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Abstract
In today’s fast-changing and dynamic business environment, the pressures on
manufacturing companies to compete on the global arena have been intensified.
Production is challenged to handle and benefit from ever increasing competitions in
terms of cost, delivery capability, and flexibility. In order to gain and sustain the
competitive advantage under such circumstances, strong and constant development of
production must be ensured not only by continuous improvement but also by radical
improvement.

Continuous improvement or called Kaizen has been an established approach for

production improvement. The concept of Kaizen is well described and many tools and
methods that support Kaizen have been developed and widely applied in industry.
However, the need and importance of radical improvement in production or called
“Kaikaku” in Japanese are still limitedly recognized at companies. Moreover,
knowledge of structured support that facilitates an effective and efficient execution of
Kaikaku has been insufficiently developed.

The purpose of the research presented in this thesis is to develop models and methods
that address the need and importance of Kaikaku in production and facilitate the
realization of it.

The research is comprised of a literature study and three case studies. The literature
study was conducted in order to structure the concept of Kaikaku. As a result of the
study, a conceptual framework of Kaikaku was developed. The three case studies were
conducted to identify influential factors in realizing Kaikaku. Both Swedish and
Japanese companies were studied and analyzed. These case studies led to identify a
way of realizing a certain type of Kaikaku. Some characteristics of organization setting
were also found influential to realization of Kaikaku.
Acknowledgements
The research project “Kaikaku in production” started in the corporation with Nätverket
för Produktionsutveckling (NPU), Mälardaren University (MDH), and Deva Mecaneyes
AB. I would like to start to thank NPU, especially Mats Ågren - a chairman of NPU who
raised the opportunity to initiate the research project.

I would like to send great appreciation to my supervisors, Professor Mats Jackson and
Adjunct Professor Monica Bellgran. Their insights, comments, guidance,
encouragement, and patience have been invaluable help in doing the research work,
including writing the papers and licentiate thesis. I would also like to thank my
employer Deva Mecaneyes AB, especially Mattias Lövemark, Magnus Welén, and Ann-
Sofie Eriksson who have supported the research project.

Special thanks must be sent to my personal mentor, Mikami Hiroyuki. With his
abundant experience of developing and operating production based on Toyota
Production System, he taught me important principles related to managing and
improving production. I would not have learned so much without being able to work
with him.

I would like to thank all the people in our research group and in the companies
involved in this research. It is too many to mention all the names, but they provide
valuable inputs to the research and their support has been encouragement to me.

Lastly, I would like to thank my family. Especially Sara, my wife and a part of the reason
why I am living in Sweden, thank you very much for all your support and
encouragement. Now I wish you good luck for completing your PhD thesis. And Hugo,
my son, thank you for giving more joy and meaning to my life.
Publications

Appended Papers
Paper A Yamamoto, Y. and Bellgran, M. (2009), “Kaizen and Kaikaku for competitive
production”, Mälardalen University

Paper B Yamamoto, Y. and Bellgran, M. (2010), "Fundamental mindset that drives

improvements towards lean production", Assembly Automation, Vol. 30, No.
2, pp. 124-130.

Paper C Yamamoto, Y. and Bellgran, M. (2009), "Production management

infrastructure that enables production to be innovative", 16th Annual
International EurOMA Conference, Göteborg, Sweden.

Additional Publications
Yamamoto, Y. and Bellgran, M. (2008), "Guidelines for increasing skills in Kaizen shown
by a Japanese TPS Expert at 6 Swedish Manufacturing Companies", The 18th
International Conference on Flexible Automation and Intelligent Manufacturing,
Skövde, Sweden.

Yamamoto, Y., Bellgran, M., and Jackson, M. (2008), "Kaizen and Kaikaku– Recent
challenges and support models", Swedish Production Symposium SPS 2008,
Stockholm, Sweden.
Table of Contents
1 INTRODUCTION .......................................................................................................1

1.1 BACKGROUND ...................................................................................................... 1

1.2 PROBLEM STATEMENT ............................................................................................ 4
1.3 OBJECTIVE OF THE RESEARCH ................................................................................... 5
1.4 RESEARCH QUESTIONS ............................................................................................ 5
1.5 DELIMITATIONS..................................................................................................... 6
1.6 OUTLINE OF THE THESIS .......................................................................................... 7

2. RESEARCH METHODOLOGY .....................................................................................9

2.1 SCIENTIFIC APPROACH ............................................................................................ 9

2.2 RESEARCH DESIGN ............................................................................................... 10
2.3 EMPIRICAL DATA COLLECTION – CASE STUDY ............................................................. 12
2.4 RESEARCH PROCESS ............................................................................................. 13
2.5 ESTIMATION OF THE QUALITY OF THE RESEARCH ........................................................ 18

3 FRAME OF REFERENCE ............................................................................................21

3.1 PRODUCTION SYSTEM .......................................................................................... 21

3.1.1 A systems view on production ................................................................... 21
3.1.2 Competitiveness of a production system .................................................... 22
3.2 IMPROVEMENT OF A PRODUCTION SYSTEM ............................................................... 23
3.2.1 Kaizen ......................................................................................................... 24
3.2.2 Kaikaku ....................................................................................................... 25
3.4 REALIZATION OF KAIKAKU ..................................................................................... 30
3.4.1 When to initiate Kaikaku ............................................................................ 31
3.4.2 Who to conduct Kaikaku............................................................................ 31
3.4.3 How to realize Kaikaku – the systematic approach .................................... 31
3.4.4 How to realize Kaikaku - the contingency and learning approach ............. 35
3.5 SUMMARY ......................................................................................................... 39

4. THE RESEARCH RESULTS AND ANALYSIS ................................................................41

4.1 THEORETICAL AND EMPIRICAL FINDINGS ................................................................... 41

4.1.1 The literature study .................................................................................... 41
4.1.2 Case study A – practice of Lean transformation ......................................... 42
4.1.3 Case study B – Kaizen practice at Swedish and Japanese companies ........ 43
4.1.4 Case study C – organization setting that facilitates Kaikaku ..................... 44
4.2 ANALYSIS OF THE FINDINGS ................................................................................... 47
4.2.1 A conceptual model of Kaikaku .................................................................. 47
4.2.2 A practical way of driving Lean transformation ......................................... 53
 4.2.3 Production management and organizational setting that can increase the
likelihood of realizing radically innovative Kaikaku. ............................................... 58
4.4 SUMMARY ......................................................................................................... 62

5. DISCUSSIONS AND CONCLUSIONS ......................................................................... 63

5.1 FULFILLMENT OF THE RESEARCH OBJECTIVE ............................................................... 63

5.2 REFLECTION ON THE SCIENTIFIC AND INDUSTRIAL CONTRIBUTION .................................. 66
5.3 QUALITY OF THE CONDUCTED RESEARCH .................................................................. 67
5.4 FUTURE RESEARCH ............................................................................................... 68

REFERENCE ............................................................................................................... 69
 1 Introduction
This chapter is an introduction, and starts with the
background of the research, where the needs, potential,
and challenges of “Kaikaku” - radical improvement in
production - are described. Then, the research objective
and research questions are presented. Finally, the
delimitation of the research and the outline of the thesis
are described.

1.1 Background
In today’s business environment, the pressures on manufacturing companies to
compete on the global arena have been increasingly intensified. Requirements on
production capabilities such as quality, cost, delivery capability, and flexibility have
become severe to an ever greater extent. Moreover, changes inside and outside of
production have become more dynamic and complex. Production is challenged to
handle and benefit from, for example, high fluctuations of production volumes and
variances, shorter product life cycles, shorter lead time of product realization, rapid
technological advancement, corporate mergers and acquisitions, and changes of laws
and regulations. Under such circumstances, companies must ensure constant and
strong development of the production. Such development is especially necessary for
the companies that have the production in high wage countries.

In Sweden, one of the high wage countries, manufacturing industry has been vitally
important for the country’s growth and welfare. The industry accounts for more than
half of the nation’s exports. Around 700,000 people work in this sector, and an
estimated 1.4 million people are indirectly dependent on the industry (IVA, 2005a). For
many years, the industry had experienced strong production development.
Manufacturing companies were active in developing and transferring new technologies
or new work methods to production. Examples included NC machines, CAD/CAM
systems, industry robots, time measurement methods, and automation. In the 1980’s,
the radically new concept of work organization in production called “the result-
oriented team” was invented and applied widely in the industry, which drew the
world’s attention.

Despite the efforts mentioned and developments made in the past, it has been said
recently that in the last two decades at least, the development of production has been
neglected at many Swedish manufacturing companies (Kinnander, 2005; Axelsson and
Tangen, 2008). The situation can be described as follows:

1
• The potential and importance of production have been underestimated by
company management and society representatives. They consider that enough
investment has already been made in industrial production, and that more focus
should now be paid to developing new products and new industry branches such as
IT, biotechnology, and nanotechnology. This view has contributed extensively to
the trend of outsourcing and the re-localization of production to low wage
countries.
• The competence and number of production engineers have been significantly
reduced. The devalued view of production mentioned is one of the reasons. The
concept of “the result-oriented team” also downgraded the role of production
engineers: in this concept, the responsibility for developing production was moved
from production engineers to shop floor operators.

During 2009, several workshops were held at Mälardalen University to discuss how to
support the development of production in Sweden. The attendants of the workshops,
production managers, researchers, and consultants, recognized the similar situation
mentioned above:

• Company management is less aware of the potential and importance of

production.
• Companies often focus on short term results and provide insufficient
opportunities to develop the production with a long term perspective.
• The production engineering function is generally weak. At companies,
production engineers work more like support men or repairmen to the
production shop floor, rather than developers of production.
• Managers are keen on introducing Lean production, but they consider that no
further effort is needed afterwards.

IVA (2005b) warned that the low prioritizing of production may cause significant
negative impacts on the competitiveness of manufacturing companies and, eventually,
the country’s welfare system. The need for the strong development of production
should be especially emphasized in Sweden (e.g. Bellgran and Säfsten, 2005; IVA,
2005b; Kinnander, 2005). For example, Kinnander (2005) states that the country needs
to create a greater understanding of the potential and importance of production, in
other words, to create a “new production culture”.

The strong development of production can be supported in various ways, but in

general two approaches are commonly recognized: incremental and continuous
improvement and infrequent and radical improvement.

2
Incremental and continuous improvement (called Kaizen in Japanese) is a well-known
approach for improving production. Kaizen became widely known to the world after
the introduction by Imai (1986). The key characteristics of Kaizen are often described
as continuous, incremental improvement in nature, participative, and process-oriented.
The concept has been extensively described, and a number of supporting methods and
tools have been developed and widely applied in industry.

The other approach, radical improvement, has been also conducted by many
companies. However, it has been less documented and theorized compared to
continuous improvement. Radical improvement is called “Kaikaku” in Japanese. Here,
Kaikaku means radial improvements that are conducted infrequently, involve some
fundamental changes within the production, cause dramatic performance gain, and
are often initiated by top or senior management.

In the recent Japanese manufacturing industry, the importance of Kaikaku in

production has been strongly emphasized. The emphasis is evident even at the
companies that are highly proficient in Kaizen, such as the Toyota Motor Corporation.
The former CEO of the company, Watanabe, says “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” (Stewart and
Raman, 2007).

Kaikaku in production has become a trend among Japanese manufacturing companies

(Ikaida, 2007; Kimura and Takano, 2005). One of the major triggers of the trend is the
emerging internal or external competitors in East and South East Asia. In order to
sustain competitive advantage from these competitors, many Japanese companies
have made intensive efforts to increase the speed of the improvement in production.
Many companies have also been trying to make their domestic factories distinctly
advanced compared to those competitors. As a result, an increasing number of
factories in Japan are becoming more unique and creative (Kimura and Takano, 2005).

The above-mentioned Kaikaku trend in Japan gives meaningful implications to Swedish

manufacturing industry. The word Kaikaku has been little known to the industry.
However, introducing the concept of Kaikaku to the industry has a potential to raise
the awareness about the need for the strong development of production and
contribute to creating new production culture.

The potential of Kaikaku is not confined to radical performance improvement in

production. It also contributes to increasing a production function’s capability for
collective learning and improvement. Such capability is considered especially
important for sustaining competitive advantage in the long run. Several authors who

3
analyze the Toyota Production System (TPS), considered by many scholars and
practitioners one of the most competitive production systems today, commonly claim
that Toyota’s operational excellence resides not only in TPS itself, but also in the
company’s capability for collective learning (e.g. Shibata and Kaneda, 2001; Fujimoto,
2001; Liker, 2004). Fujimoto (2001) states that the ultimate source of the
competitiveness of this company lies in its capability for tenacious learning, in other
words, the power of self-evolution. A company that is excellent in Kaizen and capable
of effectively handling radical improvement and innovation in production has a higher
chance of sustaining the international competitiveness in production.

1.2 Problem statement

The situation of industrial production in Sweden described above gives impulse to
research Kaikaku and how to support it. In terms of researching Kaikaku, two problems
in particular are addressed in this thesis.

First, the concept of Kaikaku needs to be further analyzed and consistently described.
In order to increase the awareness of the need for and potential of Kaikaku, the
concept should be communicated effectively to Swedish industry. However, this is
difficult to do because Kaikaku has not been well-conceptualized and described in
order for non-Japanese companies to understand what Kaikaku really is. There is
considerable confusion about how Kaikaku is described in literature and industry. For
example, some refer to Kaikaku as introducing new technologies to production. Some
refer to it as introducing new production practices, such as Lean production and Six
Sigma. Some others say that Kaikaku is an exhaustive execution of Kaizen. The
ambiguous concept also makes it difficult to conduct research regarding how to
support Kaikaku.

Second, more structured support needs to be developed that helps companies to

conduct Kaikaku effectively and efficiently. Most companies have made some sort of
radical improvements, but structured guidance for conducting Kaikaku is often
insufficiently provided. The companies often rely heavily on a limited number of
experienced internal individuals, external consultants, or system suppliers in order to
realize radical improvements. The knowledge of how to support Kaikaku is also limited
in academia. Even in Japan, where many Kaikaku activities are conducted and reported,
authors describe mostly what the companies have achieved by Kaikaku but little of
how they have realized it.

4
1.3 Objective of the research
Considering the background and problem statement mentioned above, the research
presented in this thesis focuses on Kaikaku in production and specifies the objectives
as follows:

The research has two objectives. The first objective is to analyze and
structure the concept of Kaikaku in order to describe the phenomenon
comprehensively and consistently. The second objective is to develop
methods or guidance that facilitate the realization of Kaikaku. The methods
or guidance should contribute to realizing radical improvements in
production and to improving the production function’s capability for
collective learning and improvement.

1.4 Research questions

To meet the research objectives, the following three research questions are
formulated. The first research question is related to the first objective, and the other
two are related to the second research objective.

In order to meet the first objective, it is necessary to analyze various industrial cases of
radical improvement in production and what kind of improvements scholars and
practitioners refer to as Kaikaku. It is also important to search for theories that can
explain the phenomenon of Kaikaku in a structured way. Therefore, the first research
question is:

RQ 1: How do scholars and practitioners describe the phenomenon of

Kaikaku, and what theories are suitable to explain the phenomenon in a
comprehensive and structured way?

In order to develop methods or guidance that facilitate the realization of Kaikaku, it is

necessary to identify factors or mechanisms that strongly affect an effective and
efficient execution of Kaikaku. It is also important to analyze how these factors and
mechanisms are related to improving the capability of collective learning. Therefore,
the second research question is as follows:

RQ 2: What factors or mechanisms significantly contribute to an effective

and efficient execution of Kaikaku and to an improvement of the capability
for collective learning?

