The Butterfly Effect illustrates how seemingly minor improvements, when accumulated through the principles of Kaizen, can lead to significant and sustainable growth in complex systems.
Continuous improvement involves the implementation of activities that do not require significant costs, but the return on them is sometimes elusive in monetary terms.
How to correlate Kaizen and the Butterfly effect on economy?
If we consider the production or other process as a kind of system consisting of many factors that can be conditionally combined into three groups. Then the effect of improvements will consist of the sum of the effect of each factor.
- The first group is technological. That is, factors that are due to the peculiarities of the technology used. The presence of variability, and the technological parameters of the system.
- Second, a group of factors related to organizational processes. That is, to the management of the This includes the planning and dispatching system at the enterprise, information transfer, logistics processes, and so on.
- The third group is environmental factors. That is, this includes all those influences that are beyond the control of the organization. These are the political and economic environment, weather, climate, the state of the labor market, and so on.
In the case when we improve the parameters of one of the factors by a certain amount, changes in other parameters of the system will negate the overall effect of local improvement.
The efficiency of the system will change in a controlled way only when a certain “critical mass” of improvements is formed, while the group of external (uncontrollable) factors will remain conditionally unchanged. Only then will the function of the model change in one direction or another, that is, in the case of the production system, it will be possible to state the fact of increasing labor productivity and increasing efficiency.
Real economic effects
In any other cases, fluctuations, variability, fluctuations of the system will completely extinguish the effect of local improvements, which may affect the development of such undertakings. That is, in fact, a short-term and low-budget event. In fact, giving a certain effect, cannot be calculating to obtain accurate digital data in dollars. And the condition of the mandatory effect will not allow the implementation of this improvement. As a result, the entire system of continuous improvement will be in danger of collapse, since the same “critical mass” will not accumulate.
It is important to correctly interpret the effects that arise from improvement measures. In most cases, a certain potential is form, a reserve that can be use to obtain economic benefits. That is, in this case, the role of management increases, which must see and correctly use the emerging potential.
The emergence of potential should be consider as a criterion for the expediency of improvement measures, even if the parameters and condition of the production system do not allow converting this potential into a real economic effect.
So if we carry out a standard calculation of the savings in numbers from reducing the labor intensity of labor, then the savings in labor costs are determined, and not the savings of people. If in this case the potential of employees is not used to perform an additional amount of work, then the effect in dollars as such does not arise.
Synergistic approach
Thus, it is important to separate the conditions and factors of the emergence of potential for growth in production, or cost reduction, and the use of this potential to obtain a real economic effect. Only when there is a stable positive dynamic that overcomes random fluctuations in the system, only then there is an effect in monetary terms and the company can recognize the effectiveness and success of all implemented measures to improve the system. In other cases, only the conditions for increasing efficiency are creates.
In this regard, the concept of continuous improvement is aptly describe in terms of a synergistic approach apply to the functioning of complex socio-economic systems. Thus, most of the time an arbitrary production system is in a state of sustainable development and local, relatively insignificant changes (fluctuations) are not able to radically change this trajectory.
That is, the system is describes by a certain parametric model and the dynamics are generally predictable. However, accumulating, oscillations lead the system to a state where even a slight impact radically changes the parameters of the system.
We, that is, in this case there is an unstable, equilibrium state, or, in other words, the system is at the bifurcation point. Having passed this point, the production system receives a new trajectory of sustainable development, which is not a continuation of the previous one and has completely different parameters.
The butterfly effect
As a result, we can observe the so-called “butterfly effect”, when relatively minor impacts lead to very significant changes in the functioning of the system. And in this case, it is important to be able to recognize such conditions in order to maximize the effect of improvements.
At the same time, the importance of continuous improvements increases, which, forming a kind of critical mass, can significantly increase the efficiency of the production system. At the same time, the costs of these improvements will be relatively small, but the final contribution to the final financial result will be many times higher than the simple sum of the effects.
By deploying a program for the development of a production system based on the principles of Kaizen, it is necessary to create conditions for local improvements. The procedure from submission of the proposal to the implementation “in metal” should be simple and fast. Same time, it is necessary to determine when it is necessary to spend time and resources for an economic justification, and when only a general understanding is enough that improvement increases efficiency and contributes to the final financial result of the company’s activities.
As I brief as : “Great adventures come from small causes,” and leadership in the industry begins with small improvements.