“Don’t use money on Muda.”

“Don’t use money on Muda.”

A common phrase we use in Japan.

There are two words we use to describe such thinking.

The first is “Kenyaku【倹約】.” This word’s subject is money. This activity reduces Muda spending and uses the savings for something truly necessary.

One of the most famous figures in Japanese history associated with “Kenyaku” is the first Shogun of the Tokugawa shogunate, Ieyasu. He was known for not spending money. For example, when he was Shogun, a piece of toilet paper blew into the garden. He ran to grab it. When the maids laughed, he responded, “This is how I became a Shogun.” Compared with his predecessors, his spending was modest. Yet he did not hesitate to spend when necessary. For example, he used his money to support some Samurai who were financially struggling. These were the ones who supported him in the important battles. Since Ieyasu was born at Okazaki, his stories are well captured in the Mikawa region, where Toyota is from.

Another word we use is “Setuyaku【節約】.” The scope of this word is broad, covering not only money but also time, energy, and materials. However, it requires a certain level of endurance. This “Setuyaku” is used in many areas of business. “Switch off the office light when you leave.” “Stop idling.” “In summer, the AC is set to 28°C in Japanese offices.” Such practices are common in Japanese offices.

So, how are these connected to Kaizen?

In terms of the subject, Kaizen targets broad issues. The seven types of Muda suggest that we should see broadly.

But Kaizen is not about endurance. If someone has to move, move. It's not about staying in an uncomfortable zone. In some cases, to avoid overproduction, we have to wait. If we don’t wait and overproduce, we will be fighting for more space for inventory. There was a place where they said, “Buying tools for every operator will cost us,” and the workers were sharing tools, waiting for each other. Such endurance is unnecessary. We should have the right tool for every worker.

So, Kaizen might be closer to Kenyaku?

The subject of Kaizen is not limited to money. But as we Kaizen many things, we should get financial returns. I don’t think each Kaizen should have an ROI, but as an activity, we should.

But the cost savings are not the final objective. We should use the savings to accomplish something bigger.

One such activity is human development. We should allocate funds to develop people. This doesn’t mean fancy training at gorgeous sites. The training should take place at Genba. We don’t need fancy presentations and notebooks. We just need a pencil and paper to conduct Kaizen.

But a coach is an overhead cost. We should invest in coaching.

But a trainee sometimes needs to be trained off-line. We need reserves and flexible manpower to cover the offline training.

Another example is team and group leaders. Having resources capable of training people is valuable.

These areas are often the first targets of any cost-cutting program, which ultimately kills organizations in the long term.

When we suggest training, many production managers assume we will take their people away for training, sacrificing their output and time. This perception stems from corporate training programs conducted without regard for output. But what is the message of training that sacrifices output or forces people to work on the weekends? Instead, production should have reserves and flexible manpower. By utilizing these resources, we can train without sacrifice.

There is another word associated with these Kenyaku and Setsuyaku. That is Keti, which means stingy and cheap. Being money-sensitive does not mean being stingy or cheap. And sometimes ‘cheap’ means higher cost. For example, cheap materials lead to more defects. Cheap machines break more often. And untrained personnel can damage the business. Kaizen doesn’t mean cheap.

There must be many different ideas about “money-saving” across cultures. How do those ideas impact the improvement activity?