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Q: What are the critical success factors
in achieving a satisfactory ROI?
You will maximize ROI when you increase annual
returns, reduce the time in which gains are achieved and lower the investment.
There are few investments that can provide the
same rate of return: about 20 times its investment within 3 years as a LEAN Six
Sigma project typically does do, especially with the “low hanging fruit”
ones. However, once these “low hanging fruit” projects are
harvested, the success of the implementation becomes more about alignment to the
right problems – and that is a more difficult objective.
The most critical success factor in achieving a
satisfactory ROI is by far project selection.
You will be ahead of the game before you start IF you were to pick the
RIGHT project.
The success of a project is depends on its
alignment with the stakeholder objectives and respective company initiatives
such as cost savings, profitability improvement through specific markets’
penetration, etc.. Targeting
strategic goals that redefine the company can have a much greater effect on the
returns on an initiative.
A properly selected program will comprise
projects with enough hard savings to achieve an desirable ROI.
Then you should move on to goals with even greater impact, such as
revenue projects that can change the company's growth rate, and finally, move on
to goals focused at redefining the company's competitive position.
When organizations measure the RIGHT thing and
then report it so it leads to the RIGHT activity, then these LEAN Six Sigma
metrics and improvement strategies can get organizations out of the firefighting
mode and into the fire prevention mode.
Finally, you should always apply the 80/20
rule, that is go after the low hanging fruit first for getting quick money “to
the bank.” That is where you will
get the most bang from your LEAN Six Sigma implementation efforts. The reason is simple: there is a well-accepted rule of thumb
that states: 15 percent of the people within an organization will change
anything any time, 35 percent are early adopters, 35 percent are late adopters
and 15 percent say "over my dead body."
In most organizations, doing a good job with the first three categories
is sufficient. When approximately 85 percent have institutionalized a change,
the last group will either drift over or the culture will alienate them to the
point they look for other options.
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