The workshops mentioned in Section 1.1 implied that “production management and
organization setting” (here meaning, for example, mindsets of management,
5
organization structure, competencies and roles of production engineers) could provide
an important foundation for realizing Kaikaku in production. In order to fulfill the
second research objective, it was found necessary to investigate management and
organization settings that can increase the probability of realizing Kaikaku. Therefore,
the third research question is the following:

RQ 3: What are the characteristics of production management and

organization settings that can increase the likelihood of realizing Kaikaku?

1.5 Delimitations
The research focuses on Kaikaku in production within manufacturing industry.
Production functions located in Japan and Sweden are particularly considered as study
objects. This is because the accessibility to these objects is high for the author of this
thesis, and because the author is generally interested in comparing production in
those two countries. In terms of production, these countries have different cultural
backgrounds but face similar challenges. For example, factories at these countries are
under strong off-shoring and re-localization pressure due to the high wages.

Borrowing the notion of Dunphy (1996), researchers who study production

improvement can be categorized into three types: analysts, actionists, and futurists.
Analysts are primarily interested in analyzing the nature of improvements in
production. For example, they try to analyze the characteristics of Kaizen and Kaikaku.
Actionists are interested in how to intervene production to generate improvements.
Finally, futurists try to predict future production, to which one can create trajectories.
The research in this thesis mostly takes the perspectives of analyst and actionist.
Predicting future production is not the primary interest of the research.

A radical improvement in production usually goes through the following general

stages: analyzing the current status quo, identifying the production strategy and the
desired future state of production, transition, and a more moderate phase of
improvement. All the stages are important, but the research focuses mainly on the
transition stage. The research will not deal with how to analyze the current status of
production, nor how to formulate a production strategy.

Finally, Kaikaku is often conducted in a project form. However, many of the case
studies that report about Kaikaku do not particularly articulate that project
management is the decisive factor in the success of Kaikaku. Therefore, the research
presented in this thesis does not consider the project management aspect in Kaikaku.

6
1.6 Outline of the thesis
Chapter 2 introduces the research methodology employed by the research presented
in this thesis and motivates why particular methods are applied. Chapter 3 presents
the frame of reference that provides a theoretical foundation for the research. Chapter
4 then presents the research results. Finally, in Chapter 5, conclusions are made and
future research opportunities are suggested.

7
8
 2. Research methodology
This chapter discusses the methodology employed by the
research presented in this thesis. Motivations are given as
to why particular research approaches and data collecting
techniques were used in the research. The research
process is presented, and, finally, the quality of the
conducted research is discussed.

2.1 Scientific approach

The choice of scientific approach reflects a researcher’s perception of the world as well
as his or her view of science. Consensus regarding how to approach the world in terms
of research is often referred to as paradigms. Commonly acknowledged scientific
paradigms are positivistic and hermeneutic. The positivistic research paradigm is often
adopted by a traditional natural science school. Gummesson (2000) describes several
characteristics of positivistic research. For example, the vantage point is primarily
deductive, statistical and mathematical techniques for quantitative processing of data
are central, and researchers are detached from the object of research. On the other
hand, hermeneutic research is often adopted in the field of social science and uses a
more personal interpretive process to understand reality. The vantage point is
primarily inductive, it mainly uses non-quantitative data collection and analysis, and
the researcher’s personality is also considered a research instrument.

These paradigms can be related to the methodological approaches suggested by

Arbnor and Bjerke (1997), called analytic, systems, and actors approaches. The analytic
approach is close to the positivistic paradigm, and seeks to explain the reality as
objectively as possible. It tries to identify casual relationships of certain phenomena. It
strives to find independent causes, considering the classical laws of physics as a model.
The systems approach takes a more holistic perspective than the analytical approach.
It aims to explain reality from a system theoretical perspective. Finally, the actors
approach is close to the hermeneutic paradigm and focuses more on understanding a
social construction of reality. The relationships of the paradigms and the
methodological approaches is shown in Figure 2.1.

9
 Positivistic paradigm Hermeneutic paradigm

Analytical approach

Systems approach

Actors approach

Figure 2.1. The methodological approaches related to the paradigms

(Arbnor and Bjerke, 1997)

The research in this thesis is aimed at investigating radical improvements in production.

Production is a complex organization of material transformation processes, human
beings, equipment, information, and management and control (Hubka and Eder, 1988).
When improving production, interactions of all the mentioned elements need to be
considered. Therefore, in the research presented in this thesis, the systems approach
was the most suitable approach to analyzing and describing the phenomena of
production improvement. On the other hand, some aspect of the actors approach was
also appropriate to consider. Production and operation management, which often
involves people and groups in organizations, bears some of the characteristics of a
social science (Westbrook, 1994). Since an improvement in production is conducted by
humans, organizational culture and an individual’s mindset and behavior considerably
affect the process and the result of the improvement. The actors approach allows a
researcher to obtain deep access to such “soft” issues of the phenomena.

Since an improvement in production is a complex, human-involved, and context-

dependent activity, it is hardly understood and explained sufficiently by numerical data
and mathematical formulas. The research that deals mainly with numbers in data
collection and analysis is called quantitative research. On the other hand, qualitative
research deals mainly with qualitative data and aims to understand the meaning,
context, and process of certain phenomena that cannot be explained properly by
quantitative research (Maxwell, 2005). In qualitative research, researchers can gain
holistic perspectives, personal contacts and insights, access to qualitative data, unique
case orientations, and insights into dynamic systems (Patton, 1990). Therefore,
qualitative research was adopted as the suitable approach for the research presented
in this thesis.

2.2 Research design

There are several research design guidelines available in literature (e.g. Maxwell, 2005;
Blessing and Chakrabarti, 2002; Flynn et al., 1990; Blaxter et al., 2006). These
guidelines commonly explain and discuss the specification of research objectives, the

10
establishment of theoretical foundations, the choice of research methods, the choice
of data collection and analysis techniques, and the analysis of quality of the research.
The qualitative research design model suggested by Maxwell (2005) has five
components: Goals, Conceptual Framework, Research Questions, Methods, and
Validity. The Goals concern the research objective that considers the question of why
the research needs to be conducted. The Conceptual Framework is about
understanding the state of the art within the area of the research. The Research
Questions are the specific questions that guide the research toward its objective. The
Methods are the techniques of data collection and analysis. Finally, the Validity is
related to the quality of the research considering how the result and the conclusions
might be wrong. These components form an integrated and interacting whole, with
each component closely tied to several others rather than being linked in a liner
sequence. This relationship is illustrated in Figure 2.2.

Conceptual
Goals Framework

Research
Questions

Methods Validity

Figure 2.2. An Interactive Model of Research Design (Maxwell, 2005)

The research presented in this thesis mainly relied on Maxwell’s (2005) research
design method, since it provides detailed guidance regarding how to conduct
qualitative research. However, other research design methods were also referred to.
One of them is Design Research Methodology (DRM), suggested by Blessing and
Chakrabarti (2002). DRM divides a research process into four stages: Research
clarification, Descriptive study I, Prescriptive study, and Descriptive study II. At the first
stage, a research goal is created. Then, deeper understanding of the phenomena under
study is obtained through the second stage. In the third stage, supporting models and
theories are developed. These models and theories are tested in the last stage.
Although a research process in reality is highly iterative both within and between the
stages (Blessing and Chakrabarti, 2002), the conceptual division of a research process
helps to plan the research and understand its progress.

11
2.3 Empirical data collection – case study
An empirical study uses data gathered from naturally occurring situations or
experiments, rather than via laboratory or simulations (Flynn et al., 1990). When not
enough evidence is found in literature, better understanding of the phenomena can be
obtained by an empirical study (Blessing and Chakrabarti, 2002). There are several
empirical data collection methods described in literature. According to Yin (1994),
there are five methods: experiments, surveys, archival analysis, histories, and case
studies. In Yin’s (1994) definition, a case study is an empirical inquiry that investigates
a contemporary phenomenon within its real-life context, especially when the
boundaries between phenomenon and context are not clearly evident. The case study
is a preferred method when a “how” or “why” question is asked about a contemporary
set of events over which the investigator has little or no control (Yin, 1994; Meredith,
1998). An important advantage of the case study is the opportunity to obtain a holistic
view of a specific phenomenon or series of events, when one studies them from many
different aspects (Gummesson, 2000). An empirical study can be used to either build
or verify theory (Flynn et al., 1990), but the case study is most appropriate for
generating or extending theory (Meredith, 1998). In the research presented in this
thesis, it is important to explore the questions of how to realize radical improvements
in production. Little theoretical development has been made in the research area.
Thus, the research should be more related to theory building than testing or verifying
existing theories. Therefore, the case study was employed as the main empirical data
collection method.

In the case study, researchers can rely on various sources of evidence. Yin (1994) states
that evidence may come from six sources: documents, archival records, interviews,
direct observation, participant observation, and physical artifacts. Each source has its
advantages and disadvantages. For example, interviews are the most common
technique used for case studies. They allow direct focus on the topics of the studies.
However, interviews can be subject to misinterpretations, poor recalls, and selections
of inadequate respondents. Direct observation allows the researcher to follow events
and their context in real time, but it can be time consuming. Gummesson (2000) and
Westbrook (1994) describe the advantages of participant observation, or action
research. These authors state that deep access to the study object is a prominent
advantage of the participant observation, although there is a risk of subjectivity and
reliability. No single source has a complete advantage over all the other. Therefore,
triangulation - the use of multiple sources of evidence - is optimal (Yin, 1994). In the
research of radical improvements in production, gaining a high level of access to the
events of radical improvements is critically important in order to obtain a deeper
insight into the phenomena. Therefore, the case studies presented in this thesis relied
on not only interviews but also direct and participant observations.

12
The selection of cases is an important aspect of case studies. Eisenhardt (1989) states
that the selection of cases can be based on statistical sampling or theoretical sampling.
In statistical sampling, cases are chosen randomly from the chosen population. It is
often useful to test or verify theories based on statistical evidence. In theoretical
sampling, cases may be chosen randomly, but random selection is neither necessary
nor even preferable (Eisenhardt, 1989). Instead, cases are chosen to help generate,
replicate or extend theories (Meredith, 1998). As mentioned earlier, the research
presented in this thesis is mainly related to theory building. Therefore, the theoretical
sampling was considered in the selection of the cases. However, it should be
mentioned that pragmatic issues such as the author’s personal contacts and the
contacts of the research institution with companies significantly influenced the choice
of the cases.

The analysis of collected empirical data involves examining, categorizing, tabulating, or

otherwise recombining the evidence to address the propositions of the study. Planning
how to analyze the collected data before and during a case study is important.
Otherwise, a researcher may fall into one of the realities of case studies: a staggering
volume of data (Yin, 1994; Maxwell, 2005; Eisenhardt, 1989). The data analysis
techniques used in the research were within-case analysis (Eisenhardt, 1989),
tabulation, pattern matching, and comparison of the data obtained from the different
cases.

2.4 Research process

As mentioned earlier, research methodologists state that conducting research is an
iterative process. This was true also for the research presented in this thesis. The
research objective, the research questions, and the theoretical framework were
frequently reviewed and updated. The research process presented below is more like a
result of a journey, instead of a prescribed plan made at the beginning of the research.

In the initial phase of the research, the focus was on finding an answer to the first
research question. Then, the research worked on the second research question. In the
late phase of the research, the third research question was in focus. The research
methods, sources of evidence, and data analysis techniques relied on or employed in
order to answer the research questions are shown in Table 2.1.

13
 Table 2.1. Relationship of the research questions and the research methods.

RQ1 RQ2 RQ3

Main Literature study Empirical study Empirical study Empirical study
research (Case study A ) (Case study B ) (Case study C )
method
Unit of Phenomena of Process of Kaizen practice Management
analysis Kaikaku Kaikaku, Lean and
transformation organization
in particular setting
Main source Literature Direct and Direct Semi-
of evidence participant observations structured
observations interviews
Data Comparison, Within-case Comparison, Tabulation,
analysis categorization analysis, pattern comparison
technique pattern matching
matching
Developed Definition of A model of Eight Characteristics
theory Kaikaku driving Lean guidelines that of innovative
Four types of transformation enhance production
Kaikaku Kaizen organization
Relevant Research Descriptive Descriptive Descriptive
stage of clarification, study I, study I, study I
DRM Descriptive Prescriptive Prescriptive
study I study study
Appended Paper A Paper B Paper A Paper C
paper

In order to answer the first research question, or in short “what Kaikaku is”, a
literature study was conducted. The literature study had two goals: to understand the
phenomena of Kaikaku better and to identify theories that can explain the phenomena
in a structured way. In literature, there were several terms similar to Kaikaku.
Examples include innovation, breakthrough improvement, Kakushin, second-order
change, and evolutional or revolutionary improvement. The research paid specific
attention to the words Kaikaku and Kakushin that are frequently used among Japanese
manufacturing companies. In Japanese, Kaikaku means reform or radical change, and
Kakushin means innovation. However, since no distinct difference was identified in the
way of using those two words in the context of radical improvements in production,
the research considered that Kaikaku and Kakushin meant the same, and they were
named as Kaikaku. The word Kaikaku was in focus in the study because analyzing the
practices of radical improvements in production in Japan was one of the main research
14
interests. Kaikaku may connote more specific activities or meanings than the literal
meaning of radical improvement, as Kaizen does for incremental improvement. For the
first goal of the literature study, dozens of case study reports that feature Kaikaku in
production at Japanese companies were reviewed and analyzed. For the second goal,
literature in various theoretical areas were reviewed. Production improvement,
organization development, manufacturing strategy, production system design, and
product innovation are examples. The literature study was complemented by
conversations and discussions about Kaikaku with a number of industrial people. As a
result of the study, a conceptual framework of Kaikaku was developed. The framework
provides a holistic view of Kaikaku. It also classifies various kinds of Kaikaku into four
types. Further explanations of the framework will be made in Chapter 4.

The literature study mentioned above identified that Kaikaku is a wide ranged activity.
There are various ways to realize Kaikaku. Finding an answer to the second research
question, in short “how to realize Kaikaku”, can be too broad to manage. Therefore,
the research presented in this thesis focused on a more specific area of radical
improvements in production, that is, the implementation of Lean production. The
implementation of Lean production, or Lean transformation, at a factory often involves
fundamental changes in, for instance, production flow, production planning system,
production management structure, and organization culture. Lean transformation was
focused on because it has been a popular activity among Swedish manufacturing
companies and some interesting cases were available. In order to investigate the Lean
transformation process, case study A was conducted.

In case study A, one-and-half-year direct and participant observations were made on

two Lean transformation cases at two medium-sized Swedish manufacturing
companies. One of the two companies (here called company A) is a medium sized
company having approximately 150 employees. They produce precision casting goods
for automotive, industrial equipment, and infrastructural industries. Product variation
is about 600 products. The other company, named as company B, is also a medium
sized manufacturing company with about 130 employees. They produce electrical
products mainly for infrastructural industry. These two companies had made few
improvements in the operations before the transformations were initiated. The
managements of the companies wanted to apply Lean production to their factories to
increase operational competitiveness.

These transformations were particularly interesting cases, because they were

consulted and facilitated by an experienced Japanese consultant. The consultant had
worked for one of Toyota’s supplier companies in Japan, where he developed TPS-
inspired production for more than 20 years. He retired from the company in 2005 and
continues to consult TPS at a number of companies. In total, he has instructed TPS at
15
more than 150 companies and to 2,800 people globally. His consultation style is the
one commonly practiced within Toyota and its related companies: going to the shop
floor, seeing and analyzing the operation there carefully, and suggesting improvement.
The main focus of his consultation is on shop floor operation. However, the range of
change is often extended to the whole company, for example, to the management
structure and the management’s mindset.

