Value

In my last post, I mentioned the game-changing book Lean Thinking by James Womack and Daniel Jones.  They get right down to business with the 5 principles of Lean, the first of which is Specify Value.

Value can only be defined by the customer and it only has meaning when it is expressed in terms of a specific product that meets the customer’s needs at a specific price at a specific time. 

Value can only be created by the producer.  Womack and Jones state that this is the reason producers exist — to create value for the customer.  So, to restate this from a from a Lean perspective, in order to produce value it first has to be defined by the customer.

I have led product development projects that we, as the producer, defined the value to the customer and can say that the products and related services were, at the end of the day, off the mark.  Assuming we new best resulted in costly product feature changes and launch delays.  A couple of the lines never fully recovered and the 3-year life cycle was plagued with inefficiencies, delivery and quality issues, engineering mishaps, and ultimately, reduced margins.

Our most successful projects involved key customers in the features design process and subsequent service of our flagship products.  This allowed us to hear their definition of value and design a product flow that delivered that value successfully throughout the 3-year life cycle of the product.  The momentum of that success carried forward into the next flagship redesign, which proved to be more successful.

Once we understood the value as defined by the customer, we deployed lean methodologies in all areas of the organization and lo and behold, we had some pretty favorable margins as the result of the cultural shift.  It’s easy to speak in terms solely of the product, but we dug in to truly understand our customers’ business models which ensured timely invoicing and payments.

Value.

Up next: Muda

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Michael Bates has over 35 years’ experience as a lean practitioner, 30 of which while leading manufacturing, engineering, and service operations.  He holds numerous Lean certifications and is a Six Sigma Master Black Belt.  Michael is also certified in Project, Program and Portfolio Management.
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