Sunday, October 30, 2011

The challenge of defining value

I have only recently really begun to appreciate how good Toyota's definition of value is.  The Toyota definition is:
Value is the minimum activity required to change a product towards what the customer is busying.
This is a wonderfully compact and definite definition.  There is nothing loose about it, nothing is defined as in the opinion of the customer or is open to further discussion.  Two things got me thinking about this.  The first was something my father in law said.  He worked as a lecturer at NAIT teaching business studies.  We were talking about our work and he said how difficult it was to get his students to understand the idea of waste.  That comment has stuck with me as I have wondered how effectively I have communicated the definition of value and wastes to the companies and people I have been working with. 
The second thing to get me thinking about the definition of value was this story of a locksmith:

Business was bad, the locksmith confided. When he was starting out, picking locks took him forever, and sometimes he'd have to smash them open, but customers appreciated his efforts and gave generous tips. Now, as a veteran, lock-picking took him mere moments, and his clients, seeing how easy he found it, had stopped tipping. Worse, they even resented paying his fees for what seemed like so little elbow-grease.

The definition of value here is all back to front.  The value the locksmith offers is unlocking the lock.  The work I want him to achieve is to open the door.  How long that takes and how he achieves that should not be my concern.  In fact the quicker he can open the lock the quicker I can get at the contents of the safe or into the comfort of my home.  However from the story the locksmith was not being rewarded by his customers for the value he was offering.  Instead the customers were recognizing the hard work he was doing and rewarding him for him for his hard work and not the value he offered.
The preference to recognize hard work over value is very common and in some organizations institutionalized.  The worker who sweats hard and overcomes problems is often rewarded over the worker whose machine never breaks down and always delivers on time.  Or the office employee who has to stay late to get the monthly figures done is recognized over the one who quietly leaves at 5 every day.
A critical part of the lean journey is changing this mindset.   The companies that embrace lean switch their focus to maximizing the value they deliver and minimizing the hard valueless work they do.  The first step on that journey is to learn to see the difference between value and hard work.

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