The author to this thesis directly observed the Lean transformations at company A and
B. The author participated in the transformations as a translator and also as an
assistant to the Japanese consultant. The participation began when the
transformations started in September 2007 and September 2008, respectively, at
company A and B. The period of the participation was one and half years at company A,
and a half year at company B. Observation data were collected in various ways,
including through the author’s participations of actual improvement activities, through
the discussions with presidents, production managers, group leaders, engineers, and
operators, and through frequent conversations with the consultant that especially
helped to understand the thinking behind of his behaviors, decisions, and actions
during his consultation. An important feature of case studies is the frequent overlap of
data collection and data analysis (Eisenhardt, 1989). Van Maanen (1988) suggests that
field notes should be an ongoing commentary about what is happening in the case
study, involving both observations and analysis of them, preferably separated from
one another. Collected data were documented and analyzed based on Van Maanen’s
suggestion. Participant observation has a distinct benefit: the ability to perceive reality
from the viewpoint of someone “inside” rather external to it. However, it also has the
risk of potential bias produced (Yin, 1994). The author’s position as a translator and
assistant consultant made it easier to observe the improvement events from a third
person perspective. As a result of case study A, a mechanism of how to drive a Lean
transformation was identified. Further descriptions of the result of the case study A
will be made in Chapter 4.

Case study B was performed when the above-mentioned Japanese consultant held
TPS-workshops at six Swedish companies in April 2007. The workshops included
seminars of TPS at meeting rooms, where the consultant explained basic concepts of
TPS and its practice, and on-site shop floor consultations, where the consultant went
to the shop floors of the companies and instructed improvements. The attendants of
the workshops were mainly middle and senior managers related to production. The six
companies are located around the Mälardalen region in Sweden, manufacturing
products such as vehicle components, electrical products, and industrial equipments.
The author of the thesis was involved in the workshops as a translator for the
consultant and, at the same time, as a researcher observing the workshops. The
comments and behavior of the consultant and the conversations between the
16
consultants and the attendants of the workshops were documented, especially those
related to improvements in production. Analysis of collected data showed that one of
the major differences between the six Swedish companies and the companies
proficient in TPS was thoroughness in conducting Kaizen. The analysis also led to
developing eight guidelines for enhancing Kaizen at shop floor. The guidelines are
presented in Chapter 4. The result was relevant to the second research question,
because, as later explained, the literature study and case study A showed that Kaizen is
an integral part of Kaikaku in some cases.

The third research question is about production management and organization

settings that can facilitate Kaikaku. The third research question was raised through the
workshops mentioned in Chapter 1. In retrospect, it was found that workshops
attended by experts from both academy and industry were an effective way to collect
data related to a research study. In order to answer the third research question, case
study C was conducted. The case study, however, focused on a more specific type of
Kaikaku, defined as radically innovative Kaikaku. This type is described in Chapter 4. In
the case study, five Japanese companies and four Swedish companies were studied.
These five Japanese companies were selected as extreme cases because various
articles, magazines, and newspapers in Japan mentioned that the domestic factories of
those companies are highly efficient and use various advanced technologies and work
processes. In addition, a practical issue, the accessibility to those companies, also
influenced the choice of the companies. The four Swedish companies were selected as
reference cases in order to understand the status of production management and
organization setting at Swedish companies. All of the studied companies were large
manufacturing companies. Six of them were in the automobile industry. The brief
profiles of the nine companies are presented in Appended Paper C. Data was collected
through semi-structured interviews with production managers or corporate executives
of the companies. They can regard production management from a holistic perspective.
The interview items were prepared based on a literature study. The questions asked
during the interviews were related to four general categories:

• Manufacturing strategy of the company

• Organization of the production engineering function
• Education systems within the production function
• Culture of the production organization

More detailed interview items are found in Appended Paper C. The author of the
thesis conducted all of the interviews during May and April of 2009. Collected evidence
at each company was tabulated for each interview item, and then compared between
the companies. As a result, several characteristics of production organization and

17
management setting that can facilitate radically innovative Kaikaku were identified.
The result of case study C will be more described in Chapter 4.

2.5 Estimation of the quality of the research

Literature often discusses validity and reliability as means of evaluating the quality of
the conducted research. Conducting research without considering its validity and
reliability is pointless because the researcher will not be able to generalize from the
results (Flynn et al., 1990).

The validity is about the degree to which a theory, model, concept, or category
describes reality with a good fit (Gummesson, 2000). Maxwell (2005) mentions two
specific validity threats: bias and reactivity. Bias is the researcher’s selectivity in
collecting and analyzing data. Reactivity is the influence of the researcher on the
setting or individuals studied. During the research presented in this thesis, the
mentioned validity threats were kept in mind. However, the reactivity was difficult to
be avoided especially when the participant observation was conducted in case study A.
Little could be done other than being aware of the researcher’s influence on the study
objects. On the other hand, the validity of the result obtained from case study A can be
reasonably high. This is because the case study was conducted for a long period of
time and a deep access to the study objects was obtained. Westbrook (1994) states
that any misunderstandings or wrong assumptions in theory building have multiple
opportunities to get exposed and corrected because of the variety of modes of
communication between a researcher and the collaborating organization.

In terms of validity, there is another concept called external validity. This is about
whether the study’s findings are generalizable beyond the immediate case study.
According to Yin (1994), there are two types of generalization, statistical and analytical.
Statistical generalization infers a population on the basis of collecting a large number
of samples. Analytical generalization is based on in-depth studies that involve
exhaustive investigations of certain phenomena. If a researcher has a good descriptive
or analytic language and can grasp the interactions and characteristics of the
phenomena studied, the possibilities to generalize from a few cases, or even a single
case, may be reasonably good (Norman, 1970). Case studies A, B, and C were in-depth
studies of the phenomena of improvements in production, and were not based on
statistical data collection and analysis. It can be reasonably assumed that an analytical
generalization is possible to a certain degree from the results of those case studies.

Reliability means that two or more researchers studying the same phenomena with
similar purposes should reach approximately the same results. In order to achieve
higher reliability, it is important to make as many steps as operational as possible and
to conduct research as if someone was always looking over your shoulder (Yin, 1994).

18
Developing a consistent method to study various sites is appropriate, and the method
should be documented enough to be used by other researchers (Westbrook, 1994).
Gummesson (2000) states that higher reliability can be achieved by, for example, a
well-documented and richly-described case, a comprehensive account of the research
process, and a clear presentation of the results and the conclusions. In the research
presented in this thesis, various efforts were made to increase reliability. During the
direct and the participant observations in case study A and B, the collected evidence
was frequently written down in documents. In case study C, an interview protocol was
designed based on a literature study and two pilot interviews. The interview
conversations were written down as memos or recorded when allowed. Even with
those efforts, the author of this thesis perceived that achieving high reliability was a
challenging issue. During the case studies, many other informal information sources
outside of the cases (for example, daily conversations with colleagues, friends, and
family members, newspapers, and articles) implicitly influence what conclusions to
draw from the cases. Among other things, a researcher’s previous experience, cultural
background and values, personal openness, and skill at providing deep insight to the
observed events can also affect the understanding and interpretation of a case
(Westbrook, 1994; Gummesson, 2000). Therefore, it can be assumed that limited
reliability is inevitable, especially when one conducts direct and participant
observations.

19
20
 3 Frame of reference
This chapter presents the frame of reference that provides
a theoretical foundation for the research presented in this
thesis. The first section presents some theories related to
production systems. Then, the terms Kaizen and Kaikaku
are introduced and defined, followed by relevant theories
with respect to the realization of Kaikaku. Finally, a
summary of this chapter is made.

3.1 Production system

Before discussing theories related to production systems, the term production needs
to be defined. In literature, production is defined in various ways. This thesis adopts
one of the most accepted definitions suggested by CIRP (1990):

Production is the act of processes (or the connected series of acts or

processes) of actually physically making a product from its material
constituents.

The term “manufacturing” is also frequently used in literature. In this thesis,

manufacturing is defined as the activities needed in order to put a product to the
market, including product development, production, marketing, and so on.

3.1.1 A systems view on production

Production is generally viewed as a complex activity involving different elements such
as machines, materials, information, and humans. These elements are organized to
realize the desired functions of the production. Due to this complexity, production is
often described from a system perspective. In the system theory, a system has its
function of transforming certain inputs into desired outputs. It also consists of a set of
elements interlinked by relationships, and has a hierarchical structure where a part of
the system is a subsystem and the system itself is the part of a more comprehensive
system called a supersystem (Seliger et al., 1987). How to describe a production
system depends on which perspective the observer has. For example, when the
observer is interested in analyzing the transformation process of the production, he or
she may use a process flow chart to describe the production. The production can be
also described as a shop floor layout or a value stream map. Some observers may add
a production organization in order to describe the production.

In improving production, changes can be made in any elements of the production, for
example, production processes, production equipment, employees, information
processes, management structures, organization structures, and organization culture.
21
The influence of the changes can be transmitted to any of the elements as well. In the
research of improvements in production, it is necessary to understand production
from a holistic perspective, having all elements of the production in consideration.
Close attention needs to be paid to the interactions between those elements. In this
sense, the model of the transformation system suggested by Hubka and Eder (1984) is
most suitable to adopt as the definition of a production system in this thesis. Hubka
and Eder (1984) describe a production system as a transformation system, as shown in
Figure 3.1. In their description, an operand is transformed through a transformation
process to a desired state. Human, technical, information, and management systems
participate and drive the transformation process. These subsystems also interact with
each other, although such interactions are not explicitly displayed in Figure 3.1.

Transformation
system

Human Technical Information Management

system system system system

Operand Operand
in existing in desired
Transformation process
state state

Figure 3.1. Model of the transformation system (Hubka and Eder, 1984)

3.1.2 Competitiveness of a production system

Various performance parameters are often used to measure and evaluate the
competitiveness of a production system. One of the most common ways is to use so-
called “competitive factors” or “manufacturing capabilities”, often described as quality,
cost, delivery capability, and flexibility (for example, see Wheelwright and Hayes, 1985).
Manufacturing companies constantly make efforts to manage and improve
competitive factors in order to gain and sustain their competitive advantage.

Various factors within a production system influence the mentioned competitive

factors. According to Fujimoto (2001), the competitiveness of a production system can
be analyzed from two aspects, namely static and dynamic aspects. The static aspect of
the competitiveness can be evaluated at a certain point of time. It can be, for example,
the skills and knowledge of the production operators and the support staff, the state
of the production equipment, or the information and management system used in the

22
production. It can also be how these mentioned components of the production are
organized or synthesized in order to function as an effective whole.

On the other hand, the dynamic aspect of the competitiveness is evaluated along with
time. How effectively a production system can evolve and constantly increase its
performance over time is a dynamic aspect of the competitiveness. Many authors who
analyze Toyota Production System (TPS) commonly claim that that Toyota’s
operational excellence resides not only in TPS itself, but also in the company’s
capability of collective learning. Fujimoto (2001) asserts that the ultimate source of
competitiveness of Toyota lies in the company’s capability for tenacious learning or
“power of self-evolution”. Shibata and Kaneda (2001) mention that the TPS currently
known to the public is merely an outcome of Toyota’s constant activities of self-
evolution. Liker (2004) also mentions that the power behind TPS is the company’s
management commitment to continuously investing in its people and promoting a
culture of constant improvement. These authors imply that the dynamic aspect is
becoming increasingly important in order to compete in the present manufacturing
competitive environment. Therefore, the research presented in this thesis focuses not
only on how to radically improve the competitive factors of production, but also on
how radical improvements increase the production function’s capability for collective
learning and improvement.

3.2 Improvement of a production system

It is widely recognized that there are two general approaches for improving a
production system: incremental and continuous improvement, and infrequent but
radical improvement. In Japanese, they are called Kaizen and Kaikaku, respectively.
Their basic characteristics can be described as Figure 3.2. As mentioned in Chapter 1,
doing both Kaizen and Kaikaku effectively and efficiently is essential to gaining and
sustaining an international competitiveness of production. In the following subsections,
these two approaches are introduced and defined.

23
 Kaizen • Small step improvement
• Process orientation
Production performance
• People orientation
• Continuous

Kaikaku • Episodic
• Fundamental change
• Intend dramatic result
• Top-down initiative
Time
Figure 3.2. Basic characteristics of Kaizen and Kaikaku.

3.2.1 Kaizen
Kaizen means improvement in Japanese. However, in terms of industry, Kaizen carries
the connotation of more specific activities that take place in a workplace to enhance
the operations. The concept of Kaizen and its features are extensively described in
literature. One of the most comprehensive descriptions is provided by Imai (1986).
According to Berger (1997), the features of Kaizen described by Imai (1986) and other
authors can be summarized into three key notions: process orientation, small step
improvement, and people orientation. Process orientation means that attention is
directed at creating sound processes, assuming that good results will follow
automatically. Kaizen is distinctive in its focus on small improvements of work
standards as a result of an ongoing effort. People orientation means that Kaizen
involves everyone in the organization from the top management to the workers at the
shop floor believing that their effort is going to “pay off” in the long run. The similar
work is also done by Brunet and New (2003). They identify three core principles of
Kaizen: it is continuous, usually incremental in nature, and participative.

The learning aspect of Kaizen is also mentioned in literature. For example, Weick and
Quinn (1999) state that an improvement can be seen as an expansion of the range of
skills and knowledge, not only as a set of specific actions. They also state that it is not
just a substitution of existing systems and practices, but also includes strengthening
existing skills and knowledge.

Several authors mention the importance of Kaizen in relation to Kaikaku. Kaizen is

necessary in order to maintain and improve the outcome obtained by Kaikaku (Imai,
1986, Harrington, 1995). Brunet and New (2003) state that Kaizen helps to create a
mindset in which radical changes and new technologies become more easily accepted
in the workplace. Watanabe, the former CEO of Toyota, says that while trying to come

24
up with incremental improvements, many people come up with revolutionary ideas
(Stewart and Raman, 2007). Harrington (1995) claims that organizations just starting
their improvement activities should first direct their efforts to continuous
improvements, establishing a working base. Then they should expand their
improvement effort to include breakthrough improvements.

Kaizen seems to be a well-established concept in literature. Along with the concept, a

number of Kaizen methods and tools have been developed and widely applied in
industry. Typical examples include the following: a problem-solving process called
PDCA (Plan, Do, Check, Action), problem-solving tools called “seven quality tools”,
small group improvement activities called “quality control circle”, individual suggestion
system, and a performance management method called “policy development” that
connects overall system targets and local Kaizen activities.

In terms of the definition of Kaizen, various definitions can be found in literature. In

this thesis, Kaizen is defined based on the characteristics mentioned above. The
definition of Kaizen is also made in relation to the definition of Kaikaku described later:

Kaizen is the continuous and incremental improvement of an activity with

the purpose of increasing the performance of a production system. Typical
activities are updating working standards and gradually reducing wastes in
an operation. The performance increase as a result of Kaizen is usually less
than 20 or 30 % in a given period of time.

As mentioned earlier, the performance of a production system can be described using

various factors related to quality, cost, delivery, and flexibility. Examples include defect
rate, labor productivity, production cost per product, production lead time, delivery
accuracy, and level of inventory.

3.2.2 Kaikaku
A literal translation of the Japanese word Kaikaku is reformation, drastic change, or
radical change. Japanese manufacturing companies have been using the term to name
an improvement in production that is more radical than Kaizen. In literature, Kaikaku is
often mentioned in contrast to Kaizen. Imai (1986) states that a Kaizen strategy
maintains and improves the working standard through small and gradual
improvements, while Kaikaku calls for radical improvements as a result of large
investments in technology and/or equipment. Kondou (2003) says that Kaizen is a
process for improving existing operations by applying conservative changes, while
Kaikaku is a process to attain dramatic results by replacing existing practices with new

25
ones. Womack and Jones (1996) and Liker (2004) refer to Kaikaku as radical
improvement and Kaizen as incremental continuous improvement.

