January 19, 2023

How to Cut Costs & Create Profit — 3 Steps for Reducing Non-Value

What is value? What is non-value? What does the customer ACTUALLY pay for? We answer these questions and more in this blog.

Zack Estes
COO, Path for Growth

Let's jump in and discuss three steps for reducing non-value.

We're going to get a definition of what value is and what value isn't and get a shared understanding and foundation from which we can grow.

And then learn how we can take three steps to reduce non-value.

What is value?

Value is precisely what the customer pays for.

Nothing else.

We're going to use this specific definition moving forward.

We're not saying that some people are valuable and others aren't.

We aren't talking about people. We're talking about the thing that a customer pays for.

The change they're looking to receive. The impact they're looking to receive.

So what is non-value?

Everything else.

Everything else is non-value.

We want to have clear definitions here so we'll be able to clearly see value—or the lack thereof.

Who pays for what?

The customers pays for value.

But non-value things exist.

So who pays for that?

The business.

This idea is important because non-value activity extracts opportunity away from the business. It extracts profit away from the business.

We're not saying that there wouldn't be a return on the investment.

We are saying that the customer isn't paying for it.

The business makes a hypothesis that some "non-value" work will hopefully generate a return for the business (not the customer), but that does not make the work value.

Let's return to the definition. Value is precisely what the customer pays for. Nothing else.

But what if we could deliver the value to our customers and reduce the amount of non-value the business is paying for?

That is the question. That is what continuous improvement is all about.

Reducing non-value.

So how do we do that? How do we reduce non-value?

3 Steps for Reducing Non-Value

There are three steps for reducing things that the customer does not pay for.

  1. See it.
  2. Name it.
  3. Do something about it.

See it.

Interacting with a business as a customer is far easier to see what's going on.

When you're at a restaurant or a coffee shop, it is easy to step back physically and observe what is happening.

Don't just focus on what you're doing in the moment.

Zoom out, detach, and ask yourself, "what is actually happening right now?"

Notice how many steps the barista takes to get from here-to-there.

Notice how many people are waiting to receive their order.

Notice how many employees are actually making coffee and how many are standing around.

What are those people doing? Why are they doing that? Are they contributing to the thing that I am purchasing?

It's easier to observe as a customer because you have a vested interest: "I'm paying for this."

You'll begin to develop your eyes as you intentionally observe the creation and delivery of value.

That's what you want. It's a muscle. It's a skill.

You want to develop your eyes to see value. And—you want to develop your eyes to see non-value.

A good trick here is to assume what your seeing is non-value. And then, pick on each part of the process and justify whether or not it is value.

It's a safer bet to not assume that any step in the process contributes to the creation of value.

Name it.

As you examine each step, ask if a customer would pay for that specific step.

If it's all they received—whether or not they actually received anything—would they pay good, hard-earned money for it?

As an example...

If you went to a restaurant and didn't get food, but you got excellent service—whatever that means without food—would you actually pay for it?

The answer is obviously no.

But suppose you compliment the food with excellent service. In that case, you will remark about how such an enjoyable, respectful, and professional person that was.

Someone who enjoyably delivered value.

But the delivery is not the value. Value is the thing the customer is explicitly paying for.

Another example of non-value is requirements and regulations.

They're things that have to be done.

It's important to remember that requirements and regulations are not why a business is in business.

A business is in business to exchange value for a profit.

Don't get caught up making non-value work the priority.

Isolate each step in any given process and name it. Is it value? Or is it non-value?

A secondary filter when naming work is to recognize if it is service or showmanship.

Service is the creation of value.

Showmanship is the delivery of value.

Service is what the customer is paying for.

Showmanship is what the business is responsible for... so that the customer receives the created value.

It's all too often easy to get distracted by improving showmanship and letting the service go down the drain.

Bloating your showmanship will bloat your overhead.

But that isn't to say showmanship isn't essential.

If you create value, but it never gets to the customer, they never experience the impact.

Customers won't exchange money for something they cannot receive.

Therefore, the business must figure out how to deliver that value.

And the customer is only paying for the creation of value.

Do something about it.

The best way to start something is to understand it.

Start by understanding why a particular process is done the way that it is.

There might be a good reason.

There might be a bad reason.

There might have been a worse way to do it prior to you engaging with the present-day method.

Maybe you're new to the company. Or the department. Or the team.

And you're experiencing the latest and greatest version.

Imagine this—people before you have improved this process from the first version to the version that it is now.

And you're experiencing the fruit of that reduced non-value.

Meanwhile, the bloat of non-value is so apparent because you have new, fresh eyes.

It is so obvious that the process could be done better.

It is so obvious that the process could be done faster.

You can now contribute to reducing what non-value still exists.

That's your role.

"I see how much work has gotten us from here-to-there. Let's go further, faster. Let's do something different."

This is how we begin to understand why non-value exists in a particular process and how the process has evolved.

Once you understand the past and present, you're properly equipped to address the future.

The next step is to find a way to get to the desired result.

We use Success Statements at Path for Growth to describe a desired outcome.

A Success Statement is simply a sentence that reflects what winning looks like.

You want to find a way to get the desired result with less non-value.

"Can we figure out a way to get what the customer wants with less non-value... while maintaining a product that the customer values just as much as they used to? As good, or better, quality."


The customer pays for value.

The business pays for non-value.

It is the responsibility of the business to deliver the created value to the customer.

The goal of continuous improvement is to reduce non-value.

Don't let your knowledge outweigh your application.

Tag @pathforgrowth on social media and let us know how you're reducing non-value in your business.

Zack Estes
COO, Path for Growth
How to Cut Costs & Create Profit — 3 Steps for Reducing Non-Value

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