A Look at “Create Value for the Customer” and the Results Dimension

A Look at “Create Value for the Customer” and the Results Dimension

by Ken Snyder

“Create Value for the Customer” is one of the Shingo Guiding Principles in the Results dimension of the Shingo Model. In the current Model, it is the only principle in this dimension. Within the Shingo Model, our working definition of this principle is:

“Ultimately, value must be defined through the lens of what a customer wants and is willing to pay for. Organizations that fail to deliver both effectively and efficiently on this most fundamental outcome cannot be sustained over the long-term.”[1]

The working definition of the Results dimension is:

“Great results are the outcome of following the principles that govern the results. The closer one emulates ideal behaviors, the closer they are to achieving enterprise excellence – consistently delivering ideal results to all stakeholders.”[2]

Common Misunderstandings

In teaching this dimension and principle, we usually experience some common problems, such as:

  • Who is the Customer? This is the most common question. Is the customer limited to the current buyer of the product or service? How about future buyers? What about buyers of future products? These questions are often expanded in other ways, too – How about the shareholders of the organization? How about the employees? – Shouldn’t the organization be creating value for them as well? What about the community? Or even the regulators? The list continues.
  • Equal? Since there is just one principle in this dimension, are the two equal?
  • Other Dimension Results? Another common question is whether or not the results that directly impact the customer are truly the results that matter? Shouldn’t results focused on other dimensions also be tracked?
  • KPIs and not KBIs. The singular link between “Create Value for the Customer” and “Results” also leads to the unfortunate conclusion that the results that matter are the outward-looking, customer-centric Key Performance Indicators (KPIs). This confusion happens despite Go & Observe activities, focused on behaviors, where the primary purpose is to observe Key Behavioral Indicators (KBIs). This confusion seems to be re-enforced by the graphic image used in the Model that places “Results” at the top of the pyramid.

Suggestions Regarding “Create Value for the Customer”

Various people have suggested rewording this principle to address the problem of “Who is the customer?” Two suggestions are worth noting:

  • “Create Value for All Stakeholders.” This suggestion recognizes the fact that various stakeholders derive value from organizations. We have already recognized this and have included this as a topic in our current training curriculum. However, this has the potential of diluting the importance of focusing on the paying Many Shingo Prize applicants report that as they focus on providing value to the paying customer, they maximize value creation for shareholders, provide a meaningful place to work for employees, and easily meet regulatory requirements. Based on these many reports, the most effective way to create value for all stakeholders seems to be to focus on the paying customer.
  • “Create Value for All Customers.” This suggestion is an attempt to introduce the need to create value for all stakeholders, while not diluting the necessary focus on the paying

We are persuaded by the suggestion that the organization needs to create value for all stakeholders, while not diluting the necessary focus on the paying customer, and support the slight change to the wording of this principle to “Create Value for All Customers.”

Suggestion Regarding “Results”

Results must be measured in all dimensions with regard to all of the Shingo principles in the Model. A suggestion to ensure this focus is to eliminate “Results” as a dimension and to infuse “Results” into the other three dimensions and into every principle. A conjoined suggestion is that a clear emphasis be placed on KBIs. The reasoning is that KBIs (i.e., leading indicators) drive KPIs (i.e., lagging indicators). KPIs are measured only to ensure that the KBIs are actually driving the ideal results. We find this suggestion very reasonable because it addresses the question about the principle and the dimension being equal, it resolves the question about results in other dimensions, and it places the focus on KBIs.

If “Results” is eliminated as a dimension and infused into all the dimensions and principles, it raises the question of where should the principle “Create Value for All Customers” go? We are persuaded by the suggestion that this principle is about the “whole” organization “aligning” around a “common purpose” of creating value for all customers. It is only reasonable, therefore, that this principle be included in the Enterprise Alignment dimension.

[1] Shingo Model handbook, 2019

[2] ibid

2 Responses

  1. Ken E. says:

    Love the evolution and continuous improvement of the model. When will the updated version of the model be released to the public?

  2. Kevan Latty says:

    If you are thinking about paying customers, and if you think about customers from both a present or potential perspective, the concept of create value for customers, within an enterprise that pursues excellence, naturally extends to a company taking accountability and responsibility for the behaviours created around their products and service offering and the impacts resulting from the physical source of inputs consumed, ie the raw materials, throughout the full lifespan and all end of life outputs and impacts from their products and services.

    If you consider the impact from bad financial advice on customers, the impact of consumer goods that are easily available and highly disposable, ie, single use packaging around the products themselves, or items where customers desire a long lifespan, yet are designed and built for a relatively short lifespan – ie: a lot of electronic goods etc that end up in landfill, or those products and services that do as a direct cause, or byproduct cause negative environmental, family and community impacts, these impacts are huge, and the problem a global one where boards with a corporate social conscience can take the lead.

    The reality that I hope for, is that our companies/ boards/ leaders can overcome the predisposition towards short term gains and truly think about and manage the cradle to grave of their products and services, to serve their customers regardless of whether they are past, present and immediate or long term future.

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