6 Practical Steps to Implement Kaizen in Russian Business(How to save 70 million Ru within 70 days)

Kaizen is the practice of continuous improvement, a light-footed and decentralized approach to business brought to the world's attention by major Japanese corporations like Toyota. Although in the end kaizen improves a business's long-term competiveness, transitioning to this practice can be full of pitfalls — resistance from team members and lack of understanding among them. These situations appear quite often. Managers who want to bring this new progressive method into reality within their own organization will likely face these issues.

An example of a challenging transition to kaizen is detailed below. Although this case focuses on a transportation company, based on my experience I can say the initial struggle is common regardless of the area of business or workplace culture. There may be some differences in these projects, but a key trend is the challenge of overcoming habits. What makes this specific example particularly useful is that analytics caught and demonstrated a vivid visual picture of the overall positive impact of such a dynamic change.

So, a transportation department had been serving its clients for several years. The business rapidly grew and the department also increased in size along with transportation demand. At that time quick launches of new business units were the single priority. Operational effectiveness fell out of focus due to this, even though performance analyses and consultants frequently pointed out that tremendous opportunities were not being utilized.

Pic. 1 demonstrates how the ordered trucks need (1) to deliver the same load (3) was declining day by day while the project team was implementing kaizen.

The project team together with the transportation team managed to decrease the amount of the trucks in half within 70 days. They have saved 70 million rubles per year in operational cost and more than 100 million rubles of their capital budget.

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Number of trucks (1), number of routes (2), total load (3)

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Below are six sequential steps for the implementation of any new organization practices (in this case kaizen) within an existing operating team of a Russian business unit (Pic. 2).

Step 1. THOROUGH preparation: Change begins with thoughtful project team formation and clear distribution of the roles in it; move the project team as close as possible physically to a managed object and personnel; collect and double check of the input data (any surpluses or safety stocks above the target must be excluded otherwise they will blackout the true problems); train and motivate all the project participants; establish control and feedback procedures; organize reporting to a manager and get support from him or her (the manager should have authority for decision making about all the dynamic changes).

Step 2. CONTROLED implementation: Sett and communicate clear targets to personnel; control target achievement; find the most problematic areas and prioritized them (the more problems happen in these areas, the more efforts dedicated to for resolving them); focus on a problem until it is fully resolved (the project team should not be dismissed with the first improvements!); encourage and support the change team; regularly (my recommendation is weekly) run a project implementation analysis and review; make frequent reports to the manager.

Step 3. RESISTANCE overcoming: Pockets of resistance to changes comes at this stage. Here's what to do: Find out the source of the active or passive resistance and decisively separate the sabotage leaders (it is a waste of time to change the minds or educate these kind of associates); conduct more trainings for the rest of the team, focusing on project benefits for the business and for each of them personally. In the case above, the

managers and the drivers blamed the technical failures of the trucks to keep using the abundant fuel, spare parts, and other materials as before, thus undermining the change.

Step 4. TARGET achievement: Continue with the Step 2 agenda; encourage the proactive team members; mark the project wins. Step 4 is over once the pre-calculated project target is achieved.

Step 5. PARTNER involvement: Involve the external partners at this stage. The team has already achieved impressive enough results to let the partners trust your organization and view the project seriously. The synchronized partners’ efforts will let each partner achieve the cost cuts they would never achieve singly. In the described example, the client had contributed 20% of the transportation cost cuts on top.

Step 6. Make it a HABIT: Do not stop the project as soon as the team has achieved the final expected result. The team should be working as before for the next two to four months until the new practice becomes a habit for all the participants. Without this, there is a tremendous risk the system will return to an original state. The team will not be able to ever again repeat the initial project success.

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A brief review: Some associates who work for companies in Russia often say that the effective business practices used across the world cannot be implemented under Russian realities. This is untrue. All the work practices are as applicable in Russian business as in any other country. There are no any reasons why they are not. There are only differences how to implement these practices and further use them. Either it is kaizen or another method. The six-step plan described above helps managers implement a new practice or philosophy in their organization, but only for those who strongly wish to make the change a reality.

Alexander Zhukovskiy October, 2015www.zhukovskiy.me

THOROUGH preparation

CONTROLED implementation

RESISTANCE overcoming

TARGET achievement

PARTNER involvement Make it a HABIT