Culture is one of the most critical factors in an organization’s success. It influences decision-making, team leadership, problem-solving, and challenge-tackling. Companies with strong, improvement-oriented cultures can adapt more quickly, engage employees more effectively, and achieve sustainable results. As Tony Hsieh said, “If you get the culture right, most of the other stuff will just take care of itself.” In other words, if an organization develops the right culture, the different aspects will naturally fall into place.

This article is associated with the release of the new book by Euclides Coimbra and Alberto Bastos, The Kaizen Culture Paradox: The Smartest Way to Run a Company, from Kaizen Institute. The book summarizes the authors’ experience with hundreds of cultural transformations and proposes a practical model for building more agile, efficient, and sustainable organizations, starting with culture.

This article examines the principles of Kaizen culture and its key components, as well as the steps to implement them effectively to achieve measurable and sustainable results.

Organizational culture as a performance driver

“Organizational culture” is a frequently discussed concept, yet it is rarely met with a clear consensus on its definition. It often feels intangible, complex to measure, and even more challenging to transform. Still, culture is present in everything and stands as one of the key factors determining whether an organization stagnates or evolves. Let’s explore what organizational culture really means and how it directly impacts performance.

What is “organizational culture”?

Organizational culture encompasses the shared values, standards, beliefs, and behaviors that shape how people think, act, and make decisions within a company. Unlike a policy or process, it’s not something you can see or touch—but it’s felt in daily routines: in team interactions, in how conflicts are handled, in what gets prioritized, and in how leaders show up. It answers questions like:

• “What behaviors are valued here?”
• “How do people interact, and how do they approach and solve problems?”
• “What’s acceptable, and what’s not?”

Culture evolves through the organization’s experiences, leadership behavior, the stories people tell, and the practices that become established. While it’s often linked to slogans, mission statements, or corporate values, culture is ultimately defined by what people do when no one’s watching, as Herb Kelleher famously put it. 

How does culture impact organizational performance?

Culture has a direct influence on the way teams work and collaborate. A positive culture focused on continuous improvement fosters an environment where individual and collective responsibility is valued, problems are seen as learning opportunities, and innovation comes naturally.

When aligned with business strategy, culture becomes a genuine performance engine, sustaining long-term results and preparing the organization to thrive in increasingly complex environments.

Its impact can be seen across several dimensions:

• Strategy execution: Peter Drucker’s famous quote, “Culture eats strategy for breakfast,” captures the reality that even the best strategy will fail in a culture that doesn’t support it.
• Employee engagement and retention: A strong, positive culture boosts motivation, reduces turnover, and strengthens commitment.
• Adaptability and innovation: Organizations that value learning, collaboration, and openness tend to be more agile and resilient in the face of change.
• Customer experience: Internal culture directly influences external outcomes—a weak culture often translates to poor service or low product quality.
• Operational excellence: In organizations striving to implement the Kaizen and Lean mindset, culture is the true enabler of continuous improvement.

On the other hand, toxic, reactive, or disorganized cultures stifle initiative, drain motivation, and perpetuate inefficiencies, ultimately limiting performance, innovation, and resilience. Ignoring organizational culture means missing out on one of the most powerful levers for transformation and sustainable performance.

The Kaizen Culture: what it is and how it works

Kaizen, a Japanese term meaning “continuous improvement,” represents far more than just a set of tools or methodologies. It represents a cultural transformation that engages everyone in the organization in an ongoing pursuit of better ways to work. The Kaizen Culture is founded on the principle that anyone, regardless of their role, can and should identify problems and propose improvements.

While many companies invest in large-scale transformation initiatives or chase the latest management trends, Kaizen focuses on applying improvement principles and practices consistently across all levels of the organization. This steady, disciplined approach is what makes Kaizen one of the most innovative and most effective ways to reshape culture and generate real value.

The long-term success of companies like Toyota, Danaher, and Bosch proves that when Kaizen principles are deeply embedded into the culture, results are not only consistent—they’re sustainable.

Next, let’s explore the four essential components of a true Kaizen Culture: Values & Principles, Practices & Behaviors, Systems & Tools, and Results & Performance.

