We saw that our fictitious customer was focused on four different strategies for controlling or reducing costs:
- Reducing materials costs
- Controlling direct labor costs
- Minimizing manufacturing overhead
- Decreasing selling, general, and administrative expenses (S, G, & A)
Now, let’s drill down another level to discover the causes of each of these, by asking questions such as:
‘What are some of the causes you’ve identified that contribute to the problem of escalating materials costs?’
Or . . .
‘How will you go about reducing direct labor costs?’
The Business Value Hierarchy model built downward one more level, illustrating several tactics (in gray) supporting each of the strategies this example company is using to pursue their major goals.
Moving downward to the next level in the BVH model provides more detail about their business and reveals more potential opportunities for improvement. They’ve already been thinking about the business problems that are keeping them from reaching their goals and objectives, long before we came along. We should try to learn what some of their ideas are, as well as which ones they’ve started in on, which ones have been put off, which ones have already produced positive results, and which ones have failed.
As I mentioned before, this level of understanding of your customer will require research and multiple meetings. It should be considered an ongoing iterative process, much like the development of an organization chart, which becomes more rich and complete with every meeting or interaction with the people within your customer’s organization.