Value & Cost - What Are We Working Toward?

Sharing a thought-provoking quote today from Eliyahu Goldratt: "The problem with a cost reduction strategy is that there is a finite limit. You can only get to zero."

I find it valuable to reflect on quotes like this and apply them to my understanding, allowing them to influence my perspective. One interpretation I have is the common organizational mindset of asking, "How much cost can we take out of that?" This mindset reveals its own limitations, as the answer is "at most, all of it."

Conversely, when we ask, "How much value can we create in that process?" the ceiling disappears. A strategy focused solely on reducing costs without creating value is inherently limited.

Our customers need us to create value for them. During this process (and it is sometimes very difficult), we create processes and bill them for actions that they would rather we wouldn't spend our time doing.

When we view the customer in the right way, it should cause an appreciation of their time and money to be in view of our own operations. When we have employee surveys that are favorable, but customer surveys that are unfavorable, this might be an indicator to aim differently.

When the customer communicates to us that they are dissatisfied, and it means little to our organizations, we are on our way to becoming extinct. Some organizations have deep pockets, and can last for a while, but the beginning of that end can be traced to have originated here.

I've often observed organizations removing value in the pursuit of cost reduction, which negatively impacts both aspects.

It is important that we build cultures that can clearly see & identify wastes. We should build a culture that responds to problems quickly and correctly, but in all of this motion and action, let us not miss the importance of being able to identify value.

When we become great at identifying waste and value, our decisions will become more effective for our customer.

A question for us today: Look around at your current organization. When faced with challenges, do we prioritize "reducing costs," or do we take the time to identify "missing value" as well?