The Lean Entrepreneur: How Visionaries Create Products, Innovate with New Ventures, and Disrupt Markets

Articulating the Value Stream

In lean manufacturing, an organization’s value stream is comprised of all activities undertaken to provide value to the customer. Activities include everything from developing the concept of a product to its design, engineering, manufacturing, and delivery.

As we’ve discussed, the value stream in a lean enterprise includes both value-added activities (for example, assembling part of a car) and non-value-added activities (for example, forklifting parts across a warehouse floor). The objective of lean is to eliminate as many of the non-value-added processes as possible (some are necessary) and to optimize the efficiency of the value-added activities, while maintaining the established value to the customer.

The value being produced should never be adversely affected by process optimization, the elimination of activities, or other improvements. Destroying real value is more wasteful than eliminating inefficient time, money, or raw resources utilization. An organization may or may not be better off becoming more efficient through elimination of waste independent of its effect on value creation. The latter may be the goal in some organizations, but it isn’t lean.

In the context of a lean startup, in which the production and delivery of value hasn’t been proven, you don’t truly know either the value being created or for whom it’s being created. You may think you know. You may believe what’s between your ears; you may have faith in your idea and your abilities, ...