When we see how Kaikaku is described in literature, some distinctive characteristics

that differ from those of Kaizen can be identified. This thesis summarizes them as
episodic, fundamental, dramatic result, and top-down initiative. Each of these
characteristics is described below.

Kaikaku occurs episodically, while Kaizen takes place continuously. In a reactive

manner, Kaikaku can be seen as a consequence of the inability to change as quickly as
the environment (Pfeffer, 1998). As adaptation lags, effectiveness decreases, pressures
for change increases, and a revolutionary period is entered (Weick and Quinn, 1999).
According to Sawa (2007), the Kaikaku activity at Canon Inc. was initiated when the
effect of their Kaizen activity became stagnated due to the increasing volume and
variation of the products, shorter product life cycles, and increasing number of
contract workers. Enomoto (2007) mentions that NEC Corporation initiated Kaikaku at
the Japanese plants due to the competitive threats of fast-growing plants in East and
Southeast Asia. An organization can also conduct a radical change proactively to
establish a solid competitive position against competitors.

In Kaikaku, people intend to bring about fundamental changes. Kaizen can bring about
fundamental changes when accumulated over time (Orlikowski, 1996), but it is not
always intended to do so. In Kaikaku, a change occurs in the deep structure or shared
schemata (Bartunek and Moch, 1994). Replacement with new practice, knowledge,
and methodologies occurs (Kondou, 2003). A fundamental change is brought about
when the conventional way is discarded (Uno, 2004).

Kaikaku tends to bring about a dramatic increase in performance. The increase is

usually larger and obtained quicker than that from Kaizen. Womack and Jones (1996)
mention that the Kaikaku bonus released by changing a classic batch-and-queue
production system to continuous flow with effective pull is a doubling of labor
productivity, a cut in production throughput times by 90 percent, and a reduction of
inventories by 90 percent. Kaikaku at the Takaoka factory in Toyota re-opened in
summer 2007 cut lead times, logistics, and the assembly line in half (Stewart and
Raman, 2007). Kaikaku at Aisin, one of the Toyota Group companies, reduced or
increased key performance factors (such as lead time, cost, and productivity per area,
for example) drastically (Shirai, 2007).

Finally, a top-down approach is often mentioned when Kaikaku is described. In that

approach, the direction and initiation of the change come from a strategic level of an
organization. It is monitored and driven by top management or their representatives.
However, this does not mean that a top-down change is always directive and never
26
collaborative or participative (Balogun and Hailey, 2008). The initiation is usually
triggered by top management. However, in some cases, the actual changes can be
planned and driven by a wide group of individuals at a tactical and/or operational level.

When it comes to defining Kaikaku, this can be made in numerous ways. In this thesis,
Kaikaku is defined based on the characteristics mentioned above. The definition is also
made in contrast to the definition of Kaizen described in the previous subsection:

Kaikaku is an infrequent but radical improvement where fundamental

changes occur in the production system and a dramatic performance
increase is obtained. Initiated often by top management, fundamental
changes are made through reformations or replacements of the system by
introducing new knowledge, work methods, strategies, production
technologies, or equipment and so forth. The performance increase as a
result of Kaikaku is often 30 to 50 % or more.

In short, Kaizen is small changes producing small or moderate production performance

improvements, whereas Kaikaku is fundamental changes producing radical
performance improvements in production. It should be noted that some
improvements exist that do not fall into either of the definitions of Kaizen or Kaikaku.
One such occurs when fundamental changes of a production system do not generate
any radical performance improvement. The other kind occurs when a dramatic
performance improvement is realized without any fundamental change. These kinds of
improvements can be considered rare instances, and therefore are not discussed in
this thesis.

Another point should be mentioned with respect to the definitions of Kaizen and
Kaikaku. In order to classify an improvement to Kaizen or Kaikaku, the observers’
perspective needs to be specified. For instance, when a two-year improvement
program is observed from a “distance” (the macro level of analysis in time and system
hierarchy), it may consist of a flow of smaller improvement events resulting in a major
change and a drastic performance increase. The improvement program is, therefore,
perceived as Kaikaku. On the other hand, when each of the improvement events is
observed from a view “closer in” (the micro level of analysis in time and system), they
can be seen as Kaizen. An image of this explanation is shown in Figure 3.3.

27
 Performance
And/or

Time
Figure 3.3. Image of the macro and micro levels of analysis.

As shown earlier in this subsection, there is a shared consensus about Kaikaku in

literature. However, the consensus only exists at a general level. Kaikaku is understood
and described much differently at a more detailed level. Examples are shown in Table
3.1. Imai (1986) describes Kaikaku as technology-oriented,
oriented, involving large investments
in equipment and being conducted by a small group of champions. However, Ikaida
(2007) describes Kaikaku as a various and wide-ranged
ranged activity involving everyone in an
organization.
rganization. Womack and Jones (1996) often use the word Kaikaku when they
mention the changes from batch-production flow-production. Wakamatsu and
production to flow
Kondou (2003) assert that exhaustive Kaizen will lead to Kaikaku. Norman (2004)
mentions that Kaikaku is moreore commonly referred to as “Kaizen blitz” in USA. Kaizen
blitz is an intensive improvement event within a limited period of time, varying from a
few days to a few months. It is driven by a small group of people, and it focus
focuses on a
limited area of operation (Bicheno, 2004).

Other than those differences shown in Table 3.1, the word of Kaikaku is used for
purposes of describing different innovativeness levels. Kaikaku can be achieved by
introducing off-the-shelf
shelf solutions (examples include off off-the-shelf equipment or
packaged company-wide improvement initiatives atives such as TPM, Six Sigma, and Lean).
The introduced solutions may be new for the company. However, from the industrial
perspective, the solutions are not new. On the other hand, a higher innovativeness
level can be achieved by Kaikaku, by creating and using radically new equipment or
work methods that do not exist in industry. In Japan, the latter type of innovativeness
is increasingly observed as the result of their efforts to create unique plants that have
outstanding performances and at the same timee are difficult to be copied by foreign
competitors (Ikaida, 2007; Kimura and Takano, 2005) 2005). An example of this type of
Kaikaku is Toyota’s Takaoka plant (Stewart and Raman, 2007)
2007).

28
 Table 3.1. Different descriptions or expressions of Kaikaku.

Author Description or expression of Kaikaku

Imai (1986) Technology oriented.

Conducted by a small number of champions.
Wakamatsu and An accumulation of daily Kaizen leads to Kaikaku.
Kondou (2003) Kaizen is a means of Kaikaku.

Ikaida (2007) An accumulation of numerous improvement activities.

A various and wide-range activity.
Needs to be implanted to everyone as DNA.

Womack and Jones Radical activity to eliminate waste.

(1996) Transforming batch production to flow production.

Sawa (2007) Mass movement.

Uno (2004) Fundamental change toward the ideal state, discarding the
conventional way.
Shibata and Kaneda System improvement where a new working method is
(2001) introduced.

Kondou (2003) The process of attaining dramatic results by replacing

existing practices with new ones. Important to obtain new
knowledge as well as to acquire new and externally
available methodologies.

Norman (2004), and More commonly referred as a ‘kaizen blitz’ in the United
Bicheno (2004) States. It delivers a large gain in a short time in a small
area.

The different understandings and uses of the term Kaikaku make the concept of
Kaikaku unclear and confusing. The unclearness and confusion make it difficult to
consistently discuss how to realize Kaikaku. The concept of Kaikaku, therefore, needs
to be explored further and developed in order to conduct research within this area.

The lack of consistent terminology implies that Kaikaku is still an immature research
area. The number of published articles shown in Table 3.2 illustrates this as well.

29
 Table 3.2. Comparison of number of articles indentified in databases.

Number of relevant
Article database Search word Search object articles found
(from 2004 to 2009)
Kaikaku, Seisan*
Title 82
CiNii (in Japanese)
(Database for Kakushin, Seisan*
Title 146
Japanese (in Japanese)
articles ) Gemba** Kaizen
Title 187
(in Japanese)
Title, Abstract,
Kaikaku 3
Key word
Title, Abstract,
Kakushin 2
Key word
Elin@Mälardalen Title, Abstract,
(Database for Kaizen 135
Key word
English-written
Innovation, production Title 28
articles)
Breakthrough Title, Abstract,
4
improvement Key word
Title, Abstract,
Radical improvement 1
Key word
* Seisan means production in Japanese, **Gemba means shop floor in Japanese

In the table above, CiNii is one of the largest article database available in Japan for
Japanese-written articles. English-written articles are searched by Elin@Mälardalen,
one of the largest database available at Mälardalen University. Several search words
were used (for instance, “Kaikaku” and “Kaizen”) and numbers of articles found were
counted. Whether the topic of an article is relevant to Kaizen or Kaikaku in production
is judged only from the titles of the articles. The statistics show that the number of the
Japanese articles featuring Kaikaku is as many as those concerning Kaizen. However,
most of the articles featuring Kaikaku are case study reports in which the companies
present the outcomes of Kaikaku. Furthermore, they describe very little about how
they realized Kaikaku. For English-written articles, the number of articles featuring
Kaikaku is significantly fewer than those featuring Kaizen. This indicates that there is
much room left to research about Kaikaku.

3.4 Realization of Kaikaku

In the previous section, the concept of Kaikaku was introduced and the need for
further clarification of the concept was claimed. This section presents and discusses
the theories relevant to the questions of when, who, and how to realize Kaikaku. The

30
first two subsections discuss when to initiate Kaikaku and who conducts it, and the
third and fourth subsection discusses how to realize Kaikaku.

3.4.1 When to initiate Kaikaku

When to initiate a radical improvement and how quickly it needs to be realized should
be determined by a strategic analysis (Balogun and Haiey, 2008). Various external and
internal factors of the production system need to be investigated in the strategic
analysis. The external factors of the production system are, for example, market
situation, competitive position of the company, financial situation of the company,
product structure and volume, business strategy of the company, and available and
upcoming technologies. Internal factors include, for example, performance of the
current production system, skill and knowledge of the employees, their capability of
handling radical changes, awareness of the need of change, technological level of the
equipment, and organization culture. A strategic decision is made in terms of the
timing of the Kaikaku initiation, the level of capital investment, the resource allocation,
and so on based on the strategic analysis. As stated in Chapter 1, this thesis does not
deal with how to conduct strategic analysis and strategic decision making. Therefore,
the question of when to initiate Kaikaku is discussed to a limited degree in this thesis.

3.4.2 Who to conduct Kaikaku

As mentioned in Section 3.2.2, many researchers state that the initiator of Kaikaku is
usually top or senior management. However, who actually drives the change can vary.
It can be change champions like top management, change agents, or external
consultants, for example. The question of who drives Kaikaku can very much depends
on the context of the company and also type of changes. For example, key drivers of a
change can be different depending on whether the change is technology-oriented or
operations-oriented. The “who” question in Kaikaku will not be discussed much further
in this thesis, but some discussion is made in the next chapter.

3.4.3 How to realize Kaikaku – the systematic approach

There are several theories that describe the processes of how to realize a radical
improvement in production. Here the processes are divided into two general types:
the systematic approach and the contingency and learning approach. This subsection
and the next subsection describe these two types respectively.

The systematic approach is about following well-defined systematic and prescriptive

processes in order to realize radical improvements in production. A number of
researchers have developed and presented such systematic and prescriptive processes.
This thesis introduces particularly two research areas; namely, production system
design and systemized company-wide improvement initiatives.

31
Production system design
With the increasingly dynamic business environment, many manufacturing companies
face challenges to redesign or restructure their production systems more frequently
than before (Wu, 1994). However, there generally exists a lack of awareness or
availability of structured approaches in designing production system. The ad hoc
approaches require numerous iterations and correction stages (Wu, 2001). In response
to this recognition, research has been done in order to develop a design process of
production system. Various design processes are suggested, including those presented
by Wu (2001), Bellgran (1998), Bellgran and Säfsten (2005), Axelsson and Tangen
(2008), Almström (2005), and Karlsson (2002).

The common characteristics of those design theories can be summarized as follows.

They often take a holistic perspective and decompose a whole system design process
into several sub-processes. Sub-processes often start by analyzing current internal and
external production situations. Then, a manufacturing strategy is formed, and the
requirements on the production system are specified. A conceptual design is made and
evaluated, and then a more detail design is made. Later, an implementation plan is
made and then the plan is executed. At each sub-process, these design theories often
specify necessary actions and variables to be considered or decided (e.g. production
policy, goal, layout, cycle time, and information flow).

Applying those theories into practice in the context of Kaikaku seems to be meaningful.
They provide a comprehensive coverage of production system design activities. They
allow for the linking of business and manufacturing strategies to the design of the
production system. A systematic process makes it easier to control the design process
as well as the outcome. However, some shortages also exist. The suggested design
processes are still too simplified and abstract. Though necessary actions and variables
are specified at each sub-process, little guidance is made on which actions or variables
are more important than others at a specific context. In reality, users of those theories
may not need to follow all the suggested actions with the same weight, and the
variables are often to a large extent interdependent. Furthermore, these theories
often take a general engineering perspective by focusing on designing physical
features and information flows of the production system. However, they consider less
organization development perspectives (mind and behavior changes of the
organization and organizational learning during the change process, for example).

Systemized company-wide improvement initiatives

Researchers, manufacturing companies, and consulting firms have developed
processes of company-wide improvement initiatives. By following the processes, it is
believed to be possible to realize a radical improvement in production. Examples of
such initiatives include Total Quality Control (TQC), Total Productive Maintenance
32
(TPM), Lean production, Six Sigma, Theory of Constraints (TOC), Demand Flow
Technology (DFT), and Business Process Reengineering (BPR). In this section, only some
representative ones are introduced (TPM, Six Sigma, and Lean production). In the
following, the concepts and implementation processes of the three improvement
initiatives are shown.

TPM is a total activity involving all personnel from top management to every employee,
aiming to achieve maximum stability and utilization of production equipment. In TPM,
the overall effectiveness of equipment is measured, and various factors that hinder the
effectiveness are identified. Based on small group activities, those factors are removed.
There are a number of tools, techniques, and practices available that support TPM
activities. As for the implementation process of TPM, Osada et al. (2001) suggest
following 12 steps. They are: decision of TPM introduction by top management, pre-
study, formulation of master schedule, formulation of organization, setting target, kick
off, breaking down execution plan, benchmarking, activity promotion, development of
instructors, and monitoring and following up the progress. The first seven steps belong
to the preparing phase, and the last five belong to the driving phase. Osada et al.
(2001) emphasize that the preparation phase is especially important to establish a
solid basis for the implementation.

Six Sigma seeks to improve the quality of products by identifying and removing the
causes of defects and variation in manufacturing processes. It uses a set of quality
improvement methods (statistical methods and quality control tools are two
examples). Six Sigma also creates a special infrastructure of people within the
organization specialized in using those methods and tools. Six Sigma can be introduced
as tool boxes applied to existing local improvement activities in a company, but also as
a company-wide strategy. According to Magnusson et al. (2003), if Six Sigma becomes
the “DNA” of a company, the company can enjoy breakthrough improvements in the
areas of bottom line results, customer satisfaction and performance. The same authors
above suggest a 12-step Six Sigma deployment model. The steps can be grouped into
four different major stages of deployment, getting started, education, measurement,
and improvement. At the getting started stage, top and senior management’s
commitment is gained, a facilitator is appointed, and the implementation program is
formalized. At the training stage, improvement experts are trained, and first results are
obtained and communicated to the organization. At the measurement stage, the
performance measurement system is created, and the goal is set. At the last stage, the
momentum of improvement is built up throughout the organization.

