Tag Archives: value-added work

How to Devote More Resources to Value-Added Work

Our previous post defined the concept of “value-added work” as being work our customers would be willing to pay for if they knew what we were doing. That post also noted it is common for 50% – 80% of all work within an organization to be “non” value-added!

Here are four ways to devote more resources to increasing the amount of work that is value-added within an organization:

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
  • Overlooking ways we could leverage our capabilities to solve a problem that the customers may not even have articulated to themselves

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.

Another example is data accuracy issues in software that helps a company develop routes for drivers. Any error in the data input will create errors in the routes — inefficient or even impossible routes. The underlying cause is errors in the data input, but the root cause is somewhere in the process through which the correct data should be identified and entered. Studying the input process to identify where and how errors are made will help lead to and address the root causes and greatly reduce the amount of resources NOT creating value for the customers.

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. Finding ways to reduce email clutter, improve meeting management, and streamline reports are just a few examples of how this non-value-added work can be reduced or eliminated.

Is Your Work Value-Added?

One of Bill Conway’s favorite sayings has always been, “The most important business decision people make every day, is deciding what to work on.”

It’s important for us all to continually self-evaluate in this area. What should we work on? What value will it add for our customers?

Once people know what to work on, they can then determine which tools and methods to use – i.e., How should we go about it? But deciding “what” to work on and “why” must be the first considerations.

Most of us would likely agree that we want our workforce to spend most if not all of their time on “value-added” work, which is often defined as the work our external customer would be willing to pay for, if they knew what we were doing.

Sometimes this is a product, sometimes a service, and sometimes a combination of product and value-adding service. For example, a value-adding distributor delivers the product to a work-site but can also prepare or pre-stage the material, so it is ready to be put into use, saving the construction company time and money. The value goes beyond the product they sell to the service of presenting it in the form that is ready for use.

Common Categories of Work

People are often surprised at the amount of “non-value-added” work that is part of the day-to-day reality in most organizations. Even in the best performing organizations, it is well under 50% of the work being done. In many organizations, over 80% of time and resources are not adding value.

Consider these common examples of non-value-added work:

  • Inspections to find errors
  • Rework to fix errors
  • Errors or defects that are never found and make their way into defective final product
  • Work that sits waiting in front of a bottleneck, or resources that are idled behind a bottleneck
  • Unnecessary work
  • Necessary work such as filling-out expense reports
  • Excess inventory
  • Work product that does not match customer needs or customer needs that go unmet because they have not been surfaced

So, the question is, what can, or should, we do to increase the amount of value-added work within our organization? Our next post will focus on some answers…

How Much of Your Work is Value-added?

Most of us would likely agree that we want our workforce to spend most if not all of their time on “value added” work, which is often defined as the work our external customer would be willing to pay for, if they knew what we were doing.

But studies indicate that even in the ‘best performing’ organizations, “value-added work” is well under 50% of the work being done!

Consider the following examples of “non-value-added” work:

  • Inspections to find errors
  • Rework to fix errors
  • Errors or defects that are never found and make their way into a defective final product
  • Work that sits waiting in front of a bottleneck, or resources that are idled behind a bottleneck
  • Unnecessary work
  • Excess inventory
  • Work product that does not match customer needs or customer needs that go unmet because they have not been surfaced.

If this list is a familiar one, you’re not alone… and while this list could go on, the point is that there is a huge opportunity for improvement for most of us if we could simply convert just some of the non-value-added work into pure value-added work.

Simple… but not easy!

Assuming we conduct an honest assessment of all work processes, here are four ideas for increasing the amount of value-added work:

  1.  Work on the bottlenecks
  2. Increase understanding of/ alignment with what customers truly value
  3. Identify root causes of errors, defects, etc.
  4. Eliminate non-value-adding administrative work such as unnecessary email, unproductive meetings, or reports that do not produce additional value for the customers or the organization

Read the full article…

A Closer Look at Value-Added Work

value1As noted in our previous post, the most elementary definition of value-added work is “work our external customer would be willing to pay for. if they know what we were doing.”

