Continuous improvement and cost reduction are pervasive in today's business. While good things, that practically everyone is doing, they only comprise half of the equation - and alone, are like playing a game with only a defense team. You can't win. Quality, continuous improvement, cost reduction and operational excellence are all necessary to survive and compete, but alone, they won't guarantee success. Why not? Every significant player in the market has them and every customer expects them - so they are no longer differentiators in today's marketplace (see Differentiation page).
Kaizen and Kakushin. Toyota is known as the master of Kaizen (continuous improvement). While Toyota's new president, Katsuaki Watanabe still wants the plethora of incremental improvements that kaizen brings, their new president, Katsuaki Watanabe, also wants some Kakushin - that is, bigger leaps of improvements. Kakushen means continuous innovation.
Enhancing and growing the top line by doing new things of value (innovation) is the other half of the equation: the offense that scores points with customers. Continuous improvement attempts to reduce cost faster than the market and competition reduce price. Innovation adds value (price, margin, profitability) faster than adding cost, while thwarting the competition at the same time. Besides, everybody wants the next new thing - as long as they perceive that is has a value for them.
Innovation is continuous renewal, that insures a healthy future for the enterprise. Innovation is the wave that makes the biggest difference - and one that sets you apart from the competition.
As Larry Bossidy (former CEO of Honeywell and Vice Chairman at GE) once said, "You can't cost reduce yourself into prosperity." As others have observed as succinctly and directly as possible (and like all living organisms), you're either growing or dying. Therefore, "Innovate or die" is not an unreasonable statement. Live. Don't just survive. Innovate, and thrive!
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