The term “Lean production” is introduced by Womack et al. (1990) after their
investigation of Japanese auto makers, especially of the production system of Toyota
Motor Corporation. In the early period of Lean awareness, after the introduction by
33
Womack et al. (1990), many of the manufacturers’ efforts were focused on the
emulation of shop floor techniques of Lean, such as 5S, flow production, small batch
production, single minute exchange of dies (SMED), standardized work, and Kanban.
They found it difficult to sustain them. Later, the necessity of organizational cultural
and mindset change in Lean application was noted by several authors. Womack and
Jones (1996) identify the importance of “thinking” in Lean production and summarize
five principles of “Lean thinking”. Liker (2004) further states that the introduction of
Lean production involves a far deeper and more pervasive cultural transformation than
the application of a set of Lean tools, and he presents fourteen management principles
as the foundation of TPS. These mentioned authors and many other advocates of Lean
production commonly agree that the goal of Lean transformation is to achieve
competitive and adaptive manufacturing with the culture of continuous improvement
and organizational learning. Several authors also suggest the implementation process.
For example, Womack and Jones (1996) suggested the framework of “Lean leap” which
consists of four implementation phases (get started, create a new organization, install
business systems, and complete the transformation). At each phase, several specific
steps are defined (see Table 3.3). For instance, the first phase of “get started” has the
following steps: find a change agent, get Lean knowledge, find a lever, map value
streams, and initiate change as soon as possible to win the acceptance.

Table 3.3. Implementation process of “Lean leap”

based on Womack and Jones (1996), and Hines et al. (2004).

Phase Specific steps Time frame

Get started Find a change agent First six months

Get lean knowledge
Find a lever
Map value streams
Initiate change
Expand your scope
Create a new Reorganize by product family Six months through
organization Create a lean function year two
Devise a policy for excess people
Devise a growth strategy
Remove anchor-draggers
Install a “perfection” mind-set

34
Install business systems Introduce lean accounting Years three and
Relate pay to firm performance four
Implement transparency
Initiate policy deployment
Introduce lean learning
Find right-sized tools
Complete the Apply these steps to your By the end of year
transformation suppliers/customers five
Develop global strategy
Transition from top-down to
bottom-up improvement

These improvement initiatives mentioned can bring about radical improvements in

production, especially when a deep cultural change is achieved and everyone within
the organization is aligned to the company’s strategic direction. However, the risk of
adopting these packaged solutions and following the suggested processes are also
mentioned by several authors. For instance, relying heavily on the packaged solutions
may hinder in-depth organizational learning. Wu (2001) states that companies may
adopt them as panaceas without understanding the strategic rationale and concepts
behind them. Relying on these packaged solutions and believing that they have
learned to solve their problems is not really a “learning organization” (McGill and
Slocum, 1993). In a learning organization in their term, people are not only doing
things better but also creating completely new things. Another criticism is that the
implementation processes such as described above often omit how to actually realize
an organizational cultural change, despite its being the key and the most challenging
part of the implementation. Following the suggested pre-determined processes does
not assure that a deep cultural change will occur. Moreover, some authors state that in
reality an implementation process seldom proceeds in a pre-determined and liner
fashion. For example, in the context of Lean transformation, Drew et al. (2004) state:

“Although it may be tempting to turn these (Lean transformation) phases

into a project plan or a process to be followed, the reality of the journey is
not like that. There is no ‘right’ way to approach a Lean transformation.”

Hines et al. (2004) also claim there is no pre-determined way or “one best way” to
implement Lean and, thus, a more contingent approach needs to be considered in the
implementation.

3.4.4 How to realize Kaikaku - the contingency and learning approach

As shown in the previous subsection, many production system design theories and
implementation theories of company-wide improvement initiatives suggest systematic
35
and prescriptive processes. However, another kind of approach to realizing a radical
improvement in production can be identified in literature. This thesis calls that
approach the contingency and learning approach. In the following, the approach is
introduced.

The contingency approach

The contingency approach considers that there is no one best way to organize a
process to achieve a certain objective. The approach believes that the process is
deeply context-dependent, and therefore proper interventions should be made at
proper times based on the organization’s changing internal and external context.
Several authors claim that the contingency approach needs to be considered when a
company conducts an improvement that involves a deep cultural change. Change
management is a research area that discusses how to support bringing about a cultural
change in an organization. The contingency approach is often adopted in change
management theories (for example, the theories presented by Balogun and Hailey
(2008) and Hayes (2002)). This thesis introduces them briefly as an example of the
contingency approach.

The above-mentioned change management theories suggest analyzing the company’s

internal and external context factors prior to the change. The theories provide a set of
different change options. Top-down change or bottom up change, collaborative
change or directive change, which organization level to be changed, and who to be the
key person of the change are some of the options. The change options are selected
based on the analyzed context factors of the company. The change management
theories also describe how to manage personal transition, meaning a change of a
person’s mindsets and behaviors. For instance, Balogun and Hailey (2008) describe a
psychological process of personal transition with three stages: “letting go the past”,
“adapting to change”, and “moving forward”. These authors suggest how to support
and facilitate the personal transition at each stage. Monitoring a change process is also
important in the change management theories. Balogun and Hailey (2008) assert that
while managers can drop intervention at the top of the organization, it is impossible to
“manage” or “control” the interpretations of the recipient. A change is a more non-
linear and on-going process that requires proximity to those on the receiving end and
facilitation of creating alignment among the people within the organization.

It can be beneficial to consider the change management theories especially when a

radical improvement involves a cultural change. However, the theories are developed
from a general organizational management perspective. Thus, they are not particularly
concrete in describing and suggesting how to realize a cultural change in the context of
radical improvements in production. In fact, radical improvements in production with

36
the contingent approach is rarely documented or discussed in literature. This indicates
that much room is left to research on this type of approach.

The learning approach

The learning approach is closely related to the concept of learning organization. Prior
to discussing the learning approach, the concept of a learning organization is first
described. Senge (1990) describes the basic meaning of a learning organization as “an
organization that is continually expanding its capacity to create its future ". McGill and
Slocum (1993) mention the characteristics of a learning organization as openness,
systemic thinking, creativity, personal efficacy, and empathy. Argyris (1994) states that
in a learning organization, individuals or groups can do “double-loop learning”. This is
where the individuals and the groups can not only conduct improvements but also
question the values, assumptions and policies of the organization that led to the
improvements in the first place. Edmondson (2008) says that an embracing
atmosphere of learning where trust and respect thrive allows flexibility and innovation
flourish. According to McGill and Slocum (1993), there are different degrees in
organizational learning. They present four levels of learning organization as shown in
Table 3.4.

Table 3.4. Four levels of learning organization (McGill and Slocum, 1993).

Level of learning organization Description

Level 1: Bureaucracy, scientific management,

Knowing organization separation of thinkers and doers, one best
way to do it.

Level 2: Able to modify routines, but limited within

Understanding organization own jobs and divisions.

Level 3: Company-wide improvement approach,

Thinking organization but tend to introduce packaged solutions
or off-the-shelf solutions, believing they
have learned to solve the problems.

Level 4: Foster continuous experiments,

Learning organization commitment to learning from every aspect
of organization’s experiences, more than
simply acquiring new knowledge and
insights, able to “unlearn” old practice and
values.

37
The learning approach considers a change process itself a learning process. A change is
a means of achieving a desired objective. At the same time, it is a means of developing
the capability of collective learning and improvement. A change provides an
opportunity to bring an organization to a higher state of learning organization.
Edmondson (2008) emphasizes the importance of the learning aspect in an execution.
She states that the managerial mindset that enables an efficient execution inhibits an
employee’s ability to learn and innovate. A focus on getting things done, and done
right, crowds out the experimentation and reflection vital to sustainable success.

A number of Kaikaku activities at Japanese manufacturing companies seem to favor

the learning approach for realizing a radical improvement in production. In these
activities, managements often set stretched performance targets, but do not provide
processes or solutions to realize these targets. Instead, they let employees find
answers through their own experiments and learning. The stretched target is often
high enough that the employees need to leave their conventional thinking and
performance expectations. Toyota also seems to favor the learning approach to realize
radical improvements. As a result of their long term analysis of Toyota, Takeuchi et al.
(2008) state that:

“By setting near-unattainable goals, Toyota’s senior executives push the

company to break free from established routines. ... Toyota has found that a
practical way to achieve the impossible is to think deeply but take small
steps- and never give up. The company first breaks down a big goal into
manageable challenges. Then it experiments to come up with new initiatives
and processes for handling the more difficult components of each challenge.
This pragmatic approach to innovation yields numerous learning
opportunities.”

The learning approach does not appear to be a systematic and efficient way to realize
a radical improvement in production. Nonetheless, it helps to develop the capability of
collective learning and improvement. Moreover, this approach has a distinct
advantage of stimulating creativity to generate an innovation. The systematic
approach described in the previous subsection and the learning approach can be
compared. The comparison corresponds to Edmondson's comparison of “execution as
efficiency” and “execution as learning” respectively (Edmondson, 2008). Her
comparison is shown in Table 3.5. In the approach of the execution as efficiency,
solutions are provided by leaders and optimal work processes are designed and set up
in advance. The processes can be executed efficiently in a top-down and linear fashion,
but little room is left for employees to learn. On the other hand, in the learning
approach, the leaders set a general direction but let the employees themselves find
the answers. Tentative work processes are made at the starting point, but they
38
continue to be developed through experiments. The execution may be less systematic
and less efficient, but the employees have many learning opportunities to improve
their actions. In reality, a radical improvement in production contains both approaches,
but one of them is usually more emphasized.

Table 3.5: Comparison of two types of execution (Edmondson, 2008).

Execution as Efficiency Execution as Learning

Leaders provide answers. Leaders set direction and articulate the

mission.

Employees follow directions. Employees (usually in teams) discover

answers.
Optimal work processes are designed and Tentative work processes are set up as a
set up in advance. starting point.

New work processes are developed Work processes keep developing; small
infrequently; implementing change is a changes, experiments, and improvements
huge undertaking. are a way of life

Feedback is typically one-way (from boss Feedback is always two-way; the boss
to employee) and corrective. gives feedback in the forms of coaching
and advice; team members give feedback
about what they are learning from the
work.

Problem-solving is rarely required; Problem-solving is constantly needed, so

judgment is not expected; employees ask valuable information is provided to guide
managers when they are unsure. employees' judgments.

In the discussion of the competitiveness of a production system (see Section 3.1.2), it is

mentioned that the production organization’s strong capability of collective learning
and improvement has become an important factor in competitiveness. From that
perspective, the learning approach of realizing a radical improvement in production
has a significant potential to contribute to the production’s competitiveness. However,
the learning approach in the context of radical improvements in production has been
little documented or discussed in literature. Similar to the contingency approach, the
learning approach of realizing Kaikaku has much room left to be explored and analyzed.

3.5 Summary
This chapter aims to present the frame of reference that gives a theoretical foundation
for the research presented in this thesis. At each section and subsection, relevant
39
theories are introduced and discussed. Here, an overall summary of this chapter is
made:

• A production system is defined based on the model of the transformation system

suggested by Hubka and Eder (1984) as shown in the Figure 3.1. Kaikaku causes
some fundamental changes within a production system defined above.
• The competitiveness of a production system can be evaluated from both a static
and a dynamic aspect. These aspects are described in Subsection 3.1.2. The
recent literature shows that the dynamic aspect becomes more important for the
competitiveness of the production.
• The basic ideas of Kaizen and Kaikaku are introduced and defined. The word of
Kaikaku has been used in Japanese industry for more than 20 years, but it is not
much known to the rest of the world compared to Kaizen. The concept of Kaizen
is well-established, but Kaikaku is still understood differently in literature. The
concept of Kaikaku, therefore, needs to be more clarified in order to conduct the
research on how to realize Kaikaku.
• A wide variety of theories can be associated with the question of how to realize
Kaikaku in production. This thesis divides the relevant theories into the
systematic approach and the contingency and learning approach. The systematic
approach (e.g., production system design theories) favors systematic and
prescriptive processes. It considers that an efficient execution of the process
contributes to the competitiveness of the production. On the other hand, the
contingency approach assumes that a pre-determined process does not always
work effectively or efficiently, and that proper interventions should be taken
place based on the changing context of an individual or a group. The learning
approach can be less systematic, but it allows more experiments in the process
that contribute to the dynamic aspect of the production competitiveness.
Compared to the systematic approach, the contingency and learning approach of
realizing radical improvements in production have been little documented in
literature and little theoretical development has been made. This indicates that
much room is left to research in this area.

The frame of reference and the problem recognitions mentioned above were not
formed at the beginning of the research. Rather, they have been developed and
evolved during the course of the research. The problem recognitions influenced the
formulation of the research questions presented in Chapter 1, and they also influenced
the way case studies were conducted and analyzed. The result of the research work
will be presented in the next chapter.

40
 4. The research results and analysis
As mentioned in Chapter 2, the research presented in this
thesis was comprised of a literature study and three case
studies. The first section presents the findings from these
studies. Based on the findings, models or factors related to
the research objectives were developed or indentified. The
second section presents those models and factors.

4.1 Theoretical and empirical findings

The following subsections present the findings obtained from the literature study and
the three case studies.

4.1.1 The literature study

The literature study had two goals: to understand the phenomena of Kaikaku better
and to identify theories that can explain the phenomena in a structured way. The
literature study revealed that Kaikaku is an ambiguous construction and that it involves
a wide range of activities. Many of the findings from the study are presented in
Chapter 3, which can be summarized as follows:

• At a generic level, there is a shared consensus about Kaikaku in literature.

General characteristics of Kaikaku are: it occurs episodically, it causes some
fundamental changes within a production system, drastic performance
increases are obtained, and Kaikaku is usually initiated by top or senior
management. The definition of Kaikaku is made based on these characteristics.
• At a more detailed level, Kaikaku is described much differently in literature.
Examples are shown in Table 3.1.
• Many manufacturing companies have initiated Kaikaku in production, but
with different focuses. For example, some companies focus on radical
changes of production flows, while others focus on radical changes of
production equipment.
• Some companies realize Kaikaku by introducing solutions that are already
available in industry. Other companies realize Kaikaku by creating radically
innovative solutions that are even new to the industry.

The study implied that some sort of a categorization framework was needed in order
to understand Kaikaku in a comprehensive and structured way. From the literature
study, it was found that two theories were particularly useful for the categorization.
One was the typology of product innovation. The other was manufacturing decision
categories used in the theoretical area of manufacturing strategy. With modification of

41
these two theories, a categorization framework of Kaikaku was developed. The
categorization framework is presented in Section 4.2.1.

4.1.2 Case study A – practice of Lean transformation

Case study A was conducted to identify how to drive a Lean transformation. The
author of the thesis observed and participated in two Lean transformations at two
medium-sized Swedish manufacturing companies. The transformations were consulted
and driven by a Japanese consultant with abundant experience developing TPS-
inspired production.

During the case study, the studied two companies, named company A and B in Chapter
2, realized radical improvements in production. For example, at company A, the
production lead times have been reduced on the average by 35%. This was realized by
the drastic changes of production flows, production planning, batch sizes,
management structure, organization culture, among other factors. At company B, the
lead times of the assembly and test processes were reduced from a few days to a few
hours. This was mainly realized by changing from batch production to one-piece flow.

The outcomes of these transformations may not be particularly unique from other
Lean transformations found in industry or literature. However, the interesting findings
from case study A were related to how the consultant drove these Lean
transformations. At the beginning of the transformations, a general direction of
improvement (e.g. the lead time shall be reduced by half, or the number of internal
defects shall be reduced to half) was set. However, the Japanese consultant was
reluctant to make detailed plans. He said, “I can make a rough plan, but I have never
seen any Lean transformations that followed any detailed plan.” Moreover, his advice,
comments, and behavior appeared spontaneous, with little consistency. Examples of
improvement events described below illustrate his behavior and actions during the
Lean transformations. More examples can be found in appended paper B.

