(10 min read) If you only have 30 seconds to spare today on a value added training video let it be this one:
In that context the idea of ‘Value Added Work’ comes from lean manufacturing.
It refers to work that adds form, fit, or function to a product or service. That is, any activity that the customer would be willing to pay for in isolation.
Any effort that does not increase value in the eye of the customer is considered a form of waste. In the world of lean manufacturing there are 8 classifications of waste easily remembered with the acronym DOWNTIME.
The message is unambiguous: Focus on value-added work. Minimize waste as much as possible.
That’s well covered ground but today I’m here to share a logical extrapolation of that idea.
For anyone concerned with professional growth & compensation the important question to ask yourself is:
‘For whom are you producing value?‘
The Big Picture:
It occurred to me that work can be further classified on a sliding 3 axis scale.
The output of any given effort can benefit your company, an external customer, or no one at all.
It may not be perfect but it’s definitely a useful way to think.
Seeking Professional Growth: As an Employee
If my efforts produce value for the customer, that encourages them to cough up more revenue, which helps my company right?
Of course, but it won’t help you.
If you want a raise then you need to maximize value for your business, not your customer!
Working your way up the company pay scale requires focusing on producing solutions that generate company value. (Setting aside the idea of professional growth through amoral Machiavellian strategies which explains why some seemingly undeserving/unsavory people sometimes find their way to the top.)
As an example lets look at the educational background of people most commonly at the top of the org chart:
*Business focused people manage others and make connections on the golf course to secure a new customer contracts.
*Engineers use their knowledge of technology to open up new doors & improve processes.
*Economists & accountants know about tax optimization strategies & how to play financial games that ensure short term wins (on paper at least).
All of these activities generate immense value for the company & shareholders, but by themselves produce 0 direct value for the customer. So these people find their way to the top.
If you want to make more money in a corporate environment, try to put as many layers between you and the external customer as possible.
Unfortunately, doing so will fundamentally change the nature of the work you do; and the option is not always available.
Someone ultimately needs to create customer value for any business to function, or society at large for that matter.
The opposite end of the spectrum: Labor
Product assembler. Teacher. Customer service rep. Taxi driver. Shipping clerk. Cashier. Janitor.
Unfortunately for each, their compensation is not a function of the quality of their work.
Supporting the customer is necessary & generates immediate cashflow but it is impossible for individuals in any of those roles to put their respective organizations at large further ahead on a meaningful scale.
0 value added for your business means 0 personal growth.
Not to be disparaging, these people create tons of value for customers/society and we should all be grateful when they go the extra mile for us!
I’m simply pointing out why those professions are categorically unconducive to being well compensated.
There also exists a 3rd category of work:
Work that generates 0 value-added for anyone.
Its inevitable that some of our efforts don’t directly generate value for anyone, but beware if that’s your entire job!
You shouldn’t expect being a parasite (weather consciously or not) to take you very far.
I say “shouldn’t” because in the midst of the anomalous low interest rates of 2020-2022, big tech companies made a habit of hiring talent simply to keep competitors from scooping them up.
This lead to some lucky people occupying luxurious low expectation positions who then bragged about their leisurely work days on social media.
Who wouldn’t want their workday to consist of free breakfast buffets, sitting in frivolous meetings to contribute ‘no updates here’, sampling mimosas on the rooftop garden of a high-rise, and capping it off by sending 1 single email while cooling off at the pool after a massage?
To them all I can say is enjoy it while it lasts.
For most people, a typical day in the life of a bullshit job holder involves ‘sampling’ emails that have nothing to do with you, ‘swimming’ in paperwork that not one single person on earth cares about, and capping it off by sending memes to your friends from the toilet to pass the final 10 minutes before clocking out.
In either case such a position puts you at great risk of being laid off when times change and you are discovered to be a painless cost reduction.
Until I hear back on my application for Netflix’s Ice Cream & Movie Pairing Manager, I’ll focus on continuing to add value where I can. For the company when possible.
Seeking professional growth as a solo entrepreneur or small business owner-operator
Even as the sole employee of your own business, that 3 axis scale is useful to moderate expectations of current vs future compensation.
Any specific task you do exists on that sliding scale!
Need money asap? Advertise your products, take on custom requests, and build-to-deliver like crazy. You only generate immediate cashflow when you produce customer value.
Want to make a more money next year?
Focus on developing newer products & better production processes to improve future yield. You only grow the business and increase your future wage when you produce company value.
Near term cash flow & long term growth occupy opposite ends of a balance scale and not every role provides opportunities for both; even when operating independently.
I’ll wrap up by comparing specific examples from the gig economy.
1. Driving for Uber has always been a raw deal.
Your pay is equal to the depreciating value of your vehicle, and your risk of accidental death is completely uncompensated!
You do collect cash in hand at the end of every day, but your service is a pure commodity so there are zero prospects for getting paid more tomorrow.
2. Making YouTube videos full time is a high risk bet.
Starting from scratch, you can expect to produce 1 quality video per week, resulting in ~52 videos/year.
I’ve read that you can expect to have 1k-10k subscribers after producing ~152 videos.
The bar for monetization on YouTube is 1,000 subscribers with 4,000 valid public watch hours in a rolling year. Only after achieving this can you get paid for ad views.
If your average video is 2 minutes long, that minimum number of watch hours yield ~120k views/yr
At an average revenue of $0.18 per ad view, you could hope to collect ~$21,600/year to in ‘passive’ income…after 3 years of building your channel! (IMO Passive income is over glamorized. Its just active income with a deferred reward OR a payment for taking risk.)
So sure, the potential for ‘Mr. Beast’-like-channel-growth exists but the payoff is so greatly deferred that for this endeavor to ever be worth your time you must win big, continuously!
3. I’ve written enough today. Next time I’ll properly introduce a novel idea that I believe occupies a happy medium between immediate cash flow & future-growth.
Sam Harris interviewed Marc Andreessen who describes a related problem with business management. https://www.youtube.com/watch?v=3E5pop88c_4
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I didn’t really focus on this as being a problem as much as it being a useful way to think, but yes it definitely is a problem for people in customer focused roles. I like the idea of performance quality/sales commissions as part of the solution. Video looks like a good one (I assume the relevant part is the ‘James Burnham and managerial capitalism + the principal-agent problem’)
Here is another link if the other one didn’t work. Not sure if it has the part I was talking about in the preview alone. Basically, management in these large companies make so much money guaranteed that they are risk averse and not innovative. Just keep the ship headed in the same direction and if things go wrong, jump ship and get hired by the next one. Rinse and repeat. Not sure how accurate that is, but it appeals to my biases.
Ive known enough people in high positions to say that the normal distribution applies to them the same as everyone else. Some are incredibly smart & hardworking. Others…not so much 🙂 To be fair I imagine its easy to lose that drive as your career naturally plateau’s and you find that less effort still yields the same reward.