10 Attributes of Strong Value Streams
1. A strong Value Stream must have a clear understanding of who its customers and stakeholders are.
Value Streams are defined by the constant flow of requests and deliveries of customer and stakeholder requests. As a rule of thumb, the customer is the one who requests and receives the value produced. Stakeholders, on the other hand, are parties with interest in either the production process or the value produced. Anyone that can either affect or be affected by a Value Stream.
In some cases, the one who receives the product or service might differ from the one who has requested it (e.g. when Person A sends a letter to Person B via Australian Post). When that happens, you might have multiple customers and stakeholders for which you might need to cater.
For instance, in a digital Value Stream, the customer/stakeholder could be:
- The one who represents the market share (e.g. customers of a SaaS platform)
- An executive of a functional area within your organisation (e.g. the VP of Marketing)
- A Value Stream segment to which you provide shared services (e.g. UX Design Team)
- A governance body (e.g. E-PMO, Steering Committee, Board, Government, Regulatory body)
Most of the time, Value Streams have several customers or stakeholders, meaning multiple sources of demand. Most likely, such different sources of demand would compete with each other for capacity within your delivery ecosystem. Therefore, it’s imperative that, for each of them, you understand customer purpose and service level expectations so you can design your system of work to serve them appropriately or, at a very minimum, be able to signal explicitly that you can’t meet their expectations at the moment and discuss alternatives.
2. A strong Value Stream has a clear understanding of customer purpose and Service Level Expectations (SLE)
Depending on the conditions in which customers/stakeholders make a request, their purpose and SLE would likely be different.
Let’s use a VP of Growth of a SaaS platform as an example. She commonly requests new product features from the product and engineering teams with the purpose of improving the marketability of the product in the long run. She also demands a series of A/B testing to the same team with the purpose of running experiments to increase acquisition, activation, retention, revenue, and referral.
When requesting new product features, she doesn't expect the product and engineering teams to act upon all of them, but she expects them to cater for some of her needs.
For that, we could describe her SLE as follows:
- Commitment rate: 40-60%
- Time to commit: 1-3 months
- Lead time: 3-6 months
Now, when she requests A/B testing services, her SLE is much stricter because that is part of her process of building growth. Delaying A/B tests delays her growth initiatives, which compromises the organisation targets.
In such a circumstance, the SLE could be described as:
- Commitment rate: 70-80%
- Time to commit: up to 14 days
- Lead time: up to 7 days
Of course, this is a fictitious scenario. The point being different demands from different customers (even from the same customer) will have different service level expectations. Failing to note this factor and making it explicit is a good recipe for problems.
Service level expectations are defined by customers and stakeholders (not by the Value Stream itself). It is based upon the criteria used by them to select the product or service provider.
Common selection criteria forming service level expectations in digital Value Streams might include:
- Lead time and its predictability
- Productivity and its predictability
- Quality and its predictability
- Commitment Rate
- Time to Commit
One concept that is important to remember:
- Same customer, different purposes, different SLEs.
- Multiple customers, multiple purposes, multiple SLEs.
Visualising and managing this manually can be a challenging job. VSM platforms can now help you with that.
Another vital thing to keep in mind is that if there’s a product or service, there are options—this implies choices. So, if the products or services your Value Stream is providing are not fit for your customers’ purpose, they will manifest that somehow, usually with their two feet.
When a customer or stakeholder doesn't have a choice but to choose your Value Stream, the problem will usually manifest itself via a set of dysfunctional behaviours that severely impact culture.
Some selection criteria are usually top-of-mind for customers, such as lead time, cost, and quality. Others are unconscious, such as ethics and conformity with norms and regulations. The latter are usually triggered by exceptions.
If you don’t know what your customer’s service level expectations are, try experimenting and ask them: “Hey, Ann. This is how we’ve been able to serve your Marketing requests [show her some key customer-centric metrics]. I was wondering how that matches up with your expectation? Can we talk about that?”.
