Back to Basics - What is Value?

By Pascal Dennis (bio)

Value is Lean’s guiding star, Mother Lode and raison d’etre.

So what is value? Here are some common definitions:

• ‘What the customer is willing to pay for.’
• Okay, but what if the customer doesn’t know what they’re willing to pay for? (Would customers have said yes to the IPad in conception?)

• Value = Quality/Cost
• A serviceable definition

• Changes form, fit or function of a product
• A nice manufacturing definition, but does it apply in, say, a bank or hospital?

• An action that moves a process forward
• Nebulous, no?

All of these are correct, in their way. Value is like a gemstone – hold it up to the light and different colors emerge.

Most importantly, the team must connect closely with internal and external customers and understand value from their point of view.

This is the beauty of connectivity and commerce. Work is activity that creates value. Our work enables our customer, who is thereby able to create more value.

The splendid work of Steve Jobs, Bill Gates and their teams compound my productivity (such as it is).

Work ennobles and enriches both the worker and the recipient, which is why we revere it so.

(Of course, there are extreme philosophies that demean work, and believe value is fixed and cannot be created. For these, the only question for such is how to divide the economic pie.

But you rarely see them in a factory, hospital, design studio or any place value is created.)

In summary, value is Lean’s guiding star. Get close to your customer and ask them what they need from you.

Best regards,

Pascal




In case you missed our last few blogs... please feel free to have another look…

You Want to Get More Done? Do Less…
Strategy Deployment & Language
Where Lean Has Gone Wrong & What to Do About It, Part 2
Where Lean Has Gone Wrong & What to Do About It, Part 1

Back to Basics – Customer Value

By Al Norval

I’d like to start a series of blogs today which get back to the basics of Lean. It seems to me that as Lean gets more mainstream, people are forgetting the basic principles of Lean and are contorting Lean into something it was never meant to be. The worst examples are where people take what they were always doing and re-label the same work as Lean. I’m sure we can all think of many examples of this.

What do I mean by Lean?

It’s the engagement of all people in driving continuous improvement through the elimination of waste to improve Customer Value. The result is the world’s most powerful business system.

Today, I’d like to start right at the beginning with Customer Value.

In my consulting practice I often come across organizations that are in the middle of a Lean transformation and when I ask why are they doing it – what’s the purpose? I get an answer of – to save money, to meet our financial obligations to the organization.

This answer always disappoints me since there is much more to Lean than that. In Lean we need to meet the needs of three publics; the Employee, the Customer and the Organization. If we’re doing Lean and not benefiting all three publics, then we’re not doing Lean properly. There has to be a win for the Employees, a win for the Customer and a win for the Organization.

If there is no win for the Employees, how can we expect to engage them in continuous improvement? More on that in the next blog in this series.

If Lean improves the value proposition for Customers, it results in a win for our Customers. Higher value entices Customers to buy more of our product or service. I like to think of Lean as a growth strategy. By delivering more value to customers, organizations can sell more and selling more is one of the best ways to achieve financial success.

Instead I see many organizations that are doing the exact opposite. They are trying to get Customers to conform to their way of doing business rather than taking the Customer viewpoint and changing the organization to become responsive to the needs of the Customer. Even worse, they develop products and services internally and then try to convince their Customers these products and services will solve their problems. A great saying in this vein goes like this “No amount of marketing can make up for poor product design”.

True Customer value comes from deeply understanding both the spoken and unspoken needs of Customers. These needs come from problems the Customer is experiencing and sometimes from problems the Customer isn’t even aware they have.

For everything we do, always ask the question - is it driving more value to our Customers?

The answer to this question is how we judge every activity, every product and every service we provide.

Cheers