Our previous post noted that approximately half of the work done in well-run organizations is value-added, which is defined as “the work our external customers would be willing to pay for if they know what we were doing.” Regrettably, the percentage plummets to only 20% in many businesses!
Yet in reality, a great deal of “non-value-added” work is necessary and important!
Consider that many people and functions play a vital role in helping the internal customer provide value for the external customer. These are the folks ‘on the banks’ of the value stream, some of them providing key enablers such as technology, safety, or information to those creating the value for external customers.
The key is to find the right balance. In most cases, the ultimate conclusion is that it’s to our advantage if we can increase the percentage of value-added work by identifying and eliminating the “waste” that is non-value-added.
Here are four ideas to increase the portion of resources that are directed at value adding activities:
1 — Work on The Bottlenecks
When we work on many things that have a small effect, we will have a small impact. The way to increase value most substantially is to work on the bottleneck, or constraint. All improvement effort that is off the critical path will have a lower impact on increasing the value add. If the bottleneck can be widened even just a little, it provides a pure increase in value.
2 — Increase Understanding of And Alignment With What Customers Truly Value
One of the biggest wastes is when the products or services we offer do not align perfectly with the customers’ needs and values. Errors are possible in two directions.
- Bundling a feature into the product or service that the customers do not really need or want. Does the technology have features that are seldom used? Does the product have any bells and whistles no one really cares about? What features have been introduced with inadequate understanding about how the products or services will actually be used? A systematic and thorough understanding of the customers is the only effective way of ensuring we are not merely adding cost instead of value when we add features to our offering.
- We also can err by overlooking ways we could leverage our capabilities to solve a problem that the customers may not even have articulated to themselves. We all, to a certain extent, take the world somewhat as we find it, assuming boundaries of what is possible simply by understanding what has always been. So listening to what customers would like to see is unlikely to surface needs. Innovative value creators will try to understand what the customers need before they even know they need it. Steve Jobs did this with the IPod: surfacing an unarticulated need that the resources at his disposal could brilliantly address.
3 — Get at The Root Causes
Replace the constant working on problems and symptoms with lasting solutions by drilling down to root causes. For example, the sales force of one company needed to better understand the value of additional services they could provide to customers. Rather than addressing the issue/opportunity in each proposal, they developed a calculator to make it quick and easy to help the customers (and themselves!) see the value provided by the additional services.
4 — Eliminate the Non-Value Adding Administrative Work
A great deal of time in most organizations is spent on emails, meetings, and reports that do not produce additional value for the customers or the organization. Here are a few approaches to reducing this waste:
- Reduce clutter in the inboxes
- Introduce and enforce meeting management protocols and best practices
- Streamline reports