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Revisiting the existing notion of continuous improvement (Kaizen): literature

review and field research of Toyota from a perspective of innovation

Article  in  Evolutionary and Institutional Economics Review · February 2017

DOI: 10.1007/s40844-017-0067-4

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Evolut Inst Econ Rev (2017) 14:29–59
DOI 10.1007/s40844-017-0067-4

ARTICLE

Revisiting the existing notion of continuous

improvement (Kaizen): literature review and field
research of Toyota from a perspective of innovation

Shumpei Iwao1

Published online: 1 February 2017

 Japan Association for Evolutionary Economics 2017

Abstract Continuous improvement (Kaizen) has been identified as a crucial factor

for strengthening firms’ competitiveness in the automotive industry as well as
others, and many scholars view it as detailed below. In the existing literature, from a
perspective of innovation, Kaizen has often been conceived of as an accumulation of
similarly small, mutually independent, incremental process innovations that are
conducted by workers, work-teams, and their leaders. However, few empirical case
studies examine the relevance of this conventional notion of Kaizen. Do Kaizen
activities contribute only to similarly small, incremental process innovations? Does
Kaizen only consist of various mutually independent innovations? Is Kaizen always
achieved by workers and work-teams rather than by engineers? This paper attempts
to observe those continuous improvements conducted in a certain factory for a
certain period. Through longitudinal observations, this paper shows via seven case
studies that (1) Kaizen consists of a series of innovations with various scales and
that these scales could also be estimated by the ‘‘scope of coordination’’ in addition
to existing scale indicators, such as the investment amount, and outcomes, such as
the cost reduction effect. Additionally, (2) Kaizen sometimes induces small changes
in product design and affects organizational activities of production design as a
small-scale product innovation. Furthermore, (3) Kaizen activities sometimes
influence other Kaizen activities. With regard to these characteristics of Kaizen, this
paper implies that (4) Kaizen management needs organizational design. For
example, in Toyota’s case, not only work-teams but also product/process design
engineers contribute to Kaizen, and shop-floor engineers play a vital role in coor-
dinating between shop-floors and engineering departments on the basis of the ‘‘staff-
in-line structure’’ of organizations.

& Shumpei Iwao

[email protected]
1
University of Tokyo, Tokyo, Japan

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30 Evolut Inst Econ Rev (2017) 14:29–59

Keywords Process innovation  Large/small innovation  Routine dynamics  Lean

manufacturing  Dynamic capabilities

JEL Classification M0  M1  M2

1 Introduction

The purpose of this study is to analyze the notion of continuous improvement

(Kaizen1) as a series of innovations through detailed field studies of a specific
leading factory. Particularly, through case studies at Toyota’s Takaoka plant, this
study aims to re-examine the conventional notion of Kaizen as a series of mutually
independent, incremental process innovations driven by operators or work-teams. In
addition, this paper explores organizational design for promoting the outcomes from
Kaizen based on a perspective of innovation.
Until now, Kaizen has been regarded as one of the crucial factors in the pursuit of
industrial competitiveness indices such as productivity, manufacturing quality, lead
time, and flexibility in the automobile industry as well as others (Imai 1986; Winter
2003; Anand et al. 2009; Fujimoto 2014). For example, Toyota annually generates
numerous improvements typical of Kaizen, which indicates that Toyota possesses a
high ability to implement Kaizen (Koike 1998; Fujimoto 1999, 2007). Because of
this competitive value of Kaizen for firms such as Toyota, some scholars have
discussed Kaizen from its practical aspects (Bessant et al. 2001; Anand et al. 2009);
however, few studies address the issue of Kaizen from the perspective of innovation
(Bessant and Caffyn 1997; Choi 1995; Boer and Gertsen 2003). Hence, this study
first summarizes existing notions of Kaizen after reviewing previous studies
regarding Kaizen and debates around innovation management related to Kaizen.
Subsequently, we examine the relevance of existing notions of Kaizen by analyzing
seven Kaizen cases in a Toyota factory.
Based on the existing literature on Kaizen, a roughly sketched notion can be
observed. Kaizen is sometimes recognized as including small but numerous changes
of routines written in standard operating procedures (SOPs) and small design
improvements of artifacts for production, such as production equipment, tools, and
software, by time/motion studies (Imai 1986). Conversely, Kaizen is also regarded
as consisting of process innovations that improve task efficiency (Anand et al.
2009), mutually independent activities that make incremental progress repeatedly
that are sometimes called ‘‘continuous innovation’’2 (Boer and Gertsen 2003).
Researchers also indicate that innovative activities such as Kaizen involve
organizational decision-making and problem-solving processes (Thompson 1965;
Myers and Marquis 1969; Fujimoto 1999). In addition, because Kaizen activities
consist of numerous decision-making/problem-solving activities implemented by
workers and their leaders, it is depicted as another type of innovation as compared

1
This article uses the word ‘‘Kaizen’’ as an uncountable noun.
2
Boer and Gertsen (2003) define continuous innovation as process and product innovation, but they also
think of continuous innovations as relatively small and numerous changes.

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Evolut Inst Econ Rev (2017) 14:29–59 31

with innovation conducted by the research and development divisions (Imai 1986;
Bessant and Caffyn 1997). In particular, existing research indicates that the main
contributors to Kaizen as incremental process innovations are workers/operators and
their leaders (Imai 1986; Lindberg and Berger 1997; Bhuiyan and Baghel 2005).
In summary, past studies describe Kaizen as consisting of numerous small
incremental innovations that (1) have small variability in scale/size, (2) change the
way products are made and are categorized as process innovations, (3) are mutually
independent and have no interaction with other Kaizen activities, and (4) are
implemented mainly by workers, work-teams, and work-team/group leaders.
However, only a few empirical studies observe a series of Kaizen and continuous
improvement activities through a longitudinal investigation from the shop-floor
level to the company level. In other words, the characteristics of Kaizen are not well
examined in published studies. Do all Kaizen activities in a firm only consist of
small-scale activities? Are those Kaizen activities related to each other? Are workers
and their leaders the only key players for Kaizen?
This study complements existing debates on Kaizen and continuous improvement
by analyzing empirical data acquired from the author’s participant observation in a
Toyota factory, Toyota’s headquarters, and other companies such as equipment
manufacturers. To analyze the seven cases, this study provides the new concept of
‘‘scope of coordination’’ for measuring the scale of each Kaizen improvement as an
innovation in addition to existing measurements such as budget size, R&D person-
hours, and outcome profit. Finally, this study finds that shop-floor engineers3 play
vital roles in dealing with different scopes of coordination in pursuit of Kaizen as
innovation. In particular, shop-floor engineers under the ‘‘staff-in-line organization’’
and located proximate to the production line perform the roles of technical
specialists and coordinators to realize Kaizen. In other words, Kaizen sometimes
involves not only workers or the headquarters’ process engineers but also shop-floor
engineers. In addition, the organizational design of ‘‘staff-in-line organization’’ that
requires the roles of technical specialists and coordinators between the shop-floor
and engineers at Toyota’s headquarters or at other firms may contribute to higher
levels of Kaizen performance. Details are discussed later in this article.

2 Literature review

This section reviews the existing debates regarding Kaizen that are related to
technology and operation management, organization theory, evolutionary eco-
nomics, and so on. In the 1980s, scholars tended to explain the cause of differences
in firms’ manufacturing performance as the Japanese way of manufacturing
management, particularly in the automobile industry (Hayes and Clark 1985). In
particular, Toyota Production System (TPS), also called Lean Production System
(LPS), attracted scholars’ and practitioners’ interest for study and benchmarking
(Monden 1983; Womack et al. 1990). Although Womack et al. (1990) identified the
importance of TPS/LPS, the fact that it has been changed through evolutionary

3
Koujô-Gijyutsu-In in Japanese.

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32 Evolut Inst Econ Rev (2017) 14:29–59

processes has been overlooked (Fujimoto 1999). Womack et al. (1990) conveyed
the importance of the softer aspects of ‘‘how to use the machine’’ of process
innovation, such as LPS, but downplayed the importance of changes in LPS through
Kaizen. However, practitioners stressed Kaizen as being the crucial element in LPS
(Imai 1986; Ōno 1988) and indicated several tools or methodologies, which were
useful for Kaizen (Shingo 1981, 1988).
Meanwhile, some practitioners argued that Kaizen consists in the changes in
worker operations with small-scale investments (Imai 1986), whereas some others
regarded Kaizen as both operations and equipment change (Shingo 1981). These
practitioners also propose some ways of thinking regarding Kaizen management.
Although these studies have indicated the importance of Kaizen and given practical
perspectives, they rarely discuss Kaizen from the perspective of innovation and
organization theory (Choi 1995; Boer and Gertsen 2003). For a more fruitful
academic discussion, rethinking Kaizen from the standpoints of innovation and
organization theory may be necessary (Choi 1995; Boer and Gertsen 2003).
From this perspective, innovation involves new combinations of materials and
forces or those of production means (Schumpeter 1934). Kaizen can also be
regarded as a kind of Schumpeter’s continuous and incremental-type innovation
because Kaizen involves small changes with new combinations of the said elements
(Myers and Marquis 1969; Boer and Gertsen 2003). In addition, according to
Thompson’s (1965) definition of innovation: ‘‘Innovation is the generation,
acceptance and implementation of new ideas, processes products or services
(Thompson 1965, p. 2),’’ Kaizen is also a kind of innovation because Kaizen
activities change organizational routines deliberately by generating new ideas
(Nelson and Winter 1982; Fujimoto 1999; Zollo and Winter 2002; Helfat and
Winter 2011).
Furthermore, Kaizen is sometimes (e.g., Imai 1986) recognized as consisting of
small but numerous changes of routinized operations that result in new SOPs and so
on. Existing studies describe Kaizen as the accumulation of numerous small
incremental innovations with little variability in scale (Choi 1995; Bessant et al.
2001; Boer and Gertsen 2003; Bhuiyan and Baghel 2005). The abovementioned
studies use the word ‘‘Kaizen’’ in two ways: Kaizen means the accumulation of each
Kaizen activity and all of the small changes/innovations generated in organizations;
it also means an individual Kaizen activity that contributes to the accumulation of
Kaizen (Choi 1995; Bessant et al. 2001; Boer and Gertsen 2003; Bhuiyan and
Baghel 2005). In other words, Kaizen refers to activities consisting of many
individual Kaizen activities as well as each Kaizen activity to change organizational
behavior. This point leads us to the next question: What is the nature of an
individual Kaizen activity?
In this regard, previous studies think of individual Kaizen as one kind of process
innovation. Process innovation involves new ways of manufacturing (Anand et al.
2009). Kaizen is regarded as the accumulation of process innovations improving the
steps to achieve efficiency through small changes (Bhuiyan and Baghel 2005;
Anand et al. 2009). Some scholars argue that process innovations in actual factories
have a range of scales and Kaizen is categorized as small (Koike 1998; Koike et al.
2001). While large-scale process innovations resemble product innovation, such as

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Evolut Inst Econ Rev (2017) 14:29–59 33

making new production equipment (Koike et al. 2001), other small-scale process
innovations, such as those of Kaizen, are thought to be more improvisational and
akin to ad hoc problem-solving (Koike 1998). In these studies, there are no
interactions among Kaizen activities in one firm, between incremental small-scale
process innovations, such as those of Kaizen, and large process innovation, or
between incremental process innovation and product innovation.
Of course, some studies address the relationship between process and product
innovations. Early studies, such as Abernathy and Utterback (1978), depict the
process of industrial innovation and the abovementioned relationship; however,
those studies equated process innovation with investment in specialized machiner-
ies, implying a directional effect from product innovation to process innovation.
After Abernathy and Utterback (1978), Hayes and Wheelwright (1979) also
addressed the interaction between product and process innovations but not the
interaction between incremental and product/process innovations. Abernathy (1978)
focused on incremental process innovation, such as Kaizen; however, incremental
innovation was treated as a symptom of industrial stagnation, and interrelationships
among incremental innovations were not fully discussed. In addition, these studies
focused mainly on industry-level rather than firm-level analyses. In other words,
existing studies are inadequate if we want to study the interaction of an incremental
innovation with other types of innovation in firms/organizations.
From the standpoint of one firm/organization, we could see Kaizen as an
organizational activity involving decision-making and problem-solving (Thompson
1965; Fujimoto 1999; Myers and Marquis 1969). From this perspective, each Kaizen
activity also consists of many tasks, such as brainstorming, discussion, and
implementation. Moreover, in each Kaizen activity, there are many tasks that affect
other organizational activities (Choi 1995). According to Fujimoto (1999), the
general definition of Kaizen activities is ‘‘activities that deliberately change
organizational routines’’ (Nelson and Winter 1982; Fujimoto 1999; Zollo and
Winter 2002; Helfat and Winter 2011). In other words, Kaizen involves meta-
routines (Hackman and Wageman 1995; Adler et al. 1999) that generate new
organizational routines through activities such as decision-making and problem-
solving.4
Previous studies view these organizational activities in one Kaizen activity; for
instance, decision-making and problem-solving are mainly implemented by
workers/operators, work-teams, and team/group leaders in job shops (Bessant and
Caffyn 1997). Furthermore, Kaizen has been considered to be a different type of
innovation compared with other innovative activities, such as large-scale process
innovations involving the development of new production equipment and product
development, which are conducted by the research and development divisions (Imai
1986; Bessant and Caffyn 1997). Particularly, previous studies have identified
workers/operators and their leaders as the main contributors to Kaizen (Imai 1986;
Lindberg and Berger 1997; Bhuiyan and Baghel 2005).

4
Evolutionary economics considers that changes of organizational routines occur by chance like
distribution of a random variable (Nelson and Winter 1982), thus making micro-firm-level analysis
difficult.

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34 Evolut Inst Econ Rev (2017) 14:29–59

However, existing notions of Kaizen have not been fully examined by a detailed
field study, and the possibility of not recognizing important points in Kaizen
management exists. For example, the need for coordination to realize Kaizen has
rarely been discussed in the past. Conversely, coordination has been the central
problem of organizational change (Feldman and Pentland 2003). Recent organiza-
tional routines theory, called ‘‘routine dynamics’’ (Feldman 2000; Feldman and
Pentland 2003; Becker 2004, 2005), formulates the organizational routine5, thus ‘‘an
organizational routine is a repetitive, recognizable pattern of interdependent actions,
involving multiple participants (Feldman and Pentland 2003, p. 96)’’ and also makes
micro-level analysis of organizational routine changes possible. For instance,
because of this interdependence, changes in organizational routine through Kaizen
might affect other organizational activities (Iwao 2015). Moreover, routine
dynamics theory argues that changes in organizational routines require coordination
between the organization’s upper- and lower-level actors (Feldman 2000; Feldman
and Pentland 2003; Pentland and Feldman 2008). For example, actors at the upper
levels of organizations might resist changes originating from lower levels if they
perceive them as countering organizational interests (Feldman 2000; Feldman and
Pentland 2003). Conversely, changes in organizational routine suggested by upper
levels sometimes encounter resistance by lower-level actors (Pentland and Feldman
2008), indicating that changing organizational routines also requires vertical
coordination.
Conflicts over changes in organizational routines may also arise between
departments, such as the finance department versus the design department, and require
horizontal coordination. D’Adderio (2008) notes, for example, that making a list of
components to be purchased is complicated and requires coordination among functional
departments. Furthermore, horizontal coordination might cause a clash of interests
(D’Adderio 2008). In addition, the more specialized the functional departments, the
more difficult the coordination (March and Simon 1958). Thus, frequent horizontal
coordination in a complex system is accompanied by significant difficulty (Lawrence
and Lorsch 1967). For example, automobiles involve considerable interdependence
among components (Fujimoto 2007); thus, altering the parameters of one component
affects other components and also affects all functional departments with which they are
concerned. Those alterations, in turn, generate a chain reaction of alterations, further
escalating the need for coordination (Clark and Fujimoto 1991; D’Adderio 2008).
Kaizen sometimes involves changes in production equipment (Shingo 1988; Koike et al.
2001). When changes affect artifacts, people must redesign them (Simon 1969), and the
coordination required for innovation swells among manufacturing, product engineering,
manufacturing engineering, purchasing, and finance (Ettlie and Reza 1992) and
sometimes outside the organization, such as suppliers (Dyer and Singh 1998).
As reviewed above, Kaizen is viewed as consisting of small, incremental,
mutually independent process innovations generated repeatedly by workers. If this
view is sufficient, then there is relatively little necessity to pay attention to the
5
Their discussion considers it important to divide one routine into two aspects (ostensive and
performative). The ostensive aspect describes standard rules or procedures that govern behavior in
organizations. The performative aspect indicates the specific and inherently improvisational actions taken
by people in organizations. This study does not use this idea.

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Evolut Inst Econ Rev (2017) 14:29–59 35

coordination problem around Kaizen because stakeholders around Kaizen remain on

the shop-floor. However, recent organization theory makes the important point that
creating innovation through organizational change (Thompson 1965; Choi 1995)
needs coordination. This point has not been considered in past studies around
Kaizen. Hence, we need to perform detailed field research and re-examine the
existing view of Kaizen when we try to apply the abovementioned organization
theories to Kaizen. In incremental innovation, if there are relatively small-scale
innovations and also relatively large-scale innovations that affect many actors, then
coordination becomes a Kaizen management problem. In this case, we also need to
investigate in what ways many Kaizen activities mutually interact as innovations.

3 Methods

This paper has described the inadequacies of previous studies that did not fully
examine the conventional existing notion of Kaizen. As shown in the literature
review, from both theoretical and empirical viewpoints, we could gain more insights
by characterizing and analyzing the reality of Kaizen in certain firm(s) from the
perspectives of innovation and organization theory.
As a next step, we have to examine this by exploratory positive analysis. To observe the
detailed interactions of each Kaizen as innovation and to reveal the reality of this type of
innovation, a fact-finding field survey is necessary (Barratt et al. 2011; Eisenhardt 1989).
Moreover, this study focuses on research questions such as ‘‘Are there interactions
between small- and large-scale innovations?’’ and ‘‘How can we manage them?’’ The
preferred method for answering these questions is the case study because case studies
better address questions of ‘‘why’’ and ‘‘how’’ (Yin Robert 1994). Additionally, building
new hypotheses by case studies is also this study’s goal (Eisenhardt 1989).
For this purpose, the author, who participated in Kaizen activities at the Toyota
Motor factory in Takaoka from August 27, 2013, to September 21, 2013, collected
all seven cases of Kaizen through direct observation in the research period and
interviewed all participants in Kaizen activities. The author selected Toyota because
many studies regarding Kaizen select it as the leading factory (Shingo 1981; Ōno
1988; Womack et al. 1990), and Takaoka6 is a standard factory that consists of five
units: press and welding, painting, molding, assembly and testing, and quality
control. It is also of the largest scale in terms of the historical cumulative production
quantity. In addition, the author conducted unstructured 2-h follow-up interviews on
January 31, 2014, February 13, 2014, August 29, 2014, and June 24, 2016, at the
Takaoka plant with factory floor engineers from the body shop and a 2-h interview
with Katsuaki Watanabe, former president of Toyota. After these interviews, the
collected data were checked and confirmed by interviewees.
The data cover each Kaizen case from the onset, when the need for improvement
was realized, until the outcome, when improvement effects were measured.7 The

6
Womack et al. (1990) also studies Takaoka.
7
Following D’Adderio (2011), an organizational routine change was deemed to have occurred when an
explicit operational procedure was altered.

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36 Evolut Inst Econ Rev (2017) 14:29–59

Existing notions of Kaizen Questions

(1) Small variability in scale/size (1) Q1 Q1: Size of innovations

(2) Process innovations (2) Q2 Q2: Organizational scope

(3) Mutually independent (3) Q3 Q3: Main players

(4) Contributed mainly by workers Q4: Inter-Kaizen interactions

(4) Q4

Fig. 1 Relationship between the four questions and existing notions of Kaizen

cases were arranged in ascending order as measured by the number of person-hours

required for coordination. Scopes of coordination were counted by sections and
person-hours needed for coordination, and in-house development hours were
eliminated.

4 Analytical framework

From the literature survey, we could see existing notions of Kaizen described as the
‘‘accumulation of small incremental process innovations that have little variability
in scales’’ and ‘‘mutually independent activities that contributed mainly by
workers/operators and their leaders in job shops’’. For further analysis of the field
data, the key research question (Is this existing notion true at all times?) was divided
into four secondary questions:
Q1: What is the size of the Kaizen case in question?
Q2: How many organizational areas8 contributed to the Kaizen case in question?
Q3: Who were the main contributors of the Kaizen case in question?
Q4: Did this Kaizen case in question have coordinating interactions with other
Kaizen cases? If so, which one?
As described in Fig. 1, these four questions are logically linked to the testing of
the abovementioned existing notions of Kaizen.
Question 1 still has a problem: how can we estimate the scale of innovation? Of
course, the scale of investments and outcomes is one aspect of the scale of
innovations (Boer and Gertsen 2003; Imai 1986). However, as innovative activities
such as those of Kaizen always need coordination (Thompson 1965), we also need
to measure these coordination scales. Thus, we need to use the scale of coordination
as the measurement for estimating the scale of each Kaizen activity. Furthermore, it
is necessary that the effort of decision-making for adequate coverage of
stakeholder(s) and problem-solving through coordination with these stakeholders
is done. Therefore, this study focuses on the coordination required to resolve these
problems.

8
For example, operational improvement, process/production engineering, product/design engineering,
etc. could be included in Kaizen projects as innovations.

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Evolut Inst Econ Rev (2017) 14:29–59 37

From this perspective, this paper introduces the concept of the ‘‘scope of
coordination’’ in addition to the existing measurements of innovation scales, such as
the scale of investment and outcomes. Particularly, to measure the scale of each Kaizen
activity as an innovation by the scope of innovation, scopes of coordination are
measured by the number of stakeholders affected by each Kaizen activity, called
‘‘simple scope of coordination’’ in this paper, and also the consumed person-hour for
coordination, called ‘‘weighted scope of coordination’’. Simple scopes of coordination
are calculated simply by the number of sections involved in Kaizen activities, and
weighted scopes of coordination are the person-hours consumed in coordination
efforts. By the weighted scope of coordination, we can differentiate between light and
heavy efforts of coordination. Of course, if participants of Kaizen consume the same
amount of time in each of the seven cases, these two concepts of the scope of
coordination have no meaning. If coordination efforts vary among the seven cases,
then the weighted scope of coordination can prove useful to estimate coordination
efforts required to realize Kaizen. Coordination effort is also one type of the innovation
scale of investment because firms have to pay wages/salaries for the consumed time.
Using specific examples, the scope of coordination was counted on the basis of
organizational sections, such as press and welding, painting, molding, assembly and
testing, quality control, product design engineering, production equipment engi-
neering, purchase, other factories, and other firms. If two operators only in welding
consume 2 person-hours for planning and 3 person-hours for negotiation with each
other, the simple scope of coordination is 1 section and the weighted scope of
coordination is 5 person-hours. Conversely, if two operators in welding, three
operators in molding, one production engineer, two product design engineers, and
four engineers of the equipment company met for a half-hour meeting only once and
Kaizen was realized, then the simple scope of coordination is 5 sections, i.e.,
welding, molding, production engineering, product/design engineering, and equip-
ment company, and the weighted scope of coordination is 6 person-hours.9
These two concepts of the scope of coordination make it possible to answer Questions
1, 2, and 3. This paper counts coordination points, such as the number of meetings, and
plots the sum of the two scopes of coordination in each case. After the calculation of the
scale of Kaizen as innovations by the scopes of coordination, investments, and cost
reduction effects, this study uses the analytical framework (Table 1) to summarize and
analyze the seven cases in the Discussion section (Table 11).

5 Results of the comparative case study

This study concerns Kaizen in competitive factories such as Toyota’s. Hence, this
study uses data collected during a field study of the Toyota Takaoka plant, which
comprises five units: press and welding, painting, molding, assembly and testing,
and quality control. Its organization chart is presented in Fig. 2.
The following cases concern the scope of coordination required to complete
seven Kaizen activities. This study also notes the extent of changes to artifacts, the

9
This is calculated as 12 times 0.5 = 6.

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38 Evolut Inst Econ Rev (2017) 14:29–59

Table 1 An image of the analytical framework summary

Case Q1 Q2 Q3 Q4

Case 1 – – – –
Case 2 – – – –
Case 3 – – – –
Case 4 – – – –
Case 5 – – – –
Case 6 – – – –
Case 7 – – – –

Q1: What is the size of the Kaizen case in question?

Q2: How many organizational areas contributed to the Kaizen case in question?
Q3: Who were the main contributors of the Kaizen case in question?
Q4: Did this Kaizen case in question have coordinating interactions with other K aiz en cases? If so,
which one?

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123
Evolut Inst Econ Rev (2017) 14:29–59 39

scale of investment, and cost reduction effects. Kaizen participants are operators,
team leaders, group leaders, shop-floor engineers, and outer factory engineers, such
as design, purchasing, production equipment, and other firm engineers. Operators
are designated as A, B, or C. Operators A perform standard tasks and sometimes
offer the team or group leader’s ideas for Kaizen initiatives. Operators B are
principally responsible for Kaizen. Operators C perform preventive maintenance.
Kaizen sometimes requires coordination outside the factory—for example, with
design and production equipment engineers at Toyota’s headquarters (squares in
Fig. 2). These engineers develop new products and equipment and make minor or
major alteration(s) to existing models of products and equipment. Factory managers
occasionally suggest Kaizen initiatives as do Operators A and B.
The shop-floor engineer is unique among these participants. Shop-floor engineers
are technical staff located proximate to the shop-floor, not the factory manager’s
staff. They walk around the shop-floor advising operators regarding technical issues,
and if necessary, they coordinate and negotiate with multiple actors to realize
Kaizen. Most have master’s degrees in factory engineering, and all provide support
for changes that affect the shop-floor. They have a wide range of responsibilities
that include quality, cost, manufacturing lead time, and flexibility. In other words,
shop-floor engineers play both specialist and coordinator roles.

5.1 Case 1: The case of door assembly 1

During the assembly of car doors in the body shop, the required parts are transported
from storage to the assembly line and a button is pressed to indicate that it is ready
for assembly. An SOP determines each detailed step in this process and its sequence
of execution. The starting point for improving this process (August 27, 2013) began
when line operators noticed the 1-second delay between the time the button was
pressed and when the ready light switched on. Line operators told the supervisor
that this was wasted time, and together they considered how to reduce it (1 person-
hour). The line supervisor concluded that changing the position of the sensor would
eliminate the delay. After confirming with operators that the repositioning posed no
safety problems, the supervisor asked the plant maintenance section to change it (0.5
person-hours). He also made necessary changes in the process specification list, thus
changing the operation standards. This improvement entailed practically no expense
and reduced manufacturing costs by ¥140,000 annually (August 30, 2013).10 This
Kaizen initiative consumed about 1 person-hour for coordination.
In the case of door assembly 1, the total expenditure was ¥0, simple scope of
coordination was 1 section, i.e., only welding, weighted scope of coordination was
1.5 person-hours, starting point for Kaizen was the line operator, and finishing point
was the line supervisor. Although this Kaizen finished, further change was required
from Toyota’s headquarters due to the start-up for the production of the Hybrid
Harrier (Case 5.2). Two measurements of the scope of coordination transition are
plotted in Fig. 3. The horizontal axis means the points of coordination, where the

10
¥100 yen was approximately US$1 in 2015.

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40 Evolut Inst Econ Rev (2017) 14:29–59

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Fig. 3 Transition of the scope of coordination in Case 5.1

Table 2 Summary of case 1 based on analytical framework

Case Q1 Q2 Q3 Q4

Case Using 1.5 person-hours and 0 yen, 1 section in Workers (line operators) Lead to
1 140,000 yen cost reduction Takaoka and line supervisor the Case
factory 2

scope of coordination was calculated in this case description. Table 2 displays a

brief summary of this case.

5.2 Case 2: The case of door assembly 2

While the improvement in the door assembly process was underway, the plant was
preparing to launch the Hybrid Harrier. This meant that its production volume was
set to increase, which created pressure to reduce takt11 time further. Since the

11
It is a kind of Japanese English used in factories. Takt time means the time necessary to assemble one
unit.

123
Evolut Inst Econ Rev (2017) 14:29–59 41

number of assembled models would also increase, the increased number of parts in
the storage area had to be considered. Two targets had to be achieved: reduced takt
time and improved flexibility.
This impetus for Kaizen was communicated by the group manager to all line
supervisors (chief leaders), group leaders, and team leaders (September 2, 2013).
The line supervisors decided that their knowledge was insufficient for an
improvement of that scale, so they discussed with other shop-floor employees
who had special responsibility for improvement. The discussion revealed that after
placing the parts at the assembly line, operators had to take several steps to press the
button that indicated that parts were ready for assembly. These steps were wasted
motion, and the line supervisors decided that they could eliminate such steps by
repositioning the button nearer the parts storage area. This discussion consumed
about 2 person-hours. The plant maintenance team, however, indicated that this
repositioning would require electrical rewiring, which entailed expenses. This
prompted the involvement of shop-floor engineers, who concluded that the cost
could be reduced significantly if the button and the rope switch used for changing
between off/on positions were connected through the ceiling (0.5 person-hours). The
line operators agreed, and in addition to reducing takt time, manufacturing costs
were reduced by ¥290,000 annually after ¥30,000 in expenses (September 10,
2013).
In this case, the total expenditure was ¥30,000, the simple scope of coordination
was 2 sections—welding and shop-floor engineer room—weighted scope of
coordination was 2.5 person-hours, starting point for Kaizen was the group
manager, followed by a meeting of line supervisors and a revision of the draft plan
for Kaizen by shop-floor engineers. The finishing point was the line operators. This
Kaizen succeeded and the Hybrid Harrier was launched. This success made clear
Takaoka’s manufacturing strategic direction of ‘‘multi-product in less line’’ (Case
5.3). Two measurements of the scope of coordination transition are plotted in Fig. 4;
Table 3 displays a brief summary of this case.

5.3 Case 3: The case of door assembly 3

Although the Takaoka plant successfully launched production of the Hybrid Harrier,
the plant management still faced problems. Headquarters had decided that the
facility needed to increase its flexibility and implement a production plan for multi-
product processes with many operational constraints. This plan called for further
improvement in the manufacturing process and became the impetus for Kaizen.
Shop-floor engineers concluded that there were two major problems to solve: the
parts storage area would be insufficient for the greater numbers of model parts, and
the operations required to transport parts from the storage area would increase
(September 11, 2013). At the time, shop-floor engineers from another plant were
working on a project at the Takaoka plant and solving these problems was entrusted
to them. Weekly meetings consumed approximately 4 person-hours.
Although many shop operators with different responsibilities were involved,
insufficient storage space was the most urgent problem in the meetings, for which
one proposed solution. However, shop-floor engineers calculated that this solution

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42 Evolut Inst Econ Rev (2017) 14:29–59

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Fig. 4 Transition of the scope of coordination in Case 5.2

Table 3 Summary of case 2 based on analytical framework

Case Q1 Q2 Q3 Q4

Case Using 2.5 person-hours and 30,000 yen, 2 sections in Workers and shop- Lead to the
2 290,000 yen cost reduction Takaoka floor engineers Case 3
factory

to increase the factory’s parts transport capacity would raise manufacturing costs by
¥1,730,000. Then line operators A devised their plan, which envisioned changes in
how parts were transported. Building upon this suggestion (0.5 person-hours of
coordination), shop-floor engineers proposed a radical reorganization of the storage
area, with parts arranged by frequency of use and enlarged component storage
boxes, which they said would eliminate the need for enlarged transportation
capacity. Computer-aided design (CAD) systems were also involved in the
planning. Negotiations with equipment suppliers (1 person-hour) resulted in
manufacturing costs falling by ¥2,160,000 annually after an expenditure of
¥300,000 (September 20, 2013). In this case, the quantum of investment and
component change were moderate.

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Evolut Inst Econ Rev (2017) 14:29–59 43

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Fig. 5 Transition of the scope of coordination in Case 5.3

In the case of door assembly 3, the total expenditure was ¥300,000, simple scope
of coordination was 3 sections—welding, shop-floor engineer room, and equipment
supplier—and weighted scope of coordination was 5.5 person-hours. The starting
point for Kaizen was Toyota’s headquarters and the shop-floor engineer room
comprised the project team. A draft plan made by the shop-floor engineers was
revised by operators, and the finishing point was the introduction of new equipment.
Two measurements of scope of coordination transition are plotted in Fig. 5; Table 4
displays a brief summary of this case.

5.4 Case 4: Kaizen involving component change

After the door subassembly is complete, doors must be attached to the car body, an
operation requiring bolts, nuts, and nail guns. The number of bolts and nuts had also
increased, and there were five types for each car model. Operators became
concerned regarding the increased likelihood of picking up the wrong bolt or nut.
They informed the shop-floor engineers regarding the required improvement
(August 2013), and the engineers agreed that picking up the wrong bolt or nut would
diminish product quality. They suggested reducing the number of bolt and nut types.
This conversation consumed 1 person-hour. Achieving commonality of parts,

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44 Evolut Inst Econ Rev (2017) 14:29–59

Table 4 Summary of case 3 based on analytical framework

Case Q1 Q2 Q3 Q4

Case Using 2.5 person-hours and 3 sections, Takaoka Workers, shop-floor Lead to
3 300,000 yen, 2,160,000 yen factory and an engineers, and an the
cost reduction equipment-maker equipment-maker Case
6

however, meant that major characteristics, such as strength, length, and width, of the
bolts and nuts had to be changed and shop-floor engineers had to gain the consent of
product engineers. After numerous negotiations (4 person-hours) with the product
design department, the number of bolt and nut types was reduced to two. After
negotiations with the purchasing department (2 person-hours), it was agreed that
buying large quantities of common parts would reduce total costs (September 30,
2013). Line operators accepted the proposed improvement, which was extended to
two other assembly processes.
The result, besides improved quality, was reduced manufacturing costs by
¥3,300,000 annually without expense outlays. During this Kaizen activity,
investment was zero. In this case involving component change, the total expenditure
was ¥0, simple scope of coordination was 4 sections—welding, shop-floor engineer
room, product design division, and purchasing division—and weighted scope of
coordination was 7 person-hours. The starting point for Kaizen was a line operator
who had a talk with a shop-floor engineer. And coordination with the product design
and purchasing divisions was done by shop-floor engineers. The finishing point was
acceptance by the line operators. Two measurements of scope of coordination
transition are plotted in Fig. 6; Table 5 displays a brief summary of this case.

5.5 Case 5: A case of quality improvement of the painting process

Quality control at the Takaoka plant revealed that one out of 100 units had painting
defects, which prompted shop-floor engineers to conduct a chemical analysis (2
person-hours). Results showed that the defective paint contained foreign matter
from imperfect washing of the surface before the paint was applied (August, 2013).
The cause of the problem was communicated to the assembly and paint shops. At
the request of the shop-floor engineers, paint shop operators increased the washing
time, but that change produced no improvement. This coordination took 2 person-
hours. A component analysis revealed that the paint contained a chemical used in
markers that operators from the previous process, the body shop, used to indicate
dates on the surface of the steel or to mark spots where parts would be welded. This
finding was discussed in a meeting in which shop-floor engineers from all plant
shops participated, including representatives of the marker producer. The discussion
continued for 2 h (10 person-hours), during which time tests revealed that a
different marker without the offending chemical could be used, and representatives
of the marker producer were asked to provide it. The operators accepted this plan
(September 20, 2013). The time spent reworking defective paint was reduced by

123
Evolut Inst Econ Rev (2017) 14:29–59 45

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Fig. 6 Transition of the scope of coordination in Case 5.4

Table 5 Summary of case 4 based on analytical framework

Case Q1 Q2 Q3 Q4

Case Using 7 person-hours and 0 4 sections in Toyota Workers, shop-floor engineers, –

4 yen, 3,300,000 yen cost including design product engineers, and
reduction eng purchasing division

300 h, manufacturing cost was reduced by ¥1,560,000 annually, and quality was
improved with no outlay for expenses. Paint quality was improved and costs were
reduced with zero investment.
In the case of quality improvement of the painting process, the total investment
was ¥0, simple scope of coordination was 6 sections—quality control, assembly,
paint shop, welding, shop-floor engineer room, and marker producer—and weighted
scope of coordination was 14 person-hours. Kaizen was started by quality control
engineers who informed the assembly and paint shops. Shop-floor engineers in three
shops—assembly, paint, and welding—were called out, and a meeting was
convened. The finishing point was acceptance by line operators. Two measurements
of the scope of coordination transition are plotted in Fig. 7; Table 6 displays a brief
summary of this case.

123
46 Evolut Inst Econ Rev (2017) 14:29–59

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Fig. 7 Transition of the scope of coordination in Case 5.5

Table 6 Summary of case 5 based on analytical framework

Case Q1 Q2 Q3 Q4

Case Using 14 person-hours and 0 6 sections, Takaoka Workers, shop-floor –

5 yen, 1,560,000 yen cost factory and a marker- engineers, and marker-
reduction producer producer

5.6 Case 6: A case of large-scale equipment change (sliding puzzle)

During body assembly, the hood12 is attached to the car body. There are 10 storage
areas for hood components, from which two operators carry interior and exterior
components to the assembly line (Fig. 8). Since the hood components are large,
more parts cannot be stored in the same area, which would create problems if the
number of assembled car models per assembly line was increased. An increase in
this number, however, was inevitable because headquarters had mandated more
flexibility of the production line. Therefore, the manager of the body shop instructed
the shop-floor engineers to find ways to accommodate more parts (April, 2013).

12
It is a hinged cover over the engine.

123
Evolut Inst Econ Rev (2017) 14:29–59 47

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Fig. 8 Hood assembly before improvement

Fig. 9 Hood assembly after improvement

While line supervisors were planning improvements to the storage area (1

person-hour), the shop-floor engineers heard that a similar problem had been solved
at Toyota’s Tahara plant and went there to learn the details (6 person-hours). At the
Tahara plant, they discovered that using automated guided vehicles (AGVs) solves
the problem of limited storage space in plant management. However, the Takaoka’s
shop-floor engineers thought that the AGVs were used inefficiently. Upon returning
to their plant, they discussed the problem with line supervisors (5 person-hours).
The meeting yielded a plan, proposed by the line supervisors and expanded upon by
the shop-floor engineers, whereby AGVs could be used more efficiently if they
moved along routes that resembled a sliding puzzle (Fig. 9). However, opposition

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48 Evolut Inst Econ Rev (2017) 14:29–59

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arose among the operators because they would regularly need to install recharged
AGV batteries. Shop-floor engineers negotiated with the AGV manufacturer (3
person-hours), who agreed to develop a model with a battery that recharged
automatically. The investment in equipment was ¥20 million, but now eight
different car models could be assembled on the same line compared with two before
the change (November, 2013). The facility’s annual manufacturing cost was
reduced by ¥20,000,000.
In this case of the sliding puzzle, the total expenditure was ¥20,000,000, simple
scope of coordination was 4 sections—welding, shop-floor engineer room, Tahara
plant, and AGV maker—and weighted scope of coordination was 15 person-hours.
The starting point for Kaizen was Toyota’s headquarters, and line supervisors were
unable to make improvements. After visiting the Tahara plant for benchmarking, the
shop-floor engineers changed Tahara’s original idea and even coordinated with the
AGV maker and line operators. The finishing point was acceptance by line
operators. Two measurements of the scope of coordination transition are plotted in
Fig. 10; Table 7 displays a brief summary of this case.

123
Evolut Inst Econ Rev (2017) 14:29–59 49

Table 7 Summary of Case 6 based on analytical framework

Case Q1 Q2 Q3 Q4

Case Using 15 person-hours and 4 sections in Toyota Workers, shop-floor Lead to

6 20,000,000 yen, 20,000,000 yen factories and an engineers, and the
cost reduction AGV-maker AGV-maker Case 7

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Fig. 11 Side members’ assembly before automation

5.7 Case 7: A case of process automation

The side panel13 is an exterior automotive component and the largest of all
automotive components. These are usually transported by a forklift from a rotating
pallet to the assembly line (Fig. 11). The operators thought that this process could
be made more practical.
An operator informed shop-floor engineers, and they identified the problem: it
was inefficient to store the largest components on round rotating pallets (September
4, 2013). These engineers had been involved in launching the Hybrid Harrier and
took the initiative to find funding and negotiate with two equipment suppliers for the
provisions of robots and cranes that could lift the large and heavy components.
These robots would eliminate the need for round rotating pallets and provide an
opportunity to use rectangular pallets, shortening the distance operators had to walk.
However, the heavy components had to be lifted during line assembly, for which it
was proposed to suspend an inexpensive crane from the ceiling. This project

13
It is also called the ‘‘side member’’.

123
50 Evolut Inst Econ Rev (2017) 14:29–59

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Fig. 12 Side members’ assembly after automation

required 10 person-hours. Responding to the (press) logistics section’s concern that

scheduling component deliveries would become overly complicated, shop-floor
engineers created an operation guidance board that displayed all relevant
information (1 person-hour). To acquire the ¥52 million budgets to realize Kaizen,
one of the shop-floor engineers negotiated with the production engineering
department (6 person-hours). Together, these improvements (Fig. 12) reduced
yearly manufacturing costs by ¥20 million, with improved flexibility, reduced
inventory, and shorter manufacturing lead time (January 2014).
For these Kaizen activities, ¥52,000,000 was needed and the simple scope of
coordination was 6 sections—welding, shop-floor engineer room, logistics section
of press division, production engineering division, and two equipment makers—and
weighted scope of coordination was 17 person-hours. The starting point for Kaizen
was a line operator who had a talk with the shop-floor engineer. Coordination with
the equipment maker and production engineering division was done by shop-floor
engineers. The finishing point was the introduction of new equipment. Two
measurements of the scope of coordination transition are plotted in Fig. 13; Table 8
displays a brief summary of this case.

6 Discussion

From the abovementioned cases, we can find that innovations through Kaizen have a
wide range of parameters. For example, investments range from ¥0 (Cases 1, 4, and
5) to over 1 million yen (Cases 6 and 7). Kaizen consists of small and large
incremental innovations in investments, cost reduction effects, and scopes of
coordination. A summary of the other scales in these seven cases is presented in

123
Evolut Inst Econ Rev (2017) 14:29–59 51

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Fig. 13 Transition of the scope of coordination in Case 5.7

Table 8 Summary of Case 6 based on analytical framework

Case Q1 Q2 Q3 Q4

Case 7 Using 17 person-hours and 6 sections, Workers, shop-floor engineers, –

52,000,000 yen, 20,000,000 Toyota and production/equipment engineers,
yen cost reduction equipment and equipment makers
makers

Table 9, with variances in investments and cost reductions in the seven cases.
Although cases 1, 4, and 5 consume no actual investment,14 the scale of investment
between cases 2 and 3 has a ten-fold gap, between cases 3 and 6 has a 66.7 times
gap, and that between cases 6 and 7 has a 2.6 times gap. Cost reduction effects have
a ten-fold gap (between case 1; cases 2 and 3; case 4; case 5), and even more ten-
fold gaps (from case 3–5 to case 6–7).15 Moreover, according to Spearman’s rank
correlation coefficient, in the Toyota case (Table 10), we can see a high correlation
between the two scopes of coordination and between the weighted scope of
14
Of course, it is a required consideration that weighted scope of coordination is one kind of investment.
15
From these cases, we can say that Kaizen consists of a variable scale of innovations and we can
measure this by the scope of coordination in addition to the investment amount and cost reduction effects.

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52 Evolut Inst Econ Rev (2017) 14:29–59

Table 9 Brief summary of scales of innovation in seven cases

Case Simple scope of Weighted scope of Investment Cost reduction
coordination coordination

Case 1 1 1.5 ¥0 ¥140,000

Case 2 2 2.5 ¥30,000 ¥290,000
Case 3 3 5.5 ¥300,000 ¥2,160,000
Case 4 4 7 ¥0 ¥3,300,000
Case 5 6 14 ¥0 ¥1,560,000
Case 6 4 15 ¥20,000,000 ¥20,000,000
Case 7 6 17 ¥52,000,000 ¥20,000,000

Table 10 Spearman’s rank correlation coefficient of Toyota case

Simple scope of Weighted scope of Investment Cost
coordination coordination reduction

Simple scope of 1
coordination
Weighted scope of 0.909* 1
coordination
Investment 0.283 0.593 1
Cost reduction 0.679 0.883* 0.692 1

N = 7; * p \ .05

coordination and performance improvement, such as cost reduction, but not between
investment and the scopes of coordination (Table 10). From these findings, we can
infer that the scope of coordination is a useful measure of the scale of innovation by
Kaizen.
Moreover, even in individual cases, many actors’ activities interact with each
other and simple/weighted scopes of coordination continue to change because of
these interactions. These changes vary on a case-by-case basis. For example, some
cases signify that the scopes of coordination remain small (cases 1 and 2), and cases
3 and 4 show that sometimes scopes of coordination increase gradually. In case 6,
simple scopes of coordination remain moderate but weighted scopes of coordination
escalate. In addition, case 4 shows small Kaizen activities occasionally become
large at some point and vice versa (case 7). Furthermore, Kaizen could be changed
and sometimes eliminated through coordination (as in case 5).
Next, Kaizen sometimes requires product design change (case 4) and sometimes
needs not only operators but also engineers (cases 3–7). Additionally, some Kaizen
activities are under the same concept of ‘‘multi-products in less line’’ policy (cases
1, 2, 3, 6, and 7) and others not so (cases 4 and 5). Based on the analytical
framework (Table 1), we can observe these abovementioned variances of Kaizen
(Table 11). From these facts, we could say that the existing notion of Kaizen as an
accumulation of incremental innovations that (1) have little variability in scales, (2)
are categorized only as process innovation, (3) are mutually independent innovative

123
Evolut Inst Econ Rev (2017) 14:29–59 53

Table 11 Summary of seven cases based on the analytical framework

Case Q1 Q2 Q3 Q4

Case Using 1.5 person-hours and 1 section in Workers (line operators) Lead to the
1 0 yen, 140,000 yen cost Takaoka fatory and line supervisor Case 2
reduction
Case Using 2.5 person-hours and 2 sections in Workers and shop-floor Lead to the
2 30,000 yen, 290,000 yen Takaoka factory engineers Case 3
cost reduction
Case Using 2.5 person-hours and 3 sections, Takaoka Workers, shop-floor Lead to the
3 300,000 yen, 2,160,000 factory and an engineers, and an Case 6
yen cost reduction equipment-maker equipment-maker
Case Using 7 person-hours and 0 4 sections in Workers, shop-floor –
4 yen, 3,300,000 yen cost Toyota including engineers, product
reduction design eng engineers, and purchasing
division
Case Using 14 person-hours and 6 sections, Takaoka Workers, shop-floor –
5 0 yen, 1,560,000 yen cost factory and a engineers, and marker-
reduction marker-producer producer
Case Using 15 person-hours and 4 sections in Workers, shop-floor Lead to the
6 20,000,000 yen, Toyota factories engineers, and AGV- Case 7
20,000,000 yen cost and an AGV- maker
reduction maker
Case Using 17 person-hours and 6 sections, Toyota Workers, shop-floor –
7 52,000,000 yen, and equipment engineers, production/
20,000,000 yen cost makers equipment engineers, and
reduction equipment makers

activities, and (4) are driven only by workers/operators, work-teams, and their
leaders is not completely adequate to realize Kaizen activities in Toyota (Table 11).
Furthermore, due to the emergent nature of Kaizen, sometimes shop-floor
engineers are required to follow up the Kaizen. For instance, if Kaizen affects only
one operation, as in case 1, involving small improvements and low technical
complexity, then the authority to initiate and implement changes is delegated to
shop-floor operators and group leaders, who can reasonably predict what will be
affected (e.g., safety) and can coordinate with interested parties on a small scale.
However, as in cases 2 and 3, which involve equipment changes, line operators and
supervisors must rely on shop-floor engineers, who possess the requisite technical
knowledge and can drive improvements. In the last four cases, changes involve
different functional departments or sections in the plant and external firms. In these
instances, shop-floor engineers are responsible for coordinating with all parties.
Depending on the circumstances, shop-floor engineers are both improvement
experts and coordinators.
In sum, one issue in Kaizen management and continuous improvement from the
innovation perspective is to determine the extent of coordination required to
implement Kaizen. Consistently, Toyota seems able to assess the extent of a Kaizen

123
54 Evolut Inst Econ Rev (2017) 14:29–59

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Fig. 14 Interactions among the seven cases

initiative when it is introduced.16 Moreover, after deciding what simple scope of

coordination is sufficient, Toyota’s shop-floor engineers take over coordination,
switching to the weighted scope of coordination in the seven cases. In addition,
decision-making and coordination activities could also be seen in the interaction of
the seven Kaizen cases (Fig. 14). Particularly, case 1 finished with a change of SOP,
but further change was needed to launch the Hybrid Harrier and a shop-floor
engineer served the purpose (case 2). Because of the production start-up success, the
Takaoka plant implemented a manufacturing strategy of ‘‘multi-product in less
line,’’ with multiple actors contributing, including shop-floor engineers (cases 3, 6,
and 7) (Fig. 14).
This fact raises the next question: Why are shop-floor engineers able to make this
decision? In all of the Takaoka plant’s shops, shop-floor engineers work near the
plant floor while acting as both specialists and coordinators, which is why this
organizational form is often referred to as staff-in-line.17 This differs from a
traditional ‘‘staff and line’’ organizational structure in that the ‘‘staff and line’’
organization mainly advises the line’s upper-level managers (Mintzberg 1980).18
Comparatively, staff-in-line advises lower levels of the organization, such as
workers/operators, and coordinates with other participants depending on their own
ability and responsibility. There are two main characteristics of the staff-in-line
organization at Toyota. First, employees are physically and organizationally near
the shop-floor/production line and normally act as its technical advisers. Second,
they possess the technical knowledge required to coordinate with a range of
engineers when the impetus for Kaizen is large enough to require coordination.
These two characteristics enable smooth coordination among different functions
16
Of course, it is doubtful that Toyota almost always determines the exact extent of coordination
necessary for Kaizen.
17
The term ‘‘line’’ here means both organizational positions: line and production line.
18
Mintzberg (1980) calls an organization resembling staff-in-line ‘‘the Divisionalized Form organiza-
tion’’ (p. 335). However, staff-in-line is nearer the plant floor than in Mintzberg’s model and is unique in
serving two roles.