Values and principles – the foundation of continuous improvement

Values and principles form the foundation of a Kaizen Culture. They define how an organization thinks, decides, and acts. These core beliefs guide everyday behaviors and shape the company’s identity.

Among the key values in a Kaizen Culture are continuous improvement as everyone’s daily mission, the relentless pursuit of excellence, and viewing change as an opportunity to improve.

In addition, the Kaizen Culture is anchored in guiding principles such as:

• Practice over tools: Consistent practice is what builds new habits and transforms culture, not just using tools.
• Kaizen is not only about minor improvements: Kaizen encompasses improvements of all sizes and scale.
• Efficiency starts with flow: Creating flow should be the priority—only then should resource efficiency be optimized.
• Standardizing to improve: Standards don’t constrain improvement; they provide the foundation needed to spark creativity and drive continuous improvement.
• Kaizen goes beyond operations: Continuous improvement applies to every department and area of the business.
• Kaizen as a meta-strategy: Kaizen is both a strategic framework and a method for executing business strategy.
• Kaizen is the best way to manage any organization: Embedding a Kaizen Culture represents the most effective, resilient, and sustainable management model.

Practices and behaviors – habits and routines that sustain a culture of improvement

Building a Kaizen Culture requires a strong foundation of practices and behaviors. These routines make the culture tangible and visible, and they must be clearly defined and structured across all organizational levels and roles. Everyone is expected to practice improvement—that’s the true meaning of Kaizen.

Kaizen Culture practices are typically structured into four key programs:

• Leader’s KAIZEN™ (Strategic Breakthroughs): Focused on top management and their critical role in defining, deploying, and overseeing the execution of the organization’s strategy.
• KAIZEN™ Cycles (Process Improvements): Designed for systematic, medium-term improvements, this pillar targets the elimination of inefficiencies in key value streams and core processes.
• Daily KAIZEN™ (Team-level Improvements): At the operational level, this program emphasizes developing team habits focused on identifying and solving problems daily.
• KAIZEN™ Office (KO): The organizational structure is designed to support the other three pillars by ensuring alignment, upholding methodology, and fostering the long-term sustainability of the transformation.

These four programs, which will be detailed further on, translate essential behaviors into action—such as a growth mindset, openness to change, eliminating waste (Muda), active presence on the Gemba (the place where work happens), structured problem-solving at all levels, and the constant pursuit of meaningful improvements.

Systems and tools – supporting mechanisms for effective problem solving and process improvement

For transformation to be consistent and effective, it’s essential to have systems and tools that provide structure and methodology. These mechanisms enable organizations to solve problems and improve processes more quickly, reliably, and sustainably.

The Kaizen Culture relies on foundational tools, including 5S, visual performance management, standard work, and structured problem-solving—all of which promote operational stability and reliability.

Beyond these essentials, specialized systems support improvement across every area of the organization:

• Supply chain: Tools to optimize the entire value chain—from procurement and planning to production and logistics.
• Growth: Standardized approaches for improving marketing and sales processes, as well as for product ideation and development.
• Services: Specific methodologies for increasing process flow and efficiency, enhancing team management, and elevating customer experience.
• ESG: Practices focused on strengthening stakeholder engagement and advancing environmental, social, and governance excellence.
• Digital: The use of methodologies based on artificial intelligence, advanced analytics, and process automation.

These improvement tools are typically applied in workshop formats at the Gemba. They bring structure and clarity to the improvement journey in any area of the business, making the path to change more transparent and results more impactful.

Results and impact – measurable benefits of a Kaizen approach

Implementing a continuous improvement culture is one of the most effective ways to achieve business excellence, defined as high performance across every dimension of the organization. Companies that adopt this approach combine efficiency, innovation, and adaptability, enabling them not only to meet but consistently exceed their goals.

Creating a Kaizen Culture drives more than operational improvements—it fuels sustainable growth, strengthens team engagement, and supports long-term excellence. By embedding continuous improvement into everyday routines, organizations become more agile, resilient, and competitive.

