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Chapter

Continuous Improvement
Dinis Carvalho

Abstract

The principles and concepts originated mainly in Toyota in the 1950s and now
presented in models such as Lean Thinking, Shingo Model, and The Toyota Way
itself are powerful ideas to bring success to organizations, but the path is not easy.
In theory, there are two main features to reach effective and sustainable success, the
right vision (True North) and continuous improvement toward that vision. Those
two main features are as easy to understand as they are difficult to accomplish. Even
when senior leaders have full understanding and belief, the effective implementa-
tion on a daily basis is an enormous challenge. This chapter will show how organi-
zations can implement sustainable and stable continuous improvement systems.
It will describe the principles that must be followed, the necessary requirements
that must be fulfilled, the way the organizations must be structured in teams, the
necessary routines, and all the practical steps necessary to reach that sustainable
and stable continuous improvement system.

Keywords: continuous improvement, lean thinking, Toyota way, Shingo model

1. Introduction

In the view of many senior industrial engineers and managers, the production
philosophy that emerged in Toyota during the 1950s represented a major paradigm
shift in the way of thinking about production. The previous milestone had been the
mass production paradigm exemplified by the creation of the production and assembly
lines. The assembly line concept developed at Ford (curiously another car construc-
tion company) revolutionized the industry and society of that time (beginning of the
twentieth century). This paradigm produced huge cost reductions and it made possible
for people from all over the world to gradually gain access to products that they were
unable to have before. There is a less positive side of this way of working, especially
in the way operators were seen by the system. The human operator was seen in this
system as a purely mechanical resource with the ability to repeat small operations
over long periods of time. This repeatability was seen, and is seen still, as a way to
achieve high efficiency gains because it is admitted that those who do repeatedly the
same operation become masters at doing that operation. With experience, we began
to understand the problems that can result from this approach, namely an increase in
errors that lead to loss of quality, greater risk of accidents, greater risk of developing
musculoskeletal injuries and greater propensity for demotivation at work.
Although Toyota had been using its new production paradigm in its factories
since the early 1950s, the first scientific publications on TPS emerged much later.
It was not until the 1980s that both Taiichi Ohno and Shigeo Shingo – the two
engineers to whom the development of TPS is essentially attributed – published in
English about this new paradigm, their concepts and main techniques and practices.

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

Although Shingo’s work (translated by Andrew Dillon), entitled “A Revolution in

Manufacturing: The SMED System” (Shingo, 1985), was published earlier, it does
not present TPS in general, but rather a concrete methodology, called SMED (Single
Minute Exchange of Die), specially designed to reduce equipment setup times.
Thus, the first English-language book on TPS was that of Taiichi Ohno, entitled
“Toyota Production System: Beyond Large-Scale Production” (Ohno, 1988).
However, it was in 1977 that the first scientific paper on TPS was published in
English [1]. This article featured several facets of TPS, including technical aspects
such as kanban number calculation (way of controlling production, explained
below). However, what aroused the most interest in this publication was one of
the two fundamental concepts of TPS. The authors state that TPS is based on two
fundamental concepts, the first being the “reduction of the cost of eliminating
waste” and the second “treating workers as human beings and with consideration”.
Although the former is “relatively” easy to understand, the same cannot be said of
the second. In fact, none of the concepts are easy to grasp and practice in its full-
ness, but the second is much more complex. This side of the TPS is also referred
by Mike Rother in his book about Toyota Kata [2] as the invisible side of the Toyota
approach. This side is also referred by the Shingo model as the social science part of
the TPS. It is exactly on this invisible side or social sciences side that the West has
struggled to understand and master.
This chapter is dedicated to continuous improvement (CI), and CI is only really
effective if the less visible side of the TPS more related to people and culture is
seriously taken into account. The continuous improvement (CI) concept is not fully
understood by every manager, practitioner, or academic. The three main miscon-
ceptions are: (1) CI frequently assumed as being the same as Lean; (2) any improve-
ment is CI, and (3) occasional improvements are CI.
CI is one of the five principles of Lean Thinking and not the same as Lean
Thinking. CI is a very important component of Lean but there are other important
components as well. Lean without CI is not Lean at all but Lean is more than just
CI. There is another word, “Kaizen”, which is also used frequently and adds to the
confusion. The meaning of Kaizen is something similar to continuous improvement
but that same word is also used as including the other dimensions that are observed
in Toyota factories such as pull production concept, value and waste, visual man-
agement, and so on. For many industrial engineers and managers Kaizen is similar
to Lean or TPS itself. CI is only one part of Lean or part of the TPS while the other
part is in short a set of principles that define the direction that the CI should follow,
as depicted in Figure 1.
In contrast, it is wrong to consider any improvement as CI. Any improvement
that is not aligned with the defined direction or “true north” cannot be considered
as an improvement. Improvements must be increments toward the direction that
is defined by the top management people (see Figure 1). Let us imagine that the
direction is defined as being toward one-piece-flow. The meaning is that the effort
should always be in finding solutions to reduce the lot size again and again. Then
by some reason a team of engineers promotes an “improvement” that results in a
reduction of production cost per unit achieved with bigger lot size and a consequent
increase in inventory. Can that “improvement” be considered an improvement? The
answer is no because the direction defined was exactly the opposite, the equivalent
of pursuing lot size reduction.
Finally, an occasional improvement is not CI. Many articles are published where
authors referenced CI which only described a single occasional improvement,
either being a setup reduction project or layout improvement project resulting in
less transport and motion waste. In reality, these type or actions are important for
companies’ competitive, no doubt about it, but CI is completely different. CI is

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Figure 1.
Continuous improvement direction.

the platform, the systems, the structure, and routines that allow the generation of
improvements in a continuous, stable and sustainable way.

