A Question About Kaizen

Here is a question for you about kaizen:

You have two continuous improvement systems; one which invests in 10 brilliant people each solving one $250,000 problem per year or another system which invests in 1,000 average people solving one $200 problem per month. Which would you choose?

Let’s do the math:

10 brilliant people will save you 10 x $250,000 or $2.5 million
1,000 average people will save you 1,000 x $200 x 12 or $2.4 million

What say you, and why?

29 Comments

  1. John Santomer

    February 19, 2009 - 12:16 am

    Well for one thing, the mindset of the management never sees long term achievements. Everything’s viewed at short term and immediate results. If you will look well within the middle of the time axis, what has been achieved by the many smaller improvements may be higher in level than the fewer larger achievements. But at some point in the end of the time axis, the fewer larger achievements (if harnessed, focused and strategically aligned) will be higher than the many smaller ones.
    To quote from : How Does Lean Thinking Apply to Strategy?
    The longer-term you think, the better ideas you will have. And the shorter-term you make your actions, the better results you will have.
    To put it plainly : 10 brilliant minds require less time to think of better ideas (bigger /larger strategically aligned improvements) and thus also require lesser time to achieve better results compared to 1,000 average minds coming up with smaller, localized, disparate ideas and taking more time to come up with smaller plans needing additional time to coordinate and put in action. I may be wrong here…but your figures can never lie…24M as compared to 25M in savings…hmmm. Not much of a choice now is there… If the marginal returns of the long-term fewer larger achievements is higher than the many smaller short-term achievements then the prior takes precedence. Thanks Jon, I’ve always loved how you put things so very crystal clear. Smile…

  2. Dragan Bosnjak

    February 19, 2009 - 1:07 am

    I would definitely prefer having 1000 people solving each month one $200 problem even if it makes lower profit for my organisation. Thats because it means the culture of my entire organisation is perfectly aligned with problem solving mentality and principles and not depending entirely on few brilliant individuals (who can, if properly awarded, even leave your company and leave you with nothing in hand…). This is also one of the main principles of lean thinking: transform the culture of your organisation to become the thinking creature and rewards will never miss out. If you develop 1000 people on problem solving, today they will solve one $200 problem but tomorrow they could resolve (with the same principles of lean thinking and problem solving…) one $2k problem or one $20k or $200k problem. Don’t think short-term but think also about your long-term strategies…

  3. Craig

    February 19, 2009 - 3:04 am

    It is an interesting argument. The thing that the math doesn’t take into account is the intangibles. For example, the average people, if not engaged in improvement, could quite possibly actually make a change that hurts the system or costs money. Therefore, if the 1000 are not focused on improvement they might degrade the system at a pace greater than the 10 can improve it. Change is generally the only constant so if the change is not for the better we might hypothesize that when not improving you are actually getting worse. Not sure that the logic is full proof but seems reasonable.

  4. Paul Cary

    February 19, 2009 - 4:06 am

    John, At VIBCO We have an imbedded lean culture that permiates our company, Small changes are being made daily. Some of the improvements are small and not being captured, that being said is’t just the way people think, it’s in their DNA. To have a company where average people are solving problems is more sustainable, more productive, more empowering, more propogating.

  5. Wayne Marhelski

    February 19, 2009 - 4:26 am

    Hi Jon,
    Easily the equation with the 1,000 people for a few different reasons is the preferred one. If even one of the projects from the “brilliant” groups doesn’t achieve its objectives, the amount will be significantly reduced. Whereas the $200 problem group could have 100 projects not reach their full potential and yet the impact is only $20,000 less. That fact, along with the reality that the $200 group is also doing other work besides trying to a single problem, helps to put together a better “total” picture. Coupled with a tendency for people to slip back into hold habits, or just the reality that there are “Cave People” out there and the $2.5 million isn’t likely to be achieved in the first place if the organization isn’t well disciplined.
    A second issue is that these “brilliant” people may be trying to solve the problems in isolation. If this is true, then the team building, and group experimenting that is a key part of kaizen is lost. How does one put a price tag that?
    Wayne

  6. Alex

    February 19, 2009 - 4:57 am

    I’m going to argue for small improvements, because that represents a cultural shift for the organization toward TQM, whereas 10 people represent a sub-culture of TQM fighting against the rest of the bureaucracy. Which would lead me to argue that your time line for $250k improvements might not be, um, ambitious.

