Applying kaizen to sustainable development: the interconnectedness of business, faith and poverty alleviation

September 3, 2024

It’s not just that money can’t buy happiness.  Money can’t buy health, love, intelligence, care, attention, peace of mind, laughter, respect, feeling understood or closeness to God. 

I feel somewhat qualified to make this statement since I have experienced various levels of resource richness and resource poverty my life, having grown up on the periphery of one of the world’s richest cities, but with the deepest sense of humility born of my grandparents’ values and activities and having had the chance to visit not only the world’s most luxurious offices, hotels and homes but also having also lived short-term missions with communities living in the world’s most poverty-struck conditions. I don’t think it’s an accident that God made me experience all of this, and so I would like to briefly share my thoughts on money as it is a big driver of how I see sustainability and development finance. 

It’s very important to make the distinction between poverty in resources versus poverty in mindset.  I grew up in a family that was for the most part resource moderate (also actually resource low at several distinct times) but very rich in mental ability, courage and spirit.  Having known different levels of resource richness in my own life, my best moments not only had nothing to do with money, but my lack of money often drove resourcefulness that led to important value creation, whether human, emotional, intellectual, creative or otherwise.

It is not poverty in and of itself that is tragic.  It is poverty combined with a mentality of hopelessness and inertia.  Based on what I have observed, I believe that the solution to poverty is not money… it is action first to reverse hopelessness (principally through faith and community-based networks of support) and next to reverse inertia.

This is why I believe in incremental approaches to development, or the practice of kaizen.  I don’t argue that they are the only solutions, and indeed there is a dire need of finance, industry and innovation that must happen on a systemic level in order for there to be true long-term sustainable growth.

But incremental approaches can be done anywhere, anytime and with no resources.  Incremental approaches are the first way to break the cycle of hopelessness and inertia, whether it is in the poorest slum in India or the most violent housing project in New York City. 

A PDF copy of this briefing is available here.

Achieving societal harmony through practice rather than rules

My views on poverty never became so clear as following travels and experiences in Asian cultures, and particularly following my visit to Japan.  I believe that Japan is the most convincing example of a successful country and culture, which I believe derives from its healthy mix of freedom and discipline.   Freedom in the sense of encouraging innovation, creativity and movement, while also having a very deep sense of discipline, respect and humility.

My observation is that this discipline is not achieved by imposing rules and restrictions, but by encouraging and living a series of ways and practices. For example, it is understood that bowing to a superior is customary.  My observation is that it occurs not because the younger person is afraid of punishment but because it is universally acknowledged to be the correct, natural and superior way to exist. 

It is simply is a good idea that will preserve humanity:  if we are co-existing in the same vicinity or will have an interaction, we not only acknowledge that but we also acknowledge the superior experience of the older person.  I do wonder whether this is actually derived from a principle of evolution:  in acknowledging each other, we acknowledge that if there is a threat or a problem, we are more likely to work together to find a solution and/or help each other in a time of distress. It is certainly a manifestation of altruism, but perhaps also a manifestation of the instinct to survive.

While in Japan, I also observed a deep understanding and application of the principle of care.  Care for living beings, but also care for objects.  It is practiced, daily and through many small ways, that everything around us is a precious, timeless work of art.  Respect for others and care for objects begins with the notion of attention, which is truly the most basic form of love. 

Something magical happens when we give our full attention to someone or something.  Anyone who has ever taken care of children knows how fundamental our full attention is.  Indeed, adults and children alike need to feel seen and heard.  How much conflict is born out of the negative emotions associated with not being seen and heard? 

Full attention is not just about observing.  It is about observing, interacting and, above all, bringing the appropriate response.  It seems that in Japan, the appropriate response is, what is the natural improvement to the situation?  Whether in terms of comfort, harmony, communication… I believe that Japan has truly mastered the art of improving not only the big things in life, but also the small things.  And indeed, the big things are universally in and of the small things, and vice versa.

This is the principle of kaizen:  continuous improvement in personal life, home life, social life and working life.  We improve because of time, energy, hopefulness and attention.  If money can be a driver of improvement and a tool to unlock tools to improve, it is not improvement. 

