The latest i&i Members Community Network Meeting dealt with how to clearly demonstrate the value of business improvement…
Members from the i&i Members Community of Practice, along with selected guests, convened in Dunchurch, Warwickshire, UK to discuss and learn about Return on Investment (ROI) from Business Improvement (BI) activity. Representatives from member companies including Sun Chemical, Royal Bank of Scotland, Royal Mail, British Gas, SCA Hygiene, npower and BP were joined by guests representing Aberdeenshire Council, British Airways, and RBC Dexia Investor Services to provide a broad cross-industry perspective in order to gain insight from different approaches to securing benefits and engagement.
The agenda for the meeting was implicitly designed to tackle some of the key areas within the chosen topic, such the true costs and optimum resources required to deliver BI, the right metrics for the right purpose and the right audience, aligning benefits capture with the organisation’s financial planning structure, and validating “intangible benefits” – such as employee and customer value – and linking to the ROI calculation.
Capturing the objectives
At the beginning of the day, the objectives of the attendees in attending the meeting were discussed and captured as:
• How to sell the benefits of BI to the organisation
• Measuring the change/impact on the people
• Approaches to justify existence
• Quantifying soft benefits
• New metrics
• Prioritising bottom line/soft benefits
• Acceptable benefits vs. cost targets
• Measuring intangibles to underpin the programme
• Should it be a leap of faith?
• Networking
Throughout the day, reference was made to these objectives within the presentations and group discussion session, as well as in feedback capture. Networking opportunities were provided in a relaxed environment and the whole day was governed by a strict “no-selling” policy
Justifying the cost of BI initiatives
Mark Palmer form OEE provided an holistic view of the business and its approach to demonstrating ROI of BI: grounded in annualised savings and value return of skills and knowledge acquisition. The meeting learnt the importance for the organisation to properly support the BI team in order to achieve optimum performance, allow full integration within the organisation, and consequently be able to fully realise and track the financial benefits. Finally, he shared the approach to understanding the different types of work (consistent, variable and high discretion) and the danger of getting this wrong, not only in the resulting increased costs, but also in making demonstrating ROI much more difficult.
Using the Balanced Scorecard to effectively communicate ROI was the key theme of Marko Jovic’s presentation. Attendees learnt how RBS have used the tool to align the vision and strategy of the company by linking financials with the customer, the internal business processes, and the organisation’s people. There are an expansive range of metrics used to capture all the data, some of which were new to many attendees, and Marko explained each of them, identifying the key ones and describing how they are directly linked to strategy and financial return. Marko finished by sharing the lessons he has learned in RBS’ deployment and use of Balanced Scorecard and what the main factors were for its’ success, including smart target setting, linking to reward and reducing complexity.
Maximising ROI for business improvement
Sam Lampugnani gave valuable insights into managing projects and resources to maximise ROI for business improvement. At Sun Chemical, tangible financial results were a key part of their Lean Sigma approach from the very start. However, the traditional Six Sigma ‘rule of thumb’ (i.e. $250,000 per Black Belt project, etc) did not work, and Sam detailed their innovative solution to the thorny issue of quantifying results: a Global Project Tracking System, which accurately tracks project financials and links them to budget targets. After sharing with the meeting the lessons Sun Chemical has learnt in tracking financials within their programme, Sam led the group in a Q&A discussion session delving into the finer details of the issue, namely:
• Why is it important to track the financial benefits of a Business Improvement programme?
• Do Financials need to be tracked forever?
• What is the level of detail and effort required in the financial tracking of projects?
• Who should be responsible for the tracking of Financials?
• How do you make sure that financial focus does not get in the way of real improvement, by giving priority to projects with immediate financial return versus long term improvement?
• How about about projects with intangible benefits?
The Knowledge Cafe in the afternoon allowed the attendees to focus in greater depth on the issues that are important to them about this topic. Breaking into smaller groups to discuss pointed issues within a convivial, relaxed atmosphere, the groups were rotated every 20 minutes to keep the discussions fresh and relevant. It was agreed in the feedback session afterwards that this led to useful, detailed discussions, particularly on measuring the impact of change to the organisation’s people, quantifying soft benefits, discovering and utilising new metrics, and in particular measuring intangibles to underpin the project.
“Good insight into how key measures work.”
Feedback was collected from the attendees at the end of the day. The Net Promoter Score data collated resulted in zero detractors (those who score under 7 out of 10). The attendees were asked what actionable insights they would be taking from the meeting back to their company. Below is a selection:
“How to handle intangible benefits”
“Informing peers of the extent we try to measure intangible benefits – are they really worth it? “
“Coaching all levels. Behaviour not culture. 4 scores on any projects.”
“Undertaking process dependability before identifying / agreeing the metric. Role of Team Leaders”
“Good emphasis on intangible benefits which serves as a reinforcement “
“L’Oreal Case Study. Include Management Accountants in lean events”
“I need to have a look at NPS and get someone into this. Find individual buttons to activate the need to change, not just measures”
“Ability / need to drive impact of measures not hitting targets. The need for standard definitions.”
“Great ideas on property scorecard – directly relevant to my colleagues.”
“Can we have slides please? Made me keen to revisit Balanced Scorecard.”
“Must not take scorecard as read. Look at and check strategy map in place. Will review for the business in the next few weeks.”
“How they manage the issue of core six sigma costs being picked up by local managers.”
“Useful river banks diagram.”
“To progress the useful application of the rivers diagram.”
Below is a selection of comments regarding the quality of the presentations, learning opportunities and organisation of the meeting:
“Interesting topics&sharing information with practitioners in world class organisations.
“This was the first event I’ve been to and I found it very useful to meet fellows in the same field”
“Excellent day – one of the best!”
“A very enjoyable and informative day.”
“Useful day.”
“It’s all about having the right people for the topic.”
“Nice size. Well organised.”
“Really good day – more of the same please.”
“Very good organisation and support.”
“Good venue and location. Happy with the progress for rest of year if we stick to it&SIGS.”
“Very satisfactory.”
“Interesting and useful.”
“Good insight into how key measures work.”
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i&i Members is the Community of Practice for Operational Excellence, Business Improvement and Service Innovation. Members comprise world-class, multi-national organisations who are committed to sharing knowledge and insights within the community. Pilot membership is available for a limited time. For more information contact David Hopkins on
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