Example of improvement event I: When analyzing one production process at company

A, the consultant thought that there were too many buffer stocks. It was because they
produced with one-week batches. After a quick investigation showed that it was
possible to produce with daily batches, he suggested removing the buffer stock
completely, except for the amount needed for the daily batches. The shop floor
supervisor and the operators showed confusion and an unwillingness to reduce the
stock. The consultant however insisted that they do it anyway, saying that they should
find a way to manage the reduced amount of buffer stock.

Example of improvement event II: At company A, there was a tension between the two
departments, production planning and production. Production planning felt that
production did not follow the plans. At the same time, production felt that many
42
production orders started based on prognosis and frequent priority changes of the
orders caused chaos at the production. Due to the lack of trust in production,
production planning tended to start production orders as much and early as possible in
order to offset the risk of delivery delay to the customers. This increased WIP and lead
time. It also increased the process complexity that made actual WIP and lead time
even longer. The consultant told production planners that if they tried to reduce the
risk of delivery delay by starting production orders more and earlier than necessary,
the competency of production would never improve. They were advised to try to start
only confirmed orders and, moreover, to start as late as possible. Taking actual value
added time of their products into consideration, the consultant saw that lead time
could be much shorter. He instructed them to reduce the lead time by 30 % or 50 % in
their planning system immediately, and to start production orders later in accordance
with the shortened lead time.

Example of improvement event III: At company B, an assembly section made a layout

change to create a flow production. Then, the consultant instructed the production
manager to carefully observe how operators assembled the products. He said “layout
change is just a first step. Now, observe the assembly process carefully and find any
factors that disturb the repeatability of the operation. All the disturbances you may
find are potential risks of quality problems. The disturbances can be because of lack of
assembly instructions, poor product designs for assembly, insufficient operator
training systems, inappropriate fixtures or jigs, inadequate positions of parts feeding,
malfunctions of testers, lack of parts, defect parts, competence of supervisors, and so
forth. The lead time can be shortened by the layout change, but identifying and
correcting all those disturbances is another important reason of this layout change.”

From the analysis of the improvement events observed during the case study, it was
found that there was a consistent thinking behind the consultant’s comments and
behaviors. Based on the analysis, a mechanism of how to drive a Lean transformation
was identified, and it is presented in Section 4.2.2.

4.1.3 Case study B – Kaizen practice at Swedish and Japanese companies

Case study B was conducted when the above-mentioned Japanese consultant held
TPS-workshops at six Swedish companies in April 2007. From the observation of the
workshops, it was found that one of the major differences between the six Swedish
companies and Japanese companies proficient in TPS was the way of conducting
Kaizen. The difference was especially evident in three areas: finding problems,
generating solutions, and taking actions.

Finding problems: The workshops included on-site shop floor consultations where the
consultant went to the shop floors of the companies and instructed improvements.

43
There, he pointed out deficiencies in the operations in every detail. Some attendants
of the workshops thought he was a fault-finder, but the consultant later explained that
examining shop floors with severe eyes was critically important for Kaizen. He called
these severe eyes as “Gemba eyes”. Gemba means “actual place” in Japanese, and in
the context of production it means shop floor. It was found that Gemba eyes were
necessary to identify any tangible and intangible problems at shop floors and also to
keep recognizing the need for improvement with a sense of urgency. Moreover,
Gemba eyes were also important to capture a holistic view of how the operations were
managed at the factories. By questioning how the management systems allowed the
deficiencies to occur, the performance of the systems were analyzed. It was observed
that most of the attendants at the workshops did not have Gemba eyes.

Generating solutions: During the workshops, the consultant said that one could
identify many small improvements realized by simple but creative devices or
equipment at shop floors of companies proficient in Kaizen. At such companies,
employees were often trained to use wisdom thoroughly before using money. The
consultant stated that Kaizen could be done even with pens and cartons. However,
such simple but creative solutions were rarely found at the shop floors of the six
companies.

Taking actions: One of the general impressions that the consultant felt about Kaizen at
the shop floors of the six companies was that there was a large time lag between
recognizing problems and taking actions against them. Managers and employees
seemed to prefer reaching a full consensus and removing all the uncertainties before
initiating improvements. The consultant commented that sometimes it could be better
to initiate improvements even when some uncertainties were left, because further or
better improvement ideas often became clearer after the initiation. Taking actions
immediately was encouraged by saying that small changes could be easily undone if
they would not work well.

Based on the findings from case study B, eight guidelines for enhancing Kaizen at shop
floor were developed. The guidelines are briefly presented in Section 4.2.2. The results
obtained from case study B are relevant to the second research objective. The above
mentioned literature study and case study A indicated that in some cases Kaizen was
an integral part of Kaikaku. In these cases, Kaizen proficiency can strongly influence an
effective and efficient execution of Kaikaku.

4.1.4 Case study C – organization setting that facilitates Kaikaku

Case study C investigated five Japanese companies and four Swedish companies, in
order to identify production management and organization settings that can increase
the likelihood of radically innovative Kaikaku (defined in Section 4.2.1). As mentioned

44
in Chapter 2, the five Japanese companies were selected as extreme cases. The
domestic factories of these companies are regarded as highly efficient in using various
advanced technologies and work processes. The four Swedish companies were
selected as reference cases in order to understand the status of production
management and organization settings at Swedish companies. The questions asked
during the interviews with these nine companies were related to four general
categories:

• Manufacturing strategy of the company

• Organization of the production engineering function
• Education systems within the production function
• Culture of the production organization

A brief summary of the result of the interviews is presented in below, but the mode
detailed description of the results is found in Appended Paper C.

Manufacturing strategy of the company: Production function’s strategic roles within

companies were asked in the interviews. The respondents of all the studied Japanese
companies answered that the production functions in Japan were and would be
playing significant roles in sustaining the companies’ competitive advantage. These
companies set their domestic production functions as global production development
centers, where new production equipment and new work methods are developed,
tested, and refined. Two of the studied Swedish companies assigned their domestic
factories as master plants, but the respondents of these companies did not emphasize
the role of production as much as those of Japanese companies.

No significant difference was found among the studied nine companies in terms of the
general processes of formulating manufacturing strategies. At the companies,
corporate or business strategies are created. Then, a few years of long-term
manufacturing strategies are formulated. Yearly action plans are made and specific
projects are organized based on the manufacturing strategies.

The five Japanese companies also had strategies for developing production equipment.
Most of these companies aimed at developing simple, slim, and low-cost equipment.
To realize such equipment, for example, one of the five companies required a
significantly short payback-period for certain types of equipment. Another company
restricted the height of equipment to lower than 150 centimeters. The importance of
developing their own unique equipment that could differentiate the factories from the
competitors was emphasized at the five Japanese companies. None of Swedish
companies had such a strategy for developing in-house equipment. Instead, they
mostly buy equipment from external suppliers.

45
Organization of the production engineering function: Organization structures of
production engineering functions were asked about in the interviews. A tendency of all
studied companies was that the companies tried to separate engineering support
functions for factories and production development functions. Production
development functions mean here functions for developing future production
technologies, production equipment, production lines and cells, among other things. A
respondent of one of the Japanese companies said that such a separation was needed,
otherwise, the respondent contended, the production engineers tended to be drawn
into daily problem-solving tasks for the shop floors. Generally, the Japanese companies
studied had larger production development functions than the Swedish companies
studied. The ratio of production engineers to shop floor operators was also inquired
about at each company. The ratios of the studied Japanese companies were in general
higher than the studied Swedish companies. One of the Japanese companies had a
considerably high ratio that was 28%. This company had 2,800 production engineers,
and 700 of them were assigned to develop in-house production equipment. The
company had developed its own industrial robots, and the number of the robots used
at the factories was higher than that of the operators.

The interview respondents were asked about the cooperation between product
development and production engineering functions. Most of the nine studied
companies used design review as a facilitator of the cooperation. However, the
respondents of three Swedish companies said that the cooperation needed to be
improved much more. Three studied Japanese companies had specific mechanisms
that enhanced the cooperation. For instance, one of the companies organized a so-
called “next product generation team”, which consisted of engineers from both
product and production development functions. The team simultaneously developed
future platforms for products as well as future production systems. Another company
organized a special department coordinating production engineers, product
development engineers, and factories in order to drive large improvement projects in
production.

Education systems within the production function: The respondents were asked about
the education systems within the production functions. A tendency was that the more
a company considered the strategic importance of the production, the more the
company made systematic efforts to educate production engineers and shop floor
workers. As for the education of the production engineers, most of the studied
companies educated production engineers based on learning by working. Two
Japanese companies that had a large number of production engineers had developed
central education systems.

46
As for the education of the shop floor workers, most of the studied companies had
more systematic education schemes than for the production engineers. Skill-matrixes
were commonly used among the studied companies. All of the studied Japanese
companies had central education systems for the skill development of operators. They
also organized or joined internal or external skill competitions in order to motivate skill
development.

Involvement of shop floor workers and staff: The studied companies were asked how
shop floor operators and staff contribute to creating and using new equipment and
work processes in production. The respondents of all of the Japanese companies and
two Swedish companies answered that a high level of skill in continuous improvement
on the shop floors was an important pre-condition for realizing such innovations in the
production. A respondent of one of the companies studied said that without the shop
floor's skills in making problems tangible, analyzing them, and giving feedback to
production engineers, new equipment and work processes could not be matured and
exert their full potential. A respondent at another company studied answered that
without the shop floor’s expertise in the operation, the development of new
equipment and work processes would rarely succeed.

Based on the analysis of the collected evidence from the interviews, six characteristics
of production management and organization settings that can increase the likelihood
of realizing radical innovations in production were identified. The six characteristics
will be presented in Section 4.2.3.

4.2 Analysis of the findings

Based on the theoretical and empirical findings from the literature study and the case
studies, models or factors that serve to fulfill the research objectives and answer the
research questions were developed or identified. This section presents these models
and factors.

4.2.1 A conceptual model of Kaikaku

From the literature study described in Section 4.1.1, a model of four types of Kaikaku
was developed. The model describes the phenomena of Kaikaku from a macro level of
analysis (from a plant or a production system level). The model is shown in Figure 4.1.
In the model, the horizontal and vertical axes represent two different ways of
categorizing Kaikaku.

47
 Kaikaku type I Kaikaku type III
“ Structural change beyond
Structural

“ Structural change”
the state of the art”
e.g. Replace with new production e.g. Invent new production
equipment available in industry
Area of Kaikaku

equipment and use in the factory

Kaikaku type II Kaikaku type IV

Infrastructural

“Infrastructural change” “Infrastructural change beyond

the state of the art”
e.g. Introduce available work e.g. Invent new work
methods such as TPM, Six Sigma, and methods and use in
Lean. the factory

Incrementally innovative Radically innovative

Innovativeness of the outcome by Kaikaku

Figure 4.1. Model of four types of Kaikaku.

The horizontal axis of the model represents the categorization in terms of

innovativeness of the outcome by Kaikaku. This categorization has its theoretical basis
in the typology of product innovation. Extensive research has been done in the area,
and it can be applied to Kaikaku as well. By modifying and applying the classification of
product innovation suggested by Garcia and Calantone (2002), Kaikaku can be
categorized into two types, incrementally innovative and radically innovative Kaikaku.

Incrementally innovative: Incrementally innovative Kaikaku occurs when a newly

formed production system as an outcome of Kaikaku is novel to the plant or to the
company, but a similar system already exists in the industry. Thus, the system does not
appear particularly innovative from the industrial perspective. Here, an industry means
a particular field of international manufacturing industries, such as automobiles, home
electric appliances, and mobile telephones. This type of Kaikaku often occurs when off-
the-shelf equipment or packaged production management solutions are introduced to
a plant or a company. Examples include off-the-shelf automation systems or packaged
company-wide improvement initiatives, such as Six Sigma, TPM, and Lean.

Radically innovative: Radically innovative Kaikaku occurs when a newly formed

production system is not only new to the plant or to the company but also new to the
industry. In this type of Kaikaku, novel technological solutions, work methods,

48
production flows, and work organizations, among other things, are invented and used
in a plant or a company. Such innovative solutions make the plant appear unique to
the industry.

The vertical axis of the model represents the categorization in terms of the area of
change in Kaikaku. This categorization is inspired by the framework of manufacturing
decision categories proposed by Wheelwright (1984) and Fujimoto (2001). These
authors classify the decision categories into two groups, namely structural and
infrastructural. The comprehensive coverage of the decision categories and the
characteristics associated with the mentioned groups are useful to categorize Kaikaku.
By adapting the framework of manufacturing decision categories with some
modifications, Kaikaku can be categorized into two types, structural and infrastructural.

Structural: Basic changes mainly take place in the structural area (for example, plant
network and production equipment) as shown in Table 4.1. This kind of change tends
to require substantial capital investment when altered, is often difficult to reverse or
undo once it is in place, and thus tends to cause long-term impact. It is often carefully
planned or developed by limited number of people, such as strategic planners or
production engineers.

Table 4.1. Structural area, based on Wheelwright (1984) and Fujimoto (2001).

Structural area
• Production capacity
- volume per year
• Plant network design
- size, ___location, focus
• Production technology
- equipment, automation level
• Vertical integration
- direction, extent

Infrastructural: Basic changes mainly take place in the infrastructural area as shown in
Table 4.2. Examples are production control system, quality control system, material
flow, and organization. This kind of changes tends not to require a large capital
investment at a single point of time. Instead, they tend to require continuous and
consistent efforts in improving the operation. A cumulative impact of on-going efforts
leads to realizing a major change. This type of Kaikaku is more “soft-oriented” since it
often involves basic changes of the way of working. Every employee’s active

49
involvement and the consistency in the patterns of their conduct are considered
important.

Table 4.2. Infrastructural area, based on Wheelwright (1984) and Fujimoto (2001).

Infrastructural area
• Human resource
- pay system, evaluation system,
union relation
• Production planning & control
- inventory, order system, batch size
• Quality control
- defect prevention, monitoring
• Cost control
- cost calculation, accounting
1
• Material flow
- connectedness, layout
• Maintenance
- routine, monitoring
• Organization
- structure, culture

The four types of Kaikaku shown in Figure 4.1 are the combination of the two axes
presented above. Below, each type of Kaikaku is described. Some industrial examples
associated with each Kaikaku type are also presented.

Kaikaku type I: Basic changes in the structural area result in an incrementally

innovative outcome. This type of Kaikaku tends to be realized by importing existing
solutions in the structural area. One example is increasing the level of automation with
off-the-shelf equipment.

Many industrial examples are available for this type of Kaikaku. For example,
Schroeder and Congden (1995) present cases of radical improvements at several
foundries where drastic improvements in production capacities were achieved by
purchasing and installing automatic molding machines. Sower and Foster (1990)
present a case of a radical improvement in production where the production quality
and the labor productivity increased dramatically by installing controller equipment
and handing robots.

1
A basic change of material flow at a production plant may require a large amount of capital investment. In
such a case, the change of material flow can instead be categorized to the structural area.
50
Kaikaku type II: Basic changes in the infrastructural area result in an incrementally
innovative outcome. This is typically realized by importing a set of work processes
developed by external parties or packaged company-wide improvement initiatives,
such as TPM, Lean production, and Six Sigma.

There are many industrial examples that can be categorized to this type of Kaikaku.
One example is Six Sigma implementations at ABB and Alfa Laval described by
Magnusson et al. (2003). Kaikaku at vending machine production at Kubota
Corporation (Kawakami and Kobayashi, 2005) is another example. At this company, the
productivity of certain production lines was increased by 300 percent by introducing
Lean production. The Lean transformations observed and participated during case
study B can be also categorized to Kaikaku type II. In the transformations, radical
improvements in production lead times and in-process stocks were achieved by the
basic changes of, among other things, the production flow, production control,
organization structure, and organization culture.

Kaikaku type III: Basic changes in the structural area lead to a radically innovative
outcome. In this type of Kaikaku, new technologies, production equipment, or other
kinds of solutions related to the structural area are invented and applied to the plant
or to the company.