2. Reference models

The production management and organization models that are used here as
frameworks to CI are all of them inspired from Toyota approach to production or
the Toyota model itself. These models will be here described basically in terms of
their principles because their principles lead the possible practical solutions devel-
oped and implemented in organizations that adopt them.

2.1 Lean thinking

During the 1970s and 1980s, Western companies gradually became aware of
what Toyota was doing, especially car manufacturers, because of the impressive
results they were achieving. Terms such as Just In Time and Kanban became very
popular as referring the Toyota practices during the 1980s but the word “Lean” as
referring the general Toyota approach to production was introduced in 1988 [3]
and later popularized by the famous book “The Machine that Changed the World”
[4]. The word “lean” attached to words such as “production”, and “manufacturing”,
started to be part of the vocabulary of industrial engineers and managers around
the world. Lean as a way of thinking, called “Lean Thinking”, was then proposed by
[5] and supported by the following five principles:

• Identify value: The idea is that one should try to identify as best as possible what
the market interprets as value for the products that the company offers in the
market. It is much more important to interpret the value given by the customer to
the different characteristics of our product than the value given by the creator of
the product itself. This idea is very much linked to popular knowledge “No One
Should Be a Judge in his Own Cause”. The value should not be given by the cost of
the product. Many of the costs that are associated with the product may be associ-
ated with characteristics that are not recognized as value by the customer.

• Identifying the value chain: Once identified what is the value of a product from
the customer’s point of view it is important to identify which processes add value
and which processes do not add value and try to eliminate or reduce the latter.

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

• Create flow: This principle argues that products when they are stopped waiting
for the next step in the process represent waste. Ideally, products should always
be either transformed in operation (or process) or being transported (as little
as possible) to the next operation or process. This principle identifies products
that are waiting for the next step, as waste.

• Create customer-pulled production: Implement the production pulled by

the customer: ideally means that an operation/process is only performed
when the downstream operation/process needs it, with the delivery to the
customer being the last of these operations (i.e. the customer “pulls” the
production).

• Pursue perfection: This principle is very important and requires major

transformations in the structure and culture of organizations. This is
where the continuous improvement and the central theme of this chapter is
framed.

Lean principles suggest a stronger connection to the physical part of the Toyota
approach than to its human side. The term “Lean”, in my interpretation, may have
been the term chosen by the perception that the researchers had to what they
observed in Toyota factories. The reduction of waste (“fat”), especially the reduc-
tion of WIP (and the consequent increase in the flow of articles throughout the
manufacturing processes) would be easy to observe. This fact may have given the
idea of “leanness” as can be interpreted when looking at Figure 2.
As it can be seen at the bottom part of Figure 2, a smaller amount of WIP
is metaphorically represented by a narrower pipe, i.e., it can be said that the
production looks “leaner”.
Different scholars of Toyota’s approach vary greatly in the emphasis they give
to the technical aspects and human/culture aspects. If we look at the five Lean
principles, we realize that 4 of them are dedicated to technical aspects while only
one is dedicated to a mixture of technical aspects and human/culture aspects. It is
the principle of continuous improvement or pursuit perfection which is in fact the
central theme here in the chapter.

2.2 Shingo model

The Shingo Model was developed in the same period as the Lean Thinking
model. The Shingo Model however gives more emphasis to human and cultural

Figure 2.
The physical “leanness” observed with low levels of WIP.

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aspects than Lean Thinking. The Shingo Model [6] is the basis of the Shingo
prize created by the Shingo Institute in 1988, curiously at the same time that the
term “Lean” was being coined by the previously referred MIT group led by James
Womack [3].
The Shingo Institute was established in 1988 at Utah State University in the
USA following an honorary doctorate awarded to Shigeo Shingo himself. Shigeo
Shingo contributed, with Taichi Ohno, with various theories and methodologies
for the development of the Toyota Production System. He has written several major
books including “A Study of the Toyota Production System: From an Industrial
Engineering Viewpoint (Produce What Is Needed, When It’s Needed)” first pub-
lished in English in Japan in 1981 and then published in the US in 1989 [7]. The
name of the institute was assigned in his honor. The Shingo Prize was established
in 1989 and, in that year the prize was awarded to a single company, located in
Bekerley in the USA, called Globe Metallurgical [8]. Since then, it has been awarded
to numerous companies that meet the requirements established for this important
award of excellence. The Shingo award is based on a set of criteria to assess how
“Lean” an organization is, or, if otherwise perhaps more correct, how close to
Toyota’s way of working an organization is.
The principles that were established in the Shingo Model are grouped into
different classes, see Table 1. Comparing these principles with the principles of
Lean thinking, it is easy to identify differences. Shingo principles are much more
comprehensive than Lean principles and probably reflect in more detail the real-
ity of Toyota’s philosophy and culture, as they place a lot of emphasis on the less
visible aspects of Toyota that are associated with human involvement, vision and
culture (Figure 3).
The first two principles are clearly dedicated to the side of respect for the
individual, referred to by Sugimori et al.[1]. These principles are vital to develop
a culture where everyone is motivated to contribute with work and creativity
for the benefit of all. These principles are essential to “motivate the elephant”
as nicely referred by Chip Heath and Dan Heath in their book entitled “Switch”
Heath & Heath (2010). The idea is that even if everyone knows the direction to
where their company wants to go, as well as knowing what they are supposed
to do in order to go in that direction, no result is expected if motivation does
not exist.

Shingo principle Class

Respect Every Individual Cultural enablers (People)

Lead with Humility
Seek Perfection Continuous improvement (Processes)
Embrace Scientific Thinking
Focus on Process
Assure Quality at the Source
Improve Flow & Pull
Think Systemically Enterprise alignment (Purpose)
Create Constancy of Purpose
Create Value for the Customer Results (Shareholders)

Table 1.
Shingo principles.

