As Your Customer’s Definition of Value Evolves, So Must Yours

In the days leading up to May 25, 2020 (the date George Floyd was murdered), lean thinkers were conducting their business the same way they have since Womack and Jones coined the term “lean” in 1990. Among the activities was rounding up the usual suspects — Taichi Ohno’s seven wastes: overproduction, waiting, conveyance, processing, inventory, motion, and correction. Most lean thinkers have gotten to know these wastes well over the years, and they remain relevant in 2021. However, in the wake of that day and the racial reckoning that continues unfolding in America, customers’ notions of value are evolving. Therefore, lean practitioners must take a step back and ensure they’ve taken this into account when specifying value from the customer’s perspective, which is the first principle of lean thinking and practice.

Traditionally, the lean thinking community defines value as the inherent worth of a product or service as judged by the customer; that is, what the customer is willing to pay for: activities that change the shape of materials into finished products, actions that advance the customer toward their desired outcome, or tasks that move the product or service one step closer to being received by the customer, shortening the cash-to-cash cycle. However, when applying the first principle, organizations must also consider that customers have become more sophisticated and socially responsible since the 1990s. For example, frequently, customers insist that businesses do more to implement lasting racial equity in company cultures. In other words, the way that customers think about value has evolved to reflect what is important to them at this current moment, including social equity. Later, we will look at the recent case of Nikole Hannah-Jones for additional perspective on this point.

Understanding What Your Customers Value

I recall a quote from the book Learning to See by Rother and Shook: “Whenever there is a product for a customer, there is a value stream. The challenge lies in seeing it.” This statement presupposes that before you can see the value stream, the step-by-step process you go through to serve your customer, you are, first and foremost, able to see your customer. This recognition reminds us of our purpose: to serve our customers with empathy and “respect for people,” aiming to do so with as little waste as possible and committing to improving and reducing wastes over time. 

Before you and your team learn to see the value stream, it is essential to take a deeper look at your internal customers (employees) and external customers (consumers and those who pay for your products and services). Do you see, appreciate, and welcome what makes them unique? Do you recognize and value their individuality, diverse backgrounds, and perspectives? Your ability to see your whole customer and the diverse makeup of your customers, including their uniquenesses, can be a source of insight that you can leverage to enhance long-term learning and performance. By deeply understanding your customer, you will better serve their needs and create a climate where they can thrive. Such an environment conveys a sense of belonging that translates to value for customers.

However, if your customers do not experience belongingness — where they feel valued for their uniqueness and wholly seen and heard by your organization — they will do what customers do when an organization fails to deliver what they value. They will leave you and go elsewhere. 

Many of your customers, especially your internal ones, have reached a point of being, to quote the civil rights activist Fannie Lou Hamer, “Sick and tired of being sick and tired” of being devalued and not seen. Their patience has worn thin. One has to look no further than today’s headlines to learn the consequences for not truly seeing the customer and the value they possess and create.

Examining a Case Study

For example, look at the recent debacle involving Nikole Hannah-Jones, Pulitzer Prize-winning reporter for The New York Times Magazine, and her alma mater, the University of North Carolina (UNC) Chapel Hill, the nation’s first public university. I cite this as an example only, not to join the political fray or malign a university from the state where I was born and raised. The internal customer in this scenario is Hannah-Jones. The external customers are the UNC-Chapel Hill journalism students, alumni, and the North Carolina community. The undeniable value Hannah-Jones provides is unbound, globally recognized, and includes the following (to name a few): 

• Over 20 years of journalism experience and passion for training aspiring journalists
• 52,800 Instagram followers (and counting)
• Polk and Peabody Awards
• Pulitzer Prize winner for journalism
• MacArthur “Genius Grant” Fellow
• Creator of the landmark The 1619 Project
• North Carolina Media Hall of Fame inductee 
• Knight Chair in Race and Investigative Reporting – funded by the Knight Foundation to provide knowledge, training, historical understanding, and depth of reporting to cover the changing country and its challenges
• American Academy of Arts and Sciences electee – one of the top honors a writer may achieve in America
• Cofounder of the Ida B. Wells Society for Investigative Reporting, a training and mentorship organization dedicated to increasing the ranks of investigative reporters of color
• $15 million for the Center for Journalism and Democracy, with the generous grants from the Ford, Knight, and MacArthur foundations to train aspiring journalists to cover the crisis of our democracy and bolstering journalism programs at historically Black colleges and universities across the country

Here is a little background for those lean thinkers who did not follow this highly publicized story: Despite Hannah-Jones’ long list of accomplishments — and the value she would have brought to the university — the UNC-Chapel Hill board of trustees rejected the faculty and administration’s recommendation to grant her tenure. This action was unprecedented, as all the previous Knight Chairs at the university, who were white, were appointed with tenure. Hannah-Jones, who is Black, was offered a five-year term without tenure. Only after the board’s decision went viral, becoming a national scandal, did the board finally — begrudgingly — offer Hannah-Jones tenure.

Why would any organization not show respect for such a highly acclaimed and deserving value creator as Hannah-Jones? Her treatment would be equivalent to the Shingo Academy refusing to consider the nomination of individuals of color with distinguished careers in organizational excellence. Imagine it not honoring influential leaders like Masaaki Imai, chairman, Kaizen Institute of Japan; Hajime Ohba, vice president and general manager, Toyota Motor Manufacturing, N.A.; or Ritsuo Shingo, president, Institute of Management Improvement!

I think the UNC staff members’ signed statement got the answer right: “It was racist.” I would add that they failed to define the value Hannah-Jones provides from the perspective of their customers.

Summing up the Outcome

Who ultimately loses in this value proposition gone wrong? Everyone. The internal and external customers and, especially, the organization whose leaders failed to “see” and understand their customers’ new expectations and definition of value.

Hannah-Jones, the internal customer, chose to leave UNC-Chapel Hill, in turn depriving its external customers, its students and community, of the value they expect and that she is uniquely qualified to deliver. Also, UNC-Chapel Hill lost to a competitor the ability to offer that value to its customers:  Howard University, a historically Black college and university (HBCU), where she and the value she brings will be allowed to flourish.

In a statement on her decision to decline the delayed tenure offer from UNC-Chapel Hill, Hannah-Jones wrote: 

Internal customers, your employees, who are offering value that your external customers are demanding should not have to force their way in; you should welcome them into your value stream. That means removing all barriers to its flow, including discrimination. 

Internal and external customers (students, faculty, alumni, community, etc.) and prospective customers (high value-adding recruits) find the treatment of such a highly acclaimed value-creator such as Hannah-Jones hard to swallow. If an organization so badly mistreats its high-profile internal customers of color, then the rank and file should be very concerned. Some are choosing to leave, while others are declining offers to come. According to UNC-Chapel Hill History Professor William Sturkey, “It’s a domino effect. We’re just beginning to see it,” he said. “I think probably 90% of Black and non-white faculty right now, they are probably looking at their other options. That may be a conservative estimate.” 

Not understanding that your customer’s definition of value has evolved can come at a high cost. If you don’t believe that your customers’ definition of value changed after May 25, 2020 — the backroom deals and lack of transparency that produces and normalizes racial inequity is unacceptable — then you too may have to learn the hard way. As author and noted social philosopher Eric Hoffer cautions: “In a world of change, the learners shall inherit the earth, while the learned shall find themselves perfectly suited for a world that no longer exists.” So, let’s be lean learners regarding the customer’s definition of value and not the latter.