No matter how hard we try, we will never hit perfection out of the gate. After all, delivering products and services is an inherently iterative endeavor, and speed to market may be the single greatest advantage we have in our arsenal, making good enough often the immediate goal. So what tools, tricks, and strategies are available to help us improve the standing of these offerings over time?
I’m so glad you asked.
Ever since the beginning of civilization, commerce has operated through the exchange of goods based on perceived value. Simply put, I value the thing you have more than I value the thing I have (maybe my money) and we exchange it for mutual benefit. This is the notion of perceived value. Each party perceives greater value in the other party’s goods or services and willingly participates in the exchange to resolve needs of some kind.
As we explore this idea of perceived value, it becomes important to recognize that some specific notion of value cannot be forced onto others. We each perceive value differently and individualistically, and that’s the way it should be. All the competitors in the marketplace vie for people’s dollars based their own unique system of deliberation; weighing complex factors such as brand reputation, customer loyalty, personal experience, availability and price. We all want the best deal that solves our particular problem completely.
Whenever goods and services are produced for public consumption, there are three primary categories of inputs involved: the Design Value of the solution, the consumable Materials Value of the solution, and the Process Value of turning the former into a final solution. The more these three elements are applied in a controlled and effective way, the more likely the customer is attracted by their assessment of the perceived value of your particular offering. Unfortunately, these three elements invariably suffer from an initial level of misalignment and are therefore sub-optimized as a system.
Let’s consider each of the three independently for a moment.
Design Value is both the intent and execution of a solution to resolve a problem or need in the most complete manner possible. Life-cycle costs are almost completely determined during design and include the myriad of trade-off decisions made over features, functional requirements, materials, form, and our understanding of the problem the customer needs solved. Given time, experience, market feedback, and an assurance that technology is always rapidly changing, the design of yesterday can always be improved for tomorrow. As the customer’s needs shift and/or become more clear and the competitive landscape shifts, we need to embrace the idea that our designs must evolve and improve over time. This evolution should drive our design to more fully align with the value expectation of our customers and converge with the customer’s ideal of value. Design value increases as innovative new features are integrated into the product over time.
Materials Value is a sometimes overlooked and unappreciated lever upon which to pull when we consider value. However, consider how much impact Materials has upon our perception of quality and the repercussions it has upon cost – and please don’t confuse cost with price at this point. While materials selection is ultimately a design issue, strategically sourcing materials and the quality control of said materials is an ongoing and herculean effort that must be undertaken collaboratively with designers. As typically one of the two largest components of operational costs – the second being labor – materials needs to be fanatically managed to improve cost, availability, performance, and quality through the entire lifecycle of product. Any pressure applied to bringing materials into better alignment with the other two modes will be an increase in value that the customer can recognize.
This brings us to the third aspect, Process Value. How effectively and efficiently we can convert the materials into a product or service that embodies the design without compromising quality is an impossible task to master on the first try. Initial Process Value is always lower than optimal because we don’t even know what we don’t know early on, therefore improvement is expected and required. The application of Lean is often exclusively applied here to formalize work instructions, configure workflows, establish working rhythms and collect suggestions for improvement. It is normal to see great progress in Process Value to improve both the productivity and consistency of the products or services being produced.
The danger that we unknowingly face is an over-emphasis on improving the Process to the exclusion of the Design and Materials aspects of production. Simultaneous and coordinated pressure to converge and align these three aspects of value brings us progressively more in line with the customers’ expectations of what they expect of us. We can enlarge the perceived value and therefore our value proposition, if we can demonstrate our commitment to focus Design, Materials, and Process together into one harmonized and unified proposal that reduces waste and meets the customers’ needs well. The better we squeeze all three into alignment, the more the customer rewards our value proposition. Are we possibly neglecting anything right now?
Systems simply don’t improve on their own. They require thoughtful and deliberate management and inspection, where minor improvements are commonplace and opportunities are embraced every day. By applying unrelenting pressure to these three areas, we can converge upon a state that maximizes lasting value in our customers’ eyes. When it all comes together, it’s truly a sight to behold.
Lean In and Lean On.
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