What is 'VALUE'
‘ADDING VALUE’ is the leading criterium for a successful organisation.
How to identify VALUE?
What is Value?
Let’s take an example: When I make an email for another department, what is Value Adding and what is Waste during this activity? Same for the people who will receive the email and read it?
Organizing problems
Or eliminating problems
Now please refrain from all kind of mind constructions how emails make machines run better… that is all just organizing problems instead of eliminating them.
Ask your selves: Who needs what information to do what, that really really needs to be done otherwise the company falls apart… And how can he get it in most optimal way. Now emails are extremely rare to be value creating….
– you may not get the answer you like, but maybe, just maybe you get the answer you need…
3 reasons to do something:
'Value' is when it makes the primary process (your conversion, say 'the line' or 'the machine') run more efficient or more effective
I see no way how an email makes this happen… Don’t try to find reasons. What did you REALLY wanted to achieve with this mail? What is the REAL value (if there is any)?
'Value' is also when it makes the customer happy
When it does not influence the actual production (the conversion at the machine or line), does it then thrills your customer? Does it make him really happy? (So not first make him unhappy and now try to control the damage.) So does he care about this email?
Whether we like it or not: 'Value' is when it is a real legal obligation
Now, if the customer does not care and the line is not running better, there can only be one more reason to do it: It is a legal obligation (no, not some company rule but really LEGAL and please take law-book with it to check what it says).
Since in my country there are no legal obligations as far as I now to send emails… draw your conclusion!
Never Organize a problem!
'We need this planning system, otherwise we do not know what to do when'
The value is: Give the customer what he needs in the moment he needs it. Find a way to get this done. You don’t plan your toilet paper, nor your beer or coffee. And when your planning is hardly ever correct, why do you plan at all?
'We have to control each product; what if the customer gets a faulty one?'
The value is: Bring 100% good product to the customer. Why do you think you can perform 100% correct checks when you are not able to produce 100% correct? Find ways, instead of organising this problem!
'We have to better organise Customer Complaints'
The value is: The customer has no complaints, we fulfill or exceed his expectations. Being polite and nice when he complains of course makes him feel heard. But he should not have complained at first!
What are the criteria for ‘Adding Value’?
In an ideal world, every second and every cent/dime/penny invested in a process would result in value addition to whatever subject is being processed.
To determine whether value is being added, three questions should be raised:
1. Does it (help to) add value as efficient and as effective as possible; in other words, to run the primary process more efficient or effective?
The C3 below ALL have to be present:
- Does the Customer Care?
- Is something being Changed?
- Is it done Correct, First Time Right
2. Does it in any (other) way delights the customer?
3. Is it a legal obligation?
| ! | Any activity performed in the investigated process not contributing to one of those three points can be safely skipped. |
Taking the ‘Value concept’ wider
The approach above describes the ‘business view’ to the value concept. For many companies this will be working fine.
However in my day to day practice I meet people and companies that are no longer satisfied with the usual business approach and prefer to look at their organization from a wider –more holistic or even spiritual– viewpoint.
| ! | When taking a holistic viewpoint, ‘Value’ can be defined as: ‘adding quality of/for life’ |
- So now from every activity should be determined whether this activity contributes in any way to quality of life or adds quality to life.
Amazingly enough, this might lead to complete different conclusions and not rarely it leads to a highly valuable discussion about the validity of output of the process!
Quality of life by loss-elimination
By eliminating losses from a process, quality of life will raise for the employees, since losses are nearly always annoying. They create ‘noise’, stress, fatigue and will rarely lead to job-satisfaction:
‘Today I really enjoyed waiting’… ‘Wow, I corrected all the mistakes and omissions of my colleagues’… Hi Darling, today I signed more than 60 invoices’…
Why is finding ‘value’ so difficult?
We are not used to think in ‘Value’
To improve a process, our strategy will be to find the value adding components in the process, enhance them, while at the same time eliminating the non-value adding components (the losses). However, this sounds simpler than it really is.
It proves to be astonishing difficult to find the real value-adding activities. How come?
Most processes have grown in time. There was a product or a service that was somehow created, delivered and paid for. In time the product or service evolved, and the processes around it evolved as well. Technology was added, organizations build and changed, and at best somewhere at the moment everything became automated, some experts reviewed the process asking two questions:
- How does this process work?
- How do we put it in our system? (or at best: How do we make it run as efficient as possible through our system?)
The process it selves usually is taken as a ‘given’. The focus is on how to perform it.
In practice we more than once found highly organized and automated processes that added no value at all…
Taking a new perspective
Surprisingly enough the question: ‘where in this process is really being value added’ is either not raised or over gone too fast. So the first difficulty is:
| ! |
We are not used to think in terms of ‘value’ and ‘non-value’ |
When the concept of value starts to be discussed in the teams, it becomes quickly clear that ‘value’ is a -at least partially- a relative matter that easily can be argued.
The discussions around ‘value’ are absolutely the most valuable parts in such analysis sessions.
The team establishes a clear vision about what they want to achieve as a team and as organization. Now the basis for new processes and even new organizational structures is not only clear and shared between the different team members, it also forces the rest of the organization to start thinking about this matters.
And so many times it was seen that the questions and alternatives raised by the teams forced the rest of the organization to think about fundamental issues; What do we really want to achieve here? Does this really make our machines run better? Is this really what our patients helps? Do we really help the customer with a fast complaint system for our late deliveries? So the second difficulty is:
| ! |
‘Value’ is not always a fixed given. It depends on how we define it. Usually it is not even properly defined… |
Since the real value is mostly not clearly defined or not even clearly known, it is difficult to look for it…
Remember, as you will find out later, the majority of the time and resources spent in the processes will probably non-value adding (even if you still do not believe or see it now).
| ! |
Fragments of ‘value’ are mixed up and hidden in highly complex- and little transparent processes, build of a vast amount of ‘losses’. |
Why is Value hidden in losses?
Our complex processes are mainly historically grown. Every time there was a problem or a new situation, a solutions was found and added into the existing process.
In the current processes you will find relics from the past, but also ‘valid solutions’ to existing problems. I tend to call them ‘organized problems’.
It takes a while to stop believing that such organized problems would create a value. (‘We should do this since it makes the customer happy that this problem does not occur, and when it occurs it would cause lots of problems too’).
Instead of organizing problems, the alternative would be to eliminate the possibility of their occurrence. You will be astonished what can be achieved and what the effects are when doing so!
Every time a root cause for a certain problem is being eliminated, a multitude of other problems –based on the same root cause- cannot occur either!
It sometimes takes quite a paradigm shift, but once the teams grasp the concept and see the possibilities (and most of all: the advantages) they are ready to accept and design extremely effectives solutions.
| ! |
We tend to believe that many of the activities build into our current processes are really unavoidable and/or inevitable in order to reach the actual value. |
