UNDERSTANDING VALUE STREAMS
The way you setup the Agile organization is key. Agile transformation starts with the identification of the values streams.
Let’s talk about what are value streams and what they are not. A Value Stream is simply the sequence of all of the activities that an organization takes to deliver on a customer need — and all of the people, systems, and resources required to do those activities.
Value streams differ from traditional project models in several ways:
- They are comprised of long-lived, cross-functional teams and teams of teams instead of temporary groups organized around a specific project.
- Because the teams operate on an on-going basis, they are able practice continuous improvement. Temporary teams, on the other hand, are always starting from scratch, with little opportunity to improve performance and efficiency.
- As the name suggests, value streams connect work back to the ultimate value that it delivers to the customer and/or business. With traditional projects, the real value is often obscured by project-centric metrics like being on-time and on-budget.
Here is an example from Scaled Agile, Inc:
There might be a tendency to state that this is just a workflow. However, the value stream focuses on creating long term value, without decision points like a typical flow diagram. A value stream aims to remove activities that do not create value. A value stream is not a customer journey map or equal to business processes, rather it encloses (parts of) business processes as starting point for discovering and understanding value streams.
IDENTIFING VALUE STREAMS
Defining the precise value that your organization delivers is the first step in any value stream initiative. The exact composition of value streams will look different at different organizations, typically falling into two categories: operational value streams and development value streams. Both result in the creation of value for a customer (internal and/or external) and can come in the form of products, services, or a combination of the two.
This chart is a great summary of the differences between an Operational Value Stream and a Development Value Stream from the Planview Blog:
Step 1: Identify the operational streams.
- Start with grouping your products. Grouping your products is a simple process based on process steps or like services. You need to create a matrix that cross references the process steps with each product line. Those products that use the same processes belong in the same value stream. Even if these products may have different end users, or go to completely different customers, it’s the process steps that define the value stream, not the end users.
For a financial institution, it might look like this:
Step 2: Identify the IT systems (software and hardware) that support the operational value stream.
- What systems and tools are used to move through the activities in the process or service? Identify core systems and supporting systems needed. The goal is to gain a deep understanding of how it all works.
For our financial institution example, the systems would be added like this:
Step 3: Identify the people who work on these IT systems.
- These are your end users, the ones behind the keyboards. If you are at a large organization it may be helpful to identify owners and stakeholder groups, rather than large number of individuals.
Continuing our example for a financial institution:
Step 4: Identify the development streams.
- This is the value stream that is used by the development team to build or enhance the software used to support the operational value streams and identify the end customers (the end users in step 3).
Step 5: Add the people needed to deliver the development value streams.
- The team is all the people needed to deliver the system, it often includes product/system owners, IT operations, development, QA, legal, marketing, finance, support, compliance, security, and others.
It may look like this:
USING VALUE STREAMS
Value streams offer a construct for businesses to organize and operate around what really matters: the value they deliver to customers. While the process may initially seem complex, it often results in much greater clarity into the relationships between the work that gets done and the value that it provides. That insight, in turn, opens the door to the many benefits of Agile, from efficiency to productivity and beyond.
Now that you have a good understanding of your business, here are ways to get the most benefit from value streams.
- Review your key value streams and start a discussion about whether there is an opportunity for improvement.
- Ask the team brainstorming questions. Is there pieces of this process that are wasteful? What things need improved to get more end value? What things could be automated? How do we improve output in this value stream? What can be done to improve efficiencies? Asking these types of questions about the data of the value stream will eventually lead to specific improvement ideas.
- Convert improvement ideas to user stories. Writing down improvements in a user story format makes improvements easy to compare both by estimated value and effort.
- Group user stories together under an epic. An epic is a container for a significant solution development initiative that captures the more substantial investments that occur within a portfolio. In other frameworks some may also refer to these as projects or themes, where they differ is that unlike a project, this is not a temporary endeavor as this maps back to the value stream that is continually being improved.
- Rinse and repeat. After an improvement has been implemented, we need to measure its outcome and update our Value Stream Map. This gives you another opportunity to look at your Value Stream and look for new improvements. Continuous Improvement is nothing more than repeating this process until the effort of most improvements outweighs their value.
Having mapped a value stream and creating a few user stories does not equal value stream optimization. The key is to repeat the process steps described in this play to achieve continuous improvement that is based on data. Focus on measurable outcomes to really improve your Value Stream and become a high performing team.