Which is why the accumulation of wealth can never be a goal in and of itself.  For a business to be truly sustainable, it must target continuous improvement as its goal. This philosophy has never been so clearly outlined as through the teachings of Chihiro Nakao, who was one of the greatest teachers of the Toyota Production System, as explained in the works of Professor Bob Emiliani.

A company’s real success is in continuously improving resource management and transformation

Companies today are judged based principally on financial metrics, which measure how successful they are at generating revenue from management of resources.  Financial metrics certainly speak to the notion of improvement: in a liberal market, constant improvement, combined with efficient resource management, should reward the business operator.

To take a step back, post-war economic policy in the West was very much based on the notion of reconstruction.  If you look at the boom years of the U.S. and Europe, you could say that this was sensible and relatively well executed. 

Without making this a paper about Reagan and Thatcher economics and the policies of globalization, I believe that starting in the 1980s, the philosophy of business went from improvements in collective reconstruction, i.e., living standards as a whole, to improvements in financial performance for shareholders. 

There could be many explanations for this, including the rise of leveraged buy-outs or the general sentiment that the damage done after the wars had been sufficiently remedied.  I suspect the main reason was that the post-war boom in labor and industrial activity made the notion of retirement very important.  It would only be possible to motivate such a big push in effort if workers were promised an appropriate period of reward. The first boomers embodied this success story.  Work hard, attain social mobility and spend your later years reaping the benefits.

Today, the story isn’t so successful.  Because of inflation, significant rises in the cost of living, longer life expectancy and evolutions in consumption habits, the weakness of states versus multinational companies and a myriad other factors, the entire retirement fund industry has been transformed from one of collective prudent savings to collective speculative investment. And because most retirement savings remains invested in public companies, the strategies of those companies became much more about improvements in collective living standards to improvements in pure financial performance.  

One could argue that the role of management consulting firms, mergers and leveraged buy-outs aggravated this trend, because it became very easy to move and spend private capital in a fairly opaque way, leading to strategies that were ultimately driven by shareholders’ own profitability expectations and not investment in collective improvements in living standards.  This was also aggravated by globalization strategies that made it even easier to disregard labor conditions.  And so ownership in assets located and operated far away (which I refer to as “delocalized shareholding”) became the norm, leading to decades of self-serving decisions about people, society and the planet. 

It was against the backdrop of delocalized shareholding that it became very easy to ignore troublesome conditions overseas, particularly in resource-rich countries.  Each industry had their scandals:  oil and gas, automobile, construction, textiles… human rights NGOs certainly had a big role to play in shaming some of those organizations, although missed the fundamental point that multinationals are not autonomous, but beholden to their shareholders, who for most of history focused more about dividends than working conditions in Bangladesh.

This is not to suggest that shareholders do not care about life in Bangladesh.  Rather, they do not know enough about it.  In all likelihood, they have never been there, and they know in any case that these are very poor countries to begin with.  The Milton Friedmans of the world prevailed for many decades:  it’s not the job of the corporation to fix Bangladesh, and they should indeed be grateful for the work opportunities provided by the corporation.  And so the first generation of corporate social responsibility was born out of this dialogue among shareholders:  we don’t want to be making things worse, so let’s see how we can add local value, such as through the creation of a school or hospital.

I have thought through so many of these arguments, and I do often side more with the Milton Friedmans of the world.  The simple fact is that some resources, especially in the oil, gas, mining and minerals sector, require very specialized knowledge and equipment to transform.  Having an international expert in such projects, even foreign, can be a good result because it will eventually help share that knowledge.

But this assumes that the expert is willing to promote long-term economic sovereignty, and not a perpetual cycle of resource extraction in the country of the asset and value capture in the country of the expert.

Because of the financial improvement imperative, however, the strategies of multinationals unfortunately became too focused on financial improvement for delocalized shareholders instead of general improvement in management of natural resources for shareholders together with host countries. 

One of the saddest expressions in the West is to “throw money” at a problem.  In developed economies, we throw money at obligations that we are either too tired or too frustrated to do ourselves… cleaning, caretaking, social causes, even learning! 