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

Figure 3.
Toyoda vs. Toyota.

The second class of principles is related to CI. These five principles include
almost all technical aspects and behaviors with direct influence in the produc-
tion process. In this class of continuous improvement, three Lean principles are
included, “Seek perfection”, “Flow” and “Pull Flow”. The principle of “Embrace
Scientific Thinking” is also very much related to CI because it brings reliability in
problem solving as well as reducing erratic judgment and erratic decision making.
Erratic judgment as well as erratic decision making is the classic “jump to conclu-
sions” that happens when managers or supervisors decide very quickly what is
the best solution to a problem without using a systematic approach previously
defined.
There also two principles related to the enterprise alignment creating the
environment where everyone knows where to go (Create Constancy of Purpose)
and how to act (Think Systemically) in order to go toward the vision of the
company. The last principle is related to the need to be profitable to sustain the
organization.

2.3 Toyota way

The Toyota Way is the title of the book by Jeffrey Liker [9], it is the result of a
change of designation that occurred at Toyota in 2001. As the Toyota Production
System refers only to the production area, The Toyota Way was adopted to show the
intention that the philosophy would extend to all sectors of the organization. As
with Toyota, this extension to other areas than just production, has also occurred in
various organizations around the world. Thus, with the designation of Lean <any-
thing>, the most varied implementations were appearing, for example, in hospitals
(Lean Hospitals), in accounting (Lean Accounting), in administrative environ-
ment (Lean Office), in services environment (Lean Services), in academia (Lean
Teaching), as well as in many other areas.
This Toyota Way is referred to on the Toyota Europe website [10] as being based
on two pillars: Continuous improvement and Respect for People (includes respect
and teamwork). It is curious to be close to the concepts that were presented by
Sugimori et al. [1] referred to at the beginning of this chapter. Toyota Way is broken
down into 14 principles that were published by Jeffrey Liker [9] and which are
grouped into the four sections as shown in Table 2.

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Section Principle

Section 1 Long-term philosophy Principle 1. Base your management decisions on a long-term

philosophy, even at the expense of short-term financial goals

Section 2 The Right Process Will Produce Principle 2. Create a continuous process flow to bring
the Right Results problems to the surface

Principle 3. Use “pull” systems to avoid overproduction

Principle 4. Level out the workload (Heijunka)

Principle 5. Build a culture of stopping to fix problems, to get

quality right the first time

Principle 6. Standardized tasks and processes are the

foundation for continuous improvement and employee
empowerment

Principle 7. Use visual control so no problems are hidden

Principle 8. Use only reliable, thoroughly tested technology

that serves your people and processes

Section 3 Add Value to the Organization Principle 9. Grow leaders who thoroughly understand the
by Developing Your People work, live the philosophy, and teach it to others
Principle 10. Develop exceptional people and teams who
follow your company’s philosophy

Principle 11. Respect your extended network of partners and

suppliers by challenging them and helping them improve
Section 4 Continuously Solving Root Principle 12. Go and see for yourself to thoroughly understand
Problems Drives Organizational Learning the situation (Genchi Genbutsu)

Principle 13. Make decisions slowly by consensus, thoroughly

considering all options; implement decisions rapidly
(Nemawashi)

Principle 14. Become a learning organization through

relentless reflection (Hansei) and continuous improvement
(kaizen)

Table 2.
Principles of Toyota way.

3. Continuous improvement

Constantly pursuing perfection means never being satisfied with what has
already been achieved and always seeking to do better. There is a very interesting
story of Toyota, on this subject, which was told by the manager, already retired,
Isao Yoshino, who was involved in the installation of Toyota’s first factory in the
USA. This was the NUMMI (New United Motor Manufacturing, Inc.) project,
which resulted from a partnership between Toyota and General Motors and led to
the construction of a plant in Fremont, California, in 1984. This car factory was the
first experience outside Japan, of implementing Toyota’s way of management and
culture. Returning to Isao Yoshino, the story he told did not convince me at first,
but after a long and informal conversation, I was convinced. This story reveals
one of the most fascinating aspects of Toyota’s culture, and that is as follows: The
word “Toyota” comes from the word “Toyoda”, which already existed as a brand
(Company Toyoda Automatic Loom Works) and which is actually the name of the
family that created that company. In terms of writing, both Latin and Japanese, the
words Toyota and Toyoda only differ in tenuous detail. However, it is in Japanese

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

writing that it is important to describe this difference: as can be seen in Figure 4,

the writing of the two words differs only in two small strokes.
So, 10 strokes are needed to write “Toyoda” while only eight are needed to write
“Toyota”. Why would they then have changed the name from Toyoda to Toyota,
being mentioned that even in this change is present, symbolically, a part of Toyota’s
culture? The first answer that occurred to me, and that may eventually arise to those
who know vaguely the Toyota culture, is that movements are spared when writing
the word (fewer traces). Although there is an understandable logic here, this is not
the answer. The real reason, explained personally by Isao Yoshino, is that in many
cultures, the number 10 symbolizes the top (the maximum) and then, according to
this logic, 8 means to be good but still a little below the maximum, which implies
that it is necessary to improve to reach the top. This allegory aims to make all the
people who work at Toyota understand that you are never good enough that you do
not have to improve. As Eiji Toyoda said [11]:

“Being satisfied with the current situation can be the first step towards corruption”

The constant search for perfection (seeking to be 10 assuming that one is always 8)
is like a healthy “paranoia”, which is based on the fear of letting ourselves relax with
the successes of the past and thereby increase the risk of being overtaken by com-
petitors. It is never to allow one to accept that everything is fine, and the truth is that
there is always something to improve, there is always some problem unresolved.
On this same topic, Dr. Shigeo Shingo, the co-founder of TPS, said the following:
“It is universal truth that those who are not dissatisfied will never make any prog-
ress. Yet even if one feels dissatisfaction, it must not be diverted into complaining; it
must be actively linked to improvement” [12].

