Value Innovation: value from the customer’s perspective
We are all customers in some way and we encounter different levels of customer service wherever we go. These days we might encounter a professional “greeter” at the entrance of our neighborhood grocery or we might benefit from extended service hours at our bank. Occasionally we are also delighted to discover a level of product or service that goes beyond our expectations and impresses us.
Somewhere in your work life, you have probably come across a coworker or colleague who just seemed to always “go the extra mile” – to anticipate the needs of customers and do that little bit extra – just a bit more to make the customer happy. You may have even encountered this person treating you as an “internal customer” – someone who could always find ways to improve the way that they “served” you as the next person in the process of your work.
One of the key principles of Lean thinking is to define value from the customer perspective. No matter what product or service you provide, it is the customer who decides how much they are willing to pay for it and it is the customer who decides from whom to make the purchase. It is the responsibility of the people who create value to ensure that their products and services are desirable and attractive enough to keep their customers loyal.
At Toyota, you are taught above all to think “Customer First” and to “place the customer’s interests above all others”. This doesn’t just mean the end-customer – Toyota Employees are also taught that “subsequent processes are also considered customers.”
Part of this approach means that, in the true spirit of continuous improvement, one has to constantly think from the perspective of the customer and find new ways to keep them engaged. Even if your own work activity is far removed from that of the actual end-customer, you are still tasked with knowing how your contribution can deliver quality to the next person in the process and you should be proud of how this effort contributes to the overall creation of value for the end consumer.
Know Your Customer Better Than They Know Themselves
Value Innovation is a methodology for Lean practitioners to learn more deeply about their customer – and how to find new ways to keep them satisfied. Value Innovation focuses our energies on the customer experience. I am certain you are familiar with the expression “the customer is king.” The meaning is clear – our job is to deliver as close as possible what the customer “commands.” In Japan, the expression is “Okyakusama wa Kami-sama” – which means “the customer is God.”
After living in the land of the rising sun for 15 years, and being an “Okyakusama” myself, I can truly say that my definition of “good customer service” has completely changed. In fact, after living in Japan for such a long time, I came to expect superior customer service from the most mundane activities of everyday life, from the fueling up of my car at the gas station, to shopping at the convenience store. This was not confined to just service levels but also to product innovation and so on.
One of the reasons for the uniformly high levels of customer service in Japan is due to the concept of Omotenashi which can be translated to mean “hospitality” in Japanese. The best example of Omotenashi is when the host anticipates the needs of a guest or customer (words which are synonymous in Japan). In other words, the highest level of service is to anticipate the needs of the customer before the customer themselves thinks of them.
However, proper anticipation of the customer’s needs is not done by magic. It is achieved through keen observation and through the implementation of tried and true methods that provide an understanding of the customer so that organizations can ensure their customers feel taken care of and keep coming back for more.
The practice of Value Innovation goes far beyond mere customer service perks. It is a never-ending and rigorous approach to improving customer experience and looking for ways to ultimately know the customer better than they know themselves.
If you and your organization are led by Lean principles, you have to become aware of your customers and how they measure value. You must also get a grasp of what your competitors are doing and how you measure up against them. Therefore the first step in the process of Value Innovation is to benchmark your company against the competition.
Lean Tools for Value Innovation
The act of benchmarking sounds common sense enough, but requires a great deal of effort and research to achieve real success. Finding a true reference point upon which to measure how your business provides value compared to your rivals takes time and a solid methodology to work. Thankfully, the Lean toolbox contains a number of excellent customer-focused approaches to finding out how you stack up against the competition and how you answer the all-important “Voice of the Customer.”
Quality Function Deployment, or QFD is one of those very useful tools. – and has applications that go beyond the scope of today’s topic, but can be used to help you understand true measurable criteria that outdo most common customer survey methods that identify the voice of the customer. By finding out who your competitors are – and who is considered “the best” you can use QFD techniques to actually “grade” your customer service against the top performers.
Another important approach is to actually visit your lead customers – find out who they are and what excites them. What can you learn from them? How does it feel to be your customer? Value Stream map your most important customers’ business – where do you fit in? Are there opportunities that you are missing? Are you really adding better value than your competitors? If you are purely service oriented then ask yourself, how does your service fit into a typical customer’s day?
The value of real Genchi Genbutsu in this respect cannot be underestimated. When mighty Toyota made its first serious foray into the US market with their Toyota Crown car, they failed miserably – the entire enterprise went down as a disaster in Toyota’s history. Why? Because the product that they brought to the United States was designed for the Japanese consumer in Japan – the Toyota Crown was entirely unsuited for American highways. This lesson taught Toyota to do their homework – learn from the Genba and design the product based upon the customer in their local environment.
From an internal customer perspective, cross-training and cross-functional teamwork offers employees a wonderful opportunity to understand the perspective of the next person in the process – it also offers you a chance to be more “service-oriented” towards your internal customers.
Kano Modeling Technique
Another extremely useful technique is to employ Value Innovation Mapping and to employ something called the Kano modeling technique. Essentially, once you have mapped out a particular value stream (which means you map out all the essential steps you take to bring a product or service to your customer), you then map out the customer experience (both external and internal) through customer touchpoints and actual customer experience.
Kano modeling allows us to look carefully at the kind of product and service attributes that truly resonate with customers as compared with those that customers simply expect to be there. With the Kano model, one can gain vital insight into product and service attributes that are potentially far beyond a customer’s “basic needs” – ones that have the potential to delight.
Truly “being the customer”, learning from the Gemba, Value Innovation Mapping and utilizing Kano modeling as a way to hearing the hallowed Voice of the Customer are essential methods to be used if you are trying to follow the principle of defining value from the perspective of the customer.
And as any student of the Kano model will tell you, over time, what were once customer delight or “WOW” factors become the new “must haves” – which of course means you’ve got to constantly innovate in order to be world-class. As ever, value is defined by the customer and the pursuit of perfection is a never-ending road!