Background Ops #4: Value-Producing Work
“THE JAPANESE PEOPLE WERE WASTING SOMETHING”
“In 1937, I was working in the weaving plant of Toyota Textiles. Once I heard a man say that a German was producing three times as much as a Japanese was. When he went to America from Germany, the ratio between Germany and America was 1 to 3. Thus, the ratio between Japan and America turned out to be 1 to 9. I still remember my surprise at hearing that it took nine Japanese to do a job which one American could do.
[…] But, of course, it could not be that an American was putting out 10 times more physical work. It must be that the Japanese people were wasting something. So, if we could eliminate that waste, productivity should rise by a factor of 10. This way of thinking was the starting point of the present Toyota Production System. ”
— Taiichi Ohno, Toyota Production System: Beyond Large-Scale Production, 1988
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TSR’S SERIES ON BACKGROUND OPS, ISSUE #4: VALUE-PRODUCING WORK
You almost always learn something when you study how successful organizations were built. What were they thinking? What were they believing? How did they operate?
Oftentimes, large successes come from just a long streak of common sense and consistent execution. This type of success is worth studying, of course, but isn’t necessarily surprising.
Occasionally, though, you come across something that’s… quite surprising.
I remember seeing a graphic[*] that explained how Toyota thinks about work that haunted me for a long time afterwards — I couldn’t think about anything else for a few weeks after I took one look at that graphic, and I still think about it at least once a month.
The graphic broke up work into three simple categories–
*Value-Producing Work
*Non-Value-Producing Work
*Waste
The implications are immediate — and have a certain urgency to them.
Clearly, these are true categories.
Then — is “Value Creating Work” really such a small fraction of what we actually do when we work…?
The implications were clear.
I was haunted for a long time after seeing it.
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A MINI-INDUSTRIAL REVOLUTION
It seems the study of particular companies goes in waves. An organization captures the public’s attention for a while, management theorists study and write about the organization heavily for a while, eventually people get collectively bored of that particular case, and the company fades to the background.
There’s been multiple “Toyota booms” in management theory; if you regularly read on the topic, you’ve no doubt come across some of them.
For my money, though, I think Toyota is really unique and special among companies; I think the study of it should be a core part of understanding the world. They invented a number of soft and hard innovations that become de rigeur across the business world; really, the changes they pioneered nearly single-handedly almost become a mini-industrial revolution of sorts.
This has led to immense financial success — Toyota’s complete stock market capitalization is over $200 billion dollars; no other auto manufacturer is at half that. They’re worth more than the Big 3 American manufacturers combined.
But over and above financial success, they also were one of the most prominent companies to innovate in lean manufacturing, just-in-time, and a whole host of other known best practices that have now disseminated around the world and across industries.
The entirety of what they’ve invented and pioneered could fill multiple volumes of books — it has filled multiple volumes of books — but we’re primarily interested in a single concept from one of their engineers and executives, Taiichi Ohno.
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PRESENT CAPABILITY = WORK + WASTE
Two years before the end of his storied life, Taiichi Ohno put out a classic work in management and engineering, Toyota Production System: Beyond Large-Scale Manufacturing.
A few chapters in, he notes,
“Present capability = work + waste
(Operation = work + waste)
The true improvement in efficiency is making the waste part zero and bringing the percentage of the work to 100 percent.”
He goes on to identify seven primary types of waste. A later simplified English translation called them: processing, correction, overproduction, motion, material movement, waiting, and inventory.
Almost every one of these types of waste were counterintuitive. To take an example that’s both trivial and powerful, Ohno recognized that any unnecessary movement in a factory was waste.
At first at Toyota, there were sometimes large distances that someone building a car would have to walk to grab a raw material or component between every operation. Even if the person had to walk only 5–10 feet every few minutes, this was seen as waste because it didn’t add anything to what the customer wanted and eventually got.
The walking back-and-forth didn’t add to the final outcome. Plants, thus, were designed to minimize walking back and forth.
Eventually, Toyota took this to its logical conclusion — even having a person bend over to pick a tool up off the ground was wasteful, and tools were designed to sit on a shelf as close to the production line as possible, or sometimes suspended on a cord from the air.
“Waiting” is an obvious form of waste that we all understand — just about every one of us had some point in time where we stuck waiting for a colleague to get us something we needed to finish an important piece of work. Or, even, consider waiting in line at the post office — you want to get a package mailed, the waiting in line might be necessary, but it’s wasteful since it adds nothing to what you want to have happen (the package reaching whoever you’re sending it to). If you could cut out the waiting in line, you’d get more of your time back — to either do something else productive, or to take true leisure.
