How To Unlock Value in Your Organization By Thinking About Lawnmowers
The process of unlocking value in your business starts by understanding how all the various functions of a product, service or project work together to create value in the mind of the final customer. Using a simple, easy-to-follow value methodology known as the FAST Diagram (also known as Function Analysis) it’s possible to come up with the types of performance enhancements and other changes or improvements that will create this value.
The first thing that you’ll notice about the FAST Diagram is that it’s designed to be read in two different ways. As you move from left to right, the goal is to uncover “HOW” a certain function is being performed. And, as you move from right to left, the goal is to uncover “WHY” a certain function is being performed. Where they meet in the middle is the sweet spot of value creation.
The second key aspect of a FAST Diagram is that it vastly simplifies the whole process of value creation for any organization by defining value mathematically as:
Value = Functional Performance/Cost
In other words, there are mathematically only two basic ways to unlock value… First, by increasing functional performance (increasing the numerator) or second, by decreasing cost (decreasing the denominator).
For example, think about a lawnmower that you might purchase at your local Home Depot or Lowe’s home improvement store. How would a typical customer define the value of that lawnmower? Most likely, a customer would list attributes like power, noise level, and the ability to handle different types of lawns as being central to “value.” And the lower the cost of the lawnmower, the more likely that they would think that they were receiving a “good value” for their money.
Putting yourself in the shoes of your customer is the next key step of using a FAST Diagram. Think about what customers want from a product, and how they think about functionality. Then, compare it to how your own organization thinks about these attributes. This is the first step to identifying a potential VALUE MISMATCH.
For example, what if you assume that what customers want is the biggest, most powerful lawnmower possible in order to get the job done as quickly as possible? Maybe that’s true, but maybe it’s not. Maybe customers in quiet residential neighborhoods actually prefer silent, noise-less lawnmowers and are willing to compromise on power. Moreover, what if these customers would actually value a “green” eco-friendly lawnmower that runs on electricity and not hydrocarbons?
This is the fourth step of the FAST Diagram – thinking about performance enhancements to boost value. What are some of the functions that customers would like to have for a product, but that aren’t currently available? This opens up the door to truly innovative thinking about what can be added to a product. And perhaps helps you define an entirely new product category.
This leads to the fifth step of the FAST Diagram, and that’s deciding on a relative hierarchy of how all the functions fit together. Which functions are “nice-to-have” and which are “must-have”? And, perhaps most importantly, which ones are not worth having at all? Remember – there is value to addition by subtraction.
Using the example of the lawnmower again – what if customers prefer a very simple user interface without a lot of bells and whistles? They don’t want to read a long, complicated owner’s manual. They would rather buy a lawnmower that works great right out of the box. If that’s the case, you might think of ways to subtract features, and not add them.
The key to using a FAST Diagram is that it is all about expressing functions in the most basic format possible. The best functions are usually defined with just a single action verb and a single measurable noun. By thinking abstractly and creatively about these functions, you’ll soon realize that unlocking value is not only easy – it’s also FAST. You’ll be able to spot value mismatches and take the right steps to address them.
Quote of the Day:
“A satisfied customer is the best business strategy of all.” – Michael LeBoeuf