3. Strong Value Streams understand their fitness level in relation to customer purpose and expectations.
If you don’t understand the service level in which your Value Stream operates when serving customers with your products and services, you are flying blindly.
Every service provided by a Value Stream has an inherent ‘service level expectation’ (what the customer expects) and a ‘service level’ (how well the Value Stream is able to satisfy customer requests).
That means a Value Stream could be performing well for some of its products or services, not so much for others. For example, if a Value Stream provides five different services, it could be fit for customer purpose on three of them but not on the other two.
The service level for each order can be ‘below’, ‘at par’, or ‘above’ customer expectations. When you look at the Value Stream level, fitness level isn’t a 1 or 0 thing where the Value Stream is either fit or unfit. A better way of looking at that is to which degree you have been able to satisfy your customers' SLE.
That provides teams with a clear vision of what success looks like and where they stand, functioning as a powerful platform for continuous improvement. In the example above, teams might discuss how to improve service level for Risk & Compliance demands, aiming to increase Target Met from 48% to 60%, then to 85%.
At a Value Stream level, SLEs operate with thresholds:
- A minimum threshold below which the product or service is unfit for the customer purpose.
- An exceptional performance threshold when it exceeds customer expectations.
It’s imperative that Value Streams have a clear picture of their customers and their fitness level in relation to customer purpose and expectations. However, we know that before the emergence of modern VSM platforms, visualising, and measuring it at scale was nearly impossible.
4. Strong Value Streams communicate their products and services in a way that is understandable and desirable by their customers and stakeholders.
When you go to a Cafe, you see on the menu options like Espresso, Ristretto, Macchiato, Long Black, Flat White, and Cappuccino. For Digital Value Streams, the options below commonly show up on a team’s service catalogues:
- New features: represent customer value. New value creation. Helps increase product-market fit.
- Enhancements & Optimisations: Improve customer experience, supporting adoption and retention — value protection.
- Defects & Incidents: Failure demand. When teams fail to do something or do something right.
- Enablers & Tech Debt: Activities that will help the Value Stream deliver faster, with more quality or be more reliable in the future.
- Risk & Compliance: Usually, cybersecurity-related activities as well as regulation and compliance demands.
Please note that customers don’t know and do not care how you translate their demands into your internal work item types (Epics, Stories, Tasks, Subtasks). Keep that for your delivery teams. At a Value Stream level, it’s important to use customer language. VSM platforms can make that translation effortless for you.
Once you start using customer language, VSM platforms can help you introduce new layers of meaning to the work, for instance, whether the customer request is refutable/irrefutable, delayable/not delayable, planned/unplanned, etc.
Modern VSM platforms make this process straightforward without requiring any particular configuration or customisation to your work item management tool as they function as a layer on top of them.
5. Value Streams manifest themselves in three different forms.
Full customer-facing, end-to-end Value Streams
That’s your storefront. They interact with external and internal customers and stakeholders around the products or services provided by the Value Stream. Here is where customer requests come from and are managed.
They represent an end-to-end view of the entire value creation process; from ‘request’ to ‘delivery’ or from ‘idea’ to ‘production’. Improving delivery performance on an end-to-end Value Stream requires systems thinking to drive global optimisation. It depends on the orchestration of the work across different independent areas.
Value Stream Segments
A portion of a larger Value Stream. End-to-end Value Streams are typically divided into a few (or several) segments, typically represented by handovers. Each segment usually depends on the deliverables of the previous one and corresponds to a specialisation of the process.
For digital Value Streams in enterprise organisations, it usually would map to macro process steps like “Discovery”, “Development”, “Quality Assurance”, and “Change Management”.
Value-enabling (support) Value Streams
A service that supports the delivery of value for one or many Value Stream Segments. These are usually functional teams providing specific expertise to a series of other teams. They are commonly referred to as shared services.
An example of that could be the “UX and UI team”, “Platform Engineering Team”, “Legal team”, and/or “Social Media team”.
