The way of fundamental changes
Kaikaku (Japanese for "radical change") is a business concept concerned with making fundamental and radical changes to a production system, unlike Kaizen which is focused on incremental minor changes. Both Kaizen and Kaikaku can be applied to activities other than production.
Kaikaku and Kaizen are concepts in Japanese production philosophy that relate to each other. Both have origins in the Toyota Production System.
Kaikaku means a radical change, during a limited time, of a production system. Kaizen, on the other hand, is continuous minor changes of a certain area of a production system, often with the primary goal of solving team related problems. Kaizen is based on all employees involvement and individual activities generally reach an improvement of less than 20%. A cross between Kaikaku and Kaizen is Kaizen Blitz (or Kaizen Events), which implies a radical improvement in a limited area, such as a production cell, during an intense week.
Kaikaku means that an entire business is changed radically, normally always in the form of a project. Kaikaku is most often initiated by management, since the change as such and the result will significantly impact business. Kaikaku is about introducing new knowledge, new strategies, new approaches, new production techniques or new equipment. Kaikaku can be initiated by external factors, e.g. new technology or market conditions. Kaikaku can also be initiated when management see that ongoing Kaizen work is beginning to stagnate and no longer provides adequate results in relation to the effort. Kaikaku projects often result in improvements in the range of 30-50% and a new base level for continued Kaizen. Kaikaku may also be called System Kaizen.
Kaikaku projects can be of four different types:
- Locally innovative - Capital intensive
- E.g. an installation of robot automation in a factory is not new to the industry in general, but may be new to the company. The decision is strategically grounded and could mean higher costs
- Locally innovative - Operation close
- E.g. the introduction of conventional methods Six Sigma or TPM may be new to the company. The direct cost is relatively small
- Radically innovative - Capital intensive
- E.g. the introduction of a new and innovative production technology
- Radically innovative - Operation close
- E.g. the introduction of new and innovative production solutions that are new to the industry