Defining Value Added
In the lean lexicon there is a lot of talk of removing waste from processes. Waste is anything that is not value added. There is the problem. What is value added?
In my work, I ask people to define value added for me. It seems like a simple question, but I get numerous blank stares and answers rarely match across the team or organization.
So if can’t give a standard definition of value added, then what is waste? How do you look for it? How do you know what to keep and what to eliminate?
Here is the definition I learned long ago and it never fails me:
- The customer must be willing to pay for it
- It changes the form, fit, or function of the product or service
- It must be done right the first time
ALL THREE MUST BE MET TO BE VALUE ADDED!!!
A customer may find something interesting but isn’t willing to pay the extra price for it. An example may be an optional built-in DVD player in the mini-van. Some may find it of value and pay extra for it, while others may not.
A change must be made to the product or service. Inspection stations on an assembly line are a good example of something that violates the definition. It may be needed because that is better than a bad product getting out.
Which leads to the last point. If it isn’t right the first time then it is a defect which is one of the seven types of waste.
Next time you are looking for waste, bounce it against this definition of value added. You may be surprised to find waste that you haven’t considered before.
Rating Yourself Is Important to Growth
Personal improvement is important. It shows others a person is will to take a hard look at themselves and hold themselves accountable for their actions.
When others see a person doing this it can cause them to take action to improve. This is what happened with me.
I saw my colleague rating herself on skills she wanted to improve every day. I asked her how she was going about the work. It led to a good discussion and me taking action.
Here is a simple way to do it.
Understand what skills you want to improve and then create a daily chart. At the end of each day take a couple of minutes to rate yourself based on a predetermined rating system.
Even if you don’t do anything to improve the skill that day, it will be top of mind everyday as you rate yourself. Pretty soon you will be noticing you haven’t done anything on a skill. Then you will start thinking about it during the day. You become more conscious of when to apply the skill you are working on.
Before you know it, the skill will become second nature.
Failure Is Not An Option…
…it is Mandatory!
I tell my kids that if they haven’t failed then they aren’t learning. Because if you succeed the first time all the time, then you are only applying what you already know.
Where has that gone in the business world? Companies can’t be afraid to try a new product and not fail with it. Or a new process to create the product. Or anything that can create new learning.
Part of the reason is people still don’t know how to fail. I’m not saying all in on one thing and only go live with the new after having it “perfect.”
Companies have to learn how to put something new out there. Learn from it quickly and then make changes to improve it.
If companies won’t put a truly new product out there or use a creative new process, then what are they learning?
The better question may be, “When are they going to get passed?”
Fail and learn as quickly as possible so the learning can used and the company can be in better place.
Always Keep the Door Open
Opportunities seem to present themselves when you least expect it. Not when you are trying to seek out an opportunity.
That is why it is important to keep as many doors open. It increases the possibility of an opportunity.
Network with people in new areas. This can open the door for a career opportunity. Or the opportunity for you or your team to do work in a new area, highlighting the capabilities your and your team bring to the organization.
The best way to know if you have an interest in something is to try it. Taking job assignments in new areas on a trial basis or working on a project in a new area can lead to finding new passions and interests.
None of this is possible with an opportunity from a relationship or doorway you have kept open.
How many doorways do you have open?
Engage People Using a Benefits Map
Businesses typically care about only three things: 1) Increasing Revenue, 2) Reducing Cost, and 3) Cost Avoidance. But it isn’t always easy to connect the work to one of these three outcomes.
Reducing scrap. Reducing lead time. Decreasing accidents. Making quicker decisions. These are things it is easier to connect to our work. These are outputs.
So how do the outputs tie to the outcomes? That is where a benefits map can help.
The benefits map takes the deliverables of the work (on the left) and ties them to the outcomes (on the right) by way of the outputs (in the middle).
Properly designed work has known deliverables. Getting to how theses deliverables are going to change known metrics connects them to the outputs. Then it is working with the customer to think about how changing those outputs will create a better outcome for the business.
