Define Your Value Proposition
So here's domestic at a high level there's you define define your voice of customer to find your voice of market to find your voice of process to find your current state your assumptions we're going to measurement so how long does it take now? All right what's our productivity measured things like that we go into analysis so in the measurement phase we're looking for something that we might not desire what we call undesirable defects are you tease and so what do we have that's undesirable analysis faces why do we have it what's the cause and effect relationship we get to the root causes then and improve it the root cause level now we've really uh that we've really hit a home run and then the control phases that sustainability phase I talked about yesterday like the fifth assets where it becomes cultural habit but notice that d make a circular not linear a lot of people have used it over the years in a linear way uh where it's like I define I go through a toll gate I measure I go throug...
h a toll gate ike analyse and I get to this and state that I've done you never done the idea was to make is that it's tze narrative it's ongoing and for for obvious reasons these days so we go back to define and we say let's define the voice of customers to find the voice of market let's pull out a tool called the c t q tree a critical to quality tree this is where we take vagueness and we bring it down to specific detail I always like to say to people vagueness you can't fix vague vega's the enemy so let's be very crystal clear on what it is we're trying to resolve here we can use a value stream map toe look at the overall landscape the overall system and a performance improvement grid um to get a better field then for ah where way fit with a customer so I'm gonna take you through some of these basic tools now and uh uh we could discuss it so we start with who was the customer what is value in the market what are we really getting paid for and I like to present this as more or less a nick way zhaan so value is sort of a moving target it's a function of several key things but not everybody values the same thing so from running a tile business all right um what level equality are people looking for so in that quality bucket what are they looking for if I'm going to mcdonald's what's in the quality bucket some people think really quality how does that work but let me give you a couple of ideas what's in the quality bucket predictability consistency, safety, reliability in other words I know when I'm getting before I even order it it's that predictable that reliable so quality is uh what what am I getting in my tile what am I getting in my foot? My photographs what am I getting in my uh my artwork in my exercise routine whatever that the qualities services the easy to do business with factor how easy is it for me to interact with you is a business how easy is it to mean it for me to navigate your website how easy it is for me to get in touch with you okay um how accurate is the order when I place it to get it right how friendly are you okay, so the service factor now some people put more weight on one bucket then another so we have to recognize that that value is a combination of all of these things we need to be very clear on that you know, prices price and how do we compare time earned its own space? You know, years ago they're really only these three quality service in price timer and its own bucket in nineteen nineties because time with lene time based management came out and said you know what? You might go to mcdonald's for a consistent berger ate an accurate service a clean restroom of friendly environment a competitive price but guess what? You got fifteen minutes for lunch okay um where you go for that kind of time based management fast food so to speak so a lot of people, if they can't get what they want within a certain period of time, they move on to tow somewhere else. This was a huge win for me in the game, wasn't it? Of course I wanted quality and I wanted good friendly service the price was fixed, but time was critical to me and I would like to suggest to people you think about your customers like they're wearing a stopwatch where they've got a time clock going they want to know because their time is valuable how long do I have to wait? And in a day today where we're itself service so much we could book our own hotels online book our own airlines online we can uh we can gain, not weaken google things so quickly being things so quickly we could find information so quickly and self service and now I got to call up and I gotta wait uh, all right? And this innovation bucket is really relatively new because the innovation bucket is saying, you know what? Um I value things I don't even know I value yet yeah, john I uh you know, I live in his pocket all the time and what I constantly see and we call it the pendulum effect is where there's a focus on one particular area at the expense of another move so there's an optimization has to occur your quality but time have to be balanced so you so you have appropriate quality not more than you need take more time than you need get that right balance we talking all about how to optimize these yes and we're going to talk about breaking through the when I sometimes call the two thirds paradigm where you could get two out of three or the four out of five but you can't get all five the reality is really clever companies have challenged that paradigm and now they say you know what? Who killed all five and we're going to demonstrate that in the next segment with uh with the lean signal game we're going to get in that and some kaizen sessions where we're looking at can we improve the quality and improve the service and improve the price and improve the time and innovate and the answer is yes we can but only when we shift from the or