Seek value, not quantity

For my Quality Management course at the university, the professor used a restaurant’s business model to explain the concept of value stream mapping. According to him, value for the customer would come from reduction in the overall cycle time – From the time the order is placed to the time the customer gets the food on the table to the time the customer pays the bill and leaves. He argued that it was a win-win situation since the customer’s hunger is satisfied and the restaurant is able to maximise the potential of a limited resource i.e. seating area.

Now although it sounded logical, I did not completely agree with it simply because I have been in the customer’s shoes. The logic above would be true if hunger was my sole motivation. However, I have been to restaurants to have an evening out & spend some quality time with girlfriend/family/friends. I would have actually been annoyed at a rapid fire quick service because it would have given me lesser time to soak in the ambience, speak to people, sip my drinks and have a relaxing time. On an evening out, I would rather have the restaurant focus on catering to my needs rather than focus on getting me out of the door.

So how does the restaurant make money off me given that my longer stay at the table has reduced the total footfall ? There is another metric in the restaurant business called the ARPU – Average revenue per user. To balance the reduced footfall, restaurants maximise the average revenue earned per customer. This is achieved through consultative selling of higher margin products such as wines and desserts.

Now lets tie this back to the software development process. Stories, in the context of lean, often get treated as inventory and cycle time is defined as getting a story from definition to development. There is a focus on reduction of this cycle time because it maximises the number of stories that can be delivered. However, it would be foolish to believe that more stories delivered is the same as more value delivered.

Customers seeking to build custom software applications are often unclear about what they really need. They often go along paths which yield them wrong results. They often break their own model and come back to square one. Ultimately, they learn enough to know what they really need . It is these really valuable stories that finally get delivered. It may take them longer to get there and wasted effort may occur along the way, but the end result is far more satisfying and valuable. The more time and chance the customer has to discover what they need, the more valuable the end product is for them.

Its more important to focus on maximising business value delivered, not more stories.

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4 Responses

  1. I agree completely. But I think you can pursue both paths. Give the business quality through helping them discover what they need or how to get what they know they need. But while you are doing that also work to quickly deliver what has been asked for. As long as deliveries are not chunked too big everyone is happy.

    So don’t focus on creating alot of cards to deliver, but do focus on delivering what they need, quickly.

    This assumes that plans are sufficiently short enough or flexible enough that changes in the business goals don’t get queued up behind previously scheduled deliveries that are now less valueable.

  2. I agree with you. The point I am emphasizing is that cycle time is not the most important metric – business value & customer satisfaction is.

    Of course, if you know what you are going to build, emphasis should shift to increasing productivity and turnaround time, but not at the cost of figuring out what the customer really wants.

    regards,
    Prashant

  3. Hi Prashant,

    I reached your blog hopping thoughtworks blogs.
    One thing relevant to this post is as below.

    I visited Israel for client handover. In a restaurant, there were 2 rates – one to eat here & one to take out. Take out was a little less than eating there.

    I asked my colleague, what is the reason for such a thing?
    He said, in the lunch period, lot of people come to eat out & there is no place left to eat. So, people who want to sit in there, pay a little more. Others who don’t want to pay a little more, take it with them.

    This way, it had some space available when new people come in to eat. And, they get the choice of whether they would like to eat there or carry.

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    write me here preonrelt@mail.ru

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