In professional baseball, getting on base one-third of the time is considered a solid average. Nobody expects every hit to be a home run. Some hits will be singles, some doubles, and others may be walks. But more at bats means more chances to score, and every hit helps put the team on top.
Lean Six Sigma continuous improvement projects work the same way. The projects follow a “rule of thirds,” with roughly one-third of projects producing the most return on investment (ROI) and total benefits. Does this imply that fewer projects would be better? No, because more projects means more chances for success—just like more at bats gives baseball players more chances of getting on base or hitting a home run.
With the rule of thirds, it’s the big picture that matters. In baseball, the overall score determines whether the team wins or loses—not the result of each hit. In continuous improvement, looking at all the projects collectively is a better measure of success than judging each project’s individual results. Keeping the rule of thirds in minds also helps in setting realistic expectations. Again, in baseball, every hit is not going to be a home run, and every home run is not going to score the same number of points. Carefully consider the possible benefits of each project but evaluate success by looking at all projects.
Rule of Thirds in Lean Six Sigma Project Outcomes
The following example illustrates how launching more projects can produce higher overall benefits: A Lean Six Sigma deployment team identifies projects with expected benefits of $750,000. To get there, 10 people are trained in Lean Six Sigma Green Belt, and each heads up his or her own project. Here’s what happens:
- 1/3 No Hard Benefits: One third of the projects are great projects—but they do not produce the expected ROI to yield hard dollar benefits. Maybe these projects improved the customer experience or had other soft benefits. Just because the projects didn’t produce quantifiable hard dollar savings doesn’t mean they weren’t successful; it just means the benefits in an ROI matrix isn’t there. In the example of 10 projects, 4 fell into this category. While they were beneficial, the ROI would be calculated at $0.
- 1/3 Met Expectations: Another third of the projects did result in a hard benefit ROI, but it wasn’t outstanding. The company still realized benefits and savings, and these projects were considered to be successful. In the example, 3 of the 10 projects fell into this category, and each one realized a $75,000 ROI. When combined with the first set of projects, the projects are still falling short of the $750,000 goal.
- 1/3 Impressive ROI: The final third of the projects result in impressive ROI. These projects were successful in every way, and far exceeded the expectations. In the example, 3 of the projects fell into this category and had an ROI of $200,000 each!
This is the rule of thirds in action—one-third of the projects produced the most results. But as the example shows, the remaining two-thirds of the projects were still beneficial in their own ways.
ROI and Total Benefits for 10 Projects vs. 5 Projects
With limited resources, would it be better to focus resources on the projects with the highest benefits? Yes, but…even though Lean Six Sigma projects rely on data, results are not always predictable and unintended consequences can arise. As a result, increasing the number of projects—from say 5 to 10—increases the likelihood of success.
What if the organization launches 10 Lean Six Sigma Green Belt projects with a target of $750,000 in benefits? Even if 4 projects produce no financial benefits and 3 only meet expectations, the organization can still exceed the goal with 3 successful projects. In this case, thanks to the one-third that far exceeded expectations, the overall program produced $850,000 in total benefits.
|10 Projects||ROI||Total Benefit|
|4||no hard benefit||$0|
What if the organization, instead, decided to launch only 5 projects. To reach a benefit of $750,000, each project’s average target is $150,000. With fewer chances for success, the total benefit for the 5 projects was only $650,000.
|No. of Projects||ROI||Total Benefit|
|2||no hard benefit||$0|
More Projects = More Coaching
According to the rule of thirds, tackling more projects means higher benefits. But it also means more Lean Six Sigma leaders for the projects and more coaching for those leaders. Acuity Institute is here to help with expert training, coaching, and consulting designed to accelerate continuous improvement efforts and produce ROI.
To learn more about how Acuity Institute can drive continuous improvement and help meet organizational goals, reach out today.