Lean describes waste as anything that happens in a company that a customer would not want to pay for,” explains Mike Jagger, CEO of Vancouver, Canada-based Provident Security. “So our first initiative was to divide all of our costs into two columns: things that add value to our clients and things that don’t.
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One of the things that a company can control in any market is operational excellence by
removing waste in a system,” notes Jeff Booth, co-founder and CEO of BuildDirect. In doing so, Booth has dramatically sped up the time it takes to get a new vendor up on his building materials website.
Owners like Gary choose to spend money every day to grow their businesses. However, sometimes they are actually spending their hard-earned money to cover management-influenced waste (read that again).
That was a difficult time for me. I love building businesses, not disassembling them. However, we all have an opportunity to learn in everything we do. I came away from this experience with a profound appreciation of the importance of cash in corporate performance—“free cash flow” as the single most important measure of corporate soundness and performance.
The good news (figure 1-9) here is that you have an advantage, but you're getting no return on it. We call it a waste wedge. You're investing in service features that your customers don't truly value, and it's not translating into profitability or market share. Your decision point: shift resources to attributes your customers value more, or get customers to care more about the things in which you excel. For example, our tap water was fine until bottled water made us want to drink from an obscure Swiss spring.
The good news (figure 1-9) here is that you have an advantage, but you're getting no return on it. We call it a waste wedge. You're investing in service features that your customers don't truly value, and it's not translating into profitability or market share. Your decision point: shift resources to attributes your customers value more, or get customers to care more about the things in which you excel. For example, our tap water was fine until bottled water made us want to drink from an obscure Swiss spring.