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Leadership Perspectives

Stop approving projects. Start leading a portfolio

Coordinated improvement delivers more than three times the EBIT of across-the-board cuts. Getting there takes four changes in how leaders govern.

In manufacturing, improvement projects share capacity, labor, and overhead, so each one shifts cost onto the others. Coordinated improvement has historically delivered an average 6% EBIT gain. Across-the-board cuts deliver less than 2%, and 40% of them cause measurable damage.

The difference isn’t effort. It’s governance.

Start with the outcome, not the project. Define success as a change in business-level EBIT, then work back to the projects that deliver it. A strong standalone return that erodes the rest of the operation doesn’t make the cut.

Fund by contribution, not by sponsor. Projects compete for the same people, capacity, and capital. Funding belongs to the ones that move the combined number most, not the ones with the strongest advocate.

Model the interactions before committing. See how each project shifts cost across the operation, and how the combined result holds under realistic swings in demand and cost. Your enterprise systems report the outcome after the fact. The point is to know it before.

Rebalance as conditions shift. Mix and volume don’t hold still. A plan that made sense in January may be wrong by June. Revisit it as the numbers move.

None of this requires more projects. It requires fewer decisions made in isolation.