Introduction
Some routine statements about the word “value” used with its connotation as “worth” are:
Value is what customer is willing to pay for.
If a feature, that customer wants, is being added during the process to the product or service, then the process is “value-adding” otherwise it is a non-value adding process.
Any activity that falls under the popularly known “wastes” is not an activity adding any value.
All true.
Yet while talking to operators who are, hands-on, doing inspection, or some transportation of materials inside the factory or just some document processing such as recording a complaint or confirming the details of an order from a customer over phone, all this appears remotely related to their day-to-day routines to them. One cannot just say to them or even imply that what they have been performing sincerely for several years is actually considered a “waste.”
Value is perhaps the most often used, sometimes expressly or else by implication, most flexible, to the point of being a cliché, the first and foremost ‘value-able’ terminology in all improvement methodologies.
The five basic principles of lean business are well-known. They are value – value stream – flow – customer pull & perfection. Value is obviously the first. It is the unifying principle for all the processes at all the levels of any organization. It is also applicable to any and every business context. Business without a purpose i.e., a “value” is a waste!
Yet it often lacks the required clarity for the people on the ground and stays limited to the notions that typically suit the management-offices, sale pitches and PowerPoint presentations.
Definition
The available literature is replete with discussions on value. But, while talking to the operators who are actually working on the shopfloor or direct line functions like customer service or dispatch, especially in the so-called non-value adding processes, I find the age-old definition from value engineering discipline very apt.
The definition in classical value engineering methodology is “function divided by cost.” Function in the numerator and cost in the denominator. A wonderful definition. This becomes a little too technical to explain though.
Therefore, since I started coaching, I have always adapted this definition by redefining it slightly as:
Value = Quality (or call it utility) / (Time to deliver x Cost)
Yes – I know that time is just another manifestation of costs – so in a way this is a tautology. Yet it helps while talking to people who do not find any academic language friendly.
In this conceptual equation-like representation (not mathematical of course) the gist for lean thinking is simple. Reduce cost, reduce time, or increase utility (i.e., quality) - accomplish any or all of these three possibilities – and the value of the product or service increases.
Using the concept on the ground
In my experience, once we adapt the definition to this form and remember that familiarity and futuristic novelty need to be so balanced that the solution to the problem is attractive enough to the users yet not so new that it threatens them, the user engagement becomes more effective.
Some real-life situations I recall which are etched on my memory -
Some 14 years ago, while watching the slide of, and listening to the concept of, DOWNTIME (some use TIMWOODS) i.e., the wastes (Defect, Overproduction etc.) model used in lean thinking, an otherwise quiet person (let us call him Rob) in the audience consisting of some 15-20 people, suddenly got up from his chair. He furiously threw the booklet that he had in his hands on the ground and just stormed out of the room without saying even a word. I quickly made some logical conclusion of the bullet-point in progress to the rest of the audience, then announced a coffee break and went and searched for Rob. Found him fuming just a few metres away. With just a 2-minute chat I quickly learnt that he was a person picking scrap from all the areas in the factory and dumping it into the waste-bin. He was a couple of years away from retirement. He had always considered himself a truly dedicated and committed diligent operator which he certainly was, and he was always proud that he had done so for the prior 7-8 years. It is highly likely that Rob was probably basically, emotionally overly sensitive and there are multiple intuitive ways to reason that his fury was his problem and not mine. Yet – when he learnt that the value of what he was doing was unquestionable and not all transport is a “waste”, he felt much better. Even a piece of theory had become sentimentally abrasive for him for a few minutes. I distinctly remember that Rob was an asset and subsequently happily participated in developing more efficient methods of channelizing and disposing of the scrap metal by developing improved chutes and metallic scrap-collectors for some machines. The value indeed increased. The cost went down. So did the time taken. The morale improved. Transportation was not as much a waste of the magnitude as that Rob perceived from the theory which he came across initially. The theory humanely introduced itself to the people using it, without knowing it, with passion! The theory served the people using it instead of overpowering and enslaving them with its rigidity. That's why Kaizen and Respect both matter equally when it comes to lean thinking with thorough commitment.
A role, a report, or an email, or a guideline, or a product, or a meeting, or a repetitive practice such as weekly 1-on-1 review, a software, its replacement, or an upgrade to it – practically everything can be assessed for the value it renders.
In one comical case, a supervisor who was taught to calculate and report (as a part of OEE i.e., Overall Equipment Effectiveness for those readers who know) the availability of the machine-line in percentage as
(Actual available working hours / Planned working hours x 100) %
used to add overtime hours to available hours (but not planned hours) and often calculate availability as more than what it was. Sometimes even more than 100%. After using this into the formula, this error would lose visibility. Nobody ever went to the root formulae. The business consisted of some fifteen manufacturing locations, each generating 5-6 such weekly reports for different machine-lines. The incorrect calculation was going on for perhaps several years! Calculations were done – reports were made – referred in meetings – were glanced through – to no logical end! The value of the entire system had already been badly eroded like a beautifully painted vehicle with rust beneath the painted surface! The foundational wisdom that availability of the machine cannot be more than 100% was lost in the process over years.
Let us take another example with a completely different context. It is a commonplace scenario to see that a production supervisor is working in the role of an operator, a production manager as a production supervisor, general manager often doing the job of a functional manager and so on! Worse. There is often enormous pride associated with this. Rolling up one’s sleeves and getting into action by getting into the shoes of someone who the superior is accountable for is great. Definitely it is because it demonstrates the capability and keeps it tested. But once in a blue moon. Not as an everyday business. Yet – often people are addicted to this false pride and that raises a question on the value of their role.
The value of their role has to be measured in terms of the output they effectively achieve in relation to the time they spend in the business and the remuneration they get. The moment a supervisor paid (say) a hundred thousand dollars per annum starts spending time and taking pride perennially by doing a fifty-thousand-dollar operator role that is expected to report to them – not only is the value of their own role in question, but also the value of the design of that organization structure. Value analysis can be practically stretched to assess these aspects too. On a sidenote, the same applies to a managing director or a president or a chief executive too, when they start getting into functional managers’ shoes habitually every day. Such examples are not rare either.
In summary
“Value” as a noun has multiple connotations. That as worth, that as a moral standard and that as a mathematical conclusion.
Wonder if in management, all three innately apply to the word “value.” Lean gets a larger meaning if we view the value of all we do with this broad implication.
There is a famous quote by Richard P. Feynman that would be pertinent here:
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.”
- Nilesh Pandit