3.1 Continuous improvement versus lean thinking

Continuous improvement is a concept apparently understood by all but actually

being able to implement continuous improvement in an organization is a major
challenge. Very often, continuous improvement is confused with Lean Philosophy.
This subject can be addressed from various perspectives, and may give rise to
numerous discussions, but according to one of the publications of the research
group responsible for the name “Lean” itself [5], continuous improvement is only
one of the five principles of the “Lean Thinking”. The other four principles point in
the direction in which companies should align improvement efforts, that is, they tell
us where continuous improvement should be directed to.
By way of absurd example, suppose that a company assumes as strategic objec-
tive to improve the utilization of all its equipment - that is its vision. This is how
the company thinks it can lower costs and be more competitive and sustainable
(it does not want to have equipment stopped because it wants to monetize its use).
According to this objective, all actions that result in increased use of equipment are
interpreted as improvements. However, the truth is that these “improvements” may
be increasing stocks, worsening quality, increasing response times, and driving
the company into bankruptcy. That is why improvement has to be consistent with
the direction (“True North”), vision, purpose and values, which are adequate to the
survival and sustainability of the company in the long term. Another example: let
us imagine that a change introduced on an assembly line resulted in increased pro-
ductivity. Now let us imagine that this change has also degraded ergonomic aspects
or increased the risk of accident, can we still consider it an improvement?
We believe that the most effective and successful direction to align their con-
tinuous improvement work, is guided by the principles that underpin the Lean

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Philosophy, the Shingo Model, and the Toyota Way. A necessary factor for success
occurs when the top decision makers of an organization deeply believe that these
principles are the direction to follow. The other major factor is the implementation
of the dynamics and routines necessary for the organization to progress in this
direction and this is achieved with a continuous improvement system. This is the
form of success: define a good direction (Lean Philosophy, Shingo Model and Toyota
Way) and start moving in this direction in a systematic and sustainable way (con-
tinuous improvement system). In fact, we can only know whether or not there is
improvement if we define the direction we want to take. By saying something very
obvious, we only know if we move forward if we know which way we want to go.
Many famous stories and phrases allude to this fact. For example, in Alice’s story
in Wonderland at one point the girl asks the cat: “Where is the exit? It depends,
answered the cat. From what? Alice replied. It depends on where you want to
go…”. Another example is a phrase from the great thinker Seneca: “When one sails
without destination, no wind is favorable.”
It is essential to define and believe in a path and constantly share it with the
whole organization.

3.2 Continuous improvement versus occasional improvements

It is important to clarify the difference between doing improvement and doing

continuous improvement. For many, notably Rother [2], continuous improvement
is something that happens periodically through technical innovation, projects or
improvement events. However, these types of disruptive occasional improvements
do not in fact create an effective culture of continuous improvement. As mentioned
above, getting an organization to actually have continuous improvement is no easy
task and requires very large structural changes. Moreover, continuous improvement
can no longer be seen as just a factor of competitive advantage over the competition,
but as a survival factor. Companies that do not continuously improve their perfor-
mance will eventually succumb to their competitors. Continuous improvement is no
longer an option and has become the form of survival; the question is: how can each
company materialize continuous improvement?
In its fullness CI happens when everyone, every day, implements a small
improvement in their area of influence. It is much better for many small improve-
ments to happen continuously than major improvements happening occasionally.
When everyone continually contributes to improving their areas aligned with the
strategy and the higher purpose of the company, everyone benefits from learn-
ing, everyone feels included and everyone grows up with the organization. If the
improvements are the result of large projects carried out by external people, there
will hardly be a sense of belonging and learning.
The difficulty of implementing and maintaining continuous improvement is
enormous, and few companies can do so effectively. It cannot be believed that CI
can be achieved and maintained effortlessly and without constant dedication and
attention. It is a bit like maintaining equipment or maintaining relationships. It is
necessary to maintain constant attention and care. This difficulty is reported in
“Toyota Way to Continuous Improvement” [13]. In this work, the authors state that
even Toyota has difficulties in maintaining continuous improvement, especially in
Toyota factories deployed outside Japan.

3.3 Start with CI

A common first step toward continuous improvement is based on hiring con-

sultants with experience in implement lean tolls to improve processes performance

