I was in a marketing class when I had a transformative experience; we were introduced to a new idea that jolted a deep rooted faith. It unfolded like this; we were discussing “what is Value Add?” and several of us spoke about our understanding but the final conclusion was that “Value Addition” is activities for which client is willing to pay. And it had a very important corollary, Non-Value Adding activities are those activities for which client is NOT willing to pay.
My earlier philosophy was that a company must do what it believes is required– irrespective of whether the client is willing to pay for it or not. I believed that cost of such activities for which client is not willing to pay for should be added on top of the cost of activities for which the client is willing to pay for. However after paradigm shift, I started believing that non value added activates should be at best be eliminated!
Steve Jobs once famously quoted “When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.” But this quote didn’t have any meaning for me.
A few days back, I was at a very famous 5 star hotel for my holidays. My family and I were awestruck at the beauty of the hotel – the architecture was phenomenal. On the last night of our stay, we invited our relatives for dinner and we were thoroughly impressed by the hospitality and comforts. After a sumptuous dinner; my wife and I walked our guests to their bike. We had a good walk until we reached the basement – When we reached the car park we realised it was a different world! It was at best shabby. Then we walked to the bike parking and the situation worsened – it had instructions all around – parking at owner’s risk, don’t leave helmet on the bike etc… We felt bad that such a beautiful hotel had such a bad basement. It was dirty, no paint … plain ugly! It hit us more badly when we realised this parking was mainly for the employees who took such good care of us! It also made our guests go to a place so bad before they could get to the restaurant.
I felt why did the hotel leave the place so bad? I stumbled upon the fact that normally clients never get to this place! We never had before! We left our cars to chauffers for parking!
What do MOST clients pay for? Food, beautiful rooms and corridors, hospitality… Those are all top class! Who cares about comfort of the employees and their parking? So it becomes a “Non-Value Adding” activity and cost.