paradigm to the and paradigm because we grow up with either or its quality or speed its service or price and a lot of companies have built that into their own their thinking and their cultures is we've got to give one up for the other a lot of companies these days are challenging that paradigm in proving it obsolete which is interesting to see so we'll you know we'll test that curtain I appreciate the question definitely so the value proposition, whether you're solo about a preneurs, an entrepreneur, a startup, you're you're trying to get something started your we're working out of a cubicle and a company somewhere and you you've got this idea and you've got a hobby on the side. You want to build a business out of it, whatever it is you want to d'oh, you've got a big sure that you've got a crystal clear value proposition. It's one the very first things you do in business is you have to say, what am I going to get paid for that's essentially, what value proposition is this is your solution to a market need or desire or request, but make make note it might not actually be a request, it might be a market that's not even aware this is possible there's where the innovation comes in, so I'm going to be a solution to a problem that people might not even be realized they have yet. All right, I'm going to come up with something that the people are going to go wow and get it and want to pay for it, then you have to ask yourselves, how is this idea different than other ideas like it? How is it going to be valued recognized? How are people going to know about it? How did people know if I've got this a different type of tile business this different type of photography business a different type of our studio why should they buy my work on not someone else's how am I different question related teo service based businesses with the value proposition formula applied to the service based businesses well absolutely okay absolutely saw you know what um what ah service of my often attack service legal service I could give you an example beach mama says my husband is an arborist with one two three man ground crew I handle all the admin and customer service but the question is will you be addressing how to use this system uh in a service based business so yeah, this system applies to any business that has customers which is every business it applies to any business that has processes which is every business service or product there processes processes air just sequences of activities that are needed teo deliver value to the to the client so you've got recognizing like in the game that we played I don't know that they're any businesses out there tuned in that are in the red dot replacement business or the yellow dot placement business or the diamond drying business those air simply metaphors for service provisions or physical provisions were making something we're drawing something weird we're taking photographs were building tiles things like that but I would most certainly talk aboutthe service factor on what difference just differentiates people there you know you'd taken organization like a toyota which we brought up earlier. Um you know, the primary difference between a lexus and a toyota because text toyota owns alexis is service a lot of the components on the car identical but they differentiate the lexus with service proposition and it's a whole different level of service. All right, you can see airlines do it. You can see hotels do it. Okay, what can we do to differentiate ourselves from everyone else that's promising the same service. All right, here's a quick story. You know, when alexis first came out years ago, that was actually a recall. So what is your image? Your mental model? So to speak when you think recall and a lot of people had vehicle recalls over there is where you get a postcard in the mail, right or something like that. And the postcard says, hey, there's something wrong with your car? And yes, it will fix it no charge just bring it in and we'll fix it no charge but my time is a charge and oh, my the inconveniences a charge really it's not good news when you get a recall typically lexus said, you know what we'll call you up we'll make an appointment to come pick up the car will leave you a brand new lexus is a loner okay and your car was fixed washed, waxed and filled with gas and returned the next day with a nice gift on the front seat. Now what do you say next time I leave the tank empty you know? I mean wow, right? Because they took service toe a whole different level and say we're just not going to play ball so to speak the same way everyone else plays it we're going to challenge those assumptions and challenge those paradigms and come up with a different value proposition alright that's why people uh, pay extra for a product in many cases that's really not any better than other products but it's the service offering and the easy to do business with factor and I will cover that a little bit more in just a few a few minutes. Okay? This is an interesting little of differentiation because a lot of organizations get very confused about uh, well who the customer is and we've got little see customers and big c customers, so to speak the little seas are all the people between us and the end user really, if you think about that if, uh if I make something will provide a service to somebody who uses it to provide something to someone else who uses it to provide something to someone else I mean, an illustration of this would be if I provide a a product to a target or to a walmart? Uh what do they do with it? They sell it toe someone else, the big c would be the person that comes in there and sells it now if they're clever, they're going to say we're not going to allow a lot of waste in variation in our process. Why? Because we're trying to look out for the big c the end user, we're trying to save them