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

and flows. This path is feasible in the first improvement interventions, but it is not
sustainable in the medium and long term. The reason is that, although in the first
interventions the consultants can, with little effort, obtain significant performance
gains, the following actions will achieve fewer and fewer gains. At some point, the
cost inherent in consulting becomes higher than the small gains obtained, and this
approach becomes unfeasible. Hiring consultants specialized in implementing
improvements according to Lean principles and concepts is very often the approach
that companies choose to start adopting continuous improvement practices.
The next step is, for many companies, the development of Lean skills within the
organization itself, giving training in this area to a small group of people from top and/
or middle management and assigning them the role of drivers for improvement actions,
with improvement events or other practices. As the company becomes more mature
in terms of continuous improvement, the number of employees who devote part of
their time to this type of activities increases more and more, until, in an ideal state, all
workforce end up becoming engines of this same continuous improvement. The trend
is that more and more companies, and other organizations, start to include continuous
improvement activities in the daily routines of all its employees. Companies that do not,
will gradually become more and more vulnerable to small crises and market changes.
A very high percentage of companies with continuous improvement systems
have suggestion systems. Some of them even integrate rewarding systems, which
can contemplate all suggestions or only the best ones. There are cases where the
author of the suggestion receives an economic reward proportional to the gain that
the company had from the suggestion. This is known as gainsharing. In other cases,
all suggestions are rewarded with a fixed premium (cash, gifts, company products,
clearances, etc.). In addition, many companies formalize in visual frameworks and
internal publications, the recognition, before the whole organization, to this or that
employee for their suggestions.
Those who have already gone through the experience of creating suggestion systems
quickly learned that the first difficulty is to get employees to start giving suggestions
and the second – much more complex – is to follow up on the ideas that begin to enter
in the suggestion system. This is another of the topics on which it is necessary to reflect
deeply, conscious of unintended consequences, before moving on to implementa-
tion. It is notable that Frank Devine’s Cathedral/Higher Purpose Model [14], which is
highly correlated to success in achieving Shingo awards (25% of all awarded in Europe
2010–2017) explicitly excludes reward as it, as opposed to recognition, did not feature
highly enough on the Pareto analysis on which his model relies and is prone to unin-
tended consequences. A frequent temptation is to give incentives for suggestions when
you want suggestions to appear. Another is to force a minimum number of suggestions
per week for each section of the company. Regarding the first temptation, much could
be said but let us mention a very interesting book entitled “Drive” by Daniel Pink [15].
Pink, based on results from many published scientific experiments, suggests, in short,
that incentives can be counterproductive when creativity is to be used. As much of what
is intended with suggestions is based on people’s creativity, it gets a little strange to add
something that seems to limit creativity. According to the author, wage incentives are
more effective when it comes to increasing productivity in uncreative work, namely
repetitive operations without the need for intellectual tearing.

3.4 Resistance to change

It is undeniable that an organization wishing to implement continuous improve-

ment must be prepared for resistance to change. It must be accepted naturally,
otherwise it can lead to frustrating situations, and in this sense, it may be important
to try to understand.

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If it is true that resistance to change is greatly evoked as being present in human

nature, it is no less true that the will to change is also present in human nature. These are
in fact two seemingly contradictory truths. In a way, all people are willing to change. For
example, they are willing to change when they get married or decide to have children,
and these changes completely change their lives. Any father knows that having children
results in drastic changes in routines, poor quality sleep, constant worries, permanent
attention, fear of the unknown, visits to the doctor, and more. Even knowing all the
problems that come with having children many people all over the world is deciding to
change into it. Many, on the other hand, want to change cars, others from employment,
and others from the city, etc. In fact, we are willing to make changes as long as they are
the result of our own will. On the other hand, we are not always willing to change when
someone wants us to change something in our routines. According to Chip Heath &
Dan Heath [16] – for people to change three conditions must be met: (i) clarity of what
to change to; (ii) motivation for change and (iii) clarity of the steps needed for that
change. With regard to the first condition, it is sometimes not very clear to people what
needs to be changed, and this, of course, is undesirable. When you want a team to make
a change, you need to make very clear to where or to what they are going to change.
With regard to the second condition, it is necessary that the people who will be involved
in the change have the necessary motivation to do it. If they do not identify something
that is attractive or worthwhile, then these people will not want to change. This is not
necessarily a selfish position. People may be motivated for a change that brings benefits
to others (and not to themselves) or that is aligned with a belief, a principle, or simply
because it is a cause for which they are willing to make the change. Lastly, it is still neces-
sary for people to understand very clearly the steps necessary for a change to occur. Even
knowing the reason for the change and having all the motivation to do it, people may
not be able to make that change if they do not know what needs to be done.

3.5 Human resources required for CI

In terms of the materialization of CI, ideally the efforts for improvement are
part of the normal day-to-day work at all levels of the organization. All people in the
organization routinely devote a portion of their daily time to CI tasks. Not spending
any time on improvement tasks is bad but spending all the time on improvement tasks
is also bad because it is necessary that the work is done for the products to be delivered
and the services are provided. Many are the ones who say they do not have time for
continuous improvement. On this argument, there is an interesting metaphor:

“A lumberjack was cutting down trees uninterrupted with his axe and you could
see he was very focused on it. His goal was to cut down as many trees as he could in
the time he had. There is however evidence that needs to be met, is that the more
cut the less effective the axe to cut. Another man watching approached him and
suggested that he should sharpen the axe. The lumberjack replied that he could not
sharpen the axe because he did not have time for it.”

This well-known story is referred to by Stephen Covey in his famous book “The 7
Habits of Highly Effective People” [17] In this book, the seventh habit, proposed by
the author and which is called “fine tuning the instrument”, is directly related to the
lumberjack metaphor and also aligned with the principle of continuous improvement.
Returning to the question of what should be the ideal time spent on CI opera-
tions, or time spent sharpening the ax, there is a famous metaphor attributed to
Abraham Lincoln:

“If I had six hours to cut down a tree, I'd spend the first four sharpening the axe”

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In this sentence it is suggested to spend more time on CI tasks than on the tasks of
the work itself to add value to products and services. This is not really the practice in
organizations. The percentage of time spent on CI is much lower. Although publica-
tions that advance with an indicative value are very rare, Mark Hamel & Michael
O’Connor argue [18] a value of 3% as a reference for the percentage of human
resources that in a company should be dedicated to CI tasks. Interesting value as
a reference. However, 3% of the human resources dedicated to CI should be more
expensive than 3% of the time of all human resources simply because by assumption
the human resources dedicated exclusively to CI, with knowledge of CI and able to
promote CI have higher salaries than the average employee.
Considering a round number of 460 minutes that each employee dedicates per
day in his work, then 13.8 minutes (3% of 460 minutes) should be used on average
for CI tasks. The daily meetings of 5 minutes of the operational teams have a very
common practice in companies with organized continuous improvement systems. If
we add these 5 minutes daily of all employees with some possible weekly meetings
that have longer duration, if we also add the time spent in occasional continuous
improvement events and the management and support time in the improvement
continues then easily reaches the value of 3% referred.