An example of this type of Kaikaku in industry is Kaikaku at the Takaoka factory in

Toyota. Toyota introduced numbers of innovative pieces of equipment to the plant.
This led to a 50% reduction in production lead times and the length of production lines
(Stewart and Raman, 2007). Protean Production System (PPS), developed by Denso
(Sugito et al., 2004), is another industrial example of this type of Kaikaku. PPS consists
of plug-and-play robot assembly modules that realize highly reconfigurable production
lines.

Kaikaku type IV: A radically innovative outcome is achieved by basic changes in the
infrastructural area. In this type of Kaikaku, innovative work processes, production
flows, or other kinds of unique solutions in the infrastructural area are created and
used in the plant.

An industrial example of this type of Kaikaku is the trolley-pull production created at

Ricoh United (Tanaka, 2005). This copier manufacturer changed from a conveyer line
to a unique production line consisting of connected trolleys pulled by an electric motor.
This enabled the line length to be synchronized with the production volume. As a
result of this new system, the lead time and in-process stock were reduced by 80
percent.

51
More industrial examples categorized to one or few types of Kaikaku are found in
Table 4 in Appended Paper A.

The model of four types of Kaikaku presented above has served to fulfill the research
objectives in a few ways.

First, the model helps to understand the phenomena of Kaikaku in a more

comprehensive and structured way. The ambiguity of Kaikaku accompanied by the
different understandings of the phenomena in literature has been to some degree
reduced by the model. For example, Imai (1986) says that Kaikaku is a technology-
oriented change conducted by a small number of champions, while Wakamatsu and
Kondo (2003) say that Kaikaku is an accumulation of exhaustive executions of Kaizen.
According to the presented model, it can be understood that Imai refers to the
structural type of Kaikaku, while Wakamatsu and Kondo refer to the infrastructural
type of Kaikaku. The recent Kaikaku trend in Japan in which an increasing number of
plants in Japan have become creative and unique (Ikaida, 2007; Kimura and Takano
2005) can be understood that more and more Japanese companies expand their
efforts from incrementally innovative Kaikaku to radically innovative Kaikaku.

Second, the model of Kaikaku provides a platform for further investigations as to how
to realize Kaikaku. The model shows that characteristics of changes are different
among each type of Kaikaku. This implies that necessary actions are also different
depending on the types. The model allows focusing on a specific type of Kaikaku when
discussing and analyzing how to realize Kaikaku.

Third, and finally, the model can be used in order to consider a basic strategic direction
in terms of what type of Kaikaku needs to be conducted at a specific company. Two
general rules can be related to this question. First, before initiating the structural type
of Kaikaku, improvements in the infrastructural area should be conducted first. Ohno
(1978) states that improvements of manual operations and layout changes shall be
performed before improvements of equipment or automatization; otherwise, the cost
will be increased rather than reduced. Harrington (1995) says that work processes
need to be reformed before automation is applied. Womack and Jones (1996) state
that an introduction of Lean production may significantly change the prospects for the
structural issues. The other rule is that the incrementally innovative Kaikaku should
occur before radically innovative Kaikaku. As far as better solutions are available
outside of a company, it is reasonable to introduce them. When the plant has reached
the state of the art, radically innovative Kaikaku can be considered in order to sustain
the competitive advantage.

52
4.2.2 A practical way of driving Lean transformation
From the empirical findings from case study A, a practical way of driving Lean
transformation was identified. The identified way is related to the second research
objective – in short “how to realize Kaikaku”. The identified way is related especially to
Kaikaku type II.

As mentioned in the previous section, the way of the Japanese consultant driving Lean
transformations seemed planless, spontaneous and inconsistent. However, it was
found that there was consistent thinking behind his comments, behavior, and actions.
He strongly believed that creating the need for improvements was the central driver of
Lean transformation. The identified practical way of driving Lean transformation can
be described as follows: occasionally by force, create a situation where people have no
choice (or little choice) but to feel the need of improvement. The situation is such that
brings different problems up to surface. Through letting people solving these problems
one-by-one, the performance of the operation as well as the capability of individual or
organizational learning are improved.

The image of the way of driving Lean transformation discussed can be explained by
“the Japanese sea model” as shown in Figure 4.2. This is usually used to explain why
stock levels need to be reduced in Lean production. When the water level is high, the
objects are hidden under the water. By reducing the level of it, the objects are brought
up to the surface. Likewise, a high stock level hides different problems underneath.
Problems such as lack of parts, producing defect parts, and machine break-downs are
absorbed by the stock and do not affect the operation directly. Consequently, these
problems are not likely to be recognized with a sense of urgency. When the stock level
is reduced, however, the problems start to directly affect the operation. This provokes
the need for various improvement activities. The activities can be related to quality,
work standard, maintenance, leadership, product design, and so on depending on the
problems that appear on the surface. This reducing-water-level way of working can be
generally applied to nearly any kinds of improvements. The examples of improvement
events presented in Section 4.1.2 are based on this way of working.

53
 Lack of
Machine Delay
Defects parts break-down

When the water level is high, problems When the water level is reduced,
are hidden. problems are brought to the surface.

Figure 4.2. The Japanese sea model.

The reducing-water-level way of working can be decomposed into four steps; namely,
reduce, see, think, and act. At reduce, a certain parameter or setting is changed in
order to create a situation where people feel the need for improvement. It can be
stock level, space for stock, lead time in production planning system, tact time
production, no acceptance of receiving defect parts from the previous process, and so
forth. Which parameters should be changed depends on the context of a specific
company, but there is a general rule. According to the Japanese consultant, it is
recommended to change the parameters related to delivery accuracy first, then to
proceed to change those related to quality and cost. It is because it is generally easier
to raise employees’ sense of urgency with the problems related to delivery accuracy.
The extent of parameter changes should be enough to provoke people to feel the need
for change with the sense of urgency. But if it is too much, people feel discouraged.
“Edge of chaos” - the edge between order and chaos where the creativity, growth, and
use of self-organization are at the optimal (Burnes, 2005) - can be a good indication for
the parameter setting. The reduce step must be initiated by the responsible person of
the operation, because the initiator must have an authority to change, can take the
risk of changing the operation, and can see the operation from a holistic perspective to
analyze the influence of the change.

The rest of the three steps are similar to the Kaizen process. The see step is to carefully
observe the shop floor to identify the problems that are brought up to surface. In the
think step, solutions to the problems are generated. Then, in the act step, the solutions
are implemented. These steps can be conducted by Kaizen actors who are often shop
floor leaders and operators. By conducting the reduce step, the leaders and the
operators face the problems with a sense of urgency. Then, Lean techniques or other
improvement methods become useful help for solving the problems. In this way, the
leaders and operators can learn the meaning of the Lean techniques or other
improvement methods more than when they are merely provided them without the
people feeling the need to employ them. Along with see, think, and act steps, the eight

54
guidelines of enhancing Kaizen presented in Paper A can be used. The eight guidelines
are developed based on the empirical findings obtained from case study B. The
overview of the guidelines is shown in Figure 4.3. The thesis will not go into the further
detail regarding the guidelines. The detailed description of each guideline is found in
Paper A.

Relevant
Eight guidelines of enhancing Kaizen
Kaizen skills
(1) Observe a shop floor with severe eyes
Finding (2) Never be satisfied with current operation
problems
(3) Repeat why when one sees abnormalities
with severe
insight (4) Do not blame operators, but blame system or
standard

Generating (5) Use wisdom thoroughly before using money

simple but
creative (6) Create temporary solution even if the optimal
solutions solution is unknown or takes time to be implemented

(7) Initiate change right away when a solution can

Taking be implemented immediately
immediate
actions (8) Initiate change even if there is an uncertainty.
More improvements will be found after the change.

Figure 4.3. Eight guidelines of enhancing Kaizen, based on Yamamoto (2008).

By running the cycle of the mentioned four steps, a Lean transformation is progressed.
In this way of Lean transformation, there is little sense to make a pre-determined and
detailed transformation plan. This is because necessary interventions in the course of
the transformation are deeply dependent on the problems that emerge on the surface.
In the presented way, the time plan may not appear structured. But when we look at
the pattern of conducts, the cyclical process of the four steps is consistent throughout
the Lean transformation. This gives a certain structure to the transformation. The
reducing-water-level way also makes the implementation of the Lean techniques and
the thinking (e.g. flow, pull, Kanban, standardized work, Andon, Jidoka, visualization,
customer focus, and pursuit for perfection, among others) simpler. They are simply

55
implemented in order to provoke the need for improvement, or to solve the surfaced
problems.

In order to understand the advantages and disadvantages of the presented way, it is

meaningful to compare it with a “plan-oriented way” of Lean transformation, where
solutions and implementation plans are carefully designed by a small number of
specialists and they are implemented in a top-down fashion. Table 4.3 shows the
comparison of the two ways.

Table 4.3. A comparison of two ways of Lean transformation,

modified from Appended Paper B.

The reducing-water-level way The plan-based way

The transformation process is The transformation process is

contingent and less systematic systematic

Flexible to the unexpected changes Process is rigid, thus less flexible

during the transformation process to unexpected changes

What outcome is obtained when is Outcome is designed prior to the

not exactly predicted execution

Much time is spent in actions Much time is spent in planning

Managers set direction, and Managers provide answers,

employees find answers employees follow orders

“Execution as learning” “Execution as efficiency”

(Edmondson, 2008) (Edmondson, 2008)

Chance to become a learning Chance to become a learning

organization is higher organization is limited

For the plan-based way, the transformation process is more systematic than the other
way. However, the process is more rigid and the plan-based way has, therefore,
difficulty dealing with unexpected changes during the transformation. One of the
major disadvantages of the plan-based way is that it provides less learning
opportunities to shop floor employees, since solutions are often already designed
during the planning phase and given to the shop floor to be implemented. The
reducing-water-level way has a less systematic process of transformation, and
therefore it is more difficult to predict exactly what outcome will be obtained when.
The uncertainty is especially high at the beginning of the transformation. However, a
56
notable advantage of the reducing-water-level way is that it includes a process of
collective learning. Thus, it has a higher probability of achieving a cultural change
toward a learning organization. In fact, at one of the studied companies, the managers’
and the employees’ behavioral change toward collective learning was observed. Their
mentality shifted from making excuses for not being able to meet the changed water-
level to trying to find how to meet the changed water-level. Considering the
mentioned characteristics of the reducing–water-level way, it can be said that it
involves both the contingency approach and the Leaning approach described in
Chapter 3. In Chapter 3, it was mentioned that the contingency and learning approach
of realizing radical improvements in production had been little documented in
literature. The results obtained from case study A contribute to this scarce research
area.

From the empirical findings from case study A, it is also possible to draw some key
factors that influenced the effective and efficient executions of the Lean
transformations. The identified factors are shown in Table 4.4.

Table 4.4. Key factors that influenced on the effective and efficient
executions of the Lean transformations.

Categories Key factors

Leadership • Managements' strong initiative, involvement, and commitment

The managements’ strong initiative, involvement and commitment
critically influenced the result and the speed of the improvements
during the Lean transformations.

• Leading the change by setting an example

When the managers and the shop-floor leaders led the changes by
setting an example, many of the employees became motivated for the
change. They felt attention and expectations from the managers.

Mindset • Leaving behind the established mental mode

The studied Lean transformation required the managers and the
employees to leave behind the mental mode established in the past.
Some people were not able to do it, which hindered the progresses of
the transformations significantly.

• Feeling the need for improvement

Lean tools seldom took their full effect or were sustainably used, when
the shop floor operators and staff did not feel the need of them. The
reducing-water-level way was an effective way to bring problems up to
surface and provoke employees to feel the need for improvement.

57
Organization • Creation of a “tight organization”
A “tight organization” is an organization where close cooperation, open
communications, shared mindsets and behavior, and mutual trust
among different functions and organization layers are evident. When
the case studied companies were not “tight”, a large amount of time
and effort was needed to bring about the major changes.

• Establishment of Kaizen culture

During the Lean transformations, a number of Kaizen activities were
initiated at the shop floor (for instance, 5S, operators’ maintenance,
measurement and follow up of OEE, and the improvement of set up
times). The companies’ capability of Kaizen significantly influenced the
process of the transformation.

Change • Integration of the learning approach in the change process

process
The learning approach stimulated by the reducing-water-level way was
an effective way to change the organizations toward a learning
organization. The managers and the employees became more problem-
solving oriented than making excuse oriented.

• Finding leverage through deep analysis

It was learned that in some cases root causes that hindered radical
changes lay in the areas that were not self-obvious. For instance, a root
cause of slowing the change process in the Lean transformation could
be attributed to the mindset of the production management.

Knowledge • Basic knowledge of problem-solving tools and production

principles
Sharing basic knowledge of problem-solving tools, Lean techniques, and
Lean principles with the managers and the employees helped to
maintain a common language among them and to facilitate the
alignment of their behavior within the organizations.

4.2.3 Production management and organizational setting that can increase

the likelihood of realizing radically innovative Kaikaku.
The empirical findings from case study C have indicated that six characteristics of
production management and organizational setting are important in order to increase
the likelihood of realizing radically innovative Kaikaku. The identified six characteristics
are relevant to the second research objective and the third research question, and
they are especially related to Kaikaku type III and IV. The identified characteristics are:

1. Strong management intent

2. Severe target and requirement setting on production engineering functions

58
 3. Strong production engineering functions
4. Close cooperation of production engineering functions with other functions
5. Strong emphasis on knowledge and skill development
6. Shop floor workers and staff highly competent in problem solving

1. Strong management intent

The empirical findings have indicated that management’s strong intent is needed in
order to realize radical innovations in production. The strategic importance of
production function was considerably high at the companies that tried to make their
factories radically innovative. For example, the Japanese companies studied
considered the production as the important competitive weapon of the companies.
These companies assigned the domestic production functions as the global centers of
production development, and allocated a large amount of resources to the production
development functions. These efforts imply that a radical innovation in production is
most likely a consequence of the company’s strategic intent, rather than a natural
occurrence.

2. Severe target and requirement setting on production engineering functions

The empirical findings have indicated that severe target and requirement settings can
provoke radical innovations in production. Many of the Japanese companies studied
had such severe target and requirement settings, especially on production engineering
functions. Examples include the following:

• Production cost should be reduced by half

• Production lead time should be reduced by half
• Production area should be reduced by half
• Change over time should be zero
• Payback period of investment in a piece of equipment should be reduced by
half
• Height of production equipment is no more than 150 centimeters
• Number of actuators used in a piece of equipment should be reduced by half.

It is rational to set such challenging targets in order to realize a radical innovation in

production, because targets must be set higher than the level that can be reached by
merely copying or combining existing solutions. To reach the challenging targets, the
employees may have to leave their conventional thinking and performance
expectations, and use their creativity to find innovative solutions. Certain amounts of
experiments are also needed, which provide the employees many learning
opportunities to develop their knowledge and train their skills in realizing radical
innovations.

59
3. Strong production engineering functions
It has been found from the empirical findings that allocating a sufficient amount of
competent human resources to production engineering functions is important in order
to realize radical innovations in production. At the studied companies that tried to
make their factories unique and creative, a large amount of human resources was
assigned to the production development functions. The strong emphasis on production
development functions is relevant to radical innovations in production because the
realization of such innovations often requires advanced engineering knowledge and a
certain amount of time for development.

4. Close cooperation of production engineering functions with other functions

It has been indicated that close cooperation of production engineering functions with
other functions can enhance radical innovations in production. The cooperation among
production engineering functions, product development functions, and factories has
been found especially important. At the studied companies that tried to realize radical
innovations in production, various organizational mechanisms were developed in order
to facilitate cooperation. One possible explanation of why close cooperation is
important can be that the knowledge interaction between the different functions may
have a positive influence on creating new ideas. The close cooperation can also be an
effective way to make new ideas become operationally useful on production shop
floors.

