The story of Parts Seiko, Mr. Kakiuchi’s long-term client, is a valuable subject within the newly published book Strategic KAIZEN™ written by Masaaki Imai, founder of Kaizen Institute. Mr. Kakiuchi and Mr. Imai worked closely together in the 90’s to help companies in the United States and Europe while providing training for local consultants. This was shortly after the KAIZEN™ methodology was introduced as a secret of Japan’s competitive success. Today, KAIZEN™ remains as relative and powerful to increase competitiveness for companies globally. “Unlike other consultants, our approach was not top-down, telling people what to do,” says Mr. Kakiuchi. In this interview, Mr. Kakiuchi shares his consulting style and relationship with Mr. Imai with Risa I. Cox, Managing Director of Kaizen Global Enterprises.

Thank you for your time today. Please tell us about yourself a little bit.

I graduated from the department of Industrial Engineering of Tokyo Institute of Technology in March 1974. My study was closely linked to KAIZEN™, so I was assigned to the department involving KAIZEN™ at Nissan. I spent 18 years at Nissan, including two years studying at Stanford University. At Nissan, I was assigned to various departments, even in the sales department where I had to sell cars on the street and did door-to-door sales, which we never see anymore. As I remember, no matter what I did, I was always involved in KAIZEN™. Then, I started to think about being an independent consultant to help companies.

“As I remember, no matter what I did, I was always involved in KAIZEN™.”

How did you meet Mr. Imai?

After I left Nissan, I went through training at JIT, a consulting company. Mr. Kenji Takahashi, who worked at JIT in those days, accompanied Mr. Imai as a consultant when Mr. Imai traveled to the US and Europe to spread the concept of KAIZEN™. In 1991, I joined the company as the fourth KAIZEN™ consultant. Even coming from Nissan, learning about the Toyota Production System (TPS) widened my knowledge and enabled me to work better in various situations. I knew I was contributing at Nissan, but I realized that my KAIZEN™ in productivity, quality and such was limited, such as in gemba. I realized there was a notable difference between the two companies and how they operated. At Toyota, the words ‘management’ and ‘KAIZEN™’ were seamlessly matching.

I was, then, given the opportunity to work in Europe. Mr. Imai, who had already been consulting in Europe, came to see how I worked as a consultant and had dinners with me. That is how I developed a relationship with Mr. Imai.

Please describe your consulting style.

KAIZEN™, a product of Japan, was becoming very popular with Western companies. Many Japanese consultants were working in US and Europe. However, unlike other consultants, our approach was not top-down, telling people what to do. Ours was always thinking together and doing together in gemba. By doing, we think more, learn more and do better. Mr. Imai and I share the same view.

The focus of the consultation business moved from Japan to Europe and the US, and I really enjoyed what I was doing. I improved my consulting skills and gained experience. KAIZEN™ gained popularity and became a boom around that time because of the book Mr. Imai wrote. After working with the company for 20 years, I became an independent consultant. In my view, there are three types of consultants: consultants who teach tools such as KANBAN or andon, consultants who are objective-oriented such as Deming Prize or TQC goals, and consultants who help the bottom-up approach. As an independent consultant, I am the third type, emphasizing participation from everyone. 

“By doing, we think more, learn more and do better. Mr. Imai and I share the same view.”

So, you have a long history with Mr. Imai. What is your experience now when you are with him?

We only talk about KAIZEN™! His brain is fully occupied with KAIZEN™! I think he discovered and positioned FSL™ (Flow, Synchronization, and Leveling) as the entry to the theoretical KAIZEN™ methodology. I think it is a very interesting concept. Basically, you consider the management of a company with an analog view, not with a digital view. The logic is if you have a good posture, you could be healthy. I like it very much.

By applying FSL™, Mr. Imai suggests that everything will have to improve holistically and horizontally, with everyone in it. In this view, the reduction of inventory is not isolated, people will have purposes and goals, and it will enhance better communications. I think ordinary people tend to see only a part of it, such as the inventory being reduced, or the Lead Time being shortened. But he came up with the idea by putting all of these together and calling it the management of a company. No wonder he is so energetic.

I believe it has been over 10 years since you started to consult Parts Seiko. Could you share what happened in those 10 years?

The main business of Parts Seiko has been precision machining. They have about 2,000 customers. They receive engineering drawings from customers and have both repeated orders and one-time orders. When I visited them the first time, the shop floor was messy, which was not surprising. So, based on a program I developed, we did a thorough cleaning and organizing where many problems came to the surface. As the program advanced, people visited other departments to understand and share the problems. By doing this, people learn how KAIZEN™ works and understand the importance of everybody participating. They start to use the same language and become a team. And this evolved to the improvement of all departments working as one.  

