Gail Rentsch: It's been more than 10 years since your first book, "Kaizen," introduced the concept of kaizen to American businesses. What kind of impact do you think kaizen has had on U.S. companies?

Masaaki Imai:Kaizen means ongoing improvement involving everybody, without spending much money. When "Kaizen" was first published here in 1986, many U.S. products were of poor quality, and Japanese-made products were gaining market share. Since then, American companies have made great strides in improving product quality, and much of that is attributable to their implementation of kaizen principles, which incorporate TQM.

Do you think U.S. companies use kaizen effectively today?
Many companies still have not fully embraced the kaizen concept, although I suspect they would argue with me about my comment. But, I see a lack of kaizen when I look at how companies address the actual cost of making products. Most companies still subscribe to the old paradigm which says that better quality costs more money. The real challenge to management is to improve quality while reducing cost, since that is what today's customers want.

Your new book is entitled "Gemba Kaizen." What is Gemba?
Gemba means the place where real actions take place. It usually refers to the place where manufacturing activities are conducted in a factory as well as the place where employees have direct contact with customers in the service sectors. Gemba can be a hotel dining room, a car dealer's service department, a doctor's examination room. One place that is not gemba is a manager's desk.

Why do you say U.S. companies have neglected the manufacturing shop floor for too long? That management's traditional focus on such areas as financing, marketing, R&D; and engineering is misplaced?
U.S. management has been too focused on results and not on the process of what achieves or delivers those results. They have avoided looking at the core process of the business, the one that delivers added value. Instead, they have focused on peripheral elements such as financial management, marketing, R&D; and engineering, which � while they are important to any business � are not the gemba, the value-added portion of the business. Ultimately, it's a question of greater balance between process and result. The stock market places great emphasis on short-term results, which drives executive management behavior to demand results in the short term, hence the focus on finance. In Japan, the economic system and stockholder view is more oriented to the long haul.

You advocate that management go to gemba regularly. Why do you think management is reluctant to do this?
Managers often avoid going to gemba because they don't want to be embarrassed by their ignorance. They are afraid that in gemba they will expose the fact that they don't know what is going on there, and often don't even know the right questions to ask. Add to that the traditional view which says that being assigned to gemba is a dead end for career development. Perceptions about status and class, fear of unions, the glamour of the front office, and the excitement of R&D; and marketing are also probable reasons.

Is management today obsessed with a "growth" mentality? Do you think "growth" is a smart strategy?
I can say that 99.9 percent of all the companies in the world today are obsessed with a growth mentality. These are the companies that can make profits only when the market is growing. In real life, market demand always fluctuates. The only companies that will survive into the next millennium will be the ones that have the flexibility to produce according to fluctuating demand.

Why do you feel the issue of cutting cost is so vital today?
A huge waste of resources can be noticed in the way a product is designed, made and sold. The competition for quality and cost is intensifying. Thus, improving quality while reducing cost is the only option for survival. Often, managers take cost reduction to be synonymous with cost cutting. Cost reduction should come as a result of better cost management. The key point is how to build a management system which can reduce cost while achieving good quality.

Have U.S. companies succeeded in changing their management culture and structure to better serve customers' needs?
Yes, some companies have and, in general, things are better than they were. But I still see too many companies paying lip service to quality and customer service. To my way of thinking, the best way to serve the customer's needs and, at the same time stay profitable, is to practice Just-in-Time management which supports the on-time delivery of quality products and services. But I see JIT getting a bad name because too many so-called JIT implementations are not working. To be successful in JIT, the company must introduce gemba kaizen, and it must be continuously applied. You can't do kaizen just once or twice and expect immediate results. You have to be in it for the long haul.

You advocate a use of JIT that is very different from that practiced by most U.S. companies that claim to use JIT. Please explain what JIT means to you and how it works.
I have often come across a narrow understanding of JIT, one which focuses solely on supply delivery issues. Actually, JIT is far broader. JIT must cover the entire value chain from the origins of the raw material to the end user � and it should be implemented at every step in that value chain. And, because JIT removes waste (remembering that unused, excessive inventory is considered waste), every process in the value chain needs to be flexible and able to respond within the time it takes for a customer to place an order.

That's true JIT. Also, JIT demands that every process and resource be aligned and responsive to customer fluctuations. It demands that equipment be ready to produce without failure, which is why total productive maintenance is a critical part of JIT, and it demands that every product be of the highest quality. And, finally, JIT means changing the way employees think about their work. Everybody in the company should be seeking a better way of doing their job all the time by constantly eliminating muda (non-value adding activities) and stream-lining the work processes, and managers should be establishing a challenging target to motivate employees.

Considering the vagaries of the economy and the possibility of a down turn around every bend, how can JIT impact on a company's chances for success in the good times and the bad?
If a company is successful in introducing JIT, it can help the company survive in the bad times. This is because JIT allows the company to substantially lower its break-even point and, at the same time, meet fluctuating demand. With JIT, a company can wildly improve its profits in the good times and manage to stay profitable in the bad times.

Many companies that have gone through drastic overhauls report financial growth. How does reengineering fit into your thinking?
Reengineering normally refers to a drastic, dramatic process improvement in certain areas of management utilizing computer technologies. However, reengineering addresses only a limited area of problems in the company and brings about limited improvement, no matter how dramatic. Reengineering probably will always have its place as an organizational change process. But it is relevant in limited circumstances because, ultimately, it produces short term and static results. Reengineering is like innovation � we expect innovation to occur all the time, yet we know it doesn't happen. It's unrealistic to expect reengineering to be applicable all the time. That would cause chaos. Kaizen is a more lasting improvement process.

Reports from Japan are not encouraging these days. Does this suggest that the "Japanese model" epitomized by Japan Inc. is invalid?
We need to distinguish between the external circumstances (social, cultural and political infrastructure) and the internal circumstances (how management conducts its business within the company). The recent negative reports about Japan relate to the external circumstances, such as too many governmental regulations, over-protected market in some sectors, aging society and the Big Bang needed by the monetary institutions. In short, there is a realization that Japan, Inc. may not be functioning as efficiently as it used to.

However, this does not mean that the so-called Japanese management practices (internal management of the company) have proven to be inferior. Japanese companies developed a very effective system of management, particularly in the manufacturing sectors, and the rest of the world has much to learn from these practices.

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