6. Strong Value Streams have a defined process and a set of explicit policies to transform requests into customer value.
Between a customer request and the delivery of that request, there’s everything necessary to transform it into value. That’s your Value Stream process, workflow, or ways of working...whatever you call it.
That’s what you strive to improve to become fitter and fitter continuously. Let’s look at a few examples of that.
Car Manufacturing process
New Order => Chassi => Body => Painting => Assembly => Quality Assurance => Delivered
New Order => Ready to pick => Picking => Ready to pack => Packing => Ready to Ship => Delivered
New Order => Ready => Preparing => Delivered
Software Delivery Process
New Order => Pool of Options => Next => In Progress => In Review => Delivered
The above examples are obviously an oversimplification. Real processes would most likely have more steps and many more queues between active steps, such as “Ready for XXXX”, “Waiting XXXX”, “XXXX Completed”.
As a matter of fact, in Digital Value Streams, the work commonly spends over 85% of its time on average in queues, which is bad. The good news, though, is that digital Value Streams have much room for improvement. It’s not uncommon to see Value Streams reducing their lead time by 60%, 70%, and even 90%; sometimes doubling, tripling or quadrupling the delivery of value demand.
We can assure you that they don’t achieve it by analysing, coding and testing faster. They do that by making workflow policies explicit and by identifying and reducing key sources of delay, one at a time.
Teams operating within strong Value Streams will have a clear and explicit set of policies to govern and manage their work. The policies dictate what should happen in different scenarios to ensure the work moves smoothly through the Value Stream, increasing predictability and flow.
Explicit policies should answer day-to-day questions like:
- Who can demand work to the Value Stream?
- What does urgent/expedite mean? Who can expedite work? In which conditions?
- How does expedited work move through the workflow?
- What’s the allocated capacity for each different type and source of demand?
- What does a piece of work need to have to be considered ready to enter the system?
- What does a piece of work need to have to depart the system?
- How do we control WIP? What is the optimal amount of work that should be in progress at any given point in time for each of the workflow steps?
- How do we manage blocked items?
- How do we pull work? Can people pull work in random order, or do they need to respect a strict “First-In, First-Out” (FIFO) order?
- What should people do when they are not able to pull new work into the system?
- How should teams behave when WIP Age hits 70-80% of the SLE?
- Do particular workflow steps have specific pull transaction policies?
Discussing questions like that beforehand will ensure consistency and avoid teams making these decisions on the fly or in the heat of the moment. These policies are not set in stone and should evolve as the Value Stream evolves.
7. Strong Value Streams can distinguish between Efficiency and Effectiveness.
Only recently, we've come to understand the difference between efficiency and effectiveness. We used to use it synonymously. The best distinction between them is probably one made by Peter Drucker in his book “The Effective Executive” (1966) when he said: “There is a difference between doing things right and doing the right thing”.
Dr. Russell Ackoff has expanded that definition in one of his interviews (2001). He said: “See, doing the right thing is wisdom, effectiveness. Doing things right is efficiency. The curious thing is that the righter you do the wrong thing, the wronger you become. If you’re doing the wrong thing and you make a mistake and correct it, you become wronger. So it’s better to do the right thing wrong than the wrong thing right.”
In his paper “A systemic view of transformational leadership” (1998), Dr. Ackoff puts “values” at the core of effectiveness when he says, “Efficiency is a measure of how well resources are used to achieve ends; it is value-free. Effectiveness is efficiency weighted by the values of the ends achieved; it is value-full.”
For example, a men's clothing Value Stream may efficiently turn out suits that do not fit well. Another less efficient Value Stream may turn out suits that do fit well. Because “fit” represents value to customers, the second Value Stream would be considered to be the more effective even though less efficient than the first one. Of course, a Value Stream can be both efficient and effective.
Nowadays, for Digital Value Streams, efficiency is considered presupposition and effectiveness the goal.
