Wednesday, November 27, 2013

Organizational Kaizen

The article, Can You Say What Your Strategy Is?, by David Collis and Michael Rukstad, ascertains that successful companies disseminate their strategy throughout their organization by using simple statements that are designed to align and focus the work of each employee.  According to the article, this strategic technique is beneficial because it increases the efficiency of an organization’s workers in exploiting the organization’s comparative advantages.   Similarly in the article, Simple Rules for a Complex World, Kathleen Eisenhardt echoes this notion, arguing that straightforward guidelines allow employees to make the right decision in the critical moment.  While alignment and employee focus may be beneficial outcomes, the effectiveness of this strategy may not be fully addressed in either article.  

Successful strategic statements, according to Collis and Rukstad, possess three critical components that executives need to clearly articulate.  Namely, they should identify the objective of the company, the scope of its activities and how the company drives its advantages over its competitors.  Interestingly, these same components are required in the Kaizen continuous improvement process.  By improving standardized activities and processes, Kaizen also aims to eliminate waste.  According to Masaaki Imai, author of the 1986 book Kaizen, innovation leading to improvement can only start when a problem is recognized.  If there is no recognition of the need for improvement, complacency ensues.  When management codifies its actual objective, scope and advantages, it standardizes the core activities of the organization.  This is the first step in the Kaizen approach, which is followed by measuring operations and activities, gauging measurements based on requirements, innovating to meet requirements and then standardizing the new improved operations. 

Simple strategic statements standardize an organization’s activities.  Once a standard is created, the company is able to measure its effectiveness and then better identify its advantages and disadvantages.  By exploiting advantages and over-coming disadvantages a company is identifying requirements and innovating more productive solutions.  The new improved approach is then codified into a new set of revised strategic statements, which are used to more efficiently redirect an organization’s activities.  In essence, the strategic technique discussed in both articles details the cornerstone needed to implement an organizational Kaizen approach.  Rather than focusing efficiencies at just the production level, organizational standardization allows for continual improvement in the stewardship of an organization.  It is no wonder that so many organizations adopting this strategy are more successful.  The reason for this success may be based more on the dynamic ability to continually assess and re-direct an organization towards more efficient and profitable activities rather than just the static proposition of improving operational focus. 

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