Sometimes this is a product, sometimes a service, and sometimes a combination of product and value adding service. For example, a value adding distributor delivers the product to a work-site, but can also prepare or pre-stage the material so it is ready to be put into use, saving the construction company time and money. The value goes beyond the product they sell to the service of presenting it in the form that is ready for use.

But a large portion of every organization’s resources goes not to true value creation but to all the additional activities we have in place because we have not yet found a way to make them unnecessary.

For example, if given the choice, the customer would be willing to pay us to do the job right, but not to pay us to do it wrong first and then fix it.

Would they be willing to pay extra for error-prone processes that require us to inspect the output to try to find the mistakes?

Would they be willing to pay us to warehouse inventory (as it slowly grows obsolete), or to build in features they would never use?

Would they be willing to pay us to wait for the work that is held up by our bottlenecks?

Adding Value to the Bottom Line
The customer may be willing to pay the price we ask, but all of the waste is on our dime. Every bit of it we can eliminate can be taken right to our bottom line.

Many people and functions play a vital role in helping the internal customer provide value for the external customer by providing key enablers such as technology, safety, or information to those creating the value for external customers. Some of these people may also remove the complexities or problems from work, possibly through inspection and rework,  or through process improvements.

If we can eliminate the root causes of these complexities and impediments, the time we spend removing them can be redeployed to creating more value. However, if an organization is not yet well aligned and 100% focused on creating value for the external customers, internal customers may actually create waste by requesting products or services from internal suppliers (i.e., coworkers) that do not create value. This may include attendance at non-value adding meetings, reports that do not increase ability to serve external customers, data or analysis that do not increase ability to provide more value to the customers.

We can manage this risk and increase alignment by constantly challenging and rethinking work to ensure it creates value for external customers or helps internal customers create value for external customers.

In our next post we’ll take this final point further, and identify specific steps for increasing the percentage of work that is value-added.

A Few Questions About Value-Added Work

valueadded
Is this typical? How about in your organization?

Spring-boarding from our previous post’s theme of working on the right things, finding ways to increase the amount of “value-added” work that is done each day within our organizations can be a good way of eliminating waste.

Most of us would likely agree that we want our workforce to spend most if not all of their time on “value-added” work, which is often defined as the work our external customer would be willing to pay for, if they knew what we were doing.

But you might be surprised at the amount of “non-value-added” work that is part of the day-to-day reality in most organizations.

For example, think about telephone calls you might have made over the past several months to organizations such as your bank, credit card company, cable company, or some type of customer service group. The odds-are you were first greeted by an automated system of some sort, which asked you to provide information, presumably to expedite the process. This information might include:

  • Your account number
  • Reason for your call (i.e., tech support, billing support, etc.),
  • Personal PIN number
  • Last four digits of your social security number
  • Date of birth, and so on…

Now think back… because in a high-percentage of cases, when finally connected to a person, you are asked most if not all of the same questions!

Do we enjoy this experience?

Most people say, “Heck no!”

From the perspective of being value-added, what value did the auto-attendant have for the caller (customer)?

Most people agree, none!

Possibly the auto-attendant is helpful for call-routing purposes, so it might be provide value for the organization that is being calling, but it really provides  no value for those calling in.

So it’s really no small wonder that  people are surprised to discover that a lot of the work done within their organizations is not value-added.

What is typical?
How much of total work is “non-value-added” in a typical organization, you might be wondering?

In most organizations, over 80% of time and resources are not adding value!

Even in the best-performing organizations, value-added work is well under 50% of the work being done.

