In my last post I kicked off my search for the Grand Unified Theory of Legal Value by proposing a simple equation:
Value = Benefit – Investment
In other words, Value is the gap between what you Invest and the Benefit you receive in a particular transaction.
I also suggested that increasing your customer’s* perceived Benefit (and the customer’s perception is all that matters), can have a stronger impact on Value than reducing the customer’s Investment (especially through discounting).
That said, this post will introduce a tool for increasing Value by reducing Investment: Minimize Waste. Learning to identify Waste, and then to reduce it, is probably the best first step any professional can take towards improving his or her Value proposition.
First a quick word about Investment. You probably won’t argue against the idea that a customer Invests more a transaction than just money. At the very least the customer Invests time, energy, and effort on top of any cold hard cash or other resources. On top of that, by investing in one thing the customer loses the opportunity to do other things with that time, energy, effort, and/or resources (opportunity costs).
Without presuming to have an exhaustive list, then, we can begin to define Investment as follows:
Investment = Time + Energy + Effort + Resources + Opportunity
Similarly, you (the service provider) must Invest time, energy, effort, resources, and opportunity into creating products and services that Benefit your customers. The trick is figuring out how to deliver significant Benefit with minimal Investment. An excellent way to do that is to minimize Waste.
As the title of this post says, Waste is Investment that does not generate any Benefit for the customer. In other words, it is Investment that is unnecessary from the customer’s perspective. So how can we lawyers learn to recognize and minimize Waste in our service offerings?
Fortunately, a cornerstone of Lean, including Lean Six Sigma, is the Seven Wastes of Lean. The Japanese term is Muda, literally meaning “futility; uselessness; idleness; superfluity; waste; wastage; wastefulness.” The Seven Wastes, in no particular order, are:
The idea is that the Seven Wastes give voice to specific types of Investment that do not add Benefit to the end product or service. The easiest way to conceptualize the wastes is by putting them in their original context: the factory floor.
Imagine a process for painting frames in a bicycle factory. The frames arrive at the painting process welded together, but they need to be sanded, cleaned, prepped, painted, and dried before they can move on to assembly. Some examples of possible Waste in this workflow are:
- Defects: The paint bubbles, or drips, or has coverage gaps, or otherwise renders the bicycle unmarketable. Making the frames marketable therefore will require additional Time, Effort, and Resources when the job could have been done properly the first time.
- Transportation: The sanding station is in one corner of the shop, then the frames need to be carried to the opposite corner to get a chemical wash, and then they are moved outside to a painting shed for the paint sprayer. Each time a frame is Transported to a new location, Time, Effort, and Energy are being Invested without direct Benefit the customer.
- Waiting: If the painting station is idle, Waiting for work to do, it is an underutilized Resource (as may be the person who operates it). An idle Resource is not adding Benefit, and represents lost Opportunity.
- Inventory: If the frame builders are producing more frames than the paint process can handle, the welded but unpainted frames will build up as Inventory. That inventory has to be put somewhere (using up space Resources) and kept track of (using up Time and Effort), without adding Benefit.
- Motion: Different from Transportation, Motion addresses the movement required to complete a task. If the person doing the sanding has to spend Time and Effort orienting the frame into a vise before she can start sanding, or has to spend Time and Energy walking over to a supply closet to get more sandpaper, this represents Motion Waste.
- Processing: Processing is making a greater Investment than is necessary to achieve the desired Benefit, e.g. Investing beyond the point of diminishing returns. If two coats of paint are sufficient to achieve the benefits of painting (good looks, protection, etc.), then the Time, Effort, and Resources required to apply a third coat would be wasteful Processing.
- Overproduction: As with Inventory, if the welders are building more frames than the painters can paint, then the welders are Overproducing. Their Time and Effort has added potential Benefit to the raw material Resources, but that Benefit cannot be realized until the bicycle is complete. Overproduction therefore represents Investment that has not yet added (and may never add) actual Benefit.
As you can see, identifying and reducing Waste in any of the above situations will reduce the Investment that the bike manufacturer requires to deliver the same customer Benefit. As a result, the overall process will become more Efficient.
Notice that eliminating Waste can improve the overall Value, but does not improve the customer Benefit. Nonetheless, identifying and minimizing Waste can be a great first step in understanding and improving your own value proposition.
In my next post I’ll talk more specifically about Waste in legal workflows. Until then, please send me your questions, comments, or other feedback.
* I intentionally use the term “customer” instead of “client” for reasons I’ll explore in a future post.