TLS Continuum Part 32: The ROI of Change

A common theme in many corporations is what is in it for us? If we spend this amount to secure this new service or product how much are we going to see in return? Every decision is couched in this idea that decisions must be made dependent on what we will see back from the investment. We avoid innovation and new ways to run more effectively because the ROI equation does not meet some arbitrary number in the netherworld of business. In its simplest form ROI means for each dollar we invest how many are we going to get back in the form of profit. In most cases decisions are based on whether the outcome is going to return a positive ROI. If the answer is yes, we proceed with the implementation process. If the answer is no, we typically look for another solution. This is the End of the discussion. But what happens if that is not the best response?

As we mentioned in last week’s post I am currently in the process of reading Michael Rother’s Toyota Kata. In the book Michael Rother asks the reader to consider another point of view. The suggestion is that instead of using ROI as a determinant in what to do, we should use it as a means for determining how to cost-effectively achieve a desired ending. If we move this element of the process to this point does the ROI get better or worse? If in staying agile we move resource A from an area of minimal contribution to the organization to the point where we have maximized their contributions does that change the ROI? At no time are we, or Michael Rother, suggesting going outside of the organizational financial constraints. What we are suggesting is that we take the available resources and move them to the location where they make the most sense.

David Steinberg of XML Marketing has suggested that Innovation doesn’t have to be about creating the light bulb or telegraph. Innovation can be very important small changes to something that is already working. That is the stuff that is overlooked and it can take things to the next level. The only way we effectively compete in the workplace is to be the best at what we do. We don’t get to that point by turning down the opportunity to fix David Steinberg’s small changes because the numbers don’t look like they work.

The TLS Continuum looks to provide the most direct path to resolve organizational issues through careful analysis of the conditions of the organization. We are critically thinking through the desired outcomes and sometimes these outcomes don’t fit a tight box when we look at the traditional ROI beliefs. If we look at the ROI of Change through the lens of resource utilization the ROI picture changes along with the renewed focus. If we look at it from the idea that these are the resources needed to achieve the goal rather than how much we have to spend to get there we open our eyes to see the organization in a more complete light.

Next time your management team tells you that you can’t do something because it is too costly, ask them to look at the equation with this new focus. Ask them to look at the organization and see how they can reshuffle and still achieve the organizational goals and strategies. Ask them not to be too quick to jump to a conclusion as to whether the return on investment is there. Everything we do has an ROI from the new hire to the new product introduction. The difference becomes how we determine end number.

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Comment by Katrina Kibben on January 18, 2016 at 9:57am

Great point and post. How do you set expectations re: ROI timelines on projects? Do you have any particular practices or is it always case-by-case? 


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