Zentaku Kogyo Company: Less is More

Contrary to the typical practice of cutting operating expenses by compromising on employees’ benefits, the chairman of Zentaku Kogyo Company Ltd. (Zentaku), David Wu Chongrang, aimed to improve the standard of living of his staff by steadily raising their salaries and benefits. In fact, the key performance indicator David had set for himself was to raise his employees’ salaries regularly to a preset target benchmark. Contrary to conventional approaches, over the past sixteen years (2006–2022) David had reduced Zentaku’s revenue by 28 per cent and the number of employees by two-thirds, while raising the annual gross profit per employee to 239 per cent. Zentaku had achieved more with less by transforming itself through the rigorous implementation of lean production, inspired by the famed Toyota Production System, but Zentaku’s future leadership now faced challenges in sustaining the success Zentaku had achieved. Were the management methods adopted in the past applicable to the younger generation of workers? How could the current management pass the enterprise to the younger generation while ensuring employees remained fulfilled in the workplace?

The case can be used in undergraduate, master of business administration, and executive education programs within operations management, operations strategy, service management, organizational culture, leadership, corporate governance, and business strategy courses. The case is also suitable for courses related to entrepreneurship, starting and managing a business, and management and succession in small and medium-sized enterprises (SMEs) and family-owned businesses, with an emphasis on lean and purpose-driven leadership. Specific areas include<br><br><ul><li>Operations management, quality management, or service management: Lean production/thinking in SMEs.</li><li>Purpose-driven leadership via operations: Building companies with a sense of purpose, intimacy, community, and accomplishment.</li></ul><br><br>Most widely-used case studies are about big and well-known organizations. The business models and practices of these big corporations are usually not applicable to smaller organizations or other industry sectors, yet SMEs are the backbone of economies globally. SMEs account for 90 per cent of organizations and almost 70 per cent of jobs and gross domestic product worldwide. This case is notable in showing there is an alternative to conventional approaches to success for SMEs. The case exemplifies a purpose-driven SME leveraging its strengths in lean production to achieve more with less. After completion of this case, students should be able to do the following:<br><br><ul><li>Understand how a small company like Zentaku can embark on a remarkable transformation.</li><li>Appreciate how a purpose-driven organization can create a fulfilling workplace.</li><li>Explain why the rigorous practice of lean production is essential to achieving more with less.</li><li>See how lean production may contribute to environmental, social, and governance practices and sustainability.</li><li>Identify the challenges of sustaining consistently high levels of performance during leadership succession.</li></ul>

• Operations Management
• Lean Production
• Succession
• SME