In today’s post, I will be looking at the “Kaizen” and “Kaikaku” in light of the Explore/Exploit model. Kaizen is often translated from Japanese as “continuous improvement” or “change for better”. “Kaikaku”, another Japanese term, is translated as “radical change/improvement”. “Kakushin” is another Japanese word that is used synonymously with “Kaikaku”. “Kakushin” means “innovation” in Japanese. Kaikaku got more attention from Lean practitioners when the previous Toyota President and CEO, Katsuaki Watnabe said in 2007- “Toyota could achieve its goals through Kaizen. In today’s world, however, when the rate of change is too slow, we have no choice but to resort to drastic changes or reform: Kaikaku”
The explore/exploit model is based on a famous mathematical problem. I will use the example from Brian Christian and Tom Griffith’s wonderful 2016 book “Algorithms to Live By: The Computer Science of Human Decisions”. Let’s say that you are very hungry and do not feel like cooking. Which restaurant should you go to? Your favorite Italian restaurant or the new Thai place that just opened up? Would your decision capabilities be impacted if you are traveling? Sticking with what you know and being safe is the “exploit” model. Trying out new things and taking risks is the “explore” model. The dilemma comes because you have to choose between the two. The optimal solution depends on how much time you have on your hands. If you are traveling and you are at a new place for two weeks, you should try out different things at the beginning (explore). As days go by and you only have a few more days left, you should definitely stick with what you know to be the best choice so far (exploit). Christian and Griffith stated in the book – Simply put, exploration is gathering information, and exploitation is using the information you have to get a known good result.
From an organization’s standpoint, the explore/exploit dilemma is very important. The exploit model is where the organization continues to focus on efficiency and discipline in what they already manufacture. The explore model on the other hand, is focusing on innovation and new grounds. The exploit model does not like risk and uncertainty. The exploit model does not necessarily mean maintaining status-quo or not rocking the boat. The exploit model is getting better at what you already do. One way that I have heard the differentiation between the two explained is like this – exploitation is like playing in the same sandbox and getting better at the games you play inside the sandbox. Exploration is like venturing outside of your sandbox and finding new sandboxes to play with and creating new games.
Some strategies used for the exploit model are:
- Optimize the organization for current organizational rules and structure
- Make sure standards are in place and the established rules are followed in order to achieve efficiency
- Make incremental improvements for existing processes better and still stay within the current organizational structures
- Keep making more of the current product portfolio
The explore model is about breaking new grounds. Some strategies used for the explore model are:
- Break away from the current organizational rules and structure
- Develop new structures to allow for diversity and discovery
- Make radical improvements to overhaul current processes, rules and structures
- Add new product portfolios altogether
The exploit model relies on current constraints, rules and structures. The exploration model relies on the willingness to break away from the current constraints, rules and structures. A perfect balance between the two models and oscillating between both models or engaging in both models simultaneously is very important for an organization to thrive. The organizations that can do both are called “ambidextrous”.
The explore/exploit model has some similarities to Kaizen and Kaikaku. Kaizen is about getting better at what we do incrementally. It is a personal development model. Kaikaku, on the other hand, is about breaking the mold and overhauling the organization in some cases. Launching a Lean initiative can be viewed as Kaikaku. Kaizen could be an ideal strategy for exploitation and Kaikaku for exploration. I came across a paper from Yuji Yamamoto called “Kaikaku in Production in Japan: An Analysis of Kaikaku in Terms of Ambidexterity” that further shed light on this. The paper is part of the collection called “Innovative Quality Improvements in Operations”. Yamamoto points out that while Kaizen is incremental; Kaikaku entails large-scale changes to both the social and technical systems of an organization. Kaizen is often viewed as an opportunity and Kaikaku may sometimes be viewed as a necessity. Kaizen is also viewed as a bottom-up activity with autonomy, and Kaikaku on the other hand can be viewed as top-down activity with direction from the top management. Kaikaku may be continual (with definite timelines and stops) and Kaizen is continuous. Kaizen is described as engaging everybody in improvement every day, everywhere in the organization.
Yamamoto discussed data from 65 case studies where Kaikaku activities were implemented at Japanese manufacturing companies. Yamamoto noted that the defining characteristic for Kaikaku based on the studies was that Kaikaku requires everybody’s exploration effort. In the 65 reports, the importance of everyone in the organization having a specific mental mode related to exploration, for instance, a challenging spirit, give-it-a-try mentality, and unlearning, is frequently mentioned. In the Kaikaku activities, managers often encouraged everyone in the organizations to think and act in a more explorative way than they were used to. Apparently, companies used the word Kaikaku as a way to make managers and employees be aware of this mental stance toward exploration.
Yamamoto used the exploit/explore model to further differentiate Kaizen and Kaikaku. The figure below is adapted from Yamamoto. The figure shows different degrees of exploitation and exploration activities. Problem solving with a high degree of innovativeness tends to involve more exploration than exploitation.
Some key takeaways from Yamamoto’s paper are:
- Kaikaku and Kaizen are complementary and reinforce each other. Effective Kaizen often has a positive influence on Kaikaku, and Kaikaku can stimulate Kaizen.
- Employees engaged in iterative problem solving activities in Kaizen and Kaikaku develop exploitation and exploration abilities as part of a learning cycle. The beginning of this learning cycle is about making problems and challenges visible to increase the sense of urgency. Once they are resolved, the results are made visible throughout the organization. The organizations in the case studies created an environment for keeping the learning cycle going with opportunities to engage in improvement and innovation.
- The participants of Kaikaku activities reflect on and learn from their successes and failures. They achieve a sense of achievement and are motivated to tackle challenges that are even more difficult.
- Problem solving activities often lead to identifying further improvement opportunities.
- Some companies in the report used Kaikaku to enhance Kaizen because Kaizen had been slow and reactive. While some other companies initiated Kaikaku to make employees more competent in innovation.
I will end with a Zen quote with focus on when we should be doing more:
You should sit in meditation for 20 minutes a day, unless you are too busy. In that case, you should meditate for an hour a day.
Always keep on learning…
In case you missed it, my last post was Hammurabi, Hawaii and Icarus: