ROI on Operational Excellence – Deja Vu All Over Again!

Several years ago I wrote an article for iSixSigma entitled “Ask the Expert: Six Sigma and ROI” on the causes of falling ROI’s of Six Sigma programs. It was at a time when centralized Six Sigma programs were growing dramatically and possibly losing focus.
Recently iSixSigma republished the article on their website.  Let’s use the terms Performance Improvement or Operational Excellence, instead of Six Sigma, to reflect a broader view of improvement activities.  Then consider the focus on ROI is now driven by intense scrutiny of any corporate expenditure rather than declining returns on too much expenditure.  Add the two together and you realize the old ROI article is as applicable today as it was when written.
our short ROI and Six Sigma executive brief.
If you don’t have time to read the article, let me at least give you a short abstract from it which I believe was the most salient point. It is as follows:
“If ROI is your objective, you have three variables with which to maximize it – lower the investment, raise the annual returns, or reduce the time in which gains are achieved. The most sensitive variable is raising targeted returns. Returns are a function of many interrelated variables. Some of these are the quality of the training event, the quality of the candidates, senior management support and the size of the opportunity. But I would argue that the most sensitive variable is the selection of projects”.   
“The success of projects is most dependent on alignment to the company’s initiatives, assuming the initiatives have been correctly aligned to stakeholder concerns. In its simplest form, the initiative could be cost savings. Of course, once again, targeting strategic goals that redefine the company can have a much greater effect on the returns on an initiative.”
But take a look at the whole piece and let me know our thoughts.
View the original article here