Failure demand vs Value Demand
Is churn created by “Failure Demand” impacting how you deliver value?
A work system has a certain amount of capacity. Capacity that can be spent productively in value creation for the organisation, or wasted on non-value add work. This is a concept explored through lean/ six sigma methods with a value stream map highlighting business value added work and non value added work.
A similar concept I recently came across is that of Failure Demand. This is
demand caused by a failure to do something or do something right for the customer. Customers come back, making further demands, unnecessarily consuming the organisation’s resources because the service they receive is ineffective. (Vangaurd)
So much of our day to day work in the professional environment is a self inflicted systems failure that results in some form of additional effort or re-work.
Writes Andes Kjoller and Niels Westergaard Rasmussen
Working to reduce failure demand is essentially about shifting the effort made in the organisation further towards value demand (what the customer really wants) and away from failure demand (something the organisation has inflicted on its customers/ users).
This concept forms the backbone of the Total Quality Movement. Through unrelenting focus on quality, the business will eliminate forms of waste, delivering both improved quality to customers, at a lower unit cost. Ironically by taking the extra time and focusing on getting it right the first time, the overall product delivery is sped up. This further enhances business profitability by providing options to increase unit production.
As highlighted in a recent post on the Toyota Production System, failure demand is a symptom of the system. Unless you change the system, you will not find success in addressing and reducing this waste. Toyota famously achieved this by making it everyone's job to deliver quality to the customer, demanding that their workers would not knowingly pass a quality issue down the line. They then provided support systems and training for every employee to be able to identify problems, immediately stop the work to understand and resolve the issue and root cause, and provide a help structure through leadership to assist rapidly as required.
It can be often tempting to push work out the door, assuming that getting a job done quickly, to a lower quality might be all that is needed. This is especially true in silo’d organisations where the failure demand generated from one system is hidden by boundaries into another system. It takes a system wide view and leadership to understand that the whole organisation needs to work together to deliver value and that sub optimising individual departments or teams might not be beneficial to the overall business.
Profitability comes through using the available resources as efficiently as possible. This means finding and eliminating Failure Demand. This is achieved by:
- Building time and space and slack into a workspace,
- quality training of people,
- a well defined help chain when required and
- demanding the focus of people to deliver the expected quality
Reducing failure demand ends up as a win for the business, your employees and your customers!
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