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

What is the Value in Outstanding Service?

By Al Norval

Do people value good service? Would customers pay more for good service?

This is a question I’m always asked and I always reply “Yes”. We sometimes take a narrow view of the definition of Customer Value. We look at the functionality of a product or service and the steps that go into making it ask what would the customer be willing to pay for this? While this is true and necessary, it’s not sufficient.

I prefer to take a much broader view on what drives value by looking at the entire customer experience. We can take those things that drive customer value and break them down into three groups.

There are things that I expect so that having more of these things doesn’t drive more value. When I sit down at a restaurant I expect someone to come over and take my order. Having ten people come over to take my order doesn’t drive any more value.

There are things that are linear so that the more there are, the more value is created. Fast food chains understand this. The quicker the food is delivered, the higher the value proposition.

Lastly, there are those things that truly delight customers. Things that aren’t expected but when they happen, greatly enhance the customer experience. I recently phoned a catalogue company I had dealt with in the past to place an order for some clothing. The phone was answered on the first ring and the representative greeted me by name. The order was quickly placed and using the credit card information from my file I was done in about a minute. No mess, no fuss. Compare that to horror stories we’ve all experienced placing phone orders or ordering on-line on the internet such as waiting on hold, inexperienced customer service staff with no idea about the products they are taking orders for, errors in order entry, up-selling, credit card and shipping information errors.

The company I phoned was LL Bean. They are consistently rated as one of the top customer service organizations in America. What does outstanding customer service mean to them, it means delighted customers and delighted customers means repeat business.

Cheers