The following post was first seen at the Association for Manufacturing Excellence – Target Online Newsletter – January 2014. The post was written by Shawn Casemore. To learn more about Mr. Casemore and this post please visit www.casemoreandco.com.
If a customer defines what value is, then whose responsibility is it to ensure that the value will be met? Like it or not, the reality is that not every customer knows or clearly understands what is in their best interest, not to mention that obtaining and even challenging customer views on what is value can seem a risky venture. The simplest path, and the one that most organizations take, is to obtain the feedback of sales relative to defining what customers value.
Well, I’m here to tell you that the easy path is not always the best path, and if customer value is not clearly understood to define customer’s wants and needs, then any changes to a product, service, process or activity can (and likely will) result in a less than valuable outcome.
Doubtful? Well, let’s consider LED lights for a moment. With a life span and electrical efficiency several times beyond any standard incandescent light, they appear to be just what the doctor ordered in a world where energy costs and sustainability are crucial to customers.
But there is a problem.
A standard LED light bulb, although energy efficient, does not emit much heat as compared to its incandescent cousin. That’s good news from an energy efficiency standpoint, as heat is wasted energy. But what if you relied on the light to actually provide heat? Have you noticed that LED lights on your house at Christmas do not melt snow that they come in contact with? Incandescent lights do. Big deal, right? Well what if this caused a safety concern? My uncle has driven transport trucks for more than 30 years, and during a recent discussion, he mentioned how useless the LED lights on cars and trucks actually are. They no longer melt snow to allow traffic to see taillights; an indirect benefit (or indirect value) of the older style candescent. This is a safety concern for anyone who drives in snowy terrain.
When applying lean concepts such as during a kaizen event, I always ask participants to consider both direct and indirect value to the customer. Direct value is the clear benefit the customer derives from the product, service or process. Indirect value includes any additional benefits customers enjoy, and might actually take for granted, that aren’t necessarily as evident, but if they were lost or removed would result in a significant reduction in perceived customer value and satisfaction.
To identify indirect value, consider the following questions when assessing products, services or processes:
- What are the possible unforeseen benefits and/or value to the customer (both real and perceived)?
- Is this unforeseen value clearly defined and apparent as part of the customer value proposition?
- Do customers assess a degree of value to the presence or absence of this benefit or value?
- What would be the impact of removing or reducing this value on customer satisfaction; on process effectiveness; on the customer experience?
To assess indirect value you have to think like a doctor. You have to ask your customers the right questions, put yourself in their shoes and then make a diagnosis based on customer feedback and your knowledge of what the customer expects.
So before you dismiss or revise a product, service or process, consider if there is any indirect value that your customers may not clearly define, but the absence of which would reduce the overall assessed value. By understanding indirect value, better decisions can be made which maximize the customer’s experience, improve efficiency and ensure that any changes initiated sustain over the long haul.
To learn more about the many topics of LEAN, please contact the LEAN Accountants of McKonly & Asbury, LLP.