There's No ROI in Lean*

"Hey Jim: where is the return on investment for doing all this improvement work?"

This is a frequent question I get from clients. Where is the ROI? When will I start seeing results? Show me the money.

Many consultants will reply to this question with examples of companies who, through application of clever tools, were able to quantify the savings and results. In fact, I just looked at a consultant website that had enumerated the dollar savings from the improvement work they lead to be in the several-hundred-thousand range. 

Here is what my sensei said to me, and what I will say here - even though it will likely be unpopular: There is no ROI in Lean*

Note the asterisk. What that really means is this - most who ask the question about ROI are approaching Lean and Operational Excellence with a short-term, "what's in it for me" mindset. This mindset is not compatible with what Lean truly is. So, the response from to the supposition of the question is accurate: If you are looking for a short-term quick fix, Lean is the wrong approach. There are other cost-cutting measures that will be more helpful if that is what is actually needed, such as layoffs, labor cost interventions, and financial restructuring. 

Lean based Operational Excellence is a long-term investment in your company. It has extraordinary results when implemented in a consistent, systemic, and leader-led way.

Lean can be very fast - in fact, it can be the fastest transformation a company has ever done. The limitation on the speed of Lean is really based on the engagement of the CEO/Owner.

I love responding to the questions at the start of this post with this snarky answer: "There is no ROI."  The response is almost always, "Well then why the hell should we do it???!!" 

Now THAT is an excellent question! That is the question I love to dig into. Why are you doing Lean? Why is Lean a good idea? What DOES Lean provide a company? What is Lean anyway?

With this question, and some curiosity, we can explore what really matters, and start to craft a plan to bring your business dreams into reality.