In my last post I noted that, compared to many other human undertakings, business suffers from a lack of precise definitions, especially the definition of the customer.

As Deming pointed out, understanding the needs and wants of the customers is fundamental to business success. But loose definitions like that of “customer” are disturbingly common in many business environments.

In contrast, people in a Lean environment are expected to question, think about, and precisely evaluate virtually everything. So let’s think some more about the customer.

In that last post, we started with a definition of the customer as “a person who purchases goods or services from another,” and showed that it was virtually useless.

A broader definition of a customer, one quoted in Wikipedia, is “the recipient of a good, service, product, or idea, obtained from a seller, vendor, or supplier for a monetary or other valuable consideration.”

This is a reasonable, if verbose, starting point, so let’s examine it more closely.

First, as long as it is done legally and morally in a largely free society, I can’t see why we care from whom a good, service, product, or idea was obtained. Furthermore, if we obtain something in a way that is both legal and moral, there is normally some sort of exchange. Let’s just leave out the list of synonyms to “supplier”, and substitute “exchanged” for “obtained.”

Our definition now becomes: “A customer is the recipient of a good, service, product, or idea, exchanged for a monetary or other valuable consideration.”

This definition is better, but there remains a problem of semantics. Under contract law, consideration is, by definition, something of value. There is no need to say “valuable consideration.” It’s like saying “3 a.m. in the morning.” What’s more, most money has value, so money is but one form of consideration.

We could use “consideration” alone in our definition, but the tautological wording quoted in Wikipedia from (presumably peer-reviewed) published works suggests that relatively few people understand the meaning of the term. We are seeking clarity. To be as clear as possible, let’s call consideration exactly what it is: something of value.

At this point our definition is this: “A customer is the recipient of a good, service, product, or idea, exchanged for something of value.”

This, it seems to me, is a more robust definition, applicable to most environments and most circumstances where human beings freely exchange things. But it can be made more robust yet.
Consider why a customer would choose, then exchange something of value for, a “good, service, product, or idea.”

Customers choose between competing goods, services, products, and ideas based on a perception of which competitor offers the greatest value. Having chosen, the customer exchanges something he values to obtain something he values more highly. In short, customers engage in exchange in order to maximize their value.
With this in mind, we can say that a “good, service, product, or idea” is something of value, and our definition becomes this: “A customer is the recipient of something of value in exchange for something else of value.”

This may seem like an utterly trivial definition, too lacking in form to be useful. It is, however, actually an extremely powerful idea because, as I will show in future posts, it allows us to tie together general and operations management, economics, accounting, and HR management in a sort of unified field theory of business. It all centers on the idea that customers engage in exchange in order to maximize their value. The job of a person in a Lean organization, and of the Lean organization itself, is to help customers maximize their value.

But what is value? I’ll cover this question more in future posts, but for the moment I will say that value isn’t one thing, but many.
Lean practitioners speak of a value stream. It’s a good analogy. A stream doesn’t just pop into existence full blown. It starts as many little rivulets — rivulets of value in our analogy — that flow together to form the stream. Our job as Lean practitioners is to find ways everyday to start new rivulets, and to grow existing ones.

Many people see Lean as one big thing — a kanban system, for example — or a few big things — the occasional “kaizen event”. Instead, Lean is a mindset, a constant search for ways to create more value today than we did yesterday. It’s a personal responsibility, a responsibility to critically evaluate what we produce, always seeking to create more value for whomever receives what we produce, and to serve a greater number of others with the value of what we produce. This all starts with understanding the customer, which leads to a greater understanding of your responsibility to them, to your employer, and to yourself. Ultimately this is what kaizen is all about.

Copyright 2014 by Paul G. Spring. All rights reserved.