The concept that inventory is expensive to carry and detrimental to profit was extremely counterintuitive for years in manufacturing; it’s only relatively recently that Toyota’s views on the matter and books like The Goal by Eli Goldratt have come to realize that there’s immense hidden costs in carrying inventory.
And of course, mistakes and errors that lead work to getting scrapped is obviously wasteful, no explanation needed.
Ohno’s target — which at the end of the day, is never reached — was 0% waste.
This is a fascinating mental model to adopt, with immediate practical consequences.
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BACKGROUND OPS AND VALUE-PRODUCING WORK
There’s somewhere between dozens and hundreds of regular activities in your life that produce a set of results. You need to eat, so you walk over to the sandwich shop, wait in line, order a sandwich, wait for it to get made, and then sit down and eat it.
If you stop and think about it for even the briefest moment, you realize that walking over to the sandwich shop and waiting in line and waiting for the sandwich to be made are not essential parts of getting food and eating it.
I think you can see where this is going.
If we took the schedule of a person who hadn’t explicitly studied and streamlined their life, we could likely find at least 5–10 hours per week that adds nothing of value to their life — and that’s before getting into explicit procrastination or any of their large-scale, intellectually challenging, difficult work.
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STRESSFUL?
Before we go any further, let’s answer the most expected objection –
No, your life won’t get more stressful. It’ll get less stressful.
For whatever strange reason, people often get intimidated by the idea of studying their life and workflows in order to improve them.
Taiichi Ohno mentioned that Japanese workers were initially resistant to his ideas — even though those ideas eventually allowed for repeated wage increases, safer work conditions, more comfortable and ergonomic work processes, less meaningless busywork, and huge reductions in the amount of mistakes that needed to be fixed and crises that hit.
Likewise, people often seem resistant to cleaning up whatever is messy in their lives. It might take anywhere from 1 hour to 20 hours to study, examine, and make something that works much smoother, thus saving many hours of not-fun value-less activity per month, but people often resist it.
I don’t think it’s for a lack of time or being busy, but rather, the mentality of thinking analytically and like an engineer and spotting waste is sometimes actively painful for people.
If you know a number of people in small business, no doubt you know someone who has terrible accounting, invoicing, receivables, and cash management. You see how it causes them all sorts of stress and misery. You know that it would really only take a couple half-day work sessions and the occasional review to get on-track and in control, and over time they’d have better finances, less ugly surprises, and probably more money at the end of the day.
And they don’t do it.
It’s like people think — maybe this sounds crazy written down, but it seems to be what happens — it’s like people think if they don’t look at the problems and waste in their life, then the problems aren’t there.
Looking at the problems or inefficiencies is stressful — even though, oftentimes, you only need to look at them a few times to make them go away permanently.
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MAPPING OUT WORK TO IMPROVE IT
In Background Ops #1: Strict Limit, we laid out the formula:
Explicate — Improve — Backgroundize
In other words, you:
1. Take whatever process is in your life out of the background and make it explicit.
2. Study it a bit, think on it a bit, and improve the process going forwards.
3. Move it back to the background of your life so it happens better going forwards without your constant intervention or thinking about it.
We can combine this with Taiichi Ohno’s conception of value-producing work, non-value-producing work, and waste to get a picture of what actually matters and what’s superfluous and would ideally be eliminated, thus freeing up more time going forwards for either more work or more leisure.
Professor Jeffrey Liker deeply studied Toyota and interviewed many of their executives and engineers. In one of his books, he put it like this –
“The foundation of the Toyota Way is based upon this simple yet elusive goal of identifying and eliminating waste in all work activities. In fact, when you look at a process as a time line of activities, material, and information flows, and chart the process from start to end, you find a depressing amount of waste — usually far more waste than value-added activity. But seeing the waste is not the same as eliminating it. The challenge is to develop a systematic method for continuously identifying and eliminating waste. “
Liker recommended making a Value Stream Map and Current State Map to look at how the work is currently happening. Of course, his primary audience is industrial companies — this might be overkill for simple personal processes.
A lot can be said for the approach of (1) taking any unexamined task in your life, and (2) simply writing down the steps it takes to complete that task in order.
You can make it a drawing, or use only text if it’s simple.
But you want to do it explicitly.
Once it’s all written down, you can notice steps right away that don’t add value to the process and look for ways to reduce or eliminate them.
Let’s take a trivial example of writing and sending a physical letter. For whatever reason — maybe a bank or government office wants it — you have to mail a paper letter and can’t use email.