Until a couple of years ago, every two months a meeting was held with representatives from all sites. They met at the head office in Saitama and presented the improvement efforts and visit the gemba. But in the past couple of years, everything became online. It was good that overseas participants could join the meeting online, but unfortunate that we were not able to communicate directly. Parts Seiko’s strength is to retrofit and use the old machinery to perform equivalent to new machines, as well as generating ideas to cut better. They would share results, such as the order of cutting on CAD, selection of tools, and best maintenance, and I franticly calculate and study the Lead Time safeguarding quality. 

I suggested the “Factory as a Show Room” concept, which resulted in the factory becoming a product. A showroom in general is a place where finished products are exhibited. I suggested changing the factory itself into a showroom. Then, the prospects who were not sure about placing an order before, would learn as soon as they step into the factory why the product quality is good, why they keep the delivery time, and why the price is reasonable. It is so obvious. The president appreciated my idea to commoditize a factory and show it to customers. Since then, orders have increased. This had a direct correlation to KAIZEN™.

“I suggested the “Factory as a Show Room” concept, which resulted in the factory becoming a product.”

How can you maintain what you teach?

It is hard when the top, such as the president or plant manager, changes. It happens a lot for large companies. Sometimes you lose all efforts. It is easier when the management stays. But, keeping consistent meetings, even if it is only every other month, to share efforts will maintain motivation so that the strength won’t be lost. KAIZEN™ is for people with a problem, so if you stop such efforts to solve problems, it will all disappear for sure.

What are some memorable moments when you visited Parts Seiko with Mr. Imai?

Mr. Imai surprises everybody, including the people of Parts Seiko, by showing up carrying a backpack. Right after I introduced him to Parts Seiko, the plant manager happened to be watching a TV program about KAIZEN™ one day and saw Mr. Imai’s name and was so surprised that it was him who was visiting them often.

He always keeps a smile on his face and walks up the stairs of the factory with no problem. Workers apologized for not having a lift available due to his age, but he said, “Whenever I find stairs, I’m very happy to have an exercising opportunity,” which surprised everybody and made them fans of Mr. Imai.

He also visited Parts Seiko by himself many times. Everybody who had a chance to spend time with Mr. Imai is affected by his charisma. Mr. Imai has a super-positive perspective on everything, even the COVID-19 pandemic. When I dined with him, he said “Mr. Kakiuchi, you have a Corona-chance now, are you making money?” That is Mr. Imai. He never says that he is having a tough time. And he just cannot stop talking about FSL™ whenever I see him.

“I believe my role as a consultant is to help realize the idea and let people act toward that goal.”

What does a good consultant who can generate results for companies look like?

Understanding what the management of the company says alone will not change anything. I believe my role as a consultant is to help realize the idea and let people act toward that goal. I think it is important to listen to all people in gemba whether they are foreigners, aged, men or women. Because by listening to them, enormous power can be created. Even if they are not well educated or cannot speak fluently, just one word from a worker could dramatically improve the design done by an expert in CAD. That’s why it is important to listen to people. But they do not talk to you spontaneously even if you encourage them to talk. Unless you ask good questions, you cannot expect good answers. I think it is important to ask good questions and give them security and freedom to say anything they want. Focus on positives and praise. It will improve the culture and gain momentum.

It is important to let them know that fixing the problem is not the end, it is just a trigger. Convincing people to spread the solution to other parts of the organization is my job. Make a part of a whole. Successful companies have such strength to do so.

What was the difference you observed between the US and Japan?

I experienced the rapid economic growth period in Japan. In those times, ‘correct’ behavior and life-long employment were expected. As I think back, one of the reasons why I decided to leave Nissan was because I witnessed freedom in the US. In the US, I saw people being able to express themselves freely. In Japan, that was not the case.

The gemba of production was also very different. In the US, no one was paying attention to gemba, there was no KAIZEN™. It was a totally different culture. They thought managers and workers were different human beings. Managers, supervisors, and workers were all separated. Nobody looked at the gemba. So, when we explained why Japanese companies produced good results, they were surprised. In Nissan, even university graduates wore uniforms and worked with operators on the gemba. In Japan, it was natural for everybody to participate in manufacturing, but not in the US.

I was shocked when I visited a GM factory in San Francisco. When handling a press machine, you must be extremely cautious. As a safety measure, the worker had rings on both wrists. When the press came down, the strings attached to the rings shrunk and the worker raised both arms as if he did banzai. It was as if the worker was doing forced labor. It was a long time ago, but I was surprised that that was a normal operation there.

“In Japan, it was natural for everybody to participate in manufacturing, but not in the US.”

Back then, what was the difference between Japanese and Western managers?

As an example, in a European country, workers were only expected to do what they were told. Of course, there was no KAIZEN™. Workers were afraid of getting fired and didn’t say anything. Management thought that gemba workers cannot be responsible to produce good quality, so they instruct, standardize, and provide tools and parts for them to follow. The managers had a lot of work to do and had to create added value.

By contrast, Japanese culture encourages everybody to participate and gemba could almost operate on their own to create functional products. I think presidents of Japanese companies back then had an easy time without having to think about product development.

