another aspect of this principle is the never-ending process of kaizen. It is an ongoing process. This is symbolised in the PDCA problem-solving format for improvement: a wheel. The PDCA-loop itself is a standardisation of the improvement process. The third principle is people-orientation. CI needs the involvement of everyone in the organisation from shop floor workers to top management.

Managementoriented, group-oriented and individual-oriented kaizen have their specific focus within the overall improvement process. In terms of our framework, one can see the primary focus of CI in the interaction of technology and labour. The first and second principle both refer to the process, while the third principle is people oriented. CI has an internal focus and looks for the policy, tools and techniques to integrate processes and personnel in order to improve operational and management processes. So, the market is not in the picture.

However, CI is often integrated in broader management philosophies like total quality management (Hackman and Wageman, 1995). Then, of course the market orientation is included in CI. Organizational designs of CI: a brief review In this article we focus on organisational designs for CI. Which organisational mechanisms exist in literature to enable such an organisation-wide process of focused and sustained incremental innovation? We reviewed some specific CIliterature (Imai, 1986; Fukuda, 1989; Bailey, 1997; Berger, 1997; Bessant and Caffyn, 1997; Lindberg and Berger, 1997), and analysed their descriptions of organisational designs.

Here are the results. The prime source for CI is still the Japanese kaizen approach (Imai, 1986). According to Imai (1986) there are at least three types of kaizen: managementoriented, group-oriented and individual oriented kaizen. The managementoriented type is focused on the improvement of organisational systems, organisational procedures and machinery and equipment. The group-oriented type has its primary focus on the improvement of work methods, routines and procedures. Organisational vehicles to perform these improvements are quality circles and other small-group-activities using various statistical tools to solve problems.

The individual-oriented type of kaizen is focused on improvements in one’s own work area and resources. Most often, this is organised by traditional individual suggestion systems. Improvement in every type is aimed at cost reduction and the elimination of waste. Although CI and elimination of waste is something like “second nature” in the Japanese work system, CI takes place in parallel structures and is not integrated in normal work. Group-oriented kaizen occurs in small groups that are established to improve work methods or to solve specific problems.