One Person’s Value Stream is Another Person’s Waste

One of the core tenets of continuous improvement is to work relentlessly to eliminate waste. But waste is a relative concept.

Think about the accounting department in your company? Do you consider the credit checks they do to be value added? What about the IT department troubleshooting a systems problem? Value added, or waste?

Now, think about an accounting services company that does those credit checks as a service for its customers. For that company, the credit check has a value stream associated with it. A customer is willing to pay for it. And the same holds true to the company that manages IT services for its clients.

One of the challenges with continuous improvement is that there is a lot of ambiguity in it. You can’t absolutely say that what the best current option is. There is often not a right and wrong answer to questions. Evaluations depend primarily on who your customers are and how you score your performance, which often trickles down from the company’s strategy.

So what is the practical application of this insight? Recognizing that this ambiguity goes a long way towards resolving conflicts when making improvements. People generally disagree about the wrong thing. They discuss which process is better, and debate the best configuration of a work area. The problem is that these discussions happen without context. There is no agreed upon set of grading criteria to evaluate the options.

The managers responsible for credit checks in the above example would likely have a hard time agreeing on policies. One might be willing to assume more risk and skip credit checks altogether for small orders. The other would be likely to press for tighter limits, stressing that a turn in the economy could make many marginal companies default all at once.

I recommend stepping back whenever there is a disagreement about process, policies, methods, and the like, and debate the parameters of a decision matrix. Agree first on what is important, and then the resulting decisions will fall into place.