Now there are tourist taxes to alleviate congestion in the world’s most crowded destinations.  Rather than imposing a five-euro tax on walking through Montmartre, wouldn’t it be more effective to make each visitor read a short history, watch a short video and answer a few questions?  To show that they took the time to learn something, to give it their full attention. What is someone’s full attention worth in a world of endless and meaningless scrolling? 

Sadly, many companies have also chosen to throw money at sustainable development through the creation of foundations, charities, schools, funding projects to build schools, hospitals, start-ups.    All of these are great initiatives, but they often fail to truly address the root causes of poverty and environmental degradation.

Throwing money at a problem will never be sustainable

To request recognition for financial commitment in any of these areas genuinely falls short of attaining the real goal.  It is not because we throw money at anything that we achieve success.  It is only through deep discipline, values, living the project every day and doing all the small, perhaps uninteresting but necessary tasks, that it takes to make the project succeed.  

This notion of simply “throwing money” at problems extends to many CSR initiatives. While funding can bring immediate relief or support to specific projects, without a strategy that aligns with the needs of local communities, these efforts can miss the mark entirely. Effective CSR should be rooted in genuine partnerships with those communities, emphasizing co-creation and co-implementation of solutions rather than a top-down approach. This way, companies can leverage their resources and expertise to empower individuals and foster sustainable economic development.

There are indeed many examples of philanthropic, DFI and microcredit institutions that have worked together to unlock true value in development projects.  However, these efforts are not enough.  We need a paradigm shift in the way businesses approach sustainability, moving towards a more integrated and collaborative approach that goes beyond just writing checks or creating foundations.

Thankfully, we have now reached a point in business where we collectively understand that shared management of natural resources is a true win-win strategy.  When multinationals enter into joint ventures with local companies, there is a real meaningful attempt to not only develop projects that are financially viable but also will result in the transfer of expertise and autonomous management of resources. 

The next phase that is ripe for implementation is the creation of joint ventures between multinationals and development actors.  I believe that this is true corporate responsibility:  develop business strategies in such a way as to optimize sharing of information, best practice and economic sovereignty. 

It’s not a question of money.  It’s a question of cultivating human energy, skill and general resourcefulness must in order to truly drive sustainable development.  Many companies understand this, and have been truly impressed by countries such as Brazil, Nigeria and Kazakhstan, who by implementing intelligent local content rules, together with generous training and R&D partnerships with multinationals, have sincerely enhanced the local economic ecosystem and the chances of long-term autonomous management of precious natural resources upon which many countries depend. 

That said, there are some countries where it is simply too early to put those policies in place.  The case of Sierra Leone appropriately illustrates this point.  Despite the fact that the country has tremendous reserves in gold, diamonds and other minerals, no amount of additional mining activity, whether large-scale or small-scale, will liberate it from an endless cycle of poverty. 

It is not a mining company that taught me this, but a rural female farmer called Fantah.

The time-money dilemma experienced by caretakers

There was a time I called myself a feminist, but I’m truly disappointed by the version of feminism that I see promoted in the developed world today, whether in business, politics and society today.  In most developed countries, it is a much more useful exercise to focus on building unity between people and supporting caretakers than focus on counting how many female board members a company has. 

If anything, the biggest obstacle to success in business today is availability of time and human energy.  It’s true that this does tend to impact women much more than men, but it is an issue relating to all caretakers, whether male or female and whether the person being cared for is a child, an elderly parent or a disabled person.  It’s not only women who face these problems, and simply putting women in more visible corporate positions in some way creates a false illusion of a problem being solved.  But that’s actually quite a superficial solution.

In the developing world, however, I have witnessed a very different reality about caretaking:  it impacts women much more than men, and there are still some very destructive mindsets and realities about the capacity and power of women.

I have visited Sierra Leone three times, and each time Fantah received me in her home, cooked for me and helped organize community meetings to discuss local agri cooperatives.  Without going into great detail, these short visits, which probably totaled a period of three weeks, changed my perspective and my life in a significant way, and I would encourage all who have the opportunity to not only visit countries in the same economic bracket as Sierra Leone, but also spend time living in their most real, rural parts. 