So you get out a piece of paper from your notebook and write down your current way of doing it. It might be,
1. Draft the letter
2. Write the letter
3. Print the letter from your computer
4. Put it in an envelope
5. Address the envelope
6. Put a stamp on the envelope
7. Walk to the mailbox and put the letter in
After that, you think: okay, how can I remove some of these steps and the time and effort that goes along with them? If you don’t have any immediate insight, then you think about it, you do some research on the internet, you brainstorm, you ask a smart friend.
Eventually you come across an answer — it turns out there’s a great service called mailaletter.com which lets you send good-looking letters from the internet, very reliably. (I don’t have any relationship with them aside from the fact that I use it and it’s a godsend.)
Using Mail-A-Letter, you could eliminate the printing, enveloping, addressing, stamping, and walking to the mailbox.
New process –
1. Log in to mailaletter.com
2. Draft the letter
3. Write the letter
4. Click send and enter your credit card
And of course, the original process assumes you already have a printer, printing paper, ink, envelopes, and stamps on hand — all of which also have to be maintained and represent additional work and costs.
Taiichi Ohno recognized that bad processes tend to not just cause work at the stage they’re at, but also lots of additional hidden work in maintenance and managing all the secondary processes that come from inefficiency.
It might sound excessive to do this for small things like sending a physical letter, but I actually think it’s (1) good practice for more complex activities, and (2) you’ll start to realize that a lot of activities that are “trivial” actually take a lot longer than you think.
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WHAT WORK IS VALUE-PRODUCING?
Streamlining and reducing needed effort on simple processes can already pay huge dividends — again, I think most people could probably reclaim 5–10 hours per week just doing it for basic activities, that could either be redeployed towards more productive work or more true leisure.
It really starts to shine, though, when you start taking apart complex processes at work.
In The Toyota Way, Professor Liker wrote –
“How do you distinguish the value-added work from waste? Consider an office where engineers are all very busy designing products, sitting in front of the computer, looking up technical specifications, and having meetings with co-workers or suppliers. Are they doing value-added work? The answer is you cannot measure an engineer’s value-added productivity by looking at he or she is doing. You have to follow the progress of the actual product the engineer is working on as it is being transformed into a final product (or service). Engineers transform information into a design, so you look at things such as 1) at what points do the engineers make decisions that directly affect the product? and 2) when do the engineers actually conduct important tests or do an analysis that impacts those decisions? When you start asking these kinds of questions, you’re likely to find that type engineers (or any white-collar professionals) are working like maniacs churning out all sorts of information. The problem is that very little of their work is truly value added, i.e., work that ends up actually shaping the final product.”
Okay — first — I know, this hurts. But the pain is in realizing that what’s already happening is wasteful. It doesn’t go away by shying away from it.
We’ll talk about creative processes later in this series, but for now, note that all time stuck in “writer’s block” or the equivalent for your field is either non-value-producing work or waste. Gradually reducing and eliminating that time leads to the more creative output in the same time, or the same creative output in less time.
Most companies and freelancers eventually build up a great base of creative assets and credibility assets — photos, videos, brand guidelines, templates, product information, testimonials. The problem? This stuff often isn’t indexed and people have to go digging around to find it, asking colleagues where it might be — or worse yet, repeatedly re-create similar stuff because they didn’t know it already existed.
Handoffs, in particular, should be carefully studied. Any time a piece of work is handed from one person to another, there’s a chance that there’s some missing information, poor scope, bad communications, or otherwise having work transfer poorly between people. If you’re repeatedly passing work back and forth with a colleague, being able to reduce even 1 or 2 of those handoffs per deliverable or project goes a long way towards reducing labor time, reducing calendar time, and reducing stress.
The key with these, once again, is to study (1) what’s actually producing the value, and (2) what actually happens when you’re doing the work. Again, it’s highly instructive to actually draw these out on paper for whatever work is in your field. Write out all the steps and you’ll no doubt see that many of them are not so valuable.
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BEING SOMEWHAT HARDCORE ABOUT IT
If you’re trying to decide if something is waste or not, I’d encourage you towards taking a somewhat hardcore view of things. Most people don’t like to feel bad about themselves, so they like to convince themselves they’re doing a good job.
The most successful people I know take almost the opposite approach — starting with very high standards, and gradually work towards meeting and exceeding them. Professor Liker estimated that over 90% of work is non-value-added, which is kind of shocking when you think about it. He noted that he’s seen cases where only 2% of work was value-added in organizations. (That would be 98% non-value-added and waste, if you’re counting.)
