Establishing Kaizen in small- and medium-sized German enterprises: A concept to drive innovation

• Author: Volker Doberanzke
• Pages: 8-24

Vol. 4 No. 2

June, 2020

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

ISSN 2519-1284

Acces online at www.iipccl.org

8

Establishing Kaizen in small- and medium-sized German enterprises: A

concept to drive innovation

Dr Volker Doberanzke

Abstract

The ability to innovate is crucial, not just for national economies but also for all kinds of

companies. Kaizen is the Japanese concept of management based on a philosophy of eternal

change, which is to keep a continuous improvement process going. The Kaien concept has

beenwidelyappliedspecicallyinindustriesthatare dominatedbylargeandmultinational

players, such as the automotive sector. In most European countries, small- and medium-sized

enterprisesplay a major role specicallyin GermanyIt is all the moresurprising that the

Kaizen approach has thus far been de facto irrelevant in the literature dealing with small-

and medium-sized companies. This article shows that the Kaizen philosophy provides an

appropriate strategic basis for establishing a continuous innovation process in small- and

mediumsized companies The rst part of this article explains the basic characteristics of

the concept of innovation and the importance of small- and medium-sized companies and

their ability to innovate. The second part outlines the Kaizen approach and its fundamental

paradigms. The third part describes how a Kaizen-based, continuous innovation process can

beimplementedinsmallandmediumsizedGermancompanies

Keywords: Kaizen; innovation; continuous improvement; medium-sized companies.

Introduction

From an economic perspective, the innovative strength of companies is of crucial

importance. Without innovation, any economy runs the risk of losing its potential

togenerategrowthInthiscontextthesocalledpioneer companiesplayaspecial

role: on the one hand, they are the engine and driver for new growth impulses, while

on the other hand, the innovative entrepreneur has the chance of a (temporary)

monopolyandcanthusrealizethepioneeringprotsKampmannWalter

A country's ability to innovate forms the basis for long-term growth and employment.

One important indicator of the ability of a country to innovate is that of the number

ofitspatentapplicationsInapproximatelynewpatentswereregistered

with the European PatentOce Of this  were from the US approximately

fromGermanyandfromJapanEPOAerthatGermanyisinthird

placeHoweverifweconsidertheglobalinnovationindexofthemostinnovative

countriesGermany onlycomes inninth placeGII Switzerland is atthe top

followedbySwedenandthentheUSTheGlobalInnovationIndexispublishedonce

ayearandisbasedonextensiveinnovationcriteriaThefollowingisintendedtoshow

how the Kaizen approach can be used to increase the ability to innovate, especially in

the sector for small- and medium-sized companies, which is a particularly important

sectorforGermanyseconomy

Inthe context of the organization of innovationie innovation management it is

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

Vol. 4 No. 2

June, 2020

ISSN 2519-1284

Acces online at www.iipccl.org

9

necessary to specify the term innovation. For reasons of measurability and active

management of innovation, it is essential in practice that everyone involved in the

process of innovation management de-velops a uniform understanding of the term.

This is an important prerequisite to generate inno-vation in a targeted manner. It

should be borne in mind that the development and implementation of highly

innovative ideas in the operational production process require special treatment and

aention otherwise the company runs the risk of neglecting fundamental aspects

of risk management. In the literature on innovation theory, the term innovation is

systematized according to various criteria Hauschild etal  A common

and relevant dierentiation here is the distinction between product and process

innovation.

Product innovations are innovations in goods and services that - from the perspective

of the consumer  result in new qualitative consumption experiences Product

innovation is therefore an innovation on an existing product or an entirely new

product. This demand-oriented perspective can be contrasted with the supply-

oriented concept of innovationdened by Schumpeter Schumpeter   

Thereaera distinction can be made between Invention ie a completely new

productthroughtechnicalinventionImitationie imitationandmodicationof

an innovation), and an innovation in the narrower sense (i.e., implementation of an

innovation by the entrepreneur). In contrast to product innovations, which primarily

aimforanexogenouseectieconsumerbehaviorprocessinnovationsaretypically

directed inwards. These are improvements to operational, mostly internal processes

in the company. However, process innovations are not limited to processes in the

narrower sense. In principle, process innovations can target the entire operational

ecosystemfrom theorganizational structure theprocess ows theinterfaces the

internalowof informationand materialsetc Awellknownexampleof aprocess

innovation is the assembly line production that was introduced at the beginning of

theth centuryIn the contextofthe establishment of a Kaizenbasedcontinuous

innovation process for medium-sized companies, the introduction of such a concept

is, in itself, an innovation for the individual company. In practice, however, it can

regularly be ascertained that process innovations are usually triggered when a certain

event relevant to results (e.g., an accident or the incorrect handling of a process)

has occurred This then usually leads to ad hoc measures to eliminate identied

procedural weaknesses. The establishment of a Kaizen-based, continuous innovation

process includes both product innovation and process innovation.

Small- and medium-sized enterprises in Germany

Before the importance of small and mediumsized enterprises for the German

economy is dis-cussed, the demarcation criteria for medium-sized companies should

bebrieypresented AccordingtoaEuropeanUnion EUrecommendation small

andmediumenterprisesSMEsincludecompanies withfewerthanemployees

eitherwith salesof less than million eurosor total assetsof less than million

eurosEU Commission Another denitionof the Institutefor SME Research

usestheciteriasshowninTableIfMBonn