Value: Defined

Lots of people are talking about value these days – especially in light of Lean culture.

The Merriam-Webster dictionary provides eight definitions for “value.” The definitions relate to market price, luminosity, and denomination. From a business perspective, value is related to market price and the customer’s perception of a fair return on an exchange.

From a Lean perspective, value is anything that the customer is willing to pay for – as long as it meets these three criteria:

  1. The customer cares about it.
  2. The product or service must be physically transformed or the step toward transformation must be an essential prerequisite for another step.
  3. The product or service is delivered “right the first time.”

“Non-Lean” organizations sometimes have a tough time determining what it is that their customers’ value. But determining value is actually not that difficult. It comes down to ensuring that the above three criteria are met – all the time. Look at it this way:

  • An organization with efficient processes is able to keep its costs down. This results in a greater ability to attract more customers and translates to value for the customer.
  • An organization with inefficient processes incurs higher production costs. These costs get transferred to the customer. The customer does not see this as value.

Inefficiency can be a business killer. This is where Lean organizations have an edge over non-Lean organizations.

Lean cultures enable waste reduction in business processes that directly contribute to value for the customer. Lean cultures help businesses thrive.

If your customer values your product or services, they will pay your asking price. If your offering does not meet your customers’ criteria for value, the customer may still pay for it, but will definitely be shopping around next time they want the same thing.

Next time you complete a transaction with your customer, ask them to rate the value that they just received from you. Their response will tell you how well you are actually doing compared to how well you think you’re doing. Consider it a reality check.

Value is the key to organizational survival. If an organization consistently delivers poor value to its customers, it goes out of business. It’s that simple.

Leveraging the Power of Stakeholders

Do you know that excitement that goes along with your great idea for improving your organization’s processes? From great idea to project charter, the momentum you have is at a peak when you present your project charter to the project champion for approval.

At this point, your project can go one of two ways: it gets approved by the champion or it gets denied. If it gets approved, great! You’re on your way to making change. If it gets denied, there is a strong likelihood that you did not engage and secure the support of all stakeholders.

We often talk about engaging and getting “buy-in” from stakeholders. But what, exactly, does this mean? And who are these stakeholders? And what is their interest in your project?

To answer this question, consider these key steps for determining and evaluating your stakeholders:

  1. Brainstorm to identify your stakeholders.
  2. Prioritize stakeholders based on their power and interest in your project.
  3. Understand what motivates your stakeholders and what actions you need to take to persuade them to support your project.

Stakeholders include all people who have an interest in your project and are affected by your work. They can include, for example: senior managers, your colleagues, customers, suppliers, banks, government(s), unions, community groups, and others. As you brainstorm with your team, you may come up with other unique categories.

Once you know who your stakeholders are, you need to determine their power. That is, what is their desire and ability to exert influence over your project? Stakeholders can disrupt your plans, cause uncertainty in plans, or be your staunchest advocate. In short, businesses both need and rely on their stakeholders.

It is important to understand stakeholder power and interest. Leveraging stakeholder power and interest is key to getting support for your project. The matrix included at the end of this blog provides an overview of power and interest. It illustrates the following:

  • If a stakeholder has high power and high interest, they are a key player. Take notice of them and collaborate with them to achieve project success. You must fully engage them and make the greatest efforts to satisfy their needs.
  • If a stakeholder has high power and low interest, involve them in the project by regularly communicating with them or asking them how they wish to be kept involved/informed.
  • If a stakeholder has low power and high interest, communicate frequently with them. These people can be helpful with project details.
  • If a stakeholder has low power and low interest, monitor their input, as necessary to the success of the project.

With the above in mind, you need to identify your stakeholders and how they fit on the Power-Interest matrix. The best way to determine this is to meet with your stakeholders and ask them directly – this is a great first step to building a successful relationship.

Knowing all of the above – your stakeholders, their power and interest over your project, and their motivation – you can now use an appropriate method of engagement to win their support for your project and its success.

And don’t forget to review your Power-Interest grid to ensure that stakeholder influence has not changed. If it has, get in touch with your stakeholder and determine how you can maintain their support for the project.