This sounds, I suppose, ridiculous. But it’s backed up by solid and objective before-and-after statistics of even well-run award-winning organizations reducing workloads by 20%-60% through careful study and re-design under the guidance of well-trained industrial engineers.
You’ll never hit 100% value-added-work in the time you’re working, but it doesn’t make a bad target. Take Peter Drucker on meetings, for instance –
“Meetings are by definition a concession to deficient organization. For one either meets or one works. One cannot do both at the same time. In an ideally designed structure (which in a changing world is of course only a dream) there would be no meetings. Everybody would know what he needs to know to do his job. Everyone would have the resources available to him to do his job. We meet because people holding different jobs have to cooperate to get a specific task done. We meet because the knowledge and experience needed in a specific situation are not available in one head, but have to be pieced together out of the experience and knowledge of several people.
There will always be more than enough meetings. Organization will always require so much working together that the at tempts of well-meaning behavioral scientists to create opportunities for “cooperation” may be somewhat redundant. But if executives in an organization spend more than a fairly small part of their time in meeting, it is a sure sign of malorganization.
Every meeting generates a host of little follow-up meetings — some formal, some informal, but both stretching out for hours. Meetings, therefore, need to be purposefully directed. An undirected meeting is not just a nuisance; it is a danger.
But above all, meetings have to be the exception rather than the rule. An organization in which everybody meets all the time is an organization in which no one gets anything done. Wherever a time log shows the fatty degeneration of meetings — whenever, for instance, people in an organization find them selves in meetings a quarter of their time or more — there is time-wasting malorganization.”
It’s a hardcore take, perhaps — in Drucker’s ideal world, there would be no meetings. We’re not in the ideal world, of course, so there will always be meetings. But Drucker starts off skeptical of all meetings and starts from that premise, since meetings aren’t typically adding direct value to the customer. They might be necessary work, but they’re non-value-producing work.
As a side note, to radically improve meetings, (1) have a set agenda beforehand, (2) use ten-minute timers, and (3) have a designed single person write down exactly what you covered in the last 10 minutes every time the timer goes off. It’s highly instructive. We don’t do it all the time, but Kai and I do that at Ultraworking whenever we feel like are meetings are getting longer without much gain. It tends to quickly make meetings 30%-50% shorter and lead to more decisions getting made.
That’s specific to meetings, but the general point is sound — be skeptical and question whether anything you’re doing is adding value. You’d be surprised at how many steps are only enabling you do the steps that actually matter. And you’d be doubly surprised at how, with just a tiny bit of ingenuity, you can make those steps unnecessary and still get all the value.
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GUIDANCE: TAKING THINGS APART AND PUTTING THEM BACK TOGETHER
A small fraction of all the work in the world is “value producing” — an immense amount of labor is either non-value-producing work or outright waste.
You’d do well to take your work apart and study it.
One way to do that is to draw or write on paper all the steps to do something. Then relentlessly ask whether any step is really necessary or if it could be removed by a smarter process.
This is maximally useful in complex working environments — and if you’re in a complex working environment, sooner or later you should read and study Taiichi Ohno, Jeffrey Liker, Eli Goldratt, and Peter Drucker to get really better at building a solid base and eliminating everything extraneous.
But even if your work is simple and relatively optimized already, you can still take this approach for your personal life.
It’s quite simple —
- Take any process from your work or personal life.
- Write down every single step that happens on paper.
- Identify which of those steps create the value.
- Relentlessly work to eliminate the other steps.
You can save a lot of time and hassle by thinking this way in both your work and your personal life. For your professional life and especially if you’re a freelancer or entrepreneur, it’s basically a necessity.
The biggest thing is to just start doing it. Getting started is as simple as taking a piece of paper out and writing out the steps of any activity you do and then identifying which steps produce the value. You can then look to streamline and eliminate things.
This isn’t hard and the payoffs are huge. The biggest thing is not being intimidated or embarrassed — just start. The ideal life, I reckon, would be all value-producing work and true leisure, and nothing else. It’s a dream and can’t fully happen in reality, but being hardcore about aiming for it leads to immensely more thriving.
Godspeed, yours,
Sebastian Marshall
Editor, TheStrategicReview.net
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This is the fourth issue in our series on Background Ops here at TSR. If it sparked any insights for you, please do leave a comment or hit the clap button.
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[*] Incidentally, I saved that graphic to my computer while I was doing some casual research on Toyota some years ago… but I didn’t note down who the author was and can’t find it now. Anyone know? It’s a fairly standard Toyota concept but it’s illustrated well and I’d like to credit them if possible. -SM
