The ROI of Continuous Improvement: Benchmarks from Thousands of Organizations

Real Numbers from Real Improvement Programs

What Matters in the Calculation?

How much is your improvement program actually worth? Most organizations can't answer that question because they don't track impact at the individual improvement level. KaiNexus customers can -- and the data across thousands of organizations paints a clear picture.

The average KaiNexus user generates $6,000 in annual financial impact. One in four improvements produces a measurable financial result. Among those with financial impact, over 80% of the savings recur annually. And 1.4% of improvement ideas generate more than $100,000 in impact -- which means volume matters more than chasing home runs.

These aren't projections. They're measured results from organizations using continuous improvement software to capture, implement, and track improvements at every level.

This is perhaps the most frustrating part of measuring improvement for most people. They try to aggregate data from across their organizations using a hodgepodge of reports that all include different information in varying formats, but they know that the result is nowhere near accurate enough to make predictions, validate budget requests, or celebrate publicly.

When you doubt the accuracy of your own impact numbers, how is that information supposed to increase buy-in for improvement from others?

To get ROI data you can trust, you need to establish a system of checks and balances based on the three CI KPIs:

1. Activity
2. Engagement
3. Impact

Here's how getting an accurate read on these three numbers results in ROI data that holds water:

Activity

Understanding what kind of improvement is occurring and how often it occurs is the first step toward obtaining metrics you can trust. This data will show you how hard the organization is trying to improve, who is actively involved in the initiative, and which areas of the company need coaching to get more involved.

Key areas to look at here are:

1. Submission vs. Completion: 
   
   Improvements should be completed at about the same rate as which they come into your system. Those that stall out after being identified bring down morale, decrease engagement, and reduce your impact. You should be able to check the percentage of in-progress improvements at any time and drive a greater impact by increasing that number.
2. User and Location Boards: 
   
   You need visibility into how many improvements have been submitted, what people are currently working on, and the change rate of their past improvements. You also need to know how long it takes for improvements to pass from submission to completion. When these stats are doing well, your ROI is going to increase.
3. Status Reports: 
   
   Visibility into the status of improvements across the organization enables you to assess the health of your improvement culture. A healthier culture has few overdue improvements because people prioritize the implementation of ideas and tracking of their impact. A greater ROI follows a healthier culture.

Engagement

The next area in your system of checks and balances is engagement metrics. By tracking who is doing the improvement and keeping score over time, you’re able to track averages, compare yourself to those averages, and identify trends. You can tell if the ROI you’ve attained is due to a small group of people (indicating an undeveloped culture) or a large group (indicating a sustainable, robust culture).

Reports to monitor include:

1. User Engagement Summary
   
   You need to know the average number of improvements people submit per year and the percentage of people who are active in your improvement management system. This tells you how wide your improvement culture goes.
2. Engagement by Role
   
   Insights into engagement rates at every level of your organization help you identify areas that contribute to your ROI and those that need more coaching. A high ROI from a small group of people is less significant and more likely to be an anomaly than one achieved by a wide swath of people. 
3. User Participation Summary
   
   Insight into which type of improvement work is contributing to your ROI - and the number of people engaged in them - also bolsters trust in your ROI data.

See how one health system's improvement program generated 200,000+ ideas across the organization.

Impact

How improvement impacts your bottom line is the number you need to report for ROI, but it requires the first two categories of data to ensure your impact numbers are accurate and reflect a predictable trend in business impact.

KaiNexus makes it possible for you to connect improvement to impact in your reporting, so you can drill down into any number to verify its accuracy. If you see a cost savings that looks suspiciously high, for example, you can instantly see which improvements are contributing to it and validate that the reporting impact for each is correct.

There is no mystery - and no trust required - when it comes to ROI reporting in continuous improvement software. 

Of course, I would be remiss not to mention that it’s imperative to track qualitative variables such as time savings, safety enhancements, health, and environmental impact alongside quantitative factors like cost savings and revenue.

For a deeper look at what to measure, see Continuous Improvement Metrics That Actually Matter.

What Should YOUR Improvement ROI Be?

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Not Achieving that ROI?

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KaiNexus is in the unique position of being able to provide accurate benchmarking data because of the insight our software provides into so many different organizations. We have customers around the world in a wide variety of industries at every stage of their improvement journeys. Our platform provides accurate ROI information for each of these customers, allowing us to understand and share trends, norms, and goals.

The data in this report is based on an aggregation of information from 2011 to the present. 

Because our customers use KaiNexus' continuous improvement software to capture, implement, measure, and share improvement across their organizations, they're able to achieve a markedly greater ROI than those attempting to manage improvement without such a robust platform. 

How Does KaiNexus Increase Your Impact?

More People. Faster Change Rate. Bigger Impact.