Lean Value Proposition by Walter McIntyre

The basic Lean and business value proposition in looks like this:

Profit = Perceived Value – Inherent Value

Lean process improvement projects address the Inherent Value piece of this equation. The idea is to reduce the inherent cost of production and delivery of the product or service. A common mistake that teams make is to assume that inherent value issues are not customer driven. This is a case of being inwardly focused instead of a more balanced focus (inward and customer driven).

The trick is for the Lean team to investigate the down stream and upstream impacts of any proposed changes to the business process(s). Then check those expected impacts against critical to quality concerns of the various process customers.

Remember that all processes in a business touch each other in some way.  If a change is made in one, there will be impacts elsewhere. Don’t be a victim of sub-optimization, by way of process improvement.