Systems Processes Value Waste

by Stephen
(Wellington)

It seems that there are as many definitions of these things as there are people on the planet so I thought it might be instructive to lay out our thoughts on the matter.

Systems

Your organisation is a system in that it is made up of many interdependent parts, be they physical assets, people, IT systems, or that elusive thing called intellectual capital, most of which leaves each day with your people.

There are many, many books on systems theory which we will not address here except to say that a system is only as effective as its management. That is, just because you have a system does not mean that it will automatically add value.

Processes

Because we base all our work on a process-view we maintain that your system creates value through its processes.

Organisationally this means that your processes are your contact points with your customers so it is only through your processes that you can

a) understand what your customers really want, and
b) deliver that.

Your processes effectively become the means of managing your system.

Value

Again there is much written on the subject of value so we'll keep it simple.

For service organisations the only person who can define the value created by your organisational system and its processes is your customer. So there is little point in defining the value you add if you've never spoken to your customer.

This does touch on two important theories. The Labour Theory of Value which is essentially Marxist and the Subjective Theory of Value which comes from the Austrian School of Economics. A book worth reading on these is Ronald Baker's "Pricing on Purpose"

Waste

Despite all the books on the Toyota Production System, Lean and Six Sigma, there is still a misunderstanding of waste in service organisations.

Service waste is anything you do that adds no value for your customer. It's as simple as that. And conducting a "waste audit" is equally simple. For everything you see in your processes and system, just ask "how does this contribute to the value we create for our customer?"