Organising around Value Streams
This month the inaugural edition of the State of Value Stream Management Report was released, a significant piece of research produced by the VSM Consortium. The report identifies four practices and key findings. They are:
- Organising around Value Streams
- Discovery through Value Stream Mapping
- Inspection and Adaptation Through Value Flow Analysis
- Measuring and Acting on Value Realisation.
Today, I’d like to discuss the first practice: Organising around Value Streams.
The report discusses a set of requirements deemed necessary to get the value stream-centric thinking and move towards value stream management. Those requirements are related to your organisational design and ways of working. However, If you’re not in an enterprise that can afford a significant transformation, It worries me that you might find the bar too high for you to dare to take the first step. As an industry, we need to make sure we put alternative paths forward in ways that suit different circumstances.
In this article, I want to introduce three ideas:
- Unless you are a brand new venture, you don’t “organise around Value Streams”; instead, you “reorganise”, giving there’s already an existing structure in place. Reorganisation, a.k.a transformation, is not for everyone.
- Modern Value Stream Management platforms now allow you to take that first step virtually, postponing more radical interventions, reducing the dip of transformation’s J curve, reaping benefits sooner, and over time, redesigning only the structures that really need to be physically redesigned, if any.
- You don't always need to drastically change structures to become fit-for-purpose. Often you just need to reinterpret your existing structures.
Before we deep dive, I noticed that the report is borrowing from two different schools of thought. The first being a top-down, autocratic, looking for a step-change (Kaikaku); the other is more evolutionary in its nature, aligned to starting from wherever you are and evolving incrementally (Kaizen). Although there are two voices evident in the report, at times even conflicting with each other, I do not believe that this is necessarily negative. On the contrary, I think the diversity of this group is its superpower. As a newly formed group, they are also likely going through Tuckman’s journey of forming, storming, norming, performing. I’m genuinely interested to see how the VSM Consortium evolves and norms its thinking over time.
Organising vs Reorganising around Value Streams
The key finding opens by affirming that moving from ‘waterfall, big-batch, project-oriented ways of working’ to ‘agile/DevOps, incremental and product-oriented ways of working’ requires three main organisational design considerations:
- Flattening the hierarchy to distribute authority and empower individuals within teams.
- Breaking down silos for improved collaboration.
- Systems thinking to promote end-to-end lifecycle management.
It also says that value stream-centric thinking requires a change in ways of working from project to product. It is worth pointing out that all these requirements around your organisational design and operating model should not be seen as a precondition for you to start benefiting from Value Stream Management.
I believe enterprise organisations can’t easily organise themselves around Value Streams. Unless you are a brand new venture, it is very likely your structures are already somewhat rigidly in place with clear reporting lines, goals, incentives and operating models.
Another way of looking at it would probably be that you’re actually ‘reorganising around Value Streams’. From experience, I know that more often than not, reorganising involves a set of complex, intrusive, expensive and risky interventions in the organisation design and operating model—either driven by a new internal role charged to guide the transformation or via a management consulting firm that will help rollout (typically) a wholesale redesign.
Either way, you’ll be expanding lead time, delaying economic results and leaving compounding performance gains on the table for several months and sometimes years. From what I see and hear, having to reorganise as a precondition to start operating Value Streams is not for everyone.
Reorganising physically vs Organising virtually around Value Streams
When choosing to drive step-change, previously, you had limited choices. You would generally have to go on a path of physically modifying your organisational design and operating model (org chart, reporting lines, roles and responsibilities, KPIs, bonus structure, physical spaces, cadences, processes, taxonomy, tooling, etc.).
With the recent emergence of Value Stream Management (VSM) platforms, you can now take that first step virtually, with a fraction of the effort, cost and risk. Modern VSM platforms now allow you to compose/design value streams without having to physically modify (as a pre-condition) either your organisational design or your tooling. That will enable you to start wherever you are, respecting the local context of teams and team-of-teams whilst enabling governance at a higher level of analysis.
This is achieved by applying sophisticated value stream models as an overlay on the configuration of existing planning tools. For that, VSM platforms leverage a series of rich mappings, aggregations and normalisations, allowing you to look at, and start managing your existing structure through a Value Stream lens.