During most of the time I was in Sierra Leone, I had no access to electricity, running water or a toilet.  I will never take for granted again how precious running water is in my life.  Water to drink, water to clean, water to bathe… water is perhaps the most precious collective asset of humanity as a whole, and we will never really appreciate how lucky we are in developed countries to open the faucet and have drinkable water available immediately, and hot water in a matter of seconds.

One of the biggest differences between Fantah and myself is the time it takes for us to access drinkable water each day.  For me, it’s a matter of seconds.  For her, it’s probably half of her day.  Even if we have a lot of differences, however, Fantah and I share some very important similarities.

Indeed, the dilemma of the rural working woman is not dissimilar to the dilemma of the urban working woman. In both cases, she must make sure that her children are safe and cared for in order to devote her energy to other activities, and doing it in the most efficient way possible so as to preserve her time and mental clarity – two of her most precious resources.  In developed economies, school supports these goals. But in many rural developing economies, there are simply no schools, or schools that only function sporadically, as is the case for Sierra Leone. 

The importance of time and human energy cannot be overlooked. The rural working woman needs to save as much time and energy as possible, but this can be quite difficult depending on the number of children she has to feed, and where she can procure food and water.  How can she spend her time and energy on working when she needs to look after her children, and procuring food and water may take several hours a day?

I am really convinced that increasing access to and concentration of wells has a direct impact on the productivity of rural women. If a well is located within less than 200 meters, collecting water, purifying water and cooking can be accomplished within an hour. If a well is located one or more kilometers away, this exercise consumes much more of the rural working women's time and energy. 

This is where access to clean water and sanitation infrastructure can play a crucial role in empowering rural women. By providing easy access to safe drinking water, women can save time and energy spent on collecting and purifying water. This can free up more time for them to create a business, which, when taken together with many businesses, in turn creates an economy.

Transformation of resources is the foundation of any economy… and it begins with time, expertise and human energy.  The building blocks of labor.  Before the rural working woman can take a microloan, she needs to create a business... and that requires transformation of resources into products for which there is a market of paying customers.

In order for the rural woman to transform resources into products, she needs a certain amount of equipment, and energy to fuel that equipment.  She also needs to make sure that her children are safe and cared for while she is working.  

This is a very important point.  At project inception, she needs time that is not only free from child-minding obligations, but allows her to consistently devote time to developing her project.

In most societies, this is one of the principal benefits of school, although school simply does not function in a safe or reliable way in many developing countries… leaving the woman with no childcare, no opportunity to work on her projects and no development of any economy.

Is the answer to simply build schools in countries where there are none or are only ones that are poorly functioning?  No!  Indeed, a poorly-functioning school can be counterproductive, no matter how much child-free time it provides working parents. 

At a certain point, it is not through instruction alone that a child will succeed.  It is through being exposed to peace and constructive values that the child will succeed, complemented with learning relevant information.

The power of incremental changes in building collective intelligence

The biggest incremental transformational educational tool I have come across, and tried to create and co-create wherever possible, is learning games.  As of 2024, I have authored to co-developed about 20 different games, ranging from games about farming to learning languages to soft skills to dancing.  The first thing to note about these games is they are tools for learning.  Some games provide for winning, but most do not.  In fact, as I tell my children, we play to learn.  Because when we learn, we automatically win, regardless of what the game’s outcome is.

A game in this sense is simply a strategic interaction that produces two important results.  Rather than looking at the world from a neutral perspective, a game forces us to shift our mindset, even only temporarily, to see the world in a different way.  Second, the game requires us to intuitively adapt our behavior, again even only briefly, one of life’s most important skills.  It is this:  seeing a problem from another perspective, and developing the ability to improvise, that I believe is a fundamental trait of success in life and business.