5. Strong emphasis on knowledge and skill development

The empirical findings have indicated that employee knowledge and skill development
is important in order to realize radical innovations in production. This is reasonable
because highly competent human resources are necessary to realize such innovations.
The companies studied that intended to make their factories unique and creative
enhanced the knowledge and skill development in various ways. Those ways included
setting challenging targets, promoting the development of in-house equipment, and
organizing internal skill competitions. Investing in education with a long-term
perspective was commonly observed at the Japanese companies studied, but this can
be related to the long-term employment system at those companies.

6. Shop floor workers and staff highly competent in problem solving

The empirical findings have also shown that shop floor workers and staff highly
competent in problem solving is an important factor in realizing radical innovations in
production. At many of the studied companies, the importance of problem solving
skills on shop floors was especially emphasized in the context of making new
equipment and work processes operationally effective and sustainable on shop floors.
For example, one of the Japanese companies studied had created innovative flexible
automation lines consisting of plug and play robot modules. A respondent of the
60
company said that the automation lines probably could not be operated at other
companies because highly trained operators specialized in indentifying and correcting
problems at the lines were required to operate the lines effectively. Another possible
benefit of having highly competent shop floor workers and staff is that these
employees can improve the operation by themselves without relying so much on
production engineers. This releases the production engineers from spending a large
amount of time dealing with daily problem-solving tasks for the operation.

Besides the identified characteristics, it was found that the importance of systematic
processes of realizing radical innovations in production was not emphasized at the
studied companies. One of the possible explanations can be that similar to a research
process, the realization of a radical innovation can be a highly complex and iterative
process. Therefore, it may be difficult to create a systematic process to be followed.
Instead, the studied companies seem to focus on more manageable factors, such as
organization structures, resource allocations, and target settings.

The identified six characteristics are generally consistent with the previous findings in
literature. For example, Dobni (2006) states that an innovative organization needs
eight areas of focus, such as strategic intent for innovation, employees’ skills,
knowledge management, culture of learning, and technological and financial support.
Schroeder et al. (1989) state that ways to improve the probability of realizing
innovations in production can be categorized into four areas: goals, structure/process,
culture, and resources. At a more detailed level, however, the results obtained from
case study C differ from the previous research in some respects. For example:

• The result of the case study is more related to a specific type of innovations in
production – radically innovative Kaikaku.
• The importance of production engineering functions is particularly
emphasized in the context of realizing radical innovations in production.
• Practical examples in industry associated with the six characteristics are
identified.

When comparing the studied Japanese companies with the studied Swedish
companies, all of the companies made various efforts related to the six characteristics
mentioned above. The difference, however, is the degrees of the efforts. Generally,
the Japanese companies studied strove for the mentioned characteristics more than
the Swedish companies studied. One of the reasons can be that these Japanese
companies begin to recognize that improvements such as purchasing off-the-shelf
production equipment or emulating best practices in industry do not always assure
long-term international competitiveness. Such improvements can be done at external
and internal competitors in fast-growing countries such as those in East and South East

61
Asia. All the respondents of the five Japanese companies studied commonly expressed
the fear of those competitors’ speed of competence development. The Japanese
companies probably felt that building the capability of realizing radical innovations was
one of few ways to keep domestic factories in Japan. None of the respondents of the
Swedish companies expressed the threat of the competitors in low-wage countries as
much as the Japanese companies. However, the competitive threat may become larger
in Sweden due to the ever-escalating global competition. In the near future, the
importance of realizing radical innovations in production can be highlighted more in
Swedish industry.

4.4 Summary
This chapter has presented the literature study and three case studies conducted
during the research presented in this thesis. The models and the factors developed or
identified from these studies have also been introduced. A short summary of this
chapter follows.

The literature study indicated that Kaikaku was an ambiguous construction. The
theoretical study led to create a model of four types of Kaikaku. The model helps to
understand the phenomena of Kaikaku in a comprehensive and structured way. The
model also provides a platform for further investigations as to how to realize Kaikaku.
In the end, the model serves to fulfill the first research objective – in short, “what
Kaikaku is”.

A practical way of driving Lean transformation was identified from the analysis of case
study A – the observation of the Lean transformations at two Swedish companies. The
identified way can be supported by the Kaizen guidelines developed from case study B.
It differs from the systematic ways of implementing Lean production that have been
common in literature. The results obtained from case study A serve to fulfill the second
research objective- in short “how to realize Kaikaku”. The results are particularly
relevant to Kaikaku type II.

The six characteristics of production management and organization setting that can
increase the likelihood of realizing radical innovations in production were indentified
from the empirical findings of case study C. Practical examples of these characteristics
at the studied companies have been also presented. They can serve as examples for
companies considering realizing radical innovations in production. The results obtained
from case study C are relevant to the second research objective, especially for Kaikaku
type III and IV.

Finally, conclusions are drawn in the next chapter based on the results presented in
this chapter.

62
 5. Discussions and conclusions
This chapter presents the conclusion of the research,
answering the formulated research questions and
discussing the fulfillment of the research objectives. Then,
the research contribution to academia and industry is
stated. Later, the quality of the conducted research is
examined. Finally, the chapter closes with proposals for
future research.

5.1 Fulfillment of the research objective

In Chapter 1, the research objectives were formulated as follows:

The research has two objectives. The first objective is to analyze and
structure the concept of Kaikaku in order to describe the phenomenon
comprehensively and consistently. The second objective is to develop
methods or guidance that facilitate the realization of Kaikaku. The methods
or guidance should contribute to realizing radical improvements in
production and to improving the production function’s capability for
collective learning and improvement.

To fulfill the research objectives, the research objectives were transformed into three
research questions. The frame of reference was developed in order to understand the
state of the art in the addressed research field, as presented in Chapter 3. A literature
study and three case studies were conducted.

• The literature study was conducted with the purpose of understanding the
phenomena of Kaikaku and finding appropriate theories that can explain the
phenomena in a structured way.
• Case study A was conducted to analyze and identify how to drive a Lean
transformation. The case study was also conducted to identify key factors that
strongly affect an effective and efficient execution of radical improvements in
production.
• Case study B was conducted in order to compare Swedish and Japanese
companies in terms of Kaizen practice (The results obtained from case study B
are relevant to the second research objective).
• Case study C was conducted with the purpose of identifying the
characteristics of production management and organization settings that can
increase the likelihood of realizing radically innovative Kaikaku.

63
The results obtained from these studies were presented in Chapter 4. The results are
relevant to answering the three research questions.

The first research question was formulated to fulfill the first research objective:

RQ1: How do scholars and practitioners describe the phenomenon of Kaikaku,

and what theories are suitable to explain the phenomenon in a
comprehensive and structured way?

This question has been answered through the mentioned literature study. At a generic
level, a consensus exists in the way of describing Kaikaku. Kaikaku is often described as
radical improvements that occur episodically, involve fundamental changes within a
production system, cause drastic performance gains, and are often initiated by top or
senior management. The research defined Kaikaku based on the general
characteristics of Kaikaku mentioned above in the following way:

Kaikaku is an infrequent but radical improvement where fundamental

changes occur in the production system and a dramatic performance
increase is obtained. Initiated often by top management, fundamental
changes are made through reformations or replacements of the system by
introducing new knowledge, work methods, strategies, production
technologies, or equipment and so forth. The performance increase as a
result of Kaikaku is often 30 to 50 % or more.

At a more detailed level, however, Kaikaku is differently understood and described in

literature, as shown in Table 3.1. The literature study implied that some sort of a
categorization framework was needed in order to explain the phenomena of Kaikaku in
a structured way. Two theories were found particularly useful for the categorization.
One was the typology of product innovation. The other was manufacturing decision
categories used in the theoretical area of manufacturing strategy. Based on these two
theories, a categorization framework of Kaikaku was developed that was presented in
Section 4.2.1.

The second research question was formulated in order to fulfill the second research
objective:

RQ 2: What factors or mechanisms significantly contribute to an effective

and efficient execution of Kaikaku and to an improvement of the capability
for collective learning?

The second research question can be answered from the results obtained from case
study A. From this case study, it was possible to glean some key factors that strongly

64
affected the effective and efficient executions of the Lean transformations. These
factors also had positive influences on increasing the capability for collective learning
within the studied companies. The identified factors were presented in Table 4.4:

• Management’s strong initiative, involvement, and commitment

• Leading the change by setting an example
• Leaving behind the established mental mode
• Feeling the need for improvement
• Creation of a “tight organization”
• Establishment of Kaizen culture
• Integration of the learning approach in the change process
• Finding leverage through deep analysis
• Basic knowledge of problem-solving tools and production principles

“The reducing-water-level” way described in Section 4.2.2 was identified as a

mechanism for driving Lean transformation practiced by an experienced Japanese TPS
practitioner. The identified way supports some of the above mentioned factors. They
are: leaving behind the established mental mode, feeling the need for improvement,
establishing the Kaizen culture, integrating the learning approach into the change
process, and finding leverage through deep analysis.

The nine factors mentioned above and the reducing-water-level way can be the
answers to the second research question, but these findings were derived from the
case study of Lean transformations. How much can they be generalized? Since these
findings were not tested in other situations than Lean transformations, only
hypotheses can be made. A plausible assumption is that they can be applied to Kaikaku
type II, since the studied Lean transformations belong to this type of Kaikaku. For other
types of Kaikaku, further research is most likely needed.

The third research question was formulated as:

RQ 3: What are the characteristics of production management and

organization settings that can increase the likelihood of realizing Kaikaku?

The third research question has been answered through case study C. However, this
case study focused only on radically innovative Kaikaku (Kaikaku type III and IV). From
the case study, six characteristics of production management and organization settings
were identified as relevant. The detailed explanations of each characteristic were
presented in Section 4.2.3:

• Strong management intent

• Severe target and requirement setting on production engineering functions

65
 • Strong production engineering functions
• Close cooperation of production engineering functions with other functions
• Strong emphasis on knowledge and skill development
• Shop floor workers and staff highly competent in problem-solving

The research did not investigate Kaikaku type I and II with respect to the third research
question. Further research is needed to answer the question for these types. One
assumption is that strong management intent is also necessary for Kaikaku type I and II.
However, the other identified characteristics are more like things that can be improved
or developed during these types of Kaikaku, rather than pre-conditions for these types.

The answers to the research questions indicate the fulfillment of the research
objectives. The first research objective can be considered fulfilled because the model
of four types of Kaikaku describes Kaikaku in a comprehensive and structured way and
the model actually helped to conduct further research concerning how to realize a
specific type of Kaikaku. However, the second objective is only partially fulfilled. The
results obtained from case study A, B, and C address only a limited area of Kaikaku.
Further research is needed to fulfill the second objective.

5.2 Reflection on the scientific and industrial contribution

In the field of production research, Kaikaku has been researched much less than Kaizen.
The concept of Kaikaku is ambiguous, often a sign of an immature research area. In
terms of how to realize radical improvements in production, research has been
conducted in a piecemeal manner. Many researchers focus on specific topics, for
instance, introduction of new production equipment and implementations of
company-wide improvement initiatives such as Six Sigma and Lean. There has been
little attempt to capture a more holistic view of radical improvements in production
that helps to understand the phenomena in a comprehensive and structured way. The
model of four types of Kaikaku presented in this thesis can be considered as
contributions to this challenge.

In the international research community, Kaizen is often considered as the main

contributor to high production competitiveness at Japanese manufacturing companies.
The research presented in this thesis has highlighted the fact that Kaikaku has also
been actively conducted among Japanese manufacturing companies and contributes to
the competitiveness of the production.

The importance of organizational learning during the execution of improvements has

been emphasized by several authors in literature. However, few documents and
theories have been presented as to how to practically facilitate organizational learning
during a radical improvement of production. The reducing-water-level way of driving

66
Lean transformation presented in Chapter 4 can be considered a contribution to the
scarce amount of research.

The scientific contribution mentioned is also applicable to industry. Furthermore, more

specific contribution was made through the case studies. In case study A and B, the
researcher invited a Japanese consultant with significant TPS experience. His
consultations to the case-studied Swedish companies constitute direct contributions to
the industry. During the research, the author of this thesis took advantage of access to
Japanese manufacturing companies and introduced their recent Kaikaku efforts to
Swedish industry. The recent trend of Kaikaku in Japan - shifting toward radically
innovative Kaikaku - can be an inspiration for Swedish industry. Finally, the research
results will be used to make a handbook called “Kaikaku in production” for industrial
use. This is also an exciting contribution to industry.

5.3 Quality of the conducted research

As discussed in Section 2.4, research quality can be evaluated in terms of internal
validity, external validity, and reliability.

Internal validity is about the degree to which a theory, model, concept, or category
describes reality with a good fit (Gummesson, 2000). As for the model of four types of
Kaikaku presented in this thesis, the internal validity was tested by sorting a number of
Kaikaku case study reports into the four types. All the reports are categorized into one
or a few types, as shown in Table 3 in Appended Paper A. Regarding case study A, B,
and C, the validity was improved by studying more than one organization.
Triangulation, collecting evidence from difference sources, was employed in case study
A and B, which also improved the validity of the research results. However, the main
source of the evidence in those case studies was the observations of the Japanese
consultant. Even though the similarity of his behavior and conduct to other Japanese
TPS practitioners is found in literature or heard as second-hand information, the
validity can be better supported if more than one such individual could be observed.

External validity is whether a study’s findings are generalizable beyond the immediate
case study. The analytical generalization can be considered possible from the results
obtained from case study A, B, and C. However, the results from these case studies
were not tested at any other companies than the case-studied companies. The
external validity could be improved if such a test was conducted.

Reliability means whether two or more researchers studying the same phenomenon
with similar purposes would reach approximately the same results. Various efforts
were made during the case studies to increase reliability. For instance, memos were
frequently taken during the direct and participant observations and the interview

67
items are carefully made before the interviews. However, as estimated in Section 2.4,
reliability was difficult to achieve, especially for the direct and participant observations.
The researcher’s previous experience within the study field, his cultural background
and his personal skill from having deep insight into the observed events all influenced
his interpretation of the empirical data obtained during the case studies. Moreover, in
the research, a large amount of information was collected from Japanese written
documents. This made it difficult for the international research community to evaluate
the reliability. It would be optimal if all those documents could be translated into
English or Swedish, but this was difficult due to time limitations.

5.4 Future research

The research presented in this thesis analyzed the phenomena of Kaikaku from a
holistic perspective. As a consequence, the research results stayed at a rather general
and abstract level. Future research can be conducted at a more specific and concrete
level. Since the fulfillment of the second research objective has not been completed,
future research should be more focused on how to realize Kaikaku.

Little knowledge has been developed in terms of how to realize radically innovative
Kaikaku. Provided that this type of Kaikaku may become increasingly important for
manufacturing companies in Sweden and many other countries, it is an interesting
research area for future work.

If radically innovative Kaikaku gains more attention in the future, the role of
production engineering will become more important. The development of a
production system with “low cost automation strategy” can be an important step to
realizing radical innovations in production. The low cost automation strategy is to
develop in-house automation equipment that has just enough functions for the
specific operations. This strategy has been adopted by many Japanese companies and
is quite compatible with Lean production. Therefore, it can be applied more often to
Swedish industry. Developing support that facilitates realizing the low cost automation
strategy is also an interesting area of research.

Finally, when to initiate Kaikaku has not been discussed much in this thesis. It should
be closely related to the manufacturing strategy of a company. Kaikaku should not be a
“one-shot project” concerned solely with meeting an annual performance goal,
requirements of payback period or return on investment. Rather, it should be aligned
with a long-term scenario of how a production system should be developed.
Investigating how to relate Kaikaku to such a long-term development scenario is also
an interesting area for future research.

68
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