Lean is Foremost about Adding Value

Posted by André Esterhuizen on 16/08/2016 1:35am

Winnie the Pooh“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs, but sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it. And then he feels that perhaps there isn't.”

AA Milne, A World of Winnie-the-Pooh

Many leaders share Winnie the Pooh’s frustration. They feel like they are being dragged along, under constant pressure to deliver results for their shareholders without been given the time and resources to make improvements. They often wonder if there is perhaps a meaningful philosophy out there that is relevant and able to actually significantly improve their organisation.

Even though for many years now, Lean has been hailed as that philosophy and has delivered outstanding results for many organisations, there remains a large percentage of organisations who have gained very little benefit from it. Does this mean that Lean isn’t relevant to all industries or that it is maybe not what it is cracked up to be… or is there perhaps something wrong with the way that Lean is generally applied to a business?

I was asked recently by a manager what their business could do to further improve. The business had used some Lean tools to make good improvements. Their quality was good and their deliveries on time, but in spite of all their efforts, it made very little difference to their bottom line.

You could be forgiven for thinking that Lean couldn’t help them, but I had dealt with this business for many years and noticed that their prices and lead times were higher than they used to be, costing them some valuable business.

In their search for improvement they did what many well-meaning organisations do when turning to Lean. They tried to ‘implement’ Lean as a complete package, thinking that all the tools were useful to them. They made many good improvements through using some of the Lean tools and concepts, but unfortunately they ran into trouble when they tried to reduce inventory; the holy grail among many Lean tool practitioners. Expecting to see an improvement to their bottom line, they found themselves worse off, having to increase their lead times in order to cope with the reduced inventory. The very thing that was most important to their customers was over-looked as they implemented a tool that did not add value.

Not wanting to show disrespect for the many great improvements he had made to the business, I didn’t offer the manager a solution straight away, but instead I told him a few stories (from my experience with other clients), shared some of the principles of Lean with him and then left him with some homework. I wanted him to listen to the needs and the complaints of his customers.

I suggested that he visits his customers and walk through their operations with them so that he could observe how they were using his products, how they needed it packaged and how fast they needed it. I wanted him to experience what his customers valued by walking in their shoes for a while.

By watching our customers, by listening to them and by understanding their needs, we get to understand what they value. Customers want value. Value is what they are willing to pay for and what they are willing to sacrifice their time for.

Value is foundational to the whole Lean philosophy. Even though Lean is often called a philosophy, it is really a common sense way of managing an organisation. It is framed around a methodology for developing products and services through coaching and the relentless improvement of processes and the development of our people. This methodology is defined by five guiding principles of which value is the first and fundamental one. Although it has a formidable set of tools for reducing cost and waste, improving quality and for increasing throughput, these are always in subjection to maximising value.

Hopefully the manager will return from his customers knowing what they value. He may have learned of ways that he can add more value to his customers without having to reduce his prices or lead times. If not, and low prices and short lead times are what they value, then they should be his primary concern. By using the Lean tools selectively he can now intelligently remove waste from his processes to ensure that he meets the customers’ price and lead time expectations and improve his own bottom line.  

Value should always come first. Value should always lead the process. Only once we have determined what we need to offer the customer can we get to work on improving our processes. In this way we can be assured that we won’t go off on a tangent and make improvements that may come back and bite us.

Not many organisations understand Lean this way, and this may be why, of the thousands of organisations who have implemented Lean, many sadly have had limited success. They are usually the ones who have used the Lean tools but have stopped short of applying them in the context of the framework of value and the other Lean principles.

How is your organisation doing? Are you committed to delivering value but are not quite having the success you believe you should? If you are and if you sometimes feel that there really is another way, then stop for a moment… and think… Lean.

Attend my Lean Leadership Masterclass and find out how you can lead your team to increase value to your customers and stakeholders.

 

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