That by itself is game-changing. It allows you to postpone more radical interventions, reduce the dip of the transformation’s J curve, start reaping benefits sooner, and over time, redesign only the structures that really need to be physically redesigned if any.
Redesigning vs reinterpreting existing structures
There’s a new emerging narrative that puts the construct of co-located and cross-functional teams as that in which you should always aim for, almost like a silver bullet. Sometimes that is the right thing to do, sometimes not. So it’s crucial we continue to make contextually appropriate decisions and not fall into the one-size-fits-all trap.
I believe to achieve sustainable high-performance and become fit-for-purpose, you don't always need to drastically change structures. Often, the optimal thing to do is to keep your existing component, functional and shared service teams as is, apply a service orientation lens to them, and then connect them back to your value streams as either:
- Full end-to-end customer-facing Value Streams - a service is requested by and delivered to an external customer.
- Value-enabling (support) Value Streams - a service that supports the delivery of value.
- Value Stream Segments - a portion of a larger value stream.
Looking at your structure as a chain of interconnected services, and getting your teams to start operating with a service mindset, will help them become more customer-centred, which certainly helps shift the focus from executing tasks to satisfying customer needs.
Think about that, wherever there is a request and a deliverable, there is a service. If there’s a service, there’s a customer. In the context of Value Streams, customers could be internal or external. It could be the one who represents your market share, a GM of one of your business units, a different Value Stream in your organisation or even the value stream segment downstream from you.
Every customer consuming a service from you has, implicitly or explicitly, a service level expectation. The degree to which you satisfy that expectation determines your fitness level, which influences/impacts your customer selection/satisfaction. For example, in product delivery, common selection criteria include time to market, cost, quality, productivity, and predictability.
If we want to create a culture that puts customers first, we need to make explicit (and become aware of) what makes the different services provided by each different team fit-for-purpose.
To illustrate, imagine you have a team providing bug fixes, enhancements and optimisation services to the full end-to-end customer-facing value stream. Their services and what defines good service level could be described as:
- Time to market: 5 days or less to solve bugs reported by the customer
- Productivity: At least five bugs fixed per week
- Quality: First Time Right (FTR): 90%+
- Predictability: 85% confidence on both time to market, productivity and quality
Enhancement and Optimisation
- Time to market: 14 days or less to build and deploy enhancement and optimisations requested by the customer
- Productivity: At least three enhancements and optimisations shipped with quality per week
- Quality: First Time Right (FTR): 70%+
- Predictability: 85% confidence on both time to market, productivity and quality
To summarise what we’ve discussed in a few actionable insights:
- Design/Map your Value Streams virtually using a VSM platform as a first step rather than going all-in on a wholesale disruptive transformation right from the start.
- When the time comes, instead of changing the organisational design, consider the possibility of reinterpreting some of your existing team structure using service-orientation and map them back to your Value Streams as either a ‘Value Stream Segment’ or a ‘Value-enabling Value Stream’.
- For each team, make explicit the ‘service level expectation’ or ‘that which makes the service fit-for-purpose.’
- Use a VSM platform to provide teams and leaders with contextual, near-real-time information about key concerns such as time to market, cost, quality, productivity, and predictability.
- Establish/revamp feedback loops designed to identify how delivery performance matches service level expectations. That is, how your teams are serving their customers.
- If performance differs from customer expectation, use even If performance differs from customer expectation, use the information you have (stressor) along with events like Service Delivery Review and Operations Review (reflection mechanism) to diagnose and ask how-might-we questions to find ways of addressing key sources of delay, one at a time (leadership).
By doing this, you’ll surely mature your Value Stream journey, start reaping benefits much sooner and begin to make leap steps towards sustainable high performance and becoming fit-for-[customer]-purpose.
- There’s no ‘organising around Value Streams’. Unless you’re a brand new venture, you’re looking at a reorganisation.
- Reorganisations are commonly disruptive, risky and delay economic value.
- Reorganisation as a pre-condition to VSM is not for everyone.
- Modern VSM platforms allow you to virtually organise around value streams, seizing benefits sooner and only physically redesigning what’s really necessary at a later point.
- Along with VSM platforms, service orientation can go a long way in helping you start seeing and managing your existing structure as value streams.
I hope some ideas here have sparked insights and gave you some food for thought. Click here to experience the Flomatika platform, and If you want to know more about us and how we can help you, we would love to hear from you!