money, that's part of their value proposition you come to a target or wal mart, we're going to save you money, ra meyer, we're going to save you money. So how you going to save me money? Because we're going to drive a lot of the waste out of the value stream so that when you come here, you're going to get your best deal you can. So those organizations that get the big c amazons brilliant at it, especially when they offer you an e books with an e book they can they can charge you less, you pay less front any book typically than a physical book the publisher makes more amazon makes more of the author makes more so how does that work? Everybody makes more money in the customer pays less, it doesn't add up in in the old paradigm adds up in the new one except for the printers and the physical distributors because that's where all the money came from his beam it to you there's no physical charges for that so the lean aerospace space institute years ago in cooperation with m I t the massachusetts institute of technology said, you know, when we talk about liam we're talking about and user the ultimate end user that's so that the whole philosophy of lean and running a lean world class business is it starts with the end in mind and work backwards as opposed to the other way around. So what does the and use air really goingto value and how do we make sure that that way on lee do the very work that we have to do to get that to them in a timely, productive price competitive, service friendly way here's where all the confusion comes in in fact uh god bless total quality management of the nineteen eighties total quality management taught us that the customers the next one in line well, if we buy into the customers the next one in line we're at risk and the reason where at risk is because what if the custom the next one in line is an internal department? Okay, it's the diamond department or it's the red circle department it's the next department in line and they're saying, stop hold up or do this or do this differently uh and they're not paying for it what's going on then is all of this waste is khun creep into the system and who ends up paying for it the the end the end user at the end of the day so we get into a pass a cost passing on the formula if you will and it's put industries at huge risk so by starting with a big c and working up and saying yeah, we've got little sees little customers to deal with in the intermediate customers and whatnot but we've got to make sure that we're focused on the big c that's where all the energy in the valuer this might be one of the most important slides in the entire deck it's also very controversial because this upsets people particularly people in management it differentiates value added activity from non value added activity value added activities any activity that transforms or shapes for the first time if it's for the second, third, fourth fifth time that's called rework and that's not value added for the first time any material information to meet the customer value so this is essentially what we're really getting paid for this is the value add and the non value at is all this stuff that uh we may or may not have to do that surrounds it okay? It might be necessary it might not be it might be valuable bull which doesn't mean it's value added might be valuable but uh might not be valuable so I like to use this illustration you're sitting on your couch ten years ago and you want to watch a movie on television what's the process look like I want to watch a movie it's not on television so I have to get off the couch I have to go find the car keys have to get on my bicycle or whatever I got to go down blockbuster now it's a seven eleven or something but I got to go down to a uh a video store browse the shelves things like that wait in line pay for it come home load the machine a sale oh, prayer hope it works and uh watch the movie we can map that process right? We can count the steps one of those steps are value added the so you start thinking about what's uh what's the value and what did I really want when I was sitting on the couch? I want to watch the movie when ideally right now, right? I wanted to watch the movie wanted to watch it now I didn't I didn't wantto necessarily have to go driving around and standing in line and all this activity but ten years ago that was a standard process wasn't it? We could map that out learn from it but by learning to call non value added non value added and not be offended by it we've now got innovations which says, you know what? You never have to leave the couch. You can download it while you sit there. You can on demand it. You can do all kinds of things like that with it. So we innovate by recognizing that actually very little of what we do on a process is value. Add there's an extraordinary amount of non valuable and that's what we're on the hunt for. We saw it all through the game. Okay, all through the game. This takes us to the infamous seven wastes made famous by ghanim taichi ono, chief engineer, a toyota years ago, the infamous seven ways are these correction defects. Let's, go back to the simulation we played. Did we have corrections and defects? Of course we did a lot. Did we have over production, which is doing more than we need to when we need to. And we had examples of overproduction. Susan was overproducing because he was getting paid to overproduce and yelled at if she didn't. That was just part of the system. So let's, just well, we use it eventually. Alright, movement movement is the product itself? Uh, moving around. And did we have movement? We had it all over the place, back and forth and we can measure that I was working with a company a number of years ago making vitamin tablets they made it took over fourteen miles to make a vitamin tablet and they never knew it because they never asked the question so