This podcast covers Chapter 6, “Creating Value-Seeking Behaviour” of “12 Steps to Flow: The New Framework for Business Agility,” by Haydn Shaughnessy and Fin Goulding, developers of the internationally acclaimed workshop, Flow Academy. This chapter answers the question, “How do we seek value is continuous activity without a spreadsheet, value proposition or a conventional ROI?” This is done by going deeper into the Flow Value Stack introduced in the Introduction. The key is weaving value into everyday activities rather than being a separate event.
The importance of how a customer is viewed along with the corresponding segmentation is critical for success. Innovation alone is insufficient. The authors provide as an example the TV industry in the United States and its disappearance, losing dominance to the Japanese, who eventually lost dominance to the Koreans. This loss of dominance occurred for two reasons:
1. The Japanese were better at focusing on continuous learning in semiconductor manufacturing while the Americans focused on innovation;
2. The Americans drove for excellence in image quality which led to a high degree of breakdown while the Japanese focused on optimizing the technology they had, leaving fewer breakdowns.
The lesson here is to look for optimization across a matrix of all the activities rather than driving one component to perfection. In Flow one looks to see how the matrix of all the activity involved in bringing the product to market and servicing customers can be best optimized.
The approach of Value Optimization Analysis is introduced. This is a level above traditional value stream analysis. In value stream analysis the reduction of waste in a given process is assumed to increase value while in value optimization analysis one questions, “Why are we doing this process? Is this the best way to create value in a balanced way?”
The authors go on to refer to tools that we introduced in Chapter 10, e.g., The Customer Feedback Wall, but for now they give a list of 16 questions that can be used over a three month period to conduct a value review by the team to see whether or not the right processes are being used in order to add value for the customer. Questions range from, “How many customer feedback issues have been dealt with and how can we classify them?” To, “Are enough of our products and features contributing to customer success?” The results from discussing questions such as these and others are placed on a Flow Value Wall where trends can be observed as to whether or not value is increasing, staying the same, or decreasing. While observing these trends can chose the value of performance in the long run what is key is to learn how to use this information to optimize value on a day-to-day basis. Remember, the goal is to maintain a continuous flow of innovation that can be tested with the customer.
The authors take to task the traditional use of the phrase “value proposition.” Rather than something that can be stated in one sentence or a single statement they see it as something that is much more complex and encompassing the ranges across the entire customer experience. It is open-ended and continuous. This leads asking two key questions:
1. How can I be sure that my work-in-progress and project investment are adding value to customers in a balanced or optimized way?
2. What initiatives can we develop to expand our markets as new technologies arise in new needs become evident?
This chapter focuses on the first question.
SEEKING VALUE WITHOUT WRITING VALUE PROPOSITIONS
As mentioned in previous chapters, is not only inventing new products but also adapting to system changes necessary to innovate in a timely manner. Consequently it is quite important that collective intelligence is used to stay on target for achieving goals through a continuous flow of activities in the work units. All work is interrelated which is essential for Flow to be effective in that one is taking business objectives and working them into value for the customer.
Two examples are provided, one is with regards to changing the business cycle in insurance and the other addresses creating value in the automobile industry.
The second example addresses aftermarket issues associated with car sales with one of the focal points of being how women are addressed with regards to After-Sales customers. The break the situation down into five phases:
phase 1. The statement of proposed value
phase 2. Articulating flexible business goals
phase 3. Understanding customer success factors
phase 4. Creating new units of work
phase 5. Delivery, test and iteration
They summarize the overall problem as comprising:
– many enterprises do not have problems that can be solved with a startup approach such as MVP
– they struggle to balance complex psychological and financial pressures
– After-Sales is where the profit lies
– carmakers have little idea how this market segments other than data on the types of cars that get serviced most
– carmakers think they can solve this problem with the big data solution, or “market of one.”
A key component that stands out is in Phase 4, creating new units of work. It discusses the need for integration across research, marketing, and production in order to be successful. In other words, the Post-Its associated with work breakdown appear on the same wall representing marketing, business delivery, and IT. This integration is critical for success. The forces work out into the open where team members can see if everyone truly understands what everyone else is doing along with whether or not the work is being truly integrated. This rolls into phase 5, delivery, testing, and iteration. The units of work all need to come together through minimum sustainable delivery matrices (MSD) that can be pushed to the customers in a manner that satisfies their needs as well as generate sufficient profit.
The chapter concludes with statements regarding Flow and how it focuses on value seeking rather than value propositions. That value can be sought in a number of ways:
1. In a Statement of Proposed Value
2. By creating flexible business goals to which people can adapt via spot decisions
3. Breaking work down into tasks where the value can be more easily identified especially through short cycles of work which helps get rid of anything that lacks value
4. Engineering continuous feedback loops that creates information for both the strategist and the kanban teams
5. Conduct Flow Value Optimization Analysis to check whether systems, routines, or services are creating continual added value
6. Constantly engaged in helping people broaden theres skill sets so that they can put value ahead of roles
7. Use the Executive Portfolio Wall to make sure that only work of value passes down to the executive teams
Here are the link for:
episode 0037 of Wrestling with Chaos. the Introduction, The Value Seeking Enterprise, and Chapter 1, Talking About Business Agility:
episode 0042 of Wrestling With Chaos. For Chapter 2, The Customer In The Agile Business.
episode 0043 of Wrestling With Chaos. For Chapter 3, Disrupting The Cadence of Work
episode 0045 of Wrestling With Chaos. For Chapter 4, Taking Advantage of Visible Work
episode 0046 pf Wrestling With Chaos, for Chapter 5, Anti-Project Thinking and Business Agility
For more on the various “Walls” using Post-Its refer to their excellent book, “Flow.”
In line with Business Agility and dealing with complex situations, you can download CMC’s free e-book MINDSET – 5 SIMPLE WAYS TO LOOK AT COMPLEX PROBLEMS and learn how to find a simple vantage point from which you can resolve challenges.
Your feedback is important. Choose from the following options:
- place a review in iTunes,
- click on “leave a comment” below,
- send any comments along with your name and the show number to email@example.com
Listen to future episodes for our reply.