Lean Value vs. Lean Waste
People who practice Lean will tel you to to remove waste, make product flow, and reduce over burdening (via standardization). These are great tenants and are the corner stone of nay Lean program. One area that gets ignored is increasing the value. Honestly Lean does a terrible job at focusing on increasing value and creating value beyond just reducing waste. The good news is that there are several tools that will help focus on the value side. Value refers to the job to be done for the customer. The job to be done is what the customer needs/wants. An example of this is a customer walks into a hardware shop and asks for a 1/4 inch drill bit. The customer doesn’t want a drill bit, the customer wants a 1/4 in hole. The job to be done is where you will generate value.
- Job Priority – This is how important the job to be done is to the customer.
- Solution Priority – This is to what extent the job to be done is unsatisfied
- Utility Value – The extent that desired outcome is meet
- Situational Value – How accessible is the solution
- Market Price – The price is right based on the other factors
Job Priority, Solution Priority, and Utility Value come from product innovation. This is actually defining the product and making it better to address what the customer is actually valuing. A great way to help with this is the Stanford Design School process. It is highly iterative and empathetic to develop products with a higher value to the customers. Either through utility, job priority, or solution priority. An example of this is Paypal. They created a new way for people to pay for online transaction.
Situational Value and Market Price is affected by delivery of the product. A business model canvas is a great way to innovate and find ways to deliver better value to the customers. One example of this is Microsoft 365 who doesn’t charge hundreds of dollars for their software instead just charges a small amount each month and offers cloud services. The product is the same but the delivery method was different.