4. Suggestions systems

An article published in 1999 in the scientific journal Total Quality Management

entitled “Stuff the suggestions box” [19] refers to an example of an ancient system
of suggestions that existed in Japan at the beginning of the 18th century, cre-
ated by the eighth Shogun (high-ranking military member) named Yoshimuni
Tokugawa. This system of suggestions consisted of a box placed at the entrance
of his castle with the following sign: “Make your idea known. Rewards will be
given to ideas that are accepted”. Rewards were given to people who provided good
ideas, but any ideas seen as criticism of the Shogun were often rewarded with
beheading.
Modern suggestion systems began to appear in some companies in the early
twentieth century. There is reference to suggestion systems in American companies
such as Kodak and NCR and Japanese companies such as Kanebo even in the early
twentieth century. Later but even before the Second World War, more precisely
in the 1930s, companies such as Hitachi, Yasukawa Electric and Origin Electric
introduced suggestion systems.
Toyota’s suggestion system was introduced in 1951 with the designation
“Creative Ideas Suggestion System” and it is described in some detail in the book
“40 Years, 20 Million Ideas: Toyota’s Suggestion System [20]. It is very interesting
to note the importance that Toyota already gave at the end of the first half of the
last century to the potential for creativity and innovation of employees. This was so
clear that as early as 1953 they formally adopted the slogan “Good Thinking, Good
Products” [21]. Both the aspect of respect for creativity and the aspect of putting
the customer first were well expressed in that motto.
Operators were led to take a very central role in solving problems that were
occurring in the course of their work and also in developing suggestions for intro-
ducing improvements. According to some internal Toyota documents I had access
to, the attitude of the operators should be as follows:

“When we have an idea about a better way to perform the operation, we first
clarify the idea with our supervisors and then experiment and evaluate the results.
Then we fill out a creative suggestion and submit it for evaluation.”

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Each proposal is then verified by a supervisor or group leader, who assesses its
usefulness, effectiveness, and originality using a standard scoring system to ensure
fairness. Evaluations are carried out almost immediately and a monetary premium
is paid about 2 months after the suggestion has been approved.
Another alternative for forwarding suggestions is through quality circles. A
quality circle, or quality control circle is a group composed of many people from
the same area of work or not, whose goal is to find solutions to solve quality
problems or solutions to improve quality. When a good solution is found, that
same solution or countermeasure can be applied to all other places facing the
same problem. When the members of these quality circles belong to different
areas of production, the dissemination of good practices becomes easier. Quality
circles were popular in the 1980s but gradually lost their popularity as quality
was taken over as part of production. The new type of team that began to exist
began to take on purposes other than just quality. This type of team that is often
named kaizen teams are the type of teams that would evolve from the initial
quality circles. These kaizen teams are a very relevant entity in the structure of
most continuous improvement systems.
Although it is assumed that Toyota’s suggestion system was inspired by American
suggestion systems (such as Ford’s) the great effectiveness of Toyota’s system is in
the emphasis that Toyota has always been given to employees. In texts shared by
John Shook1 in 2009 on suggestion systems it is suggested that one of GM’s flaws was
clearly neglecting the human aspect of the equation in suggestion systems. Shook
argues that GM decided that suggestions that did not bring 20 USD of savings would
be refused because the costs to process a suggestion were estimated at that value of
20 USD. The system was focused on the interest of the business and not integrated
with the personal dimension. In general terms the conventional suggestion systems
existing in America are oriented to encourage GREAT suggestions, to give GREAT
prizes, evaluated by LARGE committees with the expectation of GREAT RESULTS.
Unlike Toyota encourages small improvements with small prizes. According to the
same author, most of the prizes at Toyota are around 10 USD maximum. At Toyota,
each employee submits one suggestion per week on average and 98% of the sugges-
tions are implemented. Reflecting on the purpose of Toyota’s system the idea is not
simply to improve processes, the idea is to improve employee involvement in man-
agement and thereby improve processes as a consequence.
In the book “A Study of the Toyota Production System” published 1989 [22]
the number of suggestions presented at Toyota by the workers goes from 10.6
suggestions per worker in 1976 to 18.7 suggestions per worker in 1980 and 94%
of these suggestions were implemented in that year. The same author suggests
that these suggestions have been responsible for the productivity advantage that
Toyota’s factories have over their competitors. Joakim Ahlstrom [23] found 13
improvements implemented per person per year was a number that very few
companies in Europe could achieve. He also mentions that 20 improvements
implemented per person per year were the best that was being achieved in the
world. The accuracy of these numbers is difficult to guarantee but they are
indicators that can be used as a reference.
Yasuda [20] describes the spirit of Toyota’s suggestion system in the simple
thought: “I want to make my job easier, even if only a little easier”. It also says: “If
people remain alert to detect problems, in an environment created that facilitates

1
John Shook is one of the greatest figures in the Lean movement. He is the author of several books on
lean as the famous “learning to see” dedicated to VSM (Value Stream Mapping). John Shook was involved
in the first experience of applying TPS in America, the NUMMI project. It was a car factory that is born
from a consortium between Toyota and GM.

