The fireworks have faded, the food is all gone, the holidays have passed, and the days are once again slowly growing longer. If you’re still keeping your new years resolution, you’re doing well, but we find the concept of kaizen, continuous daily improvement, to be more achievable and to produce better results over the long term. Commonly employed in manufacturing settings, kaizen is the idea that if you strive each day to be just a little better, those improvements will measure up over the long term to significant and sustainable increases.
While the manufacturing world has adopted kaizen, and many other productivity models, the concepts apply in other businesses as well, including investing. You probably have metrics you track and regular activities you take in your work, each of these areas can easily be improved by 1% – and think about what the impact of just a small improvement would be over the long term!
In manufacturing, we often look at places where there is variance and work to bring those variances into standard tolerance. This means that the differences from part to part will be very very small. This matters more in some industries than others. For example, in roll forming when creating racks for solar panels, the rack length must be very precise. Even a portion of a millimeter off can add up to a large variance over several acres of panels. A 1% improvement in variance of those parts can add up to a big impact.
At HRH Capital, when we are considering new investments, we’re looking for cash flow positive, growing businesses that we can come in, improve, and help them continue to grow. We try to bring in significant improvements in business support and vertical integration, but also a culture of improvement where everyone tries each day to do their job a little better and find ways to improve the company. This culture starts at the top but belongs to everyone in an organization.