From the Model A to the Model 3: The Opportunity Cost of Failing to Improve

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From the Model A to the Model 3: The Opportunity Cost of Failing to Improve

By Discovery Lean Six Sigma

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The definition of opportunity cost is "a benefit that a person could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative given up when a decision is made. This cost is, therefore, most relevant for two mutually exclusive events."

Think about this in the context of opting to implement continuous improvement software. That decision is pretty clear-cut; either you implement the software, or you don't.

While people understand the concept of opportunity cost when it comes to, say, investing, applying that concept to improvement seems to be a bit more elusive.

In this post, I'd like to take a look at the opportunity cost of NOT implementing improvement software.

Typically, when we're trying to get an organization to calculate the cost of each idea they fail to capture and implement, they get stumped right off the bat because they don't know the value of their ideas and have no way to measure the numbers that are getting lost along the way.

Posted: July 19, 2017, 1:41 pm

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