Consider the sales function.  Sales is essentially a phenomenal strategic interaction: in selling something, we need to first understand the perspective of our potential customer, which can take much time, resources and energy.  Once we finally figure out what they want, we need to strategically show how our product is superior, which may require some measure of creativity and improvisation.  Understanding and improvising to respond to the other’s perspective is relevant for customers, employees, teachers, family, authorities, in the world of dating… life is a strategic interaction, and the more we practice it, the better we get. 

And if we really want to get better collectively, we need to harness the collective intelligence of humanity.  Games, especially learning cards with prompts, allow us to do just that.  Rather than putting all the burden of instruction on one expert person, we can all teach each other.  This is the beauty of co-teaching and co-learning:  we don’t need to go to the best university to get the best information.  We need to put the right people together and, above all, know what question to ask.

If you do that, then children will teach children, farmers will teach farmers, engineers will teach engineers.  Children teaching children, and especially teens teaching children, in a structured, organized way, using free or nearly free learning tools such as cards and games, is the path to development. 

It is a sad reality that many schools and universities, despite calling themselves non-profit institutions, have become vehicles for promoting values that are going against the spirit of the SDGs.  Money reinvested to build oversized amenities and price-inflated experiences only create the impression of saturation, not sustainability.  It is not a building another huge stadium that will forge the resilience and leadership of tomorrow’s leaders.  Rather, it is kaizen in action… applying the spirit of small, constant improvements to everyday life. 

If Fantah’s children can spend one hour in a safe place, learning in an informal way with a light organizational structure, she can spend one hour of time and energy on her business.  If this can happen for three hours, then an agri processing operation can be put in place and scaled.

Down the road is where the microloan will come.  And further yet, the power plant.

But the power plant cannot come before the economy is built.  No energy investor will pay for a power plant to be built in an area where there are no paying customers.  To have paying customers, they need steady income.  To have steady income, there must be a business. 

Schools do not make business.  Hospitals do not make business.  Poverty alleviation does not happen in any meaningful long-term way without business.

Fortunately, there is kaizen.  There are all of the simple, natural synergies that exist in everyday life, from shared childminding to shared cooking.  There are simple solutions such as team sports and learning cards for math and reading. 

Applying these solutions – team sports and learning cards – in a structured, incremental way is the key to unlocking the time-money dilemma for Fantah and millions of other rural communities living in poverty all over the world.

Implement kaizen practice, and don’t wait for approval or accolade

The good thing about kaizen is that it can be done wherever, whenever… and with little to no resources.  There is, however, a big challenge in implementing kaizen practices, which is really about one’s mindset.

I have found the work of Chihiro Nakao to be among the most illuminating, useful philosophy in business and in life.  In some ways, his philosophy is about strict constraints, which bring out the natural creativity and resourcefulness in people.  Nakao-san challenges team members to make improvements without money, people, space, warehouses, adjustments… his philosophy of “no” is designed to focus on improving the people and processes. 

Nakao-san is also known as the “father of moonshine.”  Moonshine was developed as a home-grown alcohol during the period of prohibition in the United States.  Because it was illegal, it required not only using materials on hand, but being extremely disciplined in their application.  Nakao-san encourages the same philosophy of innovation in companies:  improve creatively using what you have.  And it’s better to do it now, even without approval, and then beg for forgiveness if necessary.

Having had several kaizen-style teachers in my family and my life, and now in year four as an entrepreneur, I can personally attest to the success of this approach.  Discipline, and more discipline, but especially small-scale discipline, is the path to success. 

You must learn to love the word no, because only in understanding and applying variations in response to no will get you to yes.  And it might be that you must apply the exact opposite of what you are doing in order to get to yes, as long and painful a process as that might be.

Another important lesson from Nakao-san is how important it is to be in the genba.  In the business world, the genba is not the office, the Board room or the shareholders’ meeting… it is the manufacturing floor, the warehouse, the inspection room… it is where the action is. 

“Genba kaizen” means “change something for the better at the actual place where work is performed.”  And change it, you must – don’t wait!  According to Nakao-san, quick and dirty can do what slow and fancy cannot.

Let’s come back to sustainable development.  The world of investment funds, philanthropy and DFIs today are slow and fancy.  There is lots of money and there are lots of committees to decide what to do with that money.  But slowing decision-making or spending less doesn’t make the world more sustainable. 