  7. Tom Long

    February 19, 2009 - 5:52 am

    I would take the masses over a few experts any day. The potential from 1,000 people, most likely those doing the daily work, has a much greater upside than investing in a few “experts”. And if a few of the trained experts leave for another job, your pool takes a big hit, vs. a few workers leaving out of a pool of 1,000.

  8. Chris Nicholls

    February 19, 2009 - 6:00 am

    Dear Jon
    An interesting question, is it better to have 10 brilliant experts (6 Sigma black belts etc)each making one big improvement each, or 1000 regular employees making 1 improvement regularly every month.?
    I would say that neither one senario on its own is a perfect solution. I would try to engage every employee in improvement activities each to their maximum potential. So in your example the organisation would accrue a total of $4.9M of benefits. In this Organisation we have want to engage all levels of employee in continuous improvement activities. We have developed different approaches for each level of employee in order to achieve this desire.
    For Example.
    Good Spot ……….. Operators are encouraged to point out to their line manager anything they believe is abnormal.
    Suggestion Scheme … Everyone is encouraged to make improvement suggestions.
    Kaizen 10 Steps …. Teams and individuals (brilliant or otherwise) are encouraged to carryout systematic problem solving, document their activitites and share the best practice they develop with everyone.
    All of these schemes are enabled through empowerment, driven by management involvement and rewarded or recognised appropriately.
    I know some will say you can’t have the best of both worlds but we are not going to give up trying.
    Thanks & Regards
    Chris

  9. erik

    February 19, 2009 - 6:15 am

    The 1000 one. You increase the capability of the organization 100 fold over the 10 brilliant projects.

  10. Joe W

    February 19, 2009 - 6:27 am

    I guess I’ll ask a question in the spirit of the book “Extreme Toyota”…Why do you have to choose? Why can’t both co-exist? To me, this is an ideal situation with a few “brilliant” people working on some bigger picture projects and coaching/reinforcing the shop floor to make the localized improvements in their areas/span of control.

  11. Gary

    February 19, 2009 - 6:37 am

    Great question. The obvious answer for those of us experienced in TPS is #2 – many small improvements by people doing the work. These improvements will be lasting with endless potential for further improvements. Many of the $250,000 projects will be shifting costs from one bucket to another. Plus, you have to pay these 10 brilliant people.
    Question back to you – How do you explain this to traditional management when they are looking for the $250,000 projects? I find it difficult to account for all the savings in option #2, especially in tough economic times when even Toyota is lossing money. Thanks!

  12. Jon Miller

    February 19, 2009 - 7:52 am

    So everyone is willing to take a $100,000 pay cut in the name of upholding a principle… This is a hard thing for most, especially when another zero is added, but over the long run it is definitely the right thing to do.
    To answer Gary’s question, here are 3 arguments for total involvement versus expert-driven continuous improvement:
    1. Time value of money. When changes are made every day, you start saving money every day. This isn’t accurately reflected in the calculation above, although you can see the gaps between the green line and the jagged red line.
    2. Rapid detection of problems. When everyone is engaged in problem solving they will be more aware of even the smallest issues. A small number of experts working on larger projects may overlook small, day-to-day issues until they turn into big problems.
    3. Risk minimization. Most companies starting out in Lean are in the mode to develop or hire those 10 brilliant people to build a core Lean team or promotion office. If it’s a “make or buy” companies in a hurry will “buy,” or hire someone who is experienced. The perception is that this is easier than training and empowering hundreds of people. The risk comes from a company losing 1 of these 10 brilliant people when another company hires them away or if the make a career change for any reason.
    There are more reasons, perhaps others can comment on what has worked for them.
    To Joe W’s point, we shouldn’t have to choose. In reality resources are limited. In some ways these two are seen as conflicting or parallel ways of doing continuous improvement because the 10-person approach is seen as a management development approach and is typically sold at the C-level while the 1,000-person approach is seen as “employee engagement” which is an HR channel, site manager level at most. What we need are C-level people who see the true value of employee engagement.

