Defining Value Through the Eyes of a Customer
As a business owner it’s easy to get caught up in the mountain of work that requires your urgent attention. Customer needs always come first, but then there are all those other things that also need to be looked at. Like preparing for that finance meeting, reviewing a new sales proposal before it goes out to a great new prospective client or scheduling your marketing team’s annual performance reviews.
It’s hard to see the woods from the trees when you’re plugging holes and putting out fires on a daily basis. The secret to freeing up headspace (and hours in the day) to focus on your customers is to reduce the time spent on things that don’t add value.
But what does value-add mean?
Definitions that I’ve found are applicable across industries and that make sense to staff at all levels within an organization are:
Value-adding activities (VA) are activities either transform or create something, or directly contribute to satisfying end consumers. In other words, they’re those activities customers would be happy to pay for.
Non-value adding activities (NVA) are those activities that do not directly contribute to satisfying end consumers’ needs. Examples of non-value adding activities are correcting defects, errors or omissions; preparation or setup activities; or inspections and checking. Customers wouldn’t be ok knowing they were paying for NVA activties.
There’s a third category of activities that are often take up a lot of a business owner’s time. All the things that you have to do to be in business and keep the business running. These types of activities allow value to be created but they don’t transform or create anything directly.
Business value-add activities (BVA) are necessary under the current way your business operates. They are likely to be difficult to remove in the short term but may be possible to eliminate over time. Examples are applying for the right insurances, sending invoices, doing a bank reconciliation or entering information into 2 databases because there’s no interface.
So with these three definitions in mind, how much of what you do each day would you classify as value adding?
If the answer, like many of us is “not enough”, the first step forward is taking a step back and truly looking at how your business runs. Assess all the tasks that are completed and categorize them as VA, NVA or BVA; then try and eliminate all the NVA activities and reduce the effort it takes to complete the BVA steps.
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