And waiting for a grant or an investment or a loan might mean waiting a long time.  Just ask Fantah.  I personally have helped her apply for several grants, from foundations to the U.S. State Department and the European Union… all were rejected.  I suspect Nakao-san would tell her not to wait for a billionaire philanthropist to write a check: do it now and do it using existing resources. 

As Nakao-san teaches:  “Managers must challenge themselves and strive for production that surpasses the current state using lightening speed, courage and determination.”[i]  And this is precisely what she is doing.  Planting, tilling, harvesting… using traditional methods until she has enough income to invest in more sophisticated equipment. 

The most valuable asset she has is her time, and if she can organize her children in a safe, free and constructive way, such as through football games and simplified learning cards, she will be able to not only optimize her time but achieve superior production in the same, or less, time.

Her time is perhaps among the most valuable on the planet:  every minute spent in her genba is a minute spent doing the work of poverty alleviation, which has immeasurably positive ripple effects. 

The link between kaizen and faith

In order to implement kaizen, you must believe that small, incremental changes are worthwhile and indeed are worth the lack of visible, immediate progress.  In today’s economy that tends to be based on immediate gratification, kaizen requires not only discipline to apply consistent actions without having any particular accolade or result, but also believing that these actions will contribute to an important, large-scale result, and hoping that others will do the same.

I believe that kaizen can only truly succeed in an environment where there is strong moral or spiritual engagement – whether a company or community organization that has an important commitment to living its values, or in a spiritual setting where the actions are done also in the spirit of service and faith.  This is an important point:  we practice kaizen because it is part of a bigger set of values and beliefs… whether it is picking up a piece of rubbish that we did not put on the ground, or bowing to someone elderly.  Kaizen is a question of values.

Kaizen is also a question of focusing more on the process more than the result.  Bill Walsh, coach of the San Francisco 49ers masters this idea in his standards of performance, which is the philosophy that guided him to lead the team to several, seemingly impossible, victories.  The commitment to the team, spirit, values and potential of the organization must be of the highest consistency and quality.  In doing so, as he explains, the score takes care of itself.  Not immediately.  But, in the long-term, if you can connect your small actions to a much bigger set of values, you can stop worrying about the result:  the score will take care of itself.

Although the philosophies discussed in this paper are taken mostly from business and sports, I believe that faith-based organizations (FBOs) are particularly well-placed to take them forward.  First, because most FBOs are already living the spirit, at least from an organizational perspective, of kaizen and the theory of focusing on constant improvement.  Second, most FBOs have teams of conscientious, balanced and mentally resilient individuals who are often time-rich.  This includes appointed leaders of the FBOs, but also their members.  Some are so time-rich that they risk doing a disservice to their FBOs if they don’t find more practical ways to use their time.  Third, the resources of FBOs are so vast and geographically dispersed that they can easily deploy kaizen-led projects on the ground, particularly in Sierra Leone, which is home to a vibrant and spiritually diverse population.

Companies have an even bigger role to play in achieving the SDGs.  How many tractors are currently sitting idle in Africa, in Asia?  How many experienced engineers, lawyers, marketers and technicians in the world’s biggest multinationals have the expertise to use these resources efficiently for the realization of the SDGs? Not all companies are financially rich, but many are resource rich… meaning rich in talent and equipment.  Many of these existing resources that can be made available on a tax-free, donation or lease basis.  Microcredit is only a drop in the bucket compared to the value that could be created if multinationals truly committed to devote a portion of their time and energy to SDG project development. 

This is what true sustainability looks like.  It is not counting carbon tons or credits; it is putting the time, energy and resources of people and industrial companies into the realization of sustainable development projects that strengthen and create economic ecosystems that give rise to additional value creation. 

All of that sounds incredibly exciting, and would make a great newspaper headline.  Fortunately, kaizen is quite the opposite of newspaper headlines, and  we don’t have to wait for the world to be watching in order to start living it.

CPM

[i] Bob Emiliani, Kaizen Forever, page 58.