.

Return on Investment

profit / investment

improving ROI

profit ++ / investment --

[example: retail]

more value (profit ++)

• sell more to the same customer

• get more customers

• increase prices (without losing sales)

less waste (investment --)

• cheaper space / furniture / tills / ...

• fewer people

• less inventory (things on the shelves and in the back)

improving ROI

improving profit / investment

[example: software]

more value (profit ++)

• do things that are more valuable (effective)

• do things faster (efficient)

• work more

less waste (investment --)

• cheaper space / furniture / laptops / ...

• fewer people

• less inventory (Work In Progress)

Inventory

items invested in that take up space

[example: retail]

ideal: every customer walking in finds everything they are willing to buy

inventory - physical limitations:

• more inventory -> more investment

• more inventory -> more space

• more inventory -> more staff

Inventory

items invested in that take up space

[example: software]

work in progress

features (no value, low value, high value)

work-in-progress - limitations:

• more work-in-progress -> more investment

• more work-in-progress -> more context-switching

• more work-in-progress -> more cognitive-load

features - limitations:

• more features -> more investment

• more features -> higher cost to add new things

• more features -> higher chance of things breaking

• more features -> more cognitive-load

ROI 80-20

ROI = profit / investment

ROI = 10 / 100 = 10%

80-20

ROI = 8 / 20 = 40%

Inventory 80-20

ROI = profit / (space + ... + wage + inventory)

ROI = 10 / ( ? + ... + ? + 100) = <10%

80-20

ROI = 8 / ( ? + ... + ? + 20) = <40%

Work in Progress == Inventory

unfinished tasks are like an unsold products on the shelves

investments are paid, but no profits made

useful metrics

Work-In-Progress-limits

how much inventory

Lead-Time

how long between investment and profit

how long between money out and money in

Definition-of-Done

generated value, sold & paid

Book: Isn't It Obvious? - Eliyahu M. Goldratt

maybe a good metaphor = museum

• "features build up"

• "features take up space"

• "inventory is not sold"