when we found out it took fourteen miles and one hundred eighty two days to make a vitamin tablet and the value add was like two days not even and we could do it in a much smaller space that transformed this company their stock prices more than quinn toppled during the worst recession in our in our life in our lifetimes in the last eight ten years okay by taking out the waste motion is things like human motion flipping pages adjusting the ruler that's all motion we had over forty steps in that game that we're all motion waiting product waiting customer waiting if its service how long they waiting okay ask that's waiting all forms of waste inventory and a lot of people say inventory that that was an asset on the balance sheet um you know you're calling it a waste um if you look at this the symbol at toyota for example of inventory it's a tombstone they refer to it is dead material it's ah it's tze dead until we sell it so it doesn't mean zero it just means think about the amazons that I've talked about the targets the wal marts the flow inventory turns that's healthy and finally unnecessary processing is just all this complexity we build into the system check and double check signatures how many signatures it takes all this uh all this excess processing so we could look at examples of this in design and engineering you know drawing ares rework things like that we had the dry nurse in the er and the diamond department for example uh things piling up never getting launched we've seen many examples of that and the businesses we come from uh movement lot of handoffs let it touch points that emotion things like that waiting for information for meetings to start for approvals waiting for customers how often do we end up waiting for the customer um and I know I've worked with a lot of service organizations where the idea is we hand off a load of things to the customers say you need to fill out all these forms to do business with us or you need to give us back this information and days go by sometimes weeks go by that comes back is incomplete it's it's late so in this day and age the common strategy is let's just go in and sit down with the customer and get it done in two hours why wait two weeks we'll go through it together or will end well we'll send in data miners experts you give us access to your system we'll just get the data for you you'll never know it you know you'll never even know we're here so these air these air radical different ways of approaching the same kind of work that breakthrough and then of course all kinds of processing excess meetings it's it's, it's incredible how much time we can waste it in meetings and things like that there's administration example. So the point of this is to say this isn't just about making widgets or making tile or macon automotive parts or aerospace parts or tool and dire fixtures this is this is about what you do in the office. Okay, if you got incorrect data entry it's a formal waste you have a lot of copies going on a lot of reports, a lot of storage it's all formal waste I think eliminated forty percent of my job in the first two months actually, years ago when I was promoted into a director role I discovered forty percent of my job was just pure waste and eliminated it within a couple of months and it was all about excess reports, exits, meetings I mean, it was like I just sat in meetings all day and read reports it's ridiculous. I wanted to gamble, you know zuba gamba like zoomer too, but all right, so you could see it in administration you can see it with people look at all the waste with people all right amount of ah movement that's unnecessary work ergonomic issues challenges their amount of people waiting around looking looking for things, waiting for approval, searching for stuff, that kind of thing um and a big one here underlie underutilized people not tapping into them their their full potential all right and then independent actions coming up with your own way to draw better diamonds coming up with your own way to reorganize your department things like that those are independent actions a lot of times they actually make your your area better but they may kill off all system actually even worse potentially then we have other forms away so it's not just those seven that taichi ono came up with but waste space we waste material we waste talent and human potential. You know, psychologists say that the average person only reaches about ten percent of their potential in life. Imagine that the average person only reaches about ten percent of their true potential is the other ninety percent in terms of lean we'd call that waste that's that's unfortunate we all have way more capacity than we think and and variation will spend more time on variation in the next session. Okay that's where some of the six sigma comes in so voice of customer here some very practical steps any size business khun do this let's start with identifying our customers the big sea and little c who we're doing business with who's our audience what are they paying us for what they want what they not want let's collect reactive data let's survey them let's interview them let's let's get a reaction all right and then use a proactive approach to fill it and the problem with surveys and things like net promoter scores and things like that that's it's a great tool to help keep score and get feedback but it's it's reactive and until we take it and make it proactive bye proactively poker yoking the diamond department because tales don't work um it's it's it's a formal waste it's just collecting data that we don't do anything with that's a formal waste so we analyze aqui les that needs we translate those needs into the critical to equality because vega's the enemy and then we set some specs for the c t q so it looks more less like this customer says I want good service this goes back