The “Point of No Return” is a common expression that typically means you’ve reached an unrecoverable state if you continue to proceed with the current course of action. When I clicked the “Publish” button for this post, I reached a point of no return (action).
From an accounting perspective, the term “Break Even” point is used to define the point where Total Costs equal Total Revenue. The break even point translates to the quantity of parts that must be produced and sold to turn a profit. Stock exchanges around the world serve as a constant reminder that investors are only concerned with PROFIT and return on investment (PROFIT). In this context, a point of no return (profit) also exists.
Businesses exist for the customer or consumer. Poor quality, missed delivery dates, short shipments, warranty returns, and poor customer service all lead to higher costs and may eventually cause customers to reach their “point of no return”. Customers understand that the lowest price is not always the lowest cost option in the long run. Business depends on repeat customers.
What’s the point?
In the simplest of terms, our actions must yield a return that is greater than the investment required to achieve it. Delivering VALUE to the customer is one of the underlying principles of lean thinking and is measured by our ability to provide the highest quality products and services at the lowest possible cost, on time, delivered on time and in full.
This all sounds great on the surface but there will come a time where the cost to improve your systems and / or processes will exceed the return on investment – another point of no return. Alternative, lower cost, solutions must be found to meet your continuous improvement objectives.
Where a significant capital investment is required, your company may require a payback period of one or two years. A capital investment for a program that is soon to become obsolete is not a feasible option. The point of no return (investment) is reached before any funding can even be considered.
The Bottom Line
Understandably, the team will become extremely frustrated when the very solution they proposed is rejected or declined. While they may not doubt their own ability to provide viable solutions, they will doubt the company’s commitment to pursue excellence and continually improve.
For this reason, it is essential for the team to understand the reasons why. It also underscores the need to identify and respond to improvement opportunities quickly and as early as possible during the launch cycle of any new system, process, or product.
Embrace Rejection
Rejection can sometimes be a gift. As I have stated many times before, “There’s always a better way and more than one solution.” Could it be that sometimes bad things happen for a good reason?
Rejection provides (forces) us with the opportunity to consider the present circumstances from a fresh perspective. If the premise for the proposed solution was to “fix” the current system or process as it’s is now defined, perhaps a radically different and innovative system or process could better serve the company in the long term.
Is it possible that a new and lower cost alternative exists that could be at least as effective and perhaps even more efficient? There are numerous examples of systems, processes, and technologies that exist today that were discovered by removing the limits that we unconsciously place on the scope of the problem that in turn limit the solutions we are able to develop.
The real problem with problem solving is the idea that the only solution is a “fix” to a system or process that is already be flawed from the onset.
Be Inspired
TED Talks are rife with examples of problem solving that yield radical and in some cases simple solutions. The following TED Talks may serve to inspire you and your organization to look at problems and their solutions from a different perspective:
- Dan Bricklin – Meet the Inventor of the Electronic Spreadsheet
- Three Ways to Fix a Broken News Industry
- Franz Freudenthal – A New Way to Heal Hearts Without Surgery
These TED Talks present problems on a different scope and scale than we may be accustomed to, however, the very discussion of alternatives alone should serve to inspire radical thinking that in turn inspires radical change.
You may have noticed from these TED Talks that some of the solutions presented were found outside of the context or circumstances from which the problem originated. Is it possible that a “surrogate” solution exists elsewhere?
“Problems cannot be solved by the same level of thinking that created them.”
The point of no return is significant and literally requires “out of the box” thinking. Many companies no longer grace our communities or employ our neighbours, losing business and opportunities for growth to lower cost manufacturers and distributors to continually emerging global economy. The difference could very well be how we embrace the point of no return.
Consider that Toyota, as a new company to the North American automotive market, implemented innovative supply chain, inventory management, and production techniques to remain competitive. Radical change and innovation does not imply higher cost or investment. At best it should simply imply “different”.
Other companies like Apple and GE managed to change their futures under the leadership of Steve Jobs and Jack Welch respectively. Was it always pretty? Likely not from the books I’ve read. However, the outcomes are undeniable.
The courage of Steve Jobs to solicit support from Microsoft’s Bill Gates was an extremely radical decision at the time. This video, “Steve Jobs, Bill Gates and Microsoft – It’s Complicated“, clearly demonstrates the challenges faced in the relationship between Apple and Microsoft. As for GE, I highly recommend reading “Straight From the Gut” by Jack Welch to best understand the radical changes in business and company culture during his tenure there.
Asking the right questions, open minds, radical thinking, and strong leadership coupled with a commitment to pursue excellence, continually improve, and solve problems may help everyone realize that the point of no return can be one of the greatest gifts you’ll ever receive.
To quote Albert Einstein, “A clever person solves a problem. A wise person avoids it.” and so we … “look before we leap.”
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Until Next Time – STAY lean