The impact of a Kaizen Culture is reflected at two levels:

• Leading indicators: Improved employee satisfaction, enhanced quality, faster response times, reduced environmental and social impacts, and increased internal motivation.
• Lagging indicators: Customer satisfaction, business growth, improved cash flow, overall operational excellence, and increased shareholder satisfaction.

Kaizen is more than just a management tool—it’s a model for value creation. Organizations that embed it into their culture build the foundation for exceptional performance, not occasionally, but consistently and sustainably.

How to drive cultural change: the Kaizen Culture Model

With over 40 years of experience, we believe the most effective method for increasing the likelihood of success in cultural transformation—and for fostering a growth mindset focused on excellence—is the KAIZEN™ Culture Model. This model brings to life the four essential components of a true Kaizen Culture described above.

Figure 1 – Kaizen Culture Model

Next, the Practices & Behaviors Pillar will be detailed, highlighting its key aspects and significance in the overall strategy.

Leader’s KAIZEN™: The role of leadership behavior in strategic transformation

Transformation starts at the top. The Leader’s KAIZEN™ program positions leaders as key drivers of both cultural and strategic change. It begins with an assessment of current leadership models and practices, identifies existing gaps, and defines a transformational development plan. Leaders are empowered to identify waste, inspire their teams, and lead critical initiatives such as value stream analyses and Kaizen Events.

Using tools like Hoshin Kanri, leaders translate the organizational vision into breakthrough objectives and ensure cross-functional alignment. They take ownership of execution, monitor results, and foster a culture of accountability and continuous learning. Regular Gemba Walks enable them to observe day-to-day operations firsthand, support teams on the ground, and make informed decisions.

Leadership development and the definition of Leader Standard Work ensure that leaders become a visible and consistent example of sustained improvement.

KAIZEN™ Cycles: continuous process improvement

KAIZEN™ Cycles structure continuous improvement into 3-month sprints focused on the most critical processes and value streams. Based on Value Stream Analysis, cross-functional teams are formed, clear goals are established, and action plans are designed to drive improvements in efficiency and operational quality.

These initiatives are centrally managed using visual tools and Lean Project Management principles to ensure focus, cadence, and strategic alignment. Kaizen Events drive intensive implementation with multifunctional teams, followed by review cycles to assess impact and set the priorities for subsequent improvements.

Daily KAIZEN™: improving daily habits through team engagement

Daily KAIZEN™ ensures continuous improvement becomes a daily practice. Built on simple yet effective structures, it empowers autonomous teams with clear standards and regular meetings to review performance, track results, and collaboratively address challenges.

Mid-level leaders play a central role in this process, supported by ongoing training and Coaching Kata. Over time, teams grow in confidence and capability, learning to apply increasingly advanced problem-solving techniques, leading to stronger operational results and deeper employee engagement.

KAIZEN™ Office: structured support for continuous improvement

The KAIZEN™ Office (KO) provides the structured support that ensures governance, consistency, and scalability of the Kaizen transformation. It is responsible for driving the implementation of the transformation vision, managing the initiative portfolio, and aligning departments with strategic goals and execution plans.

The KO also leads the organization’s technical capability building, overseeing the training and certification of internal sensei. It promotes the sharing of best practices through formal audit systems and Yokoten (the replication of improvements across teams or areas).

While the KO is not responsible for implementing improvements, this responsibility lies with everyone in the organization—it ensures that all teams have the necessary conditions, skills, and support to do so effectively and in a structured manner.

The power of Kaizen Culture in business and organizational transformation

Culture exists whether intentional or not, and it can either drive growth or hold back progress. The Kaizen Culture provides a comprehensive management model for creating resilient, excellence-driven organizations.

In an increasingly competitive environment, organizations that embrace continuous improvement transform their behaviors, align their teams, and achieve higher levels of performance. The Kaizen Culture Model (KCM) provides the ideal framework for this transformation: a cross-functional model applicable to any industry, led by leadership and integrated into daily operations.

Organizations that cultivate an authentic culture of continuous improvement consistently achieve sustained double-digit growth year after year, while also enhancing talent retention, profitability, and strategic execution capabilities.

Investing in a Kaizen Culture means ensuring that the organization progresses every day – consistently, with clear direction and real impact. In other words, it’s the most effective way to manage any business.