The last step is to quantify the benefit to the outcome.
There are two positives to this method. The first is the team has to stop and think about how the work will benefit the business. Just the awareness alone creates teams that more in touch with how they are affecting the business.
The second is the people doing the work become more engaged int he work. They can see a visual of how they are making an impact.
Understanding how your work is helping the business is a key component in employee engagement. The Benefits Map is a simple but effective tool to help engage people.
Who is Your Real Customer?
Lean is focuses on adding value for the customer. But, who is your real customer?
Many groups will talk about supporting another group within the organization. The focus is on making the internal customer happy. Delivering what they need and want.
Internal customers are important. As a supplier, the focus should be on delivering what the internal customer wants. But, they are not your real customer. The real customer is still the end user or the consumer of the organizations product or service. That never changes.
Even if a group never touches the value added processes making the product or service, the group should be focused on the end customer. As the group works with the internal customer, questions should be asked if what the internal customer needs/wants lines up with adding value for the end customer.
Common thought is it’s not the support group’s job or position to ask because the internal customer group is assumed to already know what is being asked for is adding value.
Amazon. Zappos. Danaher. Safelite. Organizations that have figured out it is EVERYBODY’s job to focus and ask questions about what adds value to the end customer have a significant competitive advantage.
Are You Stuck in Neutral?
Seth Godin’s blog “The Cost of Neutral” is a short but insightful post. The quote to take away from the blog is this:
Not adding value is the same as taking it away.
This is a driving point to the lean methodology. You can’t stand still or you will get passed by someone who is improving and adding value for the customers.
Leaders and managers may not be directly involved in adding value to the product or service, but that does not mean they aren’t responsible for driving value creation. Leaders add value by engaging employees in ways that will help them continue to add value for the customer.
People and companies can’t afford to be stuck in neutral.
Problem Statement…Got One?
Defining the problem well is a very important step in solving any problem. Yet, in coaching problem solving, problem statements are very rarely written well or even understood.
There are five components to a well written problem statement:
- What is under performing?
- What is the actual performance?
- What is the needed performance?
- Why does this need to be addressed?
- What will be affected by solving this? (Safety, Quality, Delivery, Cost, Morale)
Example: Number of critical software issues in testing was 13 and needs to be at 0 because the software can not be released until the critical issues are resolved which delays the cost savings and increased revenue of using the new software.
(Color coded to show the components of the problem statement).
There is a clear understanding of what is wrong, where the performance needs to be and why it is important.
As a team works on solving this problem, they can always bounce their root cause and potential countermeasure against this statement to see if they are delivering on what is important. The team always knows how they are affecting the business (reducing cost and increasing revenue).
“The software has too many issues to release,” is not a good problem statement. What kind of issues? How many? What are the repercussions of the issues?
This is the type of statement that I see way too often. As you can see, there are too many questions to get a clear understanding of the problem.
A well written problem statement will get a solid problem solving process started on the right foot.
It’s Not Always About the Big Improvement
With any improvement philosophy, people always want the BIG improvement. When there are none to be had a re-organization or a shift in direction is implemented. This may work for a short period of time, but eventually the results normalize back to their old levels.
A uniqueness with lean is creating a focus on getting better each day. Even it if is just a second or two better. Saving 1 second each day while maintaining the savings from the previous day will yield 8.7 hrs of savings after a work year. What would you do with a full extra day of capacity?
Paul Akers has called this 2 second lean. It is extremely powerful.
Focusing on small improvements means focusing on what bothers you and your customer and fixing it. It could be as simple as always having to search for a stapler when doing paperwork. Or moving the placement location of a label. This saved a group I worked with 1 second per label…we timed it. Over the course of the year, that was a savings of over 30 hours for the team!
People don’t like to focus on small changes because it isn’t “sexy”. Guess what? Sexy falls apart quickly and usually has no substance.
Build lasting change a little at a time. It takes patience and understanding but two years from now you will have better actual results than people chasing only the “big” improvements that never get completed.