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Why it’s Better to Focus on Value, Not Waste

by Katrina Appell
January 28, 2021

Why it’s Better to Focus on Value, Not Waste

by Katrina Appell
January 28, 2021 | Comments (9)

In Lean Thinking, by James P. Womack and Daniel T. Jones, the first two lean principles are about value. The first is to specify the value, and the second is to identify the value stream. Despite this focus on value, organizations that practice lean too often focus on eliminating waste and rarely focus on increasing value. Perhaps because waste is often easier to identify than value, it becomes the focus of their efforts.  

The misplaced focus on eliminating waste concerns me for two reasons: 

  1. It takes focus away from value 
  2. It often eliminates waste from an individual’s perspective rather than from the value stream perspective 

Increasing Value Compared to Reducing Waste 

Don’t get me wrong. I’m not advocating that you should ignore and accept waste in your value streams. Instead, I contend that it would be better to emphasize increasing value over reducing waste. When most of us eliminate waste, we often assume that it increases the value-creating work, but that isn’t always the case. Value will only increase if you are intentional and deliberately focus on increasing value. What you want to achieve is having a higher percentage of the work being value-added compared to waste. Here are a few of the ways you can do this: 

  • Increasing Value  
  • Reducing Waste  
  • Increasing Value and Reducing Waste  

In my opinion, two places offer considerable opportunities to increase value:  

  1. Enabling people to create more value.  
  2. Creating new value through the product and service development process: 
     - Learning through experimentation 
     - Understanding user/customer value 

Increasing Value through Enabling People  

When waste is searched for and eliminated outside of a value stream perspective, it is often in service of enabling people. Empowering people to get rid of the frustrations they perceive as waste is a great way to increase their engagement. Both removing people’s frustrations and authorizing people to remove their frustrations are part of a leader’s role in creating a system that enables people to create value while achieving their full potential 

However, this is not the same as eliminating waste from a value stream perspective, as described in Lean Thinking. When reducing waste, people need to understand the entire value stream to ensure that they aren’t generating more waste elsewhere. The last thing you want to do is play a game of waste “whack a mole.You should not eliminate your waste and, in turn, create more work (waste) for someone else. Understanding value and waste together as a team through value stream mapping can ensure that you aren’t increasing waste for others by eliminating waste from only your perspective.  

To enable people to create more value, you need to create the conditions for them to achieve their full potential.  When people pursue their full potential, they enjoy their work more and perform better, leading to more value creation. You can do this by deliberately designing and using your systems, processes, and practices to enable people to have their needs for Purpose, Autonomy, and Mastery met.  

Meeting Individual Needs Yields Better Performance

Purpose-Autonomy-Mastery and Maslow  

In the book Drive, Daniel Pink identified Purpose, Autonomy, and Mastery as the three things people require for better performance based on four decades of scientific research on human motivation.  

  • Purpose is understanding the value of your work. 
  • Autonomy is having some control over your work.  
  • Mastery is improving your skills.  

The Purpose, Autonomy, and Mastery needs are at the top of Maslow’s hierarchy of needs as self-actualization. Usually, people need first to have their lower-level physiological, safety, belongingness and love, and esteem needs met before they can focus on pursuing their full potential and perform better—and creating more value 

As a leader, you need to be explicit about how you will support people in meeting their needs when experimenting with lean practices using PDCA / PDSA; this is how you show respect for people. Through creating the conditions to optimize learning and performance, you will spur more value creation while providing opportunities for people to grow and develop to reach their full potential; this is the essence of how value is created through lean thinking. 

How will you enable people to create more value?  

Increasing Value through Product and Service Development   

While there is plenty of waste in product and service development that should be reduced, the potential benefits are more significant when you focus on increasing value. After all, the purpose of product and service development is to create new value.  

Phases of Product and Service Development: Study and Execution  

Phases of Product Development

Focusing on waste elimination can lead you to ignore the value of learning and understanding before executing. The study phase is very often short-changed in organizations because we tell ourselves that we must get started; we can’t waste time learning (creating new value); we have to execute the program. The resulting scope changes and corresponding rework, as we learn what the new product or service must be to create value, usually leads to significantly longer development times. It also requires more effort and leads to high levels of frustration for the team. Nobody likes making late changes that could have been prevented --or worse yet, not understanding what the product or service must be can lead to developing products and services that don’t provide customer value, making the entire product and service development effort a waste. Both are examples of people experiencing their work as waste, which is extremely disrespectful. People want to create and provide value. 

