What is a value stream?
Who are your customers? What value are they looking for, and why does it matter to them? The answers to these questions will usually fix the compass on the Tue North of your organization. The organization's purpose is defined by what is needed and how it can be delivered. The process of inventing, creating, delivering, maintaining and improving a product or service that delivers value to customers is known in Lean terms as the "value stream".
In other words, a value stream is the sequence of activities that an organization must perform in order to satisfy a particular customer demand. Every value stream has a customer. The customer is not always an external customer; internal teams can also be the customer of a value stream. For example, a team that uses an internal platform. There will be a value stream for delivery and maintenance of this platform.
The figure below shows a hypothetical value stream for software delivery, at a very high level.
Figure 1. A very high-level value stream for delivery of a software product (example taken from the book Continuous Delivery by Jez Humble and David Farley).
In this linear version of a software delivery value stream, we assume for the sake of simplicity that all the activities in the value stream can be handled by a single team. If we add a second figure, we immediately see that value streams cannot be viewed in isolation from how teams are organized. Or how they could better be organized.
Both flows reflect value streams, but at opposite extremes in terms of the transition between the different activities in the stream.
With a waterfall approach, the responsibility lies with a number of different entities within the organization. Each link of the value creation process is handled by a specialist team or expert. Each time there is a transfer or hand-off between these entities. Each transfer is a potential bottleneck. This challenge is nicely illustrated by the well-known children's game where a phrase is whispered from one person to the next. The phrase that comes out at the end of the chain is often very distorted. In addition, with this approach the participants are often unaware of the activities of the other entities. Their main focus is on the efficiency of their own activity, not that of the full flow of change. In most cases this severely hampers an overview of all the actions that make up the value stream. Usually these value streams are barely or not at all visible, even to the participants, and often there is no feeling that everyone is working towards a common goal for the same customer.
At the other extreme, which is the (ideal) Product Team, all the activities needed to deliver something can be handled by a single, multi-disciplinary team. They also look after contact with the business stakeholders and the activities needed to keep the software operating in the production environment. “You build it, you run it” is the motto here.
In practice, there are many hybrid models. Among other reasons, this is because a pure linear value stream, e.g. for software delivery, is a difficult goal given the scale of most organizations.
What is a value stream network?
In most companies and IT organizations, the reality is complex and there is an intricate tangle of mutually dependent value streams. Some of these value streams are externally focused, while others serve internal customers. These value streams combine to form a value stream network: a complex web with mutual dependencies and feedback loops. To be able to track the full flow of added business value, you need to map out the whole network of value streams that are interacting with each other. This will allow you to streamline at the top level and boost the overall performance of the organization. This also creates a better picture of the impact of improvement proposals in one stream on the other streams.
What is value stream mapping?
Value streams are present everywhere that value is delivered. To deliver value from one place to another, most organizations need collaboration across multiple entities.
If you can’t describe what you are doing as a value stream, you don’t know what you’re doing.
- Karen Martin and Mike Osterling, Value Stream Mapping
An excellent way to make this kind of value stream visible to everyone involved is by mapping it. Value