Is your organisation undertaking an improvement initiative?

Is your organisation undertaking an improvement initiative?

Mike IarossiBusiness Improvement

Will your improvement efforts impact the bottom line?

Do you know where specifically on the P&L you’ll see the change, and to what extent?

These are very straightforward questions and yet I’m willing to wager that most Australian executives don’t have the answers.

If you don’t know how the project you’re sponsoring is going to affect the financials, then why are you doing it?

When I’m talking to clients about this, it’s usually about now when they start second-guessing their improvement efforts. And rightly so. Although some fire back with – ‘it’s about improving the customer experience’. Fair point, so again I’ll ask, can you tell me the exact number your customer experience/NPS needs to hit and for which attributes in order for you to see the needle move on your bottom line? Or are you not improving customer experience in hopes that it will increase revenue?

One of the biggest issues in Business Improvement I see here in Australia is in the form of project results ambiguity. It obscures efforts, confuses team members, makes successful project delivery nearly impossible, and costs many companies several percentage points of  margin every year.

Unless of course, your organisation happens to be one of the few that articulate its targets AFTER completing the project. How convenient. This may look good in a boardroom meeting – it will not, however, look good in your annual result to shareholders.

When first considering a project there are usually three main questions that I ask.

  1. What are we trying to accomplish?
  2. How will we know that a change is an improvement?
  3. What changes can we make that will result in improvement?

These questions were coined the ‘Model for Improvement’ (Langley et al., 2009), and although simple, answering these questions is still one of the best starting places for any improvement initiative. And the beautiful thing is, it’s something you can start asking literally today to help get your team and their efforts focused on the projects that are going to move the needle.

If your change agents and improvement teams aren’t already across this, tune them into it during your next Steer Co. Rather than using wish thinking to improve your bottom line – start demanding that your managers articulate where the change is going to come from and demonstrate just how exactly they will map it back to the dollars.

Until next time –

Reference:

Langley, G. J., Moen, R. D., Nolan, K. M., Nolan, T. W., Norman, C. L., & Provost, L. P., (2009). The Improvement Guide: A Practical Approach to Enhancing Organizational Performance (2nd ed.). San Francisco, CA: Jossey-Bass.