How to Form Value Streams?

Why are value streams hot nowadays? How have?development?value streams enhanced the good old?operational?value streams? Why do portfolio managers adopt value streams? How to form value streams in a modern organization? Is there a holy grail to understanding value streams?

50-125 people in long-lived, stable teams constitute the most effective value streams. Intra-company, product-centric, client-centric innovation squads – value streams do not have start and end dates, like projects. Whereas a project is to be completed someday, it has its scope and budget, a value stream is to go on, and has a more flexible attitude to what is to be done. A value proposition is the prime concern of value streams.

Why is the world adopting value streams?

The software revolution stands behind the trending value streams. Cars, publications, travel, entertainment – the share of software has increased in nearly any product, but nuts and bolts. Software development, however, leaves plenty of room for waste, and here is why:

• A complex and complicated matter. For example, designing a navigation app is way more complex than drawing and printing a map on paper.
• Very special human factor – knowledgeable, yet not sales- and profit-oriented; sensible to the beauty of code not to customer value.
• Volatile market – fast-changing technology and customer needs can undermine a business case over a period of months.

Value streams address the three challenges and the huge potential for waste. Value streams belong to agile management, reduce time-to-market and let the agile teams see which features generate the greatest business and customer value. The logic of value streams varies from traditional projects that bring to the fore deadlines, budgets, and the original scope of work.

Development value streams vs. operational value streams

Value streams had been long known in the pre-agile age. Manufacturing, logistics, and healthcare tuned their operations to reduce waste, such as tie-ups, unnecessary movement of resources, and excess inventory. This tuning of operations took the form of?value stream mapping. For instance, Shigeo Shingo, a Japanese industrial engineer, drew vertical lines representing non-value-adding operations and horizontal lines for value-adding processes. Although operational value streams could increase productivity, they were not contributing to fostering innovation.

Only the agile transformation brought development value streams to the table. Only these can leapfrog productivity and customer value by fostering innovation. The development value streams have yet another virtue – they guard organizations against dead-end products, bad investments, and misallocation of resources. The development value streams increase the odds of long-term survival.

It is not to say that the operational value streams have vanished. While the operational value streams output value to the client, the development value streams develop “tools” for delivering that value.

In the context of knowledge work, waste stands for delayed handoffs, wait time, and over-processing (features that users did not ask for, polishing of areas not visible to the user) rather than piling stockpiles, as is the case with operational value streams. Cross-team communication is where waste occurs most in the development value streams.

How to MAP a value stream?

This brings us to the point. If you are giving up projects in favor of value streams, your organization must be undergoing agile transformation. Value streams and agility at scale are inseparable. Agility at scale means strategy and budgeting as agile as work teams.

While you might not be into the Scaled Agile Framework (SAFe?), it takes a deep dive into high-level value streams. It’s good to have a look at SAFe?’s value stream mapping procedure, because

1. Surveys show that SAFe? is the best known portfolio-level agile framework, and the most prescriptive at the same time (Read?Leading scaling agile methodologies). Their value streams checklist will be of great help, even if you developed a lean management method in your organization.
2. SAFe? does a great job of diagnosing the business reality of today. In particular, the framework recognizes the growing share of software in most products, as well as the ever-shorter product life cycle.
3. Finally, it points to the development value streams – as a source of innovation – rather than the good old operational ones.

For a step-by-step procedure read these two excellent articles by Scaled Agile Inc.:

Identify Value Streams and Arts

Development Value Streams

Now, for those who need this information in a nutshell, we dare to cite some key statements on

how to map value streams

1. Begin identifying?Operational?Value Streams – products, services, or solutions that the company sells to end-users. Examples include manufacturing a product, fulfilling an order, admitting and treating a medical patient, providing a loan, or delivering a professional service.
2. Sales, marketing, purchasing, legal, finance, and manufacturing engineering are not themselves value streams.
3. Identify the?Solutions?each of your Operational Value Streams?uses?to deliver value to end customers.
4. Identify the People who develop and support the Solutions, for instance, 10 people in Europe, 20 in the US, 10 in Asia, etc. Systems and software developers, product managers, engineers, scientists, and IT practitioners all might be incorporated into a stream.
5. Now, the development value streams represent steps needed to develop those solutions as well as the people who develop them.?Development value streams inject innovation into operational value streams. Examples include designing a medical device or geophysical satellite, or developing and deploying a software application, SaaS system, or an e-commerce website.?
6. Since development value streams are intra-company innovation squads, what triggers them? The value stream is triggered by “idea input” from sources like customer support, sales requirements, or competitor analysis. A new feature request is often the trigger.
7. 50-125 people in long-lived, stable teams constitute the most effective value streams. Dependence and interference with other value streams must be minimal.
8. The entire purpose of the development value streams is to make operational value streams — and, thereby, the whole enterprise — more profitable and more efficient in delivering value.

Don’t rush to use professional charts, tools, and symbols right away. First, sketch with a pencil or use a whiteboard to outline the idea. Once the dust settles, formalize the map appropriately. Remember, you are trying to cut waste and not create any more than you already have.

How to FORM value streams?

Value streams have always been there, but we didn’t see them. Is?mapping?value streams all you can do en route from projects to value streams, to high-level agility? Can you promote?the formation?of value streams, as you would do with projects, rather than describing the existing value streams? Here are a few tips on how to actually?form?value streams:

• Avoid project owners’ change, roles change, limit employee turnover.
• Restrict changing team member priorities while in action. Mental context switching is expensive. Limit non-critical distractions like meetings and emails that disrupt engineers’ workflow.
• In a DevOps culture, integrate development teams more closely with the operations team.
• Avoid tightly coupled dependencies in agile projects that are to become value streams. The fewer dependencies the better.
• Discourage partially completed work. Even more actively discourage defects and bugs.
• Beware of “feature creep” – extra features that users did not actually ask for.
• Document outages, failures, as well as remedies developed. Swap technologies reluctantly.
• Exhibit your attachment to at least one KPI, optimally four to seven of them. Examples of value stream metrics are ROI, revenue per user, active users, operating margin, market share, solution usage, user and business owner satisfaction, feature cycle time, NPS (percentage of detractors minus percentage of promoters), first response time, cash to cash cycle time, reduction in costs/call center volume.

The holy grail to understanding value streams

As you can see, value streams formation is more about offering conditions and allowing the workforce to self-form and self-organize than it is about administering some specific change. Again, we have focused here on portfolio-level, development value streams, that are replacing projects in many organizations’ portfolios in the process of?agile transformation. High-level value streams make complex processes visible and ready to pivot, if needed, to drive more value.

This post first appeared on the?BigPicture?blog.