This post builds off of a little rant I went on over on LinkedIn. I wrote:
The Catch-22 of “Lean” training and “implementation”…
Executives want big returns and high ROI. That's understandable.
But, at the core of Lean, if you're going to call it that, is “#Kaizen,” which means allowing everybody to do small improvements even if there isn't big ROI.
Encouraging people to make small, simple improvements focused on making their work easier unleashes a huge number of improvements and, guess what, some will end up having a big ROI. The executives would be surprised. Plus, the cumulative effect of many small ideas is larger than what you get from demanding a few high-impact ideas.
The counterintuitive thing is that you get *better* results by not demanding a huge ROI for each improvement or project. Studies have consistently shown that 80% of an organization's improvement potential comes from the small stuff. Yet, executives are ignorant to that truth or choose to ignore it.
You can, of course, choose to focus on big projects that you think will have big ROI. But call your approach “improvement projects,” not #Lean.
Here's a Toyota article on Kaizen. They don't talk about ROI.
“Within the Toyota Production System, Kaizen humanises the workplace, empowering individual members to identify areas for improvement and suggest practical solutions. The focused activity surrounding this solution is often referred to as a kaizen blitz, while it is the responsibility of each member to adopt the improved standardised procedure and eliminate waste from within the local environment.”
Quite a contrast to a hospital executive team telling people to only focus on high-ROI projects.
And Joe Swartz and I, of course, wrote about this in our Healthcare Kaizen books.
Here is a perspective from Kaizen Institute:
“Deming was basically saying, “go ahead, compute an ROI for your Continuous Improvement projects and for your client's projects, but it won't matter too much because it will be greatly underestimated and this must be realized.” Dr. Toyoda supported this as he said Deming and his beliefs are the core of Toyota's management …. not an ROI analysis.”
It's frustrating that hospital executives will call for “evidence-based medicine,” but then so blindly ignore “evidence-based leadership” (credit to Studer Group for that phrase).
This large-ROI approach should be called “project-based improvement attempts” instead of Lean.
Of course, it's not just hospital executives who make this mistake of ignoring the potential of many many small improvements.