How will you enable people to create and provide value through product and service development  

Increasing Value by Learning through Experimentation  

Many people view any redundant activity as waste. However, many redundant product and service development activities are not waste -- they are vital to new value creation. New value is created by learning through experimentation. Two widely used lean product and service development practices that add value, but are too frequently perceived as waste are the following: 

  1. Repeating tasks in service of learning.  
  2. Developing multiple design options in service of learning.  

Running simulations and creating low-fidelity prototypes are tasks that enable rapid learning when done repeatedly throughout the development process. Developing multiple design options in parallel facilitates the learning needed to make the best design decision. These approaches allow learning early in the development process, when it is easier to incorporate it into the design to create more customer value without expensive late design changes 

When repeating tasks and developing multiple design options are perceived as waste, there is an assumption that you wouldn’t need to repeat the task or produce more than one design option if you picked right the first time. But few, if any, organizations can consistently guess the right design without the necessary learning to understand and create customer value. Gaining knowledge is a far more reliable way to ensure consistent high-performance product and service development than guessing. If you only look at the work with aneye for waste, you might wrongly eliminate repetitive tasks such as these. Further, having their work be perceived as waste is one reason people resist lean thinking in creative activities. Labeling someone’s learning work as waste is not only disrespectful, it also doesn’t create the conditions for them to create new value.  

The irony is that lean is built on learning through iterative experimentation using PDCA / PDSA.  

  • Plan – What are you going to do? What do you expect to happen?  
  • Do – Run the experiment.  
  • Check or Study – What actually happened? How is it different from what you expected? What did you learn from what happened?  
  • Act or Adjust – What do you do with what you learned? What are you going to do next? 

Learning through iterative experimentation is how knowledge and new value is created through lean practices. Capturing knowledge from experiments in a re-usable way, whether from repeating tasks or multiple design options, enables even greater value creation when used on future development projects. Not capturing learning as re-usable knowledge and not learning from repetitive tasks are indeed waste, as are some other redundant tasks – these wastes should be reduced or eliminated.  

How will you enable people to learn in the service of creating new value?  

Increasing Value through Understanding User / Customer Value    

When you don’t take the time to learn and understand first, the resulting product or service is usually not as valuable as what you could have created. Just as you would spend time defining a problem before trying to solve it, you should understand user/customer value before executing product and service development projects. In the words of Einstein: “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.”  

I’m not saying you should spend 90% of your time understanding and 10% executing, but that you should question if you are spending enough time understanding. Most organizations are not. Understanding value can start with observing for user/customer value:  

  • Ford and Toyota understand value through chief engineer immersion.  
  • Menlo Innovations understands value through high-tech anthropology. 
  • Ideo understands value through design thinking.  

How will you enable people to observe for user/customer value 

Focusing on Increasing Value  

Many organizations primarily focus their lean efforts on eliminating waste. While nobody wants waste in their value stream, it would be better to focus on increasing value. Emphasizing value creation reduces the risk that you will unintentionally remove value-creating activities while searching for waste. Emphasizing value creation also ensures that you deliver more value through intentionally focusing on creating new value  

How will you enable your organization to create more value? 

*****

What to do next:

The author is one of several coaches at LEI working to share lean thinking and practice with organizations and teams looking to enhance their product and process development success. To learn more about how they can help your organization, visit leanpd.org--or better yet, schedule a time to talk with a lean coach.

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9 Comments | Post a Comment
Bob Emiliani January 28, 2021

When we were learning TPS from Shingijutsu in the early 1990s, they taught us to focus on waste because waste was something tangible (you can see it, you can measure it, etc.) while value was intangible, changeable depending on the person or one's perspective, and thus difficult to comprehend and take action. Their view on this remains the same. On the shop (or office) floor, it still makes sense to focus on eliminate waste. But the focus is different in product development where value must be comprehended and incorporated into design (in collaboration with production; e.g. Nakao's 3P). So, to your point, it is important to understand what the focus should be depending on where you are in the value stream and what work you are doing.



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Andrew Bishop January 28, 2021
1 Person AGREES with this comment

I guess it depends on the need and the opportunity. Having worked in manufacturing and healthcare, I understand the need to focus on waste - out of respect for workers at the front line, if for no other reason!



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Joy E.Mason January 29, 2021

You gave me something to think about. Work teams might be more motivated and engaged when they know they will gain something (value) as opposed to lose something (waste). An important consideration though is  that value is determined by the customer. 



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James Curcio February 10, 2021

Very interesting post. I never put the concept of focusing on value into perspective due to the lean six sigma concepts being focused primarily on waste. Two questions popped into my head after reading this post.

1. Are individuals taught to eliminate waste primarily because it is easier to identify?

2. Is increase in value subconsciously added as waste is eliminated?

The first question I have is in human nature. Individuals tend to grasp onto the first easy concept that is identified in a problem. Maybe we need to think broader and focus on value more.

In simple terms, the second question relates to if there is a correlation between value added and waste eliminated. 



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Katrina Appell February 19, 2021

1) I think there are many reasons. One of them being that lean has primarily been applied in manufacturing and other execution work where value is pre-defined and can’t be easily increased, while waste can be more easily seen and eliminated. Many people then take this waste elimination focus to other spaces, such as product and service development, where it does a disservice since the purpose is creating new value.

