The Lean Entrepreneur

4 WADING IN THE VALUE STREAM

ARTICULATING THE VALUE STREAM

In lean manufacturing, an organization’s value stream comprises 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.

In a lean enterprise, the value stream includes both value-adding activities (for example, assembling part of a car) and non-value-adding activities (for example, forklifting parts across a warehouse floor). The objective of lean is to eliminate as many of the non-value-adding processes as possible (some are necessary) and to optimize the efficiency of the value-adding activities while maintaining or improving the value provided the customer.

Inefficient value-adding activities and non-value-adding activities create waste in the forms of lost time, money, resources, creativity, and opportunity. With lean thinking, unsold product represents nonmonetized materials and labor, along with space. What else could have been created with those resources? In addition, the value being produced should never be hurt by process optimization; we’re not optimizing merely for the sake of optimizing. Destroying value is arguably more wasteful than not eliminating the inefficient use of time, money, or raw resources.

In the context of a lean startup or innovation, in which the creation ...