  13. CE

    February 19, 2009 - 7:55 am

    The thing your math doesn’t take into account is time to execute!
    If the larger projects can deliver fast, the accumulated savings over time are probably better. (Does the red sawtooth above or below your gradual line in fact).
    More to the point, are your geniuses going to stick around? Those average Joes can be a great deal more reliable.
    The truth lies in the middle I believe, a few stars is fine but don’t let them believe their own hype and don’t make your troupers feel like worthless plodders.

  14. alex kubi

    February 19, 2009 - 8:14 am

    Jon, at what point should one consider appropriate to choose to employ the 10 person approach/or the 1,ooo person approach?

  15. Brian Buck

    February 19, 2009 - 8:28 am

    My first thought is why the either/or situation? Use AND!
    Think 5 people for the $250,000 problem and 5 people for the $250 problems. Hopefully both teams will inspire others to join in tacking both large and small problems.
    The best problems to tackle first: Remove waste from someones job so they can be freed to make improvements. No investment needed if you keep the same staff but clear up time for them to make changes.
    In the end, it is not about 10 people making improvments but EVERYBODY!

  16. Jon Miller

    February 19, 2009 - 8:43 am

    Hi Alex,
    I think Brian answered your question. Ideally when your kaizen activity has improved productivity you will be able to free up 1 or more people to become full-time continuous improvement supporters. The traditional approach has been to hire the 10 people right away who may or may not successfully engage the other 1,000. The kaizen approach is to engage the 1,000 with or without the 10 brilliant people.
    Of course depending on the type of industry you may need engineers whose job it is to investigate new technologies, processes and so forth to reduce cost. The same can be said of senior management who look for ways to increase revenue and reduce costs. In reality you need both and should not polarize to either/or but instead thoroughly understand the costs and benefits of each so that you can make the right decision for you.

  17. David Levy

    February 19, 2009 - 8:34 pm

    Getting 1000 “average people” to think about improvements is a game-changing cultural improvement. If only 20% of those average people improve their ability to identify and exploit improvement opportunities by, say 20%, you will then will do well. If only .5% of those average people turn out to be “brilliant”, that’s already 1/2 of the original “brilliant” team of 10. There are other benefits to a more “grass roots” approach, but if your crunching the numbers, I would use the above argument. Of course this presupposes that you don’t really know how many “average” people are actually working below their potential.

  18. Bryan Lund

    February 20, 2009 - 5:27 am

    Hi Jon,
    I offer up a take on this at the TWI Blog. One thing the graph doesn’t take into account is the typical backsliding that goes along with “Big K” events. Small k’s get better buy-in because the owner of the idea puts the idea into action. This was proven in the WWII TWI Job Methods program at the Picatinny Arsenal. $24M in savings were created through the Job Methods program over its three year duration in war production. That’s a lot of money for 1945 and it all came from the minds of shop floor leaders who were looking at the small things.
    It is no surprise then to see the TWI-Kaizen connection after 60 years. TWI Job Methods was exported to Japan in 1951, that the Japanese built on the work simplification and waste elimination principles of this American program and turned it into their kaizen teian programs. The book titled, 40 years 20 Million Ideas, published in 1990 says it all.
    Of course, the right answer is that you need both Big K and Small k. Looking forward into the future, if we had a small k culture in place first, something to uphold and sustain the Big K changes – your total savings is nearly $50 million and smart people to show for it.

  19. Jack Hafeli

    February 20, 2009 - 7:23 am

    To me, the choice has nothing to do with the financial math. Having only 10 people thinking about improving operations, no matter their individual or collective IQ scores, perpetuates the foolish (uniquely American) business notion that a few self-important “heroes” are required to foster improvement or change for the better.
    Here is the more enlightened approach: have those 10 lead teams made up of the 1,000 to continuously come up with untold numbers of practical workable improvements. The ideas will be more numerous, and the 1,000 will be more motivated, empowered, involved, productive, happy, (we could go on here)… simply more proud of their work.

