OK – I know what you’re thinking. The headline doesn’t seem to make much sense, but let me explain.
When companies are trying to improve, then in many cases the thinking is about delivering a better product or service. Adding some features, design, delivery, etc. While it’s useful and necessary to work on the functions and features, it’s probably the second or third layer of the actions which you can and should do. There’s a more fundamental way to think about improvement.
Here’s what I mean: Getting better is not getting better at what you do, but having more time to do what your client wants you to do, what you are good at doing. While it sounds simple, it’s actually quite a profound way to think about improvement. It means that you have to dig into the company processes and how people in the organization spend their time. We can split the spent time into three categories of activities:
- Value-add activities;
- Value-enabling activities;
- Non-value add activities.
The goal is to find out the ways how to create more value – add activities every single day. Meaning, finding more time to perform value-adding activities. There are also fewer costs if this happens, as there’s less unproductive time spent by capable people. Better processes mean fewer costs.
Valuable activities in your business
Value is doing the job that the client hired you to do and doing it better than expected. Solving the client’s problem they did not know you can solve. You need to know the problems of the clients better than they do. This is where you need to spend your time. So, here’s the takeaway: Keep the surgeon in the surgery room. Keep the employee creating value. The surgeon will not search for tools. Your processes have to be built in a way that you are occupied with the value-add activities, whichever it is in your business. It can be software development, consulting, or something else. If doing your own accounting doesn’t benefit the client, then you shouldn’t spend your time doing accounting. This is a non-value add activity for you.
The question you should ask from yourself: Do I clearly know what is the value-add in my business? If you do this constantly, and you constantly ask what are your customer problems and you keep finding solutions, you will always be top of the game. Once you don’t concentrate on your customer problems, your strengths might become your liabilities (read the Blackberry story).
First, value add – how much time is spent on value adding activities? 20%? 30%? 20% is actually a good result. Improvement work has to be done to get this number higher, but it’s not bad. The higher the percentage is, the more output you have. List down the value-adding activities. Is it consulting the clients, sales meetings, product development or something else? The value is usually reflected in the amount of money the activity produces – now or in the future. How much time do you spend on the value-adding activities percentage wise?
Second, value enable activities – what is needed for you (or other people in the organization) to be able to perform value add activities? For example, activities like good customer service enable you to add value, but they don’t exactly add value to the client or the desired result by itself. Don’t get me wrong. Good customer service can be a selling point for the company, but this is not the final product or outcome what the client is after. How much time do you spend on value-enable activities? Write down the activities which are value enablers and how much time they take from you.
Third, non-value add activities. How much time does it take for you to buy, for example, construction tools from the shop, if you’re a construction company owner? How much time does it take for you to send accounting materials to the bookkeeper? These processes do not add any value to the client. Of course, it is part of the business, but it does not add much of a value and should be delegated as much as possible.
What to do next:
- Make a check-list of value-add activities in your business.
- Make a checklist of processes for each activity so you can become more productive.
When you look at your own schedule or the activities of your staff, then ask: What’s preventing them from spending more time on value-add activities. What is preventing me? If the main value-add in your business is creating killer marketing campaigns, then you need to figure out what is preventing you from spending more time on creating killer marketing campaigns.
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Comistar provides business, legal and tax support for e-residency companies. Our core focus is on Fintech licensing, e-commerce companies, blockchain industry and affiliate marketers. We’ve been operating for over 5 years and have helped more than 300 companies to get started in Estonia.