Most of us have never added any value...and that's a good thing

Lean methodology for improvement starts with and is firmly grounded on the concept of Value as defined by the customer.  The very first thing any individual or organization must do when starting a journey of Lean is identify their customers and use the Voice of the Customer (VOC) to tell them what constitutes Value.

This idea sounds simple enough.  And you do not need an MBA to appreciate that is also makes sense.  But consider then what it means from a practical perspective.

Lean practitioners further define Value added steps as anything that changes the following attributes of a Product:

• Form or shape of the product or components
• Fit or assembly of the product or components
• Function or what the product or components are able to do

For example consider an everyday object such as a 30 ton coil of flat rolled steel.  For those of you not familiar with flat rolled steel imagine a roll of toilet paper.  Only instead of ultra soft two-ply paper, you have a long strip of steel rolled up in a coil.  And now imagine that the coil is up to 6 feet (2m) high and almost as wide.  Huge organizations called integrated steel mills produce steel in this fashion for companies who make cars, household appliances and just about anything else you can think of that is made out of sheet metal.

So how does an integrated steel mill add Value?  Using the above "3Fs" criteria consider the following simplified process:

1. (Change Form) Heat coal in a coke oven for 18 hours to remove everything but the carbon to produce coke
2. (Change Form) Mix the coke and iron ore pellets in a huge blast furnace to produce molten iron
3. (Change Form) Blast the molten iron with oxygen to produce liquid steel
4. (Change Form) Cast the liquid steel into a continuous caster to produce a long red hot strip of steel
5. (Change Form) Roll the strip of steel back and forth through a series of rollers to create an even longer and much thinner strip of steel
6. (Change Function) Run the strip of steel through a series of coating baths to coat the strip with rust inhibitors such as zinc
7. (Change Form) Roll it up in a coil

With apologies to my former colleagues in the Steel industry there are limitless variations to this process that allow companies to produce an unimaginable range of products.  But for those of us who just want the toaster to toast our bread and do not care how the steel for the body was made this will do.

So what is the problem?  Everyone who has read up to this point now knows enough to walk up to any integrated steel mill and at least get them started on their journey to Lean.

Allow me to point out the problem.

I spent five years working as an engineer in the coke ovens of a major integrated steel company.  And as I look back on those happy days spent completing one technical project after the other I am forced to acknowledge that, given the above Value Stream, I did not add one single scrap of value the entire time I was there.  I never operated the machines that loaded the coke into the coke ovens.  I never ran the rolling mills that flattened out the strip of steel.  And I never pushed the buttons to make the steel go through the coating baths.  Never mind adding Value 80% of the time.  Or 50% of the time.  Or even 5% of the time.  I'm talking Z-E-R-O Value over the entire five years I worked there.

....this is the point where usually my fellow engineers jump to my defense claiming that all the technical projects I completed added Value through improved yield, reduced raw material costs, and in one colossal example of profound Waste, I helped the company migrate their perfectly good Information Systems from a DOS platform to a Windows environment.

Well let's listen to the VOC...

"Hello Toyota.  We would like to ask your opinion on something.  We're trying to figure out if an engineer named Kevin is adding any value here.  Well he just finished a big project to switch all our databases and reporting systems from DOS to Windows.  It's really quite impressive.  We can make all sorts of graphs and reports on just about anything you can imagine."


"...does he run the coke oven to make the coke?  ...well no."


"...does he run the blast furnace to make the iron? ...uh, again no."


"...does he run any of the equipment in the rolling mills?  ....sorry no.  I don't believe he does any of that stuff.  But back to this Windows based information system.  Did we mention how impressive it is?  The graphs?  The real-time production data?  Queries?"


"Ok that's great.  We appreciate your time.  And yes your coil of steel will be ready for delivery by this afternoon as requested.  Bye for now."


Fortunately for me none of my bosses ever listened to the Voice of the Customer.

As you can imagine when I begin the journey of Lean with any client and I introduce this concept, to say that I am met with resistance would be a gross understatement.  I have never actually been physically struck by anyone at a client site.  But I have had people scream at me in rage at the notion that nothing they or anyone else does adds Value.  And I am certainly not unsympathetic.  Trust me I know first hand how demoralizing it can be to realize halfway through your professional life that most of what you thought you have accomplished has been Waste.  Keep in mind I have been an engineer, a senior executive and a management consultant.  Not a lot of opportunities to generate Value in any of those lines of work.

So how do we come to terms with this frustration and heartbreak?

Well the first option is to not ask me or any other Lean consultant to help you with your Lean journey.  Instead you can ignore your customer,  unilaterally designate thousands upon thousands of steps within your Value Stream as Value-Added based on the criteria that "you've always done them" or "you need to do them" or you "can't imagine ever not doing them."  You can imagine how popular I am in overhead departments such as HR, Research & Development, Finance, Quality and so on.

Then you can put in place improvement initiatives to squeeze out what little Waste is left (by your narrow definition) and have large company meetings to celebrate your paltry incremental successes.  You can also take great comfort in knowing that you are not alone.  The vast majority of your competitors are choosing this exact same strategy.

Or....you can decide to not be like all of your competitors.  You can make the decision to maximize your chances of significantly improving your processes by putting everything, no matter how long you have done it or how well you think you do it or how much you think you need to do it, under the VOC microscope.  And then no matter how painful or frustrating or demoralizing it is, you can listen to the Voice of the Customer when designating process steps as Value-Added or Waste.

So back to the steel company for a minute.  What would this mean for the company that gave me my very first opportunity as a professional.  Let's review the process again and roughly estimate how many people would be adding Value at any given time according to the Value Stream.  The following are extremely rough estimates for how many operators are required at any one time at each step.  And by operators I mean people who are actually pushing the buttons and running the huge machines required to make steel.

1. Heat coal in a coke oven for 18 hours to remove everything but the carbon to produce coke (3 operators)
2. Mix the coke and iron ore pellets in a huge blast furnace to produce molten iron (4 operators)
3. Blast the molten iron with oxygen to produce liquid steel (1 Operator)
4. Cast the liquid steel into a continuous caster to produce a long red hot strip of steel (1 Operator)
5. Roll the strip of steel back and forth through a series of rollers to create an even longer and much thinner strip of steel (1 Operator)
6. Run the strip of steel through a series of coating baths to coat the strip with rust inhibitors such as zinc (1 Operator)
7. Roll it up in a coil (1 Operator)

Total = 12 Operators who are actually changing the Form, Fit or Function of the Steel as it moves through the Value Stream.

Now consider that at the time I was working there the company employed roughly 10,000 people.  If 5% of them were on vacation or away from work at any given time that would mean that on day shift at least the company was somewhere in the neighborhood of 12 / 9,500 x 100% = 0.12% Efficient.  The pessimists in the group would throw up their hands in despair.  The Lean devotees would rub their hands with glee at all that potential Waste to reduce or eliminate.

My point here is obviously not to spare people's feelings and pat them on the back for doing such a great job by artificially inflating their Value Added process steps.  My point is to help people give themselves the greatest opportunity to succeed by putting everything on the table.

As a final note consider this.  Within the steel industry there are companies operating what are called "mini mills."  These smaller operations produce the same flat rolled product as the large integrated mills but with even fewer steps in their Value Streams.  They do this by recycling scrap steel and building their mills in one continuous stream (Flow).  This in turn allows them to have as few as 3 operators do what it takes 12 in the process described above.  With competitors like this out there why on earth would anyone want to limit their opportunity to improve?

So how much Value did you add for your organization's Customers today?