Earlier this month, the Financial Times’ Barney Jopson outlined how Amazon founder Jeff Bezos drives “a frugal, data-driven, and rigorously analytical approach that owes much to Toyota” and the kaizen concept of continuous development fathered by Taiichi Ohno in the 1950s.

Question your processes, challenge your status quo

While most organisations strive to improve their customer service, Amazon works to rectify the root cause of a mistake, like a product arriving damaged. Over the course of 17 years, angry calls by customers have dropped steadily.

In themselves, kaizen principles were modelled on Henry Ford’s continuous line philosophy in early 20th century America. Kaizen became known as ‘lean’ in the west in the 1990s and still has its place among the concepts taught to management students and shared by coaches with operations managers around the world.

Edward Chetcuti, a mechanical engineer and a lean management coach, says adopting a lean mindset allows people to see waste.

“Lean and kaizen principles are very simple to understand,” he explains. “Look at value from the customers’ perspective. How does your company give value to the customer? Organisations should strive to eliminate anything the customer is not willing to pay for. It sounds incredible but customers do not pay for up to 95 per cent of what organisations do. That is waste. Waste removal applies to every business. It applies to life.”

Mr Chetcuti joined training and development company Mdina Partnership three months ago after a 15-year career at components manufacturer Methode Electronics. With his background in automation and process improvement, he is now responsible for the ‘Mdina approach’ to business excellence, a concept he terms as “driving profitability through people”.

Managers should keep in mind that value – what customers pay for – often amounts to very little. When waste is eliminated, the flow of value to the customer is eased. But Mr Chetcuti points out managers cannot expect to instantly create a new culture and hope for behavioural changes after they decide to adopt lean principles in their organisations. It is the wider teams who contribute to a gradual culture change through training, consultation and review.

There must also be awareness of the weakness in lean thinking – the assumption that every part of the chain is doing what it is supposed to.

Profit depends on the ability to lower costs. Entrepreneurs make the mistake of believing that automation eliminates waste, but waste can also be inadvertently automated.

“Question your processes, challenge your status quo,” Mr Chetcuti advises. “In a non-lean plant, an accountant turns up mid-month to point out how badly the books looked the previous month. In a lean plant, pin boards indicate key performance indicators which are measured, say, every day. By acting to improve the performance of slacking units as quickly as possible, waste is reduced.”

For an organisation to be lean – even from its inception – people and processes must be measured and value drivers identified. Older businesses often do not need to shed people to be lean – restructuring is possible after gains are made. Businesses only seeking to reduce numbers risk loading a shrinking team when they attempt to restructure earlier than that. ‘Extra’ people can usually help improve other parts of the chain.

Mr Chetcuti is on the line-up at next Tuesday morning’s Profit Ability event organised by Mdina Partnership at the Hotel Juliani, St Julian’s. Other speakers include Methode Electronics’ vice-president Joe Khoury, Lean Six Sigma Master Black Belt Antoine Bonello, and Mdina Partnership founder Steve Tarr.