Pay As You Go Results

Lean Nation,

Following our theme of lean leadership, today I will discuss a concept known as pay as you go results. A lean leader needs to make sure that there is organizational alignment between improvement activity and execution of the corporate strategy.   You do not have enough time, resources, or space to waste time on activities that are not going to help you achieve your true north measures.  As a refresher, the true north measures are:

1. staff morale (many times shown as a staff safety measure, but also how you measure staff development)
2. quality (a measure of service quality, process quality, or outcome quality)
3. delivery ( a measure of lead-time or wait time)
4. cost ( a measure of $ per unit of service, or hrs per unit of service)
5. growth ( a measure of volume)

These are the categories that almost all measures roll up into.  They are also the measures that reflect operational excellence.

In addition to the alignment to the true north measures, your improvements better generate a return on their investment.  The collection of all your improvements should have a positive return after all of the improvement related expenses.  These expenses will include the cost of experts (internal and external),  staff costs for the improvement, supplies and incidental expenses associated with the improvements, and any operational and capital expenses spent as a result of the improvements.

This is what is meant by pay as you go results.  After the initial investment in training,  a lean improvement initiative should be self funding.  There should be a business benefit to improvements in staff morale ( less sick time, less turnover), quality (rework $ spent), delivery ( reduction in waiting should result in higher through-put and potentially more sales), and cost savings should be realized.

Many, in fact I'd say most,  organizations fail to achieve the potential of the pay as you go results, because of selecting the wrong measures, budget protection behaviors, failure to hold staff ,technical experts, and management  accountable for following standard work, and frequently an inability to execute the human resource changes needed to realize the savings.

If your improvement program isn't "free",  then I'd look at your measures first, and execution of your improvement activities second.  Lean is designed to create world class improvement in performance and culture.  This should include a healthy ROI.

Lean Blessings,

Ron

Ron Bercaw
www.breakthroughhorizons.com