The path to efficiency in product delivery has already been decoded and is very well documented. Knowing what the next right thing to work on requires contextual analysis and situational awareness, which for that we still rely on the brilliance of human minds.
Strong Value Streams can distinguish between those two concepts and have independent strategies to continuously boost efficiency and effectiveness.
We know that continuous improvement requires three key elements: signals, reflection mechanisms, and acts of leadership, which we are discussing below.
8. Strong Value Streams captures and radiates clear signals that are interpreted by its teams and leaders.
Having clear signals is vital to understand how Value Streams operate so leaders can become more effective in governing and steering it with confidence, course-correcting where required.
In continuous improvement, signals can manifest themselves in many different ways:
- Customer and stakeholder feedback or complaints.
- KPIs below the acceptable customer threshold.
- Healthy indicators outside of their healthy ranges.
- Improvement drivers below the target.
- Tensions sensed by teams within the Value Stream, representing gaps between reality and potential.
- The different customer-centric and flow-based metrics radiated by VSM platforms.
Extracting reliable information on how teams perform has been a forever challenge, which intensifies as the number of people involved scales.
The traditional process for obtaining reliable information is typically manual and passive. It’s also human-orchestrated, meaning the quality of information will be as good as the people executing it, making it fragile and highly political. Another challenge when gathering governance information is translating local and contextual data from teams into global and meaningful insights that leaders can make sense of.
We know that any meaningful initiative today requires cross-team, cross-level, and cross-division collaboration. The way the information is produced in each place does not follow the same format and standard. They need to be collected and molded to become useful in a governance context.
Organisations have to rely on an army of project and program managers, acting as a proxy in the middle, continuously translating raw data into meaningful insights. Unfortunately, this process is expensive, ineffective, error-prone, and full of delays—compromising the quality of the information available to leaders.
VSM platforms are now enabling enterprise organisations to establish an intentional, real-time, and data-driven approach for governance—transforming the process from passive to active, where relevant and timely information hits interested stakeholders continuously either by a schedule or by programmed triggers.
VSM platforms also enable several forms of abstractions, normalisations, and aggregations. They automate the translation process mentioned above, freeing up all those program and project managers to do much more valuable work.
9. Strong Value Streams have a series of well-defined reflection mechanisms.
Reflection mechanisms are events or ceremonies that happen regularly to create alignment, rhythm and to process the feedback, signals and tensions coming from inside and outside of a Value Stream.
They provide the time and space necessary for Value Streams to encounter ways of becoming fitter for customers and stakeholders purposes. They act as a network of feedback loops, informing and being informed by each other.
They form a set of intentionally designed events (time-based and event-driven), each of which serves a specific purpose, sometimes creating a compass, sometimes improving efficiency and effectiveness. They include:
- Strategy Review
- Replenishment Meeting
- Daily Meeting
- Service Delivery Review
- Operations Review
- Risk Review
These events are described in more detail on Value Stream Reflection Mechanisms
It is important to note that Value Streams should not add all these meetings as an overhead on top of all existing meetings. Instead, it should find existing ones that can be adapted or combined where appropriate (purpose, audience, frequency, duration).
10. Strong Value Streams have leaders focused on its sustainability and survivability.
During reflection mechanism events, frustrations, challenges, and ideas will inevitably fly around. Eventually, new improvement proposals will emerge, and people will commit to giving it a red hot go.
Acts of leadership manifest themselves when people have the courage to speak and raise problems or are brave to propose different ways of doing things, especially if it goes against the status quo or when someone takes the initiative to try out a new idea.
We see acts of leadership on all levels in Value Streams. One doesn’t need to be a leader in their corporate badge to act leadership out. Strong Value Streams encourage acts of leadership on all levels.
Value Stream leaders are committed to pursuing the sought-after “sustainable pace”, relieving people and teams from abusive environments, allowing them to do good work.
They are committed to driving continuous improvement through evolutionary changes, reducing resistance to change and introducing long-lasting institutionalised improvements.