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Business Performance Improvement: Wisdom from Three Continents

Every business person wants to make their business better; here’s wisdom about business performance improvement from business people on three continents. This is one of those rare posts I can recommend to everyone; businesses large and small, owners and employees, to improve both products and services. And, although each technique has clear regional and cultural roots, everyone can use any (or all) of them.

Jugaad

Jugaad (juggaar, jugard) is a colloquial hindi term meaning a quick innovative solution or a simple work-around. Its closest western synonym is a “hack”, but jugaad implies a more elemental or survival-oriented approach. [Wikipedia] has a fascinating example of a jugaad product… called a jugaad.

“Jugaads cost around Rs. 50,000 (less than US$1,000). They are powered by diesel engines originally intended to power agricultural irrigation pumps. They are known for poor brakes, and cannot go faster than about 60 km/h (37 mph). The vehicle often carries more than 20 people at a time in remote locations and poor road conditions. Today, a jugaad is one of the most cost effective transportation solutions for rural Indians.”

Crude? Yes. Possibly dangerous? Oh yes. But they’re the Model T of india, and they’ve linked the indian countryside by moving people and goods at up to 10 times the speed of an ox cart.

When the need (or opportunity) is great and time and money are in short supply, why not do as  India does? Grab what’s at hand, work fast, don’t sweat the details and go for quick value. Performance improvement on the run.

Kaizen

Kaizen, a Japanese word, means literally, “change for the better”.

If jugaad is rough, ready and fast, Kaizen starts slower, focuses on the quickly achievable improvement…and then refocuses on yet another incremental improvement. If jugaad is a one-off, Kaizen becomes a repetitive process for change, a little at a time. It would take too long to explain Kaizen in this short post, so I’ll leave you with a book and 5 steps.

The book is Masaaki Imai’s “Gemba Kaizen”, McGraw Hill,1997. It’s a soup-to-nuts explanation, including a series of case studies.

At heart, kaizen repeats 5 steps:

  1. When a problem (abnormality) arises, go to the workplace first.
  2. Check the gembutsu (relevant objects).
  3. Take temporary countermeasures on the spot.
  4. Find the root cause.
  5. Standardize to prevent recurrence.

Here’s an example of the results, from one of the book’s case studies:

“Löhr & Bromkamp GmbH (Löbro) in Offenbach, Germany, is a GKN group member that produces constant velocity joints and shafts. Löbro, which has 1800 employees, has been engaged in various kaizen activities during the past few years.

Various kaizen activities at Löbro between 1990 and 1995 have yielded the following improvements:
• Absenteeism: Reduced by half.
• Suggestion system: Increased from 0.15 to eight suggestions per employee per year. (Löbro is now counting suggestions actually implemented; its goal of six per person per year was achieved by the end of 1995.)
• Scrap: Reduced by half.
• Customer rejects: Reduced by 90 percent.
• Training days: Increased from 0.8 days to five days per employee per year.
• Setup: Reduced by half.
• Throughput time: Reduced by 30 percent.
• Inventory: Reduced by 40 percent.”

Performance improvement one step at a time.

Purposeful Innovation

Purposeful Innovation is the product of that dean of American business thinkers, Peter Drucker. If jugaad and kaizen are tactical and everyday, purposeful innovation is strategic and long term.

Once again I’ll give you a reference, eleven ways to innovate purposefully, and an example.

The book is Peter Drucker’s ‘Innovation and Entrepreneurship’, Harper and Row, 1985. Peter Drucker was the first business thinker to persuasively present innovation as a discipline. He explained the elements of purposeful innovation and provided examples. His elements are:

  • The unexpected: the unexpected success, the unexpected failure, the outside event
  • The incongruity: between reality as it actually is and reality as it is assumed to be or as it “ought to be”
  •  Innovation based on process need
  • Changes in industry structure or market structure that catch everyone unawares
  • Demographics: population changes
  • Changes in perception, mood and meaning
  • New knowledge, both scientific and nonscientific

Those elements, summarized in isolation, don’t sound usefully specific; but Drucker’s steady stream of evocative example cases make them all clear and concrete. Here’s an example of learning from unexpected failure:

Ford went to extreme lengths to plan and design the Edsel, embodying in its design the best information from market research, the best information about customer preferences in appearance and styling, and the highest standards of quality control. Yet the Edsel became a failure right away.

The result of Ford’s decision to go out and investigate was the one genuine innovation in the American automobile industry since Alfred P. Sloan, in the 1920’s, had defined the socioeconomic segmentation of the American market into low, lower-middle, upper-middle, and upper segments. When the Ford people went out, they discovered that this segmentation system was rapidly being replaced by… the one we would now call lifestyle segmentation.

The result, within a short period after the Edsel’s failure was the appearance of Ford’s Thunderbird, the greatest success of any American car since Henry Ford Sr. introduced his Model T in 1908.

I’ll write more about jugaad, kaizen and purposeful innovation in future posts. For now, why not just decide to make your business better, by starting your own performance improvements today?

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