A central tenet of lean thinking is delivering value to our customer. However, there are two problems in how this long-standing belief has been practiced. First, it is stated as a principle yet it is not backed up by deliberate actions and systems. We eliminate waste we perceive doesn't deliver value, but that's not the same as increasing the value delivered. Second, many people do not directly touch the work that delivers value to the customer. We may say we work on behalf of the customer's interests, but that isn't the same as directly delivering value to the customer. Our customer is often an internal customer, someone who depends on our output for them to do their work. But whether your direct customer is external or internal, most of the same fundamentals of delivering value apply.
Why does this focus on customer value matter? It should define how you design, manage and improve your work. It helps when you don't make the customer an abstract concept, such as a whole portion of the organization. When you say your customer is a factory, or a business unit, or all employees, then their needs remain abstract, the feedback remains buried, and specific value remains undefined. You should be able to look your customer in the eye. While there certainly is often more than one person, it should still be definable.
Why is it so important that you define specific value? Because all of your work, all of it, would fall into one of the following categories: value provided to your customer, necessary administrative work to keep the wheels turning, investment in process or personal improvement, or waste. If you don't define your value, you don't know what parts of your work fall into what category. Where do you focus your improvements? What do you invest in or cut? Without a clear understanding of what specific work is of value, you cannot make informed decisions.
What happens when you don't design your work around value? An extreme example is Kodak. Some companies fail because there is some technological obsolescence, yet Kodak cannot claim this because they invented the digital camera. Some companies fail because they lack critical information or insight in the marketplace. Kodak predicted when each market segment would switch from film to digital with amazing accuracy. They had everything needed to be successful and yet failed. Their actions were not in line with their customers' needs. They focused their energies on making film cheaper, instead of how to meet the needs of customers through digital solutions. Knowing what customers want is only a portion of the challenge. You must audit your activities to determine if they are aligned with those needs.
To accomplish this, you still must start with understanding customer needs. The most obvious answer is to ask, but this approach implies the customer (internal or external) clearly understands their needs. For example, the internal IT department will often rely heavily on their internal customers telling them what is needed. However, even if IT gives someone exactly what they ask for but it doesn't actually solve their problem, then IT is still blamed. The point is, if you want to serve your customers, you must understand their needs even better than they do.
How do you understand their needs without just asking them? The skill of direct observation helps you see and understand work in its true form without bias. Direct observation is about learning why things work the way they work. A simple version is getting people within the process together, including customers and suppliers, to process map their current state. I've been through this countless times, and more often than not there is a moment where someone shouts out "that's why I do what I do." They see, for the first time, the needs of their customer and how their work relates to those needs. Even without changing the work, the insight gained regarding your customer's real, everyday work will lead to small nuanced improvements in serving their needs.