to the question about service so I want good service what is good service it's vague what does it mean especially when we have a lot of different customers and they all have a different interpretation of good service right? What what does that mean? Well let's be a little more clear good services about being responsive, reliable and empathetic and uh giving me a sense of assurance okay that you know what you're doing but still seems big responsive responsiveness what what does that mean? Well at federal express years ago to toe to remind the clients that they were very customers that they were very time focused they answered the phone before it even rang the system's allowed him to do that but uh that's uh that's a speck that's a critical to quality spec so we're going you know we're going to respond within one minute we're gonna time it you're gonna check into your hotel within one minute you're gonna check into whatever within sixty seconds. Okay. Amazons very time based so it's immediate it's timed it sze measurable very measurable so how long you gonna wait to get your, uh your proofs on your photography? How long is it going to take to get my tiles? Okay, um what's uh what's the what's the budget is it going to change it all? How reliable is what you're telling me? You saw you said I was going to get uh eight good ones. Okay, I got zero out of eight in the first batch and I get two out of eight in the second badge the reliability was terrible so our ft is right first time um I'm going to get six signal level performance meaning no defects essentially how reliable is your is your business and reliability applies to services well is product accurate amounts on time accurate information? How reliable is your website all right, empathy. How well do you really understand my problem? My needs, my business, my customers, empathy. Huge empathy is huge. So it, uh, how well do you really know me? Do you know what I read? How in the world does amazon know what millions and millions and millions of people read so that they can recommend a book to you? They do, and they get it right. Ah lot. Alright, assurance. Ok. At the end of the day, you know, I, uh do I trust you, but trust you, it does. It does it. Does it appear to me like, you know what you're talking about? So when you tell me it's it's on its way, where is it? Well, I can't tell you where it is, but I can tell you it's on its way. I always do this when I go because I fly every week I go up to the heir and I go up to the terminal. And first thing I do is look out the window to see if there's an air plane at the gate. Because I'm now armed with just a little bit of data to go up to the attendant was standing there, and it says the flights leaving in ten minutes. And I might say to me, can you give me an update on when the flight actually going to leave and if they say, well, it says ten minutes there's no plane so how is that gonna happen in ten minutes and the minute you provide them with just a little bit of data they're like, oh, well, you're right um it's actually going to be a little while, yeah helps to have a little data sometimes, right? But that's the idea. So you lost me with assurance there when you said we were leaving in ten minutes and there's no plane are no crew. Okay, so the importance performance career this is a great guy great way to just simply prioritize something so one how important to the customer are the various things that we've identified or do? And then how well are we doing those? So what might be an example in the simulation we played of something that was really important to the customer hi importance to the customer that we were not doing well and we might come up with things like on time delivery throughput I wanted thirty I needed thirty and ten minutes I get zero, so through put quality diamonds in particular, okay, I want great quality I didn't get it low performance this quadrant right here is where the action is where the opportunity is so we want to go into anything identified in this quadrant our business so thanks think about this and whatever business you're in what is really important to the client by what we can't do this if we haven't sat down and talked to our customers and figured it out but what is really important to them here that we're not really doing very well that's where we want to focus our priorities in our projects if it's not that important to them and we're not that good at it we could let's leaking sleeping dogs lie so to speak or just uh not not prioritize that as much because it's not as important client this is where the action is now here's the trick all right, we want to sustain what we have out here of course, but what do we do with stuff over here? We're really good at it but it adds no value ours not important to the client an illustration of this would be stapling in the game but we're really good at stapling we're really good at filling requisitions you know we're really good at uh uh get things started but it's of no value to the customer, the customer doesn't want the staple that's irrelevant okay? We're really good at signing our names checking boxes doesn't mean anything to the customer, so this little tool allows us to really stiff differentiate prioritised what do we want to focus on? And what do we want? A table? Ah lot of times from a resource ing standpoint, we could take resource is from here and put them in projects here and get things done a lot quicker lot of organizations have projects going on, um, that are completely worthless from the customer's point of view, and they're not gonna actually result in any any payment. So to summarize this little section on voice of customer what's, the customer expect in terms outcome with the process they've got to go through to get that outcome. Sometimes we call that the easy to do business with factor. How easy is it