  20. Bryan Coats

    February 20, 2009 - 8:06 am

    I have never seen a single person single-handledly SOLVE a problem. Virtually all of the comments overlook the fact that even Six Sigma Black Belts “lead a team”–they don’t do all of the data collection, all of the analysis, all of the development and implementation of containment, corrective, and preventive actions required to “solve” a problem. So, the cost of solving that 1 problem is much greater than the price of the one person who gets the credit. On the other hand, most $200 problems can be solved in a few minutes by a small team during the normal course of the day–the time they spend solving the problem is seldom incremental (an additional cost), they’re already at work being paid and do the solving during shift change, downtime, etc.. I support the investment in some sort of “step change improvement specialists” (call them Black Belts or whatever else you want), but, if I had to choose, I’d prefer to invest some money in a lot of people rather than a lot in a few people.

  21. alex kubi

    February 21, 2009 - 6:01 am

    I get you Bryan, well, I do not have the five, currently I am coaching and training four people. We have arrived at the ‘Vital Few’, the next is to coach them project management. In my situation, I am the only expert (and really wish that we were three or four), but the turn around is really encouraging.
    Bryan, you are my champion. In two weeks time, I will multiply myself to five, after a fortnight we will be 9 and hence forth…let see how it goes for next 14 days…
    And, please note, your advice is very important, because after reading and finding that they are applicable in a goal area I am working on that day or week, I embed them in what I am working on and apply.
    Jon, it has been a day full of excitement and moving things here and there, next week I am working on the Goal area – finance!

  22. Dennis

    February 26, 2009 - 12:06 pm

    Definitely the 1000 for many of the above reasons but also for the fact that there will be at least 10 of the thousand that will go on to become one of the brilliant people mentioned, if the company retains them. You will have the best of both worlds.

  23. Robert

    February 26, 2009 - 11:50 pm

    we have 10. so called lean/TPS specialists. in a company with over 5000 employees… we are tired and frustrated sometimes and dream about the 1000-average-people version…

  24. Per Uke

    February 27, 2009 - 3:56 pm

    Joe W and Brian Buck got it right.
    Lean philosophy doesn’t have to be dogmatic, and the world of removing waste is all about creating opportunity being pragmatic.
    So do you need 1000 people thinking about $250 improvements ? Sure you do !
    Are you ready to invest in brilliant workforce to solve $250,000 issues ? You’d be foolish not to !
    And take take a deep breath and think for a while what you mean by “brilliant people”. Are you subconsciously thinking “engineers” ? that would be a second mistake (after the first which one to imagine you have to choose between 10/1000).
    So take one of your brilliant people and have him work with your “average” 1,000 to train them to be brilliant, so they can think about $500 ideas AND participate in making sure the $250,000 ones are useful and will be sustained long term (and most probably they’ll become $300,000 in the process…)
    Cheers

  25. Jason

    June 24, 2009 - 2:03 pm

    Do you know of anyone that offers e-training for Kaizen?
    Either as a participant or facilitator.

  26. Jon Miller

    June 24, 2009 - 2:07 pm

    Hi Jason,
    We do offer e-training at Gemba Academy. With a free subscription you can view 5 videos and the paid subscription currently has 34 videos, with more added each month.

  27. R.BALASUBRAMANIAN

    October 20, 2009 - 6:46 am

    i can take both as becuase kaizen is for improvement and imporvement will be continual or continuous. Hence both are essential depending upon the circumstances and situation counts.

  28. S.M.JUNAID

    January 28, 2010 - 8:45 pm

    This is an excellent question but the answer is very simple, peoples who have some knowledge about KAIZEN CREATIVE SUGGESTION SYSTEM are easily understand that the “knowledge of 10 people is better than one”.
    Another thing that the Ideas from grassroots’ level are more beneficial and profitable, remember that these are not only 1000 suggestion, 1000 peoples show their participations which will increase ownership in your company, this ownership convert into a cultural change and which ultimately convert into a good, healthy, smart and money-spinning organization.

  29. S.M.JUNAID

    February 12, 2010 - 11:26 pm

    This is an excellent question but the answer is very simple, peoples who have some knowledge about KAIZEN CREATIVE SUGGESTION SYSTEM are easily understand that the “knowledge of 10 people is better than one”.
    Another thing that the Ideas from grassroots’ level are more beneficial and profitable, remember that these are not only 1000 suggestion, 1000 peoples show their participations which will increase ownership in your company, this ownership convert into a cultural change and which ultimately convert into a good, healthy, smart and money-spinning organization.