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Variation in an organisation

Do you understand the variation in your organisation?

It’s often said that ‘Variation is the enemy of Lean’. In fact, I’m guilty of saying it myself. But it’s not always true. As an organisation, we often don’t take enough time to understand the variation in our business and why it is there. 

Turns out, not all variations are bad. 

In her excellent article over at HBR, Professor Frances Frei has spent years researching the types of demand customers have and the variation they introduce into a process. 

Professor Frei categorises demand into 5 different types: 

  1. Arrival variability – Customers do not arrive to use your product or service uniformly.  
  2. Request variability – Customers often want different things from your organisation.  
  3. Capability variability – Not all customers have the same skill level when using your products or services. 
  4. Effort variability – This type of variation is the measure of how much effort the customer is prepared to put in (think flat-packed furniture vs ready assembled). 
  5. Subjective Preference variability – This is a customer’s opinion of a product or service provided, and the same service may be viewed differently by two different people.  

It’s important to understand the different types because how we manage them is completely different. Professor Frei alerts us to the dangers of thinking that reducing variation is always the right decision. Sometimes, variation is a good thing. Some variability may be a feature of a product and therefore adds value. For example, having a wide range of choices on a menu or the same T-shirt in different colours. You wouldn’t want to remove choices without considering the Voice of the Customer.  

Frei believes that both low cost and variability accommodation can be achieved, and I agree with her. Through our work in organisations, we very often segment our customers into groups based types of services they use. This can help to better understand how to develop processes for these groups, and design new products and services too.