ROI: Too Little, Too Late

Lackluster financial results from improvement projects? Smaller than expected ROI (return on investment)? Do not be alarmed, there are solutions to these problems. With a little boost your organization can achieve great results.

Last week’s blog on the Juran JUMP program attempted to bring to light the slowness of some improvement programs and methods. In this week’s blog I will focus on how to increase the results and speed of return on investment.

Our experience at Juran has shown that improvement programs follow a critical path by completing important tasks. These tasks, or what we refer to as Performance Excellence Benchmarks, begin with the selection of projects and continue through holding the gains of an improvement.

What is a critical path? We refer to this as the minimum number of tasks that must be completed for success. Missing one of them can dramatically reduce the results in the short term and derail a great program in the long term.

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We have monitored many organizations over 30 years and the benchmarks remain the same. If you want real results you must carry out what Dr. Juran referred to as universal principles which transcend every industry and every country culture. We like to call them the JUMP factors. We will cover two of these today by discussing how to jump higher and faster by following the critical path. So what is the critical path to project success?

  1. Select and Launch Projects. Collaboration with leadership that can support both the launch and solution implementation is critical. This collaboration on what to work on is the most critical element of a successful result. Why? Big results come from big improvement. Big improvement happens when you solve problems that cut across many functions in an organization. Moving across functions requires leadership to support teams and remove obstacles that otherwise would not be removed. Cross-functional teams need permission to diagnose and solve these problems. Teams need legitimacy to “analyze someone else’s process.” Without this support teams often do not find the root cause(s) and therefore never get the large gain they thought they would.
  2. Move briskly through the problem solving process of choice. If using Lean Six Sigma (Define-Measure-Analyze-Improve-Control) knowing the most critical tool in the define step will help speed this along. It is a tool that many teams avoid using because they think it is less important. It is the Pareto principle and Pareto diagram. Why is it important?

Too many projects we have seen have tried to tackle problems as a whole. This is referred to as “boiling the ocean”. The Pareto principle, named by Dr. Juran, shows that a relative small percentage of the problem impacts the majority of the results. By applying this simple tool in the Define step, the team can move more quickly along. Here is an example.

A hospital was trying to reduce patient admissions — a common problem for hospitals and patients. The project team spent months trying to understand the processes that impacted patients; the best practices in the industry, the voice of the customers, etc. They were getting frustrated and tired of “doing all this analysis.” After a simple review we found if that had they had created a Pareto diagram in the first step of Define the problem would have been 90% solved. Why? A simple Pareto diagram of the primary care physicians whose patients were readmitted resulted in two doctors accounting for 90% of the re-admissions! From this point the team then asked what was different about these two doctors. Did they have more patients than the others? Were they not as good as the others? Did they miss something in the assessment or discharge of the patient? In all cases the answer was no. The team learned that these two doctors were the only doctors in their practice. That meant when a patient called their primary care physicians (because they were not feeling well only a few days after initially being released from the hospital) and the doctor had no backup, or time for an appointment, the patient was then told to go to the emergency room at the hospital. That then is recorded as a readmission. The patient may have been better served by seeing another doctor instead of going to the ER!

If you want to jump faster and farther, collaborate on the problem with leadership and use the Pareto principle to determine the vital few factors leading to the problem, and forget about the useful many causes of a problem.

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-Dr. Joseph A. DeFeo, Chairman & CEO of Juran