Blog Post How to Handle Divergent Customer needs who aren’t even Paying the Bills?

How to Handle Divergent Customer needs who aren’t even Paying the Bills?
Feb

24

2016

How to Handle Divergent Customer needs who aren’t even Paying the Bills?

The first step in applying Lean to any organization is being able to define the Value the organization delivers. Normally in Lean we define value add work as “what the customer wants to pay for”. There are however many situations when the customer is not the one paying, so we need another way to define value add.

resolve customer value

Example 1 – Traditional Lean Definition

The simplest situation to consider is a commercial organization selling direct to the public, a gas station is a good example. The person filling their tank and paying for the gas is the customer and the value add is delivery of the gas to the car typically in a clean safe environment.

Example 2 – Little Messier

For an organization such as a NHL club (Flames or Oilers take your pick) it gets messier. Every NHL hockey club has multiple customer groups. There are the fans who pay to attend the games and who’s attendance gives the game atmosphere. There is the league which handles TV revenues and game commitments. There are the team sponsors who pay to get their name seen, and even the concession holders who pay to be able to retail at games. Sometimes some of these customer value requirements can conflict with each other. The league wants games scheduled to meet TV’s needs with more breaks to meet advertiser’s needs. The fans on the other hand wants the game at a time they can easily get to and don’t want frequent breaks in the play.

The challenge is recognizing the value add to each customer and understanding the importance to each customer group. The club can then work at finding the right balance between each group’s needs. TV is not going to want to broadcast a match at which no fans have turned up to cheer.

Rethinking the definition of Value Add

Before we go any further we have to challenge the statement that value add is what the customer wants to pay for. For manufacturing this is a great statement that makes companies focus on what they should be doing. But for many organizations the customer is not always paying the bill. If we think of charities, public services, even some companies such as Facebook payment and customer are separate. If we start thinking of value as what the customer wants or needs from the providing organizations we can move forward.

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