Managers are commonly focused on Value-Add in Product Development and how people and teams can increase it. This way of thinking leads to a focus that is harmful to Value Realisation; it incurs a very real Cost of Delay.
When we talk about value adding time, we look at work from the perspective of the producer. We see work going by, and we notice when we are not producing. And not producing feels bad, so we optimise to keep ourselves busy.
This is OK when we can match our throughput to demand, but that only happens when there is little variation in size, complexity and arrival rate of work. In that situation, we can produce on a schedule that’s convenient for us. We will process all widgets of type X in a batch, when we’re set up for type X. To minimise unit cost, this means bigger machines that can produce bigger batches (or longer runs in between changes). Which means higher capital intensity. In a software context, this might mean more intensive testing: approaching 100% test coverage in a single test cycle at the end of the process, rather than iteratively running rapid test cycles (which we knew was the better way even back in 1994).
This is all fine if you’re producing identical widgets in an industrial setting, but in knowledge work, variation is expected. And when you have increased variation, the wait/resource utilisation curve goes up much more rapidly — you have long queues much much sooner.
Again, in the context of identical widgets, the cost of delay for any individual piece is uniform; as long as there’s a widget ready when demand arrives to use it, the main costs are in storage and tying up of capital. But with individual artefacts, the delay cost clock starts ticking the moment something starts the process, and keeps going until the end of that process.
In a high variation, individual order context, optimising for flow means not talking about value-add, but value-received. Working from the perspective of the work recipient, not the producer. Noticing when the work item is not receiving new value. Optimising to keep the progress going.
This is the inside-out thinking that customer focused organisations have been talking about for 20 years and more.
It’s the difference between The Golden Rule (do for others as you would like them to do for you) and the Anti-Matter Principle (work to meet peoples’ needs, which may not be the same as yours).
Shift the perspective from the producer to the item being worked on and its Value received to improve flow and so reduce Lead Time and the economic Cost of Delay.Recommend this post