to meet for me to get the outcome? This results, then an evaluation and customers are evaluating us all the time, and what they're evaluating us on is what are they experiencing in relation to what their expectation is? So when you go to disney world and they tell you, you know, you're going to stand in line for thirty five minutes from here, they're setting an expectation, and when you get on that ride in thirty three minutes, by the way, they don't guess they know it's not, and I think it's, um, I know how you getting on the right and thirty three minutes, what do you think? I made good time you just wasted thirty three minutes stating a lot and you're happy about it but that's a play on this formula right here okay it's knowing your system so well and delivering within a very precise time of that you want to pat it a little bit so that you you deliver better than expectation and this is where you get promoters so it looks similar to this uh we've got our outcome if our outcomes better than expected we were that's that's certainly great and we meet the outcome alright that's called satisfaction if we don't meet that's no good our process we dazzling our customers satisfying our customers or dissatisfying them where are we so we actually use this tool that bring customers in and have a conversation with us? Where would you pin the dot so to speak on the grid and here's an interesting statistic if they stuck it right in the middle they said you know what? I'm satisfied with your process you're east you're easy enough to do business with and yeah you're meeting my outcomes we'll put you right in the center sixty eight percent of customers in the center will switch sixty eight percent when another value proposition comes along they like a little bit better wow sixty eight percent so over two thirds were going to say, well, yeah, I like doing business with you and it's satisfactory but uh you know, I always say this is kind of like, uh if you set up a good friend on a blind date and then they went out on this blind date and then you know, after the date you said so tell me about how was it that was satisfactory not feeling a lot of passion there with satisfactory so satisfactory and customer satisfaction, which was a mantra of the nineteen eighties customer satisfaction this and that and everything else is no longer ah world class business practice the idea these days is advocates the howl of wow, the dazzle um really really stretched so they're they're they're they're getting an experience beyond what they expected so you're really wowing them with whatever you do and this is particularly important in the service sector incidentally, why do most organizations leave? Ah vendor supplier and it's it's it's more often due to due to process than outcome okay, now come and I'm all right but man, you're a pain in the rear to do business with I just can't stand it anymore so it's a it's a very it's a very worthwhile analysis to do with your customers the value stream when we're spend more time on value stream mapping and things like that in the next segment but the value stream is all of these activities that flow across it's the red dots, the yellow dots, the dimes that flow across to get value through to that customer so it looks essentially a value stream map looks at a high level like this so we've got the customer out here I need thirty in ten minutes my expectations my critical to quality are you know, diamonds without tails and red dots that don't touch diamonds and yellow dots that don't break the rings, that kind of thing and then we've got all these activities across our stream these would be those functional silos okay? We're looking for flow here to get that to the client and then we've gotta have ah if it's tile I gotta have material don't making my tile with there's deliveries there's there's paperwork I've got get people I had to rely on so a value stream map is a very useful way whether your one on one person shop a two person shop the value stream app shows you the architecture if you will of the business system and where you fit within that system so you could be a person inside an organization working in a red dot department, so to speak or you could be this could be your whole business you could be part of a values larger value stream where you've got er you get henry ford understood this one hundred years ago he's got miners you know, bring it you know, in foundries and uh stamping operations and assembly operations and dealerships you know that the value streams huge and we could see that and essentially any business it's ah it's a serious relationships and then we've gotta have some master planning master schedule. I like to think of this section right here is the air traffic control system how do we make sure lot of companies use e r p enterprise resource planning type tools m r p and uh s a p these different to softwares and tools that are available to help fly the plane safely in and out so to speak the materials in and out um smaller businesses can do this very simply with with an excel spreadsheet or a whiteboard quite honestly but this is going to be this is this is going to tell us where are we what's the ones the customer going to get it it's a it's a very useful tool to just organizing orchestrate the work I like to think of this too is like the orchestra of a conductor uh the conductor of an orchestra sorry. So the you know that the orchestra's got to buzz and drums and percussion it's got these functional expertise and that's a good thing but that's that harmonizer that the conductor that's pulling altogether and plane is one and we need a business more than ever before so it's harmonized in japan they call it high junker which is peaceful order we're playing in a very peaceful graceful, comfortable way. Not what we witnessed in the round one of the lead segment game.