The value stream
Remember being the “wood seller” a couple of weeks ago? Let’s go back and dig a little deeper.
Before going to the market, you gathered wood in the forest. Your friend has a handsaw and is your business partner. You both cut the wood into smaller pieces and bring them to the market.
You offer your customers to bring the wood they buy to their huts, for free. You get your first customer, who wants to buy a few pieces of wood. What would be your next step?
You load the wood in your cart. You both hop on it and deliver the wood to his doorstep.
What you just did was create and deliver value to your customer. Value creation happens before meeting your customer. Value delivery happens after their YES.
A Value stream is a series of steps for creating and delivering value to your customers.
How you manage your value stream will make or break your business.
Improving your value stream
The value of your offer depends on how your customers perceive your offer. If they don’t value your offer enough, they won’t pay you enough or ignore your offer altogether.
When you scale their perception, you scale your business. Without this, no business can survive in the long run.
To achieve this, you must continually improve your value stream. The two most consequential parameters of your value stream are the quality of your offer and the speed with which it delivers value.
Quality
There are a few questions you can ask yourself to determine the quality of your offer.
“Does it work the way it was promised?”
“Does it fulfil or exceed the expectations of your customers?”
Use these questions as a springboard and come up with your own set of questions to manage the quality of your offer.
In the case of selling wood, you could find trees that are more conducive to being burned, for example.
Test your offer through various parameters that your customers perceive as important and iterate to address each one.
Speed
How long does it take you to deliver your offer to your customer? Massive companies like Amazon, Starbucks, etc., have perfected the art of delivering value to their customers as seamlessly as possible.
Using a horse-driven cart could literally “speed” up your value delivery.
Look at the “slowest phase” of your value delivery process. Eliminate unnecessary steps and combine smaller steps into one to get them up to speed. Now look at the next slowest phase and repeat this whole iteration process.
The hypothesis
The better your value stream, the better the value of your offer.
The better your offer, the higher your revenue.
Higher revenue = Better business.