During the rapid economic growth when everything was still analog, workers in Japanese manufacturing worked in various programs such as Quality Circles (QC). Thus, they produced quality products. No wonder why Japan became number one. It was a time when quality products would sell well.

What do you think remains effective today from the Japanese method back then?

The keyword is total optimization. Things do not work well together, even if an individual fulfills one’s requirements. To realize total optimization, managers must provide support to create an environment where everybody can contribute together. It is not good enough that each person does their own job well.

So far, you have shared a lot about the past. Now, please share your view of how the world is changing.

Managers who resist KAIZEN™ must be people who are not interested in production. I work as a lecturer at Japan Management Consultants Association and am in charge of the course to train production managers. This is a large organization, but mine is the only course for manufacturing. Other courses are for financing or mental training. Managers of companies tend to be attracted to trendy or accessible courses, but not to the crude manufacturing course. I think the interest in manufacturing is decreasing in general. Perhaps, managers who are interested in manufacturing are fewer than before. This naturally makes it difficult to do KAIZEN™.

Most of your current clients are Japanese companies. What are the specific problems that Japanese companies face now?

We are short on young people. For example, if you suggest a 24-hour operation with three shifts, nobody will come. So, there is no choice but to hire foreign labor through temporary agencies. There are language barriers and there is no tacit understanding which we could have among Japanese people. This is not the workplace for KAIZEN™. Supervisors keep worrying about staffing and training new people day and night because people quit quickly and easily. Unlike old days, companies are no longer places where everybody thinks together and works on KAIZEN™ together.

Further, the Japanese market has shrunk in recent years and China also became capable of making functional products. Japan, in the meantime, is having to make products that are sellable, knowing what the customers want and how to please them.

“…There has to be top-down policy deployment, which is a premise.”

How would you help Japanese and non-Japanese companies alike?

I would like to understand what objective they want to achieve in a top-down approach and what they expect to see specifically. Based on that understanding, I would ask who is responsible for carrying out the program. For example, if a company wants to improve the quality, who is responsible for improving the quality? They may have to do more research on materials and maybe the design itself is a problem, or their handling of tools might be wrong. If workers are not taught how to use tools, then everybody is responsible.

The question is how to let everybody participate in this modern work environment. Instead of making a speech to insist everybody’s participation is important, I suggest letting everybody join in the method I mentioned before and clean the place. Then, start KAIZEN™ using what you learned so far. People can understand the importance of bottom-up much better once they use their own bodies. This is one way to start. Needless to say, there has to be top-down policy deployment, which is a premise. Without it, nothing works. But when nothing works, even if there is a specific instruction, I suggest using the method and collecting small ideas which enable people to act even without instruction.

In these changing business environments, what should companies focus on to succeed?

The period when the Japanese economy was growing rapidly was called “Product Out”, meaning you can sell if you make them. It was a period when good quality products were made through gemba programs such as QC circles. But with product diversification over the years, it became difficult to predict what you could sell. That’s when Toyota Production System (TPS) was developed. They were able to deliver what the customer wanted just in time without a computer during this growing period.

During the Product Out period, people who played key roles were people in the gemba who were capable of doing KAIZEN™ and managers who could implement TPS. The president was not among them. Gone are the days when you could manage a company as long as you manage QCD (Quality, Cost, Delivery) well. Even if you understand TPS, you still cannot sell, and even if you can sell, the profit is not good. That is today’s Japan. In the past, quality products sold well, so you just needed to improve quality. But now, good quality is a matter of course, the default. Then what is the next target?

Markets are not necessarily buying quality products anymore. Good quality is not enough. You have to think about how you can please the market, how you can make products that surprise the market. They don’t necessarily have to be products, they can be services. You have to find out what the needs of the customers are. Is it a short Lead Time? Unbroken products? While finding out what is needed, we should all work together to fulfill those needs instead of relying on professionals. Our jobs are in fact increasing. The time when all you had to do is to manage GEMBAKAIZEN™ and improve QCD is certainly over.

“Good quality is not enough.”

Do you have any good examples to share?

Our generation is not very good with digitalization. For example, one soy sauce company is making “the white soy sauce” which is very unique. The company was confident it would sell well as it presents a high-class feeling. However, when it came to the website, the product was poorly advertised. So, I suggested listening to young people. I found two talented young ladies and asked their opinion. They agreed that the advertisement did not deserve the quality product. They also said that they could not mention it in front of the president. But they took photos of the recipe using this new product for the purpose of Instagram on their own initiative and developed the online order system and QR code application. They have a more diversified team, and it shows how total optimization, and everybody’s involvement are business relevant.

What is your biggest expectation from the top and what is the most important instruction you would provide?

The president is the person who can decide everything after all. Even if I insist to listen to everybody, the final decision is always made by the president. What I expect from the top is a demonstration of leadership to show the right direction based on employees’ understanding and capability to get things done, and to speak with data. Then people can place their trust in the president.