A few examples:

  • Inspections to find errors (vs. doing it right the first time…)
  • Rework to fix errors
  • Errors or defects that are never found and make their way into a defective final product
  • Work that sits waiting in front of a bottleneck, or resources that are idled behind a bottleneck
  • Unnecessary work
  • Excess inventory
  • Lost opportunities (perhaps the biggest waste of all) due to work product that does not match customer needs or customer needs that go unmet because they have not been surfaced

We’ll take a closer look at the concept of value-added work over the next few posts, and share some thoughts and best practices for increasing the percentage of total work that is value-added.

Categories of Work – How Much is Value-Added?

valueadded4In a previous post we shared data indicating that in many organizations 80% of the work being done is non-value-added!

In several other posts we also discussed ways of increasing the amount of value-added work, which is commonly defined as “the work our customers would be willing to pay for if they knew what we were doing.”

The image above depicts the types of work that might comprise the typical “80%” of non-value-added work that takes place every day in organizations everywhere. As you can see, much of this work is necessary – such as compiling tax returns or making necessary repairs – but not necessarily value-added.

Having a firm grasp on the various categories of work that are actually taking place within our workplace is the first step toward making sustainable improvements and increasing the amount of value-added work.

As Bill Conway often said, “What we choose to work on and how we choose to accomplish that work are the most important business decisions we make each day.”

4 Ways to Increase Value-Added Work

valueadded22Now that we have established the core value-add of a manager is to study and improve the system of work, and that by eliminating the root causes of the “debris and impediments” leaders can enable the workforce to spend more time creating value and making more money, we can move on to sharing ideas on “how” to do so.

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.
    • Overlooking ways we could leverage our capabilities to solve a problem that the customers may not even have articulated to themselves.
  3. Get At The Root Causes. Replace the constant working on problems and symptoms with lasting solutions by drilling down to root causes.
  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.
     
    The amount of non-value-adding administrative work that can be found in most organizations is so varied and so large that we will share several specific ideas for seizing this opportunity for improvement in our next post.

Comment…

Value-added Work & Management’s Core Value-add

valueadded3Continuing our theme of “value-added” work, which in our previous post we defined as “the work our external customer would be willing to pay for if they knew what we were doing,” today’s post focuses on the first steps an organization might take to increase the percentage of total work that qualifies as being value-added.

It’s important to recognize at the outset that while customers may be willing to pay the price we ask, all of the waste is still on our dime!

And… every bit of waste that we eliminate can be taken right to our bottom line!

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 edge of the value stream; some of them might provide key enablers such as technology, safety, or information to those creating the value for external customers, and some might remove the ‘debris’ (through inspection and rework) or impediments (through process improvements) to the swift flow of value to the external customer.

If we can eliminate the root causes of the “debris and impediments,” then the time we save can be redeployed to creating more value and making more money.

The core value-add of a manager is to study and improve the system of work. By using the insights and information of people doing the work and knowledge about improvement tools and methods, a manager improves the system of work so that everyone’s performance improves, more value is created, and the organization becomes stronger and more profitable.

Comment…

Increasing Value-Added Work in Your Organization

valueaddedMost of us would likely agree that we want our workforce to spend most if not all of their time on value added work, which is often defined as the work our external customer would be willing to pay for if they knew what we were doing.

But you might be surprised at the amount of “non-value-added” work that is part of the day-to-day reality in most organizations. In fact, in most organizations, over 80% of time and resources are not adding value!

A few examples:

  • inspections to find errors
  • rework to fix errors
  • errors or defects that are never found and make their way into a defective final product
  • work that sits waiting in front of a bottleneck, or resources that are idled behind a bottleneck
  • unnecessary work
  • excess inventory
  • and perhaps the biggest waste of all, work product that does not match customer needs or customer needs that go unmet because they have not been surfaced

In other words, non-value-added work represents a huge opportunity for improvement if we could convert just some of the non-value adding resources into pure value add for the customer!

We will discuss this concept further in upcoming posts, and welcome your thoughts on how your organization has been able to increase the percentage of value-added work being done day-in and day-out.

Comment…