2) I think that is what people expect to happen. I think what is more likely to happen is that different waste replaces the waste that is eliminated. If you want more value you have to focus on creating more value otherwise you might get more value or you might get more waste.



Philip van Londen February 19, 2021

Dear Katrina,

 

In Lean/TPS focus on elimination of waste is a guiding principle that leverages value. You cannot shift focus and still say you are working Lean. I have two concerns with your hypothesis.

 

First, individual needs should be addressed. Yet, enabling people to eliminate waste and create value should be addressed at the level of respect for people. That is another level in the hierarchy of the Lean/TPS-system. It’s somewhat like the popular statement to add an additional waste category ‘waste. The 8the waste: ‘talent of people.’ Wasting talent is a true problem, but from another level and can be partly ’fixed’ by straightforward elimination of waste because a value stream with less waste contributes to more effective use of peoples talents. Introducing this typical 8th waste category diffuses the tangible 7 wastes and makes things more complex and less manageable in a Lean approach. Start a talent development program for people, but do not pollute Lean/TPS waste elimination with it.

 

Second, if there is a need for another focus or approach in a development situation, shouldn’t you be shifting to Agile? Because Agile provides you with another framework that is more suitable for development and has the same underlying customer value approach.

 

In my opinion the choice for Agile or Lean/TPS is very often quite simple. Are you maintaining and improving a value stream with a more or less standard product? In this case you should choose Lean/TPS. Are you innovating and developing a new product or service? Choose Agile. Hence the majority of ICT work is best suited for an Agile approach because in ICT people are developing new things all the time.

Thank you

Philip van Londen (Get Lean)



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Katrina Appell February 19, 2021

At no point, did I say that waste shouldn’t be eliminated. I am calling attention to a large opportunity space being missed by not focusing on value, which is especially true in product and service development.

Yes, addressing people’s needs is all about respect for people, which is the underlying thinking of lean. To only focus on waste is focusing on the technical leaving people out of the socio-technical system. Yes, in many cases benefits will be seen by taking only a technical approach, which are far less than what can be achieved when respecting people and improving the entire socio-technical system.

Lean practices have been used for innovating and developing new products since before lean was identified as a business practice. What came to be known as lean came from Toyota’s business practices. These business practices included innovating and developing new products. There is a chapter in The Machine that Changed the World on product development and it is covered more completely in Clark & Fujimoto’s Product Development Performance. These practices have come to be known as lean product development or lean product and process development. There has been significantly more research and practice of these methods since those original publications as well. Agile was created in the software development environment to be adaptable to changing customer requirements, which were often internal customers. Since its origin it has been adapted to other environments, which some people have found valuable. This is no way means that agile is the appropriate method for innovation over business practices that evolved from high performance product development focusing on value creation with minimal waste.



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Philip van Londen February 24, 2021

Dear Katrina,

Thank you for you elaborate answer. I fully agree that a dry technical approach of Lean isn’t the way to go. This might even do more harm than good. My daily practice of Lean guidance therefore leans heavily on change management and behavioural psychology. At least half of my work consists of addressing sociological issues concerning cultural change. (i.e. Maslow / Pink)

And thank you also for your remark on Lean Development. I’ll revisit the parts from Womack’s work on Lean product development (it’s been a while) and look into the publication of Clark and Fujimoto.

What is your opinion on Eric Ries’s Lean Startup? When I read this I was constantly under the impression I was reading an Agile approach that was re-labeled Lean. Yet it was re-labeled very well. My rigid approach to Agile for development and Lean for more-or-less existing value streams originates from that moment. I was ‘raised’ to be a Lean guy, but since then had to give the founders of the Agile Manifesto credits for an even more refined understanding of the development process when you are challenged by having to create something that does not yet exist.

Philip van Londen (Get Lean)



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Katrina Appell February 24, 2021

There has been a significant amount of research and learning in the lean product development space since the research published 30 years ago. I recommend Designing the Future by Morgan and Liker for some of the more recent learning that built upon the original research, further research, and experience putting lean product development principles into practice. There are also any resources available at leanpd.org

I’ve read Lean Startup, but it has been a while so I might not remember the content accurately. I think he had knowledge of lean principles and applied them to the work he was doing, which was startups. I can see how some of his approaches on rapid learning and getting things in front of the customer for quick learning from customers parallels to agile. This doesn’t surprise me since Agile was also influenced by lean principles to address the problems that were commonly being experienced in software development.

In both Lean Startup and Agile it is easy to see the Shewhart Cycle as Deming originally taught it to Japanese Executives. 1) Design 2) Make 3) Sell 4) Test in Service 5) Redesign (and repeat the other steps as well). It was the Japanese executives that translated this to a learning cycle of PDCA from the design cycle they were taught. Lean startup then re-translated it to designing new things.    



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