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Add Environmental Value to Your Value Stream



Who’s the literal downstream recipient of your processes?   St Alban Nuclear Power Station in France. Photo from edf.fr

A factual understanding of what customers value is essential for a company’s survival. In the book, Lean Thinking by Daniel T. Jones and James P. Womack, the first principle of Lean is to have a deep comprehension what customers value. This might seem like common sense, but it’s a place to take care.   It’s very easy to assume we already know what our customers value.  These assumptions are not based on data but on our own experience and what is currently performing in the market.    Disaster has resulted many times over (here’s a recent example) when companies pursue an idea guided by instinct, third-party insights, or shareholder pressure rather than starting with the customer and then working backward.   

Following unproven assumptions means we’re very likely provide features, products, and services that are wrongly considered important and customers feel indifferent about.  If our focus is off, we will be winning battles in an irrelevant war. Producing things (and using up our precious natural resources) that bring value to no one.

Delivering Value = Survival

The same virtue of understanding customer value and the problem of “value assumptions without validation” also apply to organizations wanting to go green.   Understanding customer value is paramount to incorporating sustainability into your business strategy.   

You might be wondering what customers have to do with a CSR problem.  In fact, I’m talking about a different kind of customer.   We must start viewing the environment as a customer with as much seriousness as the economic one who purchases your products and services.  

Who is the customer?  In his book, Run Grow Transform: Integrating Business and Lean IT, Steven Bell provides an uncomplicated answer to this question. “It’s remarkable how some teams can endlessly circle around this seemingly simple question.  So let’s establish one thing clearly:  the only customer that ultimately matters is the one that justifies our existence”.  A company’s goal is to make money, its survival depends on it.   A lean company believes building processes and products around satisfying customers is the key to making money.  A satisfied customer justifies a company’s existence.   However, our value streams have been tailored too short.  We need to expand what we consider the origin and end of our operations to think more systematically.  Industry has taken communities and environments for granted.   They have always provided the basics for survival without a cause for concern until recently.   Beyond justifying a company’s existence, they allow the ability to exist.

Thinking about sustainability from this perspective turns the tables and places the concern for survival on the company.  Given in the book, Cradle to Cradle, the case for sustainability is “let’s not be stupid”. It’s in a company’s own best interest to ensure stability and optimization of supply chains, work force, and customers by ensuring the environment is thriving.  Of course there’s an ethical reason for wanting to become a Green company, but the desire to become Green is far more simplistic (and less debatable) than that.    

In the book Lead with Lean, Michael Balle explains why Toyota has taken such care to minimize its environmental waste, not because they have a soft spot for polar bears, but because it’s simply bad for business, “Toyota is not a company of wide-eyed eco-enthusiasts.   It’s a hard nosed, large, industrial business focused on making a profit – responsibly, but with determination.” Like satisfying a customer to ensure continual sales, keeping the environment healthy ensures operational stability.   It’s a matter of survival.

What’s the Goal: Less Bad or Better

The majority of CSR programs I come across are still viewing sustainability in terms of eco efficiency, or “doing the same thing better” with the goal of inflicting less harm towards the environment by changing as little as possible in their operations.  We must ask the question: which customer are they attempting to satisfy?   It’s questionable that customers would favor a company based solely on their CSR actions. They are surely not thinking about the environment’s definition of value.  

The belief that eco-efficiency is delivering value to the environment is similar to a person reducing their smoking habit to four days instead of seven.  Can we even classify that an improvement for their health?  The situation is still deadly.  Health begins to improve when they stop smoking all together.

There’s something to be said about starting with small, environmental improvements.  Especially when sustainability is a new initiative and you need the quick wins to get team members on board.   But let’s be clear that there is a difference.  These small improvements are not an add-on feature.  They must be pulled by an overarching business strategy that has coupled satisfying environmental value with business success.

If we look again at Toyota, they began to actively pivot their business strategy toward renewable energy and redefining mobility in the 1980s.   They started small, with the concept of the Prius and R&D into a variety of renewable energy options.   Now, hybrids are the fastest growing segment of their business and their hydrogen and wind energy technology are some of the most advanced in the world.   Green is central to their business success.  Even now, they’ve not stopped thinking ahead, envisioning how mobility will look 100 years from now and beyond.  They know more cars are not the answer and are thinking big and about what’s best for the planet.   Because that equates to the survival as a company and prosperity for their future customers and employees.  Perhaps we’ll be saying, “beam me up, Toyota!” in the future.

Discovering the Earth’s Value

Unlike traditional customers, we can’t interview the communities and environments we impact to understand their pain points and how we can solve their problems by delivering value.    However, that doesn’t stop us from asking questions.  We just need to ask them in a scientific way, striving to remove as much of our “assumption” as possible.

The biologist Richard Dawkins said,  “life has no higher purpose than to perpetuate the survival of  DNA”.  With survival as the environment’s primary goal, we can begin to understand its greatest value: nourishment.    Nourishment promotes growth, provides energy, repairs harm, and maintains life.  Often companies talk about “fulfilling” customer’s needs. Nourishing takes the concept a step father.  It’s not just about being happy, it’s about thriving.

To deeply understand customer value, we wouldn’t think twice about going to see our customers face to face to understand their unique needs, desires and ideas.    We need to do this with the environment as well.   We need to see where our waste water ends up, where our landfill trash goes, and the effects of breathing the emissions we are releasing. We need to step outside our factory and office and start with the basics: the soil, the water, the air, and ask: are we nourishing you?  Then we examine our processes and their outputs and we ask, “Are these nourishing to the environment?”   The goal is not to be neutral or to find a way to offset our footprint, or even produce less waste less, but to measure how well the environment is thriving and to continually improve this metric.

Environmental Value is a moving target.  

Starting this exercise will likely be overwhelming. And it will probably feel strange (I completely agree that asking a tree if it’s nourished is weird).   But the trick is to start somewhere.   After asking the question and learning to see where we are nourishing and where we are not nourishing thousands of times the consideration will become a default part of our decision making process.

Very few things in a Lean company are static, and delivered value is no exception.  Another reason we need to continue asking our processes and products this question is because the environment changes as the world changes.   One big, expensive Life Cycle Analysis will not be valid for the next 10 years.   We need an ongoing, consistent relationship with community and nature.

The key word here is “relationship”.  To quote Pascal Dennis, ” Lean is all about connections.  If you don’t care about your downstream customer, you’re sunk.”   The most important customer of all is often times literally downstream.   Let’s ensure they’re not just satisfied, but thriving.

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