123
Evolut Inst Econ Rev (2017) 14:29–59 55

that is often required when an organizational routine is changed with a process or

product improvement. The staff-in-line form of organization minimizes the number
and intensity of internal conflicts that often accompany changes. Since staffs-in-line
are organizationally and physically near the plant floor, they naturally maintain
contact and communication with line operators and team leaders who call upon their
technical knowledge. The staff-in-line’s knowledge and experience enable them to
understand how and where changes in organizational routine occur.
Traditionally, descriptions of organization structure, such as line and staff, were
rooted in military terms (Simon 1947). Ever since Gulick and Urwick (1937) studied
how the line and staff organization facilitates organizational coordination, scholars
have continued to illuminate the importance of coordination patterns (Barnard 1938)
and organizational structure (Mintzberg 1980; March and Simon 1958). Addition-
ally, Simon (1947) noted that technical knowledge is a prerequisite for complex
decision-making. Moreover, technical knowledge along with information collected
through constant contact with the plant floor helps the staff-in-line reduce the
intensity of conflicts among functional departments and guide them toward common
organizational goals—a process that this study defines as coordination.
A shared technical language (March and Simon 1958) facilitates the coordination
function of staff-in-line because large changes in routine affect other technical
departments, such as product/design engineering or manufacturing/equipment
engineering (e.g., cases 4 and 6). At Toyota, staff-in-line apparently has authority
to modify changes suggested by other horizontal functional departments or by
vertical upper levels of the organization (e.g., cases 3, 5, and 6). These changes
accommodate realities on the plant floor, which is why operators accept them with
little opposition. Thus, staff-in-line can coordinate horizontally and vertically in an
organization. Changes suggested on the plant shop-floor are modified and also
adjusted during coordination to reflect shared organizational goals. These modifi-
cations are accepted on the shop-floor because it is understood that they originate
from experts. In other words, the shop-floor has authorized the staff-in-line to make
decisions related to improvement, which eliminates opposition to these decisions
(e.g., cases 2, 4, 5, and 6).
Thus, the effectiveness of coordination by the staff-in-line organization is
determined by the technical knowledge of shop-floor engineers and accessibility to
shop-floors and has four characteristics at Toyota:
• collect information to facilitate potential Kaizen improvements;
• assess what elements of the organization are affected by proposed changes in
routine;
• communicate between technical specialists; and
• modify changes proposed by other parties without generating conflict.

However, a staff-in-line organization does not always guarantee sufficient

coordination for Kaizen because coordinators need to be trusted by the operators,
team leaders, and group leaders. Former president of Toyota, Katsuaki Watanabe,
emphasized this point during our interviews. ‘‘To realize Kaizen, engineers have to
be nice, kind, and respect shop-floor people. Additionally, staff-in-line could help

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56 Evolut Inst Econ Rev (2017) 14:29–59

people on the plant floor with knowledge and wisdom.19’’ Case study evidence
suggests that cultivating the beginnings of Kaizen requires coordination of a defined
extent, and the extent changes with circumstances. Furthermore, estimating its
extent and assembling the necessary participants are required for Kaizen. Hence, a
staff-in-line organizational structure is effective in managing Kaizen as innovation
in Toyota.
In this study, we have seen the actual case of continuous improvement (Kaizen)
and found that Kaizen sometimes deviates from its present definition. Small changes
in organizations become radical and episodic when positive feedback exists in
complex systems (Plowman et al. 2007; Weick and Quinn 1999), and Kaizen
activities also have that kind of chain effect inside and among the cases. Some
Kaizen activities were initiated by operators, and after completing one Kaizen
activity, some actor, such as Toyota’s headquarters, requested more changes (e.g.,
cases 1 and 3) or vice versa (e.g., pilot preparation for the production of the Hybrid
Harrier). In summary, this study explains the nature of Kaizen as innovation and
also partly discusses how to manage it.
If changes have the possibility to evoke further changes, then coordination
among these changes is needed. Fujimoto (2007) notes that Toyota generates both
large and small changes, such as R&D and continuous improvement in operations,
frequently and that even small changes require coordination between vertical
hierarchies in manufacturing or between horizontal functional departments.
According to Fujimoto (1999), Toyota’s manufacturing processes by static
organizational routines have been changed through Kaizen repeatedly, and Toyota’s
ability to generate, to select, and to implement new and improved organizational
routines was estimated to exist at the macro-level of organization. However, it
remains unclear how this ability is supported at the micro-level of actors in the
organization, i.e., the principles underlying Toyota’s innovative ability by changing
routines has not been investigated completely. This paper clarifies that coordination
systems in Toyota could be a part of the mechanisms that underlie Toyota’s Kaizen
ability.

7 Concluding remarks

Existing research views Kaizen (continuous improvement) as a set of small,

mutually independent, and incremental process innovations made repeatedly by
workers/operators and their leaders. However, ‘‘Whether this conventional notion of
Kaizen always matches with the characteristics of actual firms’ Kaizen or not?’’ has
not been sufficiently investigated through in-depth empirical research. To answer
the abovementioned research question, this paper conducted a series of in-depth
field studies at one of the main factories of the Toyota Motor Company, Takaoka
plant. Results suggest that previous views/notions of Kaizen do not entirely accord
with actual Kaizen activities. This study, for instance, found that Kaizen sometimes
requires small changes in product design and the adequate scale of coordination

19
Interview conducted on February 13, 2014.

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Evolut Inst Econ Rev (2017) 14:29–59 57

depends on the case, and the extent of that coordination among participants of
Kaizen changes with each situation. Additionally, the ability to determine that
extent of coordination and assemble the relevant participants is important for the
success of innovations through Kaizen.20 In this situation, some coordination
activities cannot be handled only by operators and their leaders, and shop-floor
engineers play a crucial role in integrating Kaizen activities of different sizes such
as coordination scopes into one process. Furthermore, shop-floor engineers have a
staffs-in-line organizational structure serving dual roles of technical experts and
coordinators for Kaizen. In other words, effective Kaizen, as a series of incremental
innovations of various sizes and characteristics, may need a certain organizational
design that facilitates adequate coordination among individual Kaizen activities.
However, some issues remain for future research. First, it is clearly important for
staff-in-line organizations to gain the trust of workers on the plant floor, but the role
of management in this trust acquisition process remains unclear. Second, we were
not able to analyze how shop-floor engineers in staffs-in-line organizations
influence factories’ capabilities and performance, other than in terms of cost
reduction. Investigating the role of staff-in-line in industries other than the
automotive industry is also an important avenue for future research.

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