The 80/20 improvement kicker

Another comment by one of the BPMG Sydney chapter attendees was very pertinent - he claimed in a recent process improvement project that 98% of the benefits came from only 2% of the improvements and all of them were human related process improvements. Now that is a huge ratio and if you were the sponsor looking back at that you would probably be frustrated at the return on investment (ROI) for the other 98% - that budget could have been spent on something else.

I am a big proponent of the 80/20 rule (officially known as the Pareto Principle). Just for the fun of it let's say that most projects have the same outcome, 80% benefit from 20% of the improvement. Turning that into value, 80% ROI comes from 20% investment - as opposed to the other side where only 20% ROI comes from a massive 80% investment.

So 80/20 gives you a 4 times payback whereas 20/80 gives you a measly 0.25 payback - I know which bank I would invest in.

The challenge of course is identifying in the project planning stage where that truly valuable 20% improvement goldmine actually is.

Do that and your project will soar with the eagles.