The reason all owners are in business should be primarily to create value for themselves. The way they create value for themselves is by creating value for customers. One way to do that is by productivity acceleration. Productivity is accelerated by understanding non-value-added activities and stop doing them. That frees up a tremendous quantity of resources, time, cash, and physical space to focus on delivering customer value. This is a deep dive continuation with Sean Hutchinson, CEO/Partner with SVA Value Accelerators and Alistair Stewart, the Manufacturing Practice Leader, also with SVA Value Accelerators. This continuation is where we’re going to dig deeper and talk about productivity acceleration.

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Productivity Acceleration Detailed with CEO/Partner Sean Hutchinson and Alistair Stewart SVA Value Accelerators

Creating The Path To Higher Valuation with CEO/Partner Sean Hutchinson and Alistair Stewart

This is a deep dive continuation with Sean Hutchinson, CEO/Partner with http://buildvaluetoday.com/ (SVA Value Accelerators) and Alistair Stewart, the Manufacturing Practice Leader, also with SVA Value Accelerators. This continuation of the episode is where we’re going to dig deeper and talk about productivity acceleration. I appreciate it. Thanks so much for taking the time.

Thanks. It’s great to be with you.

Let’s talk a little bit about what productivity acceleration is. We can think about productivity as the effectiveness of the productive effort. It’s measured by the rate of output per unit. What does accelerating mean? That means making it happen quicker. The reason all owners are in business should be primarily to create value for themselves. The way they create value for themselves is by creating value for customers.

Here’s an example. Imagine that an owner staples a new order to their back, the next customer order…every time they shake somebody’s hand, every time they meet somebody, every time they wait for somebody, every time they wait for something, every time something has to go back to be redone, checking and rechecking all those activities, are what we call “non-value-added” steps. If you start to look at the operations of a typical company, and most owners are going to be shocked if they are reading this for the first time, about 95% of all activities do not create customer value.

To create customer value, an activity has to pass a classic three-part test. An activity, has to be done right the first time; It has to change the form fit or function if it’s a tangible product or has to deliver a service that otherwise wouldn’t happen or it has to convert data into information or knowledge, changing the form fit or function of something.

The last and best of the three parts of the acid test is the customer must be willing to pay for it. Again, imagine a hypothetical owner stapling him or herself to an order that halfway through that order has to go back to the preceding step because we are missing some information. We’re not exactly sure if the customer wanted it in blue or in black. We go back and we find that the sales guy wrote down B in the color box. That was all non-value-added activity. We’re going to break that out as a line item on the invoice to the customer. Checking what color you ordered. You told us loud and clear what color you ordered. We didn’t understand. We didn’t write it down. We didn’t record it. No customer is going to pay that. All of these little activities that are pervasive in every organization are death by a thousand cuts, and productivity is hurt..

Productivity is accelerated by understanding non-value-added activities and stopping doing them. That frees up a tremendous quantity of resources, time, cash and physical space to focus on delivering cus...