Why

Opportunity Lost: Because too much effort is going to waste.

There are few things more frustrating in life than expending a great deal of work, effort, sweat, and heartache, and accomplishing little in return. Answering the question, “What’s the ROI?” is a perennial challenge  for anyone applying and implementing lean. Estimates vary but approximately 10% (some optimists put it as high as 20%) of lean improvement initiatives achieve a significant impact on the market and financial performance of organizations that launch and pursue such programs.  That means that more than four out of five lean initiatives fail to deliver on their promise.

Make no mistake, market impact is what it’s all about. In the current economy it has been reported that one-third of companies are discontinuing and cutting funding for their continuous improvement efforts because the return is unknown, undocumented, or non-existent.* Even government organizations pursuing lean have to report service improvements and cost savings that their customers will notice and appreciate.

Most lean programs start out strong, delivering some impressive changeover, cycle time, and inventory reductions, as well as customer delivery and quality improvements in targeted areas. But as management attention moves on, and as assembly-line and workcell gains fail to translate into quarterly profit gains, many lean initiatives die a quiet death, written off by all involved as yet another management flavor of the month.

Still, there are a few exemplary firms in every industrial sector, and an increasing number in the service sector, that have achieved phenomenal improvements. And, here’s where things get interesting, these organizations continue to move forward quarter after quarter and year after year. Pursuing such an ideal state isn’t easy–and a change of executive management can bring all progress to a screeching halt–but it’s what makes the journey worthwhile.

Too much time and effort is being wasted because of poor execution and lost momentum, starting with the initial launch plan, and lack of leadership commitment. In some cases business results and customer impact are there but they’re being given away or aren’t being measured or communicated very well. That’s a problem.

Operations and organizational change leaders would benefit from ready access to current thinking, advice, examples, and tools for estimating and measuring the economic return on their improvement efforts. They need advice and examples for communicating those estimates and returns into terms that can be understood and supported by executives, board members, employees and other stakeholders. That is what LeanROI.org will provide.

* Pulling Away, Stiles Associates Lean Leadership Survey, Spring 2009.