Shifting Mindset – The ROI Is There

What’s the return on investment (ROI) in shifting an organisational mindset?

Let’s be more specific about what we’re talking about here.

What’s the Investment?

Normally in ROI calculations we’re talking about investment in terms of money – or proxies for money, such as effort, resources, capital or operational expenditure, and so on.

For effecting a shift in mindset, money-related investment will include:

• Staff time
• Opportunity costs
• Specialists (coaches, therapists, facilitators, etc.)
• Increased waste as folks work through the change.
• Training
• Incidentals (revisions to policies and policy documents, changes to internal processes, etc.)

And in shifting an organisational mindset, we’re also faced with the personal – that is to say, emotional – investment from everyone, across the organisation, in self-examination, unlearning (of old assumptions) and new learning (of a new frame, perspective or viewpoint). Ultimately, even a new way of being in the world of work.

What’s the Shift?

Depending on the current organisational mindset, the shift – I’ll call it a Rightshift, to indicate the desired direction of the shift, to the right, towards a more effective organisation – can in fact be one of several major shifts.

• For organisations with a currently Adhoc mindset, the desirable shift will be to an Analytic Mindset.
• For organisations with a currently Analytic mindset, the desirable shift will be to a Synergistic Mindset.
• For organisations with a currently Synergistic mindset, the desirable shift will be to an Chaordic Mindset.

And this is not something that can be delegated or bought-in. Leaders must model the shift themselves, yet bring the rest of the organisation along with them, lest they become seen as alien and bizarre.

What’s the Return?

For each shift in mindset, the approximate return is a 200% increase in organisational effectiveness. That’s to say, the whole organisation can reduce its operating costs by a factor of three, or increase its throughput by a factor of three with no increases in operating expenses or inventory (including CapEx).

Aside: Reducing operating costs is a bit of a fool’s errand, though, as, especially in knowledge-work businesses, this may mean reducing headcount, and as the organisation wins new business with its improved competitiveness, quality, service, etc., those apparently surplus yet skilled and experienced people will soon be needed again, to deliver against the uplift in demand. See also: the Porsche manufacturing turnaround story.

How do these amazing, incredible, unbelievable levels of return come about? Where do they come from?

• Increased morale and employee engagement leading to higher levels of discretionary effort, lower social loafing, etc.
• Reduced cycle times leading to reductions in e.g. costs of delay and improved flow of value.
• Reductions in WIP leading to reductions in inventory / carrying costs.
• Improved relationships skills leading to more effective working relationships, reduced coordination costs, etc..
• Improved product and service quality leading to improved customer focus, better customer experiences and gain in market share.
• More organisation-time spent on things that matter.
• More focussed CapEx investment leading to higher CapEx ROI overall.
• Reduced debt levels leading to reductions in debt-servicing costs.

You may wish to take a look as some earlier posts on this blog, and in particular the Marshall Model, to understand the challenges involved in realising this kind of fundamental shift in organisational mindset, and thereby achieving the stated ROI.

– Bob