kts value discussion at six sigma ug meeting

What does Value mean to your customers and how can you quantify it?

ISSSC Six Sigma User Group MeetingJune 10, 2010

What is VALUE?• VALUE: 1) a fair return or equivalent in goods, services, or money for

something exchanged. 2) the monetary worth of something: market price. 3) relative worth, utility, or importance <a good value at the price> <the value of base stealing in baseball> <had nothing of value to say>.

Merriam-Webster

• “Value means that someone is willing to pay more for something or is willing to make a change if he can’t get it with the current relationship”

The Profit Zone by Adrian Slywotzky

• “Value is what people perceive it to be, and nothing more”The E-Myth Revisited by Michael E. Gerber

What is VALUE?

• Value is governed by two forces– Desire: Essential to Unwanted

– Distinction: Unique to Generic• Value is delivered in the form of products, services or information to solve customer’s problems

• We must look at value from the customer’s perspective

Who is my Customer?

• External Customer• Internal Customer• Intermediate Customer• Ultimate Customer

Exercise

• Break into groups and discuss the following questions.

• What does VALUE mean to your Customers?

• How can we quantify the VALUE?

What is VALUE to my Customers?

• “It solves my problem at a reasonable price”– Solve relevant problems

• “It’s easy!”–Make it easier for them to do business with me

How do we get to specifics?

• Spend time with the customer.

• Just listening is not enough.–We must observe what they are doing and how they are doing it.

– In mfg, this means spending time with operators – the people doing the actual work.

No Longer Enough…

“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”-Theodore Levitt

IDENTIFYING OPPORTUNITIES

Scoring Opportunities, i.e. Problems

• Identify Jobs, Outcomes & Constraints– Problems that have been identified from customer inputs– Score problems (opportunities) based on Importance &

Satisfaction• Outcome-Driven Innovation Process

Source: What Customer’s Want by Tony Ulwick

Identifying Opportunities

Source: What Customer’s Want by Tony Ulwick

Scoring Opportunities, i.e. Solutions

• Products & Service Opportunities– Score based on Fit, Feasibility & Attractiveness– FIT is scored based on alignment with the organization & the capabilities and capacity

– Feasibility is scored based on the ability to identify and manage technical and commercial risk

– Attractiveness scored based on overall financial expectations of the opportunity

Discover VALUE, the process

A Map of VALUE

From “A New Definition of Value and a Revolution in Price Theory”www.endleofon.com

Recommended Reading• What Customers Want, Using Outcome-Driven Innovation to Create

Breakthrough Products and Services Anthony W. Ulwick

• Fast Innovation, Achieving superior differentiation, speed to market, and increased profitability

Michael L. George

• Sales and Marketing The Six Sigma WayMichael J. Webb

• Delivering Profitable Value, A revolutionary framework to accelerate growth, generate wealth, and rediscover the heart of business

Michael J. Lanning

• The E-Myth Revisited, Why Most Small Businesses Don't Work and What to Do About It

Michael E. Gerber

• Blue Ocean Strategy, How to Create Uncontested Market Space and Make the Competition Irrelevant

W. Chan Kim & Renée Maubourgne

About KTS Marketing Solutions

Managing Partner, Tim DeRosett has 20 years experience in marketing, business development, and sales within industrial automation and high-technology companies.

With experience in LEAN and Six Sigma methodologies, we bring process improvement to marketing, sales and service.

We help high-tech business-to-business companies realize growth and increase share-holder value.

Thank YouTim DeRosett

Managing PartnerKTS Marketing Solutions, LLC

8216 Princeton-Glendale Road, #160West Chester, OH 45069513.407.4908, office

tderosett@ktsmarketing.comwww.ktsmarketing.com

Connect with us on LinkedInwww.LinkedIn.com/TimDeRosett

Also join the Discover, Develop Deliver Value LinkedIn Group.

Robotics Industries Association Memberwww.roboticsonline.com

kts value discussion at six sigma ug meeting

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