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

their identification, the generation of creative ideas will not be exhausted”. The idea
of making very frequent small improvements seems counterintuitive in the culture
of most of our companies. In many companies we are always looking for a very good
solution that makes us have significant performance gains and we do not give much
credit to insignificant or sometimes intangible gains but that, in the long run, by
their frequency, are extremely powerful. This is a key idea for the sustainability of
continuous improvement.
In ‘Human Resource Development in Toyota Culture’ [24] the authors mention
that the relationship of trust created between the employee and the company or
institution is extremely important and perhaps that is the reason why 90,000 sug-
gestions per year are presented by Toyota employees. It is also curious to note that,
according to the same authors, Toyota intentionally does not give emphasis to cash
rewards. This is consistent with Devine’s work stressing recognition rather than
reward [14]. Generating ideas is supposed to be part of the work and as such does
not reward a person for having done only his work. The ideas generated are part
of the relationship of trust between the parties and this relationship of trust is the
currency of exchange between employer and employee. Employees individually can
and should place suggestions in suggestion boxes placed in specified places. They
are encouraged to write them or ask for help from more experienced engineering
personnel to write them if necessary but can also give suggestions verbally so that
there is no excuse for suggestions not to be given.
Toyota handles the suggestion system in a very similar way to how the system
was originally implemented many years ago. There is a committee that evaluates
all the suggestions of the workers. Whenever a worker has an improvement idea in
his work, he first talks about his idea with his direct boss, as a team leader, and tries
to implement it as a test to find out how the idea works. If they find it would work,
the worker will put the idea in a specific predefined format, with the support of the
boss, if necessary, and formally send the idea to the committee. The committee then
assesses the suggestion very quickly and decides whether it is implemented or not
and what the reward should be. However, it is important to emphasize that the main
objective of the system is NOT to give money to the employee who sends the sugges-
tion. The main objective of donating a small amount of money is to APPRECIATE
the worker’s initiative and encourage him to continue the approach. Therefore, the
main objective of the system is not to compensate the worker with the money, but to
encourage his attitude.

5. Main features of effective CI systems

To be effective a CI system needs top managers to master not only the technical
management skills side but also the behavior and cultural side. Mike Rother [2]
refers to the visible and the invisible side. The visible part has been more easily cop-
ied from Toyota many times without success because the invisible part is difficult to
copy and is often overlooked. This type of division is also referred to in other forms
such as the Shingo Model, dividing the KPI (Key Performance Indicators) and KBI
(Key Behavioral Indicators) [25].
This invisible side of organizations or the side of behavior and culture is as pres-
ent and vital as it is neglected. Edgar Schein argues: “The only thing leaders do of
real importance is create and manage culture. If you don’t manage the culture, the
culture manages you, and you may not have the slightest idea of the extent to which
it is happening.”
Leaders in the organization must define the long-term vision trying to include
a higher purpose that may create among all workers a sense of being part of

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something big. Something that makes them proud of being part of such organiza-
tion. Leader and managers must also fully understand principles such as “respect
for people” and “lead with humility”. These principles must be more than just
understood, rather they must be really living in their hearts. Devine’s ‘Rapid Mass
Engagement Process [reference Conference Book?] amplifies this effect when the
employees themselves create their own CI culture, and, sometimes, their own
Higher Purpose by consensus with their senior leaders. In the face of a problem
managers must behave in a systematic way starting with a “not blame and not
judge” attitude. Most problems occurred because the systems allow them to occur
and blaming on workers is the wrong approach to start with. The idea is to try to
find the root cause and eliminate it. Manager must welcome problems and encour-
age workers revealed them since they promote improvement.

5.1 Operational teams

Another important feature of CI is teamwork. A common feature in effective CI

systems is the presence of teams everywhere in the organization. Workers are orga-
nized in teams and managers gradually empower those teams with management
responsibilities such as performance measurement and monitoring, scheduling
their work, problem solving, and routine meetings. Transparency is an important
tool to the benefit of all. Visual management must be used by teams to show and
update daily most important aspect of their work.
These operational teams, also sometimes called “natural teams”, are teams that
normally share the same workspace and the same tasks, or complementary tasks.
The term “natural” is used because in fact these teams already exist in a natural way
even if they have no formal routines, no goals, and no team spirit. These teams are
the essential units of CI systems as they are largely responsible for adding value to
products and as such where CI is first most important. When we hear the term “opera-
tional teams” we often associate with teams operating in the production units, but the
operational teams extend to all levels of the organization. These teams can be teams
with administrative tasks, development tasks, sales or even management tasks.
The size of a team is a major factor as their performance can vary with their size.
A good rule is to try to create small teams. On this team size issue, Sutherland [26]
suggests that teams of 3–7 people needed 25% less effort than 9–12 people to do the
same job. The size of the team is often determined and/or forced by constraints of
context and typology of personality and relationship between team members. There
are teams of 3 that work very well but others there are the same number but that do
not work at all. Whether or not a strong team leader exists is also a key factor in the
team’s performance and ideal size.

5.2 Teams meetings

The meetings of the operational teams are events of enormous importance for
the sustainability of continuous improvement. The frequency of these meetings is
commonly proposed as one meeting per day. In the Kaizen Institute CI model, it is
even called Daily Kaizen. Typically the meeting follow a standard agenda lasting
5 minutes and in general terms the objectives of these meetings are: to preserve and
improve the cohesion and motivation of the team, to become aware of the state and
evolution of performance indicators, to plan the work of the day, to monitor ongo-
ing improvement actions and if necessary to report occurrences. For these meetings
to be effective it is necessary for teams to be trained and monitored very closely
in the first few weeks. It is necessary that someone with experience accompanies
the first meetings giving suggestions and feedback on the content of the agenda

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and how to conduct the meeting. At first these meetings tend to take more than
5 minutes and some issues remain un-addressed but as the team gains experience it
becomes more effective in managing time and eventually manages to do the whole
meeting in about 5 minutes in most cases.
It is important to repeat that the meeting cannot include any kind of blaming or
judgment of team members. The spirit of the meeting should always be positive and
motivating. It should always be sought to encourage team members to try to identify
something that may be preventing them from doing their job better, with less effort
and less risk.
In some organizations, workers are trained in coaching and in constructive
feedback in order to help creating the perfect atmosphere to approach problems,
improvements, and improve motivation and work satisfaction. The well-being
of team members should always be valued because respect for the human person
has an unquestionable intrinsic value and also because people who feel good can
produce better, with more quality and with more safety. It is important to remember
what was said in the first article published in English about the Toyota Production
System (TPS). In this article it is said that one of the two basic concepts of TPS
is “treating workers as being human and with consideration” [1]. It is important
that the whole organization breathes awareness of this concept and that it creates
standards, routines and practices that materialize this concept and that gradually
becomes the culture of the organization.

5.3 Project teams

The effort for continuous improvement must be widespread throughout the

organization. That is true, however, although everyone in the organization must be
involved in the constant search for improvement, it is common the need to create
temporary teams that aim at significant improvements in the process, also called
disruptive changes.
Disruptive project teams are teams designed to introduce disruptive process
improvements to clearly improve performance levels and typically lead to chang-
ing working standards. These new standards are then followed by natural teams in
order to stabilize them. In some companies the main aim of operational teams is to
stabilize standards and never improve them. These projects are projects for signifi-
cant changes in the process, relate to striking/disruptive improvements that result
in layout changes, task change, line resizing, technology changes in the process,
reduction of product change times, etc. Unlike natural teams that remain stable
for a long time these teams are formed when the project begins and is extinguished
when the project ends.
These disruptive Kaizen events typically are held for 1 week every 3 months.
Kaizen events should start with a well-defined problem, described in a clear and
short sentence, to enhance the effectiveness of the event and should also be seen as an
investment for their very effective role in training employees [27]. Bastos & Sharman
[28] suggest that for there to be significant improvements, this level of action called the
disruptive improvements, together with the CI performed by natural teams, has a mul-
tiplier effect on the improvement of processes and consequently on the performance
and competitiveness of an organization. The main message is that the combination of
the two types of efforts for improvement (Continuous and Disruptive Improvement)
result much more effectively than just the CI. In contrast Mike Rother [2] argues:

“… Toyota considers the improvement capability of all the people in an organiza-

tion the “strength” of a company. From this perspective, then, it is better for an
organization’s adaptiveness, competitiveness, and survival to have a large group

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of people systematically, methodically, making many small steps of improvement

every day rather than a small group doing periodic big projects and events.”

Despite that, Mike Rother also argues:

“… If your business philosophy is to improve, then periodic improvement projects or

kaizen workshops are okay but not enough…”

5.4 Coaching

As in everything in life the CI systems needs be maintained and improved to

stay alive. Some kind of structure is necessary to maintain, coach and guide natural
teams and promote improvement projects. In the Toyota Kata (TK) model pre-
sented by Mike Rother [2] represents how the Toyota CI system works. The role of
maintaining the natural teams’ moral and focus on seeking perfection is assigned to
a coach. The coach’s role is very relevant in the TK model since it is up to the Coach
to play the main role of maintaining the Toyota culture, maintaining the team’s
motivation and guiding it to the identification and implementation of improvement
actions that ensure learning, clear knowledge of the process and evolution toward
challenges and vision. The structure that ensures the sustainability of continuous
improvement is represented in Figure 4 where the coaching structure can be rep-
resented. Each team leader meets with his Coach once a day (whenever possible) in
front of his team’s board for a follow-up session of the actions and evolution of the
team always having as support the data that is visually presented on the team board.
The team leader’s daily sessions with the coach are occasionally accompanied by a
second-level coach who will help the first-level coach evolve his coaching skills.
When a vacancy for 2nd level coach emerges, the 1st level coach, who is more
advanced in terms of coaching skills, will be selected. The vacancy left by the
first-level coach will have to be filled by a team leader with more coaching experi-
ence and skills. This vacancy in turn will be occupied by the team worker with
more leadership skills. In this way the coaches were workers who absorbed Toyota’s
culture and assumed the responsibility of maintaining it and passing it on to the
new workers.

Figure 4.
Coaching structure of the TK.

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Concepts, Applications and Emerging Opportunities in Industrial Engineering

6. Conclusions

Continuous improvement is a key feature to include in the culture of organiza-

tions that want to play a major role in people and society. The CI culture with the
right direction and higher purpose was created by Toyota and now is being spread
around the world with many other organizations also contributing to enrich those
concepts and practices. In this chapter, three models were referred as including
the right set of principles to be followed by those who want to also benefit from
the wonders of CI. Nevertheless, CI is not easy to implement nor to master and a
lot of hard work and perseverance is required to succeed with effectiveness. The
main ingredients to implement CI are at least the following: The right mind set
of the top management, a clear definition of the vision/ “True North”, leadership
system explicitly designed to create a CI culture, generation of natural teams,
empowerment of natural teams, daily team meetings, visual management every-
where, supporting people with CI experience, always questioning the existing CI
system, coaching skills spread around the organization, constant search for people
engagement.
Unfortunately, very few organizations succeed in perfect align all the differ-
ent required elements to create the right culture. In this line of thought my friend
Frank Devine in one of his articles [14] also argue that most Corporate Leadership
Programs are detached from, rather than integrated with, CI. These leadership
programs are almost random collections of often unintegrated leadership skills
rather than a system of leadership.

Acknowledgements

This work has been supported by FCT – Fundação para a Ciência e Tecnologia
within the R&D Units Project Scope: UIDB/00319/2020”.
English is not my native language so thank you to Frank Devine for bringing an
Irishman’s key eye for English grammar to my draft. And as he says.

Author details

Dinis Carvalho
University of Minho, Guimaraes, Portugal

*Address all correspondence to: [email protected]

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms
of the Creative Commons Attribution License (http://creativecommons.org/licenses/
by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,
provided the original work is properly cited.

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Continuous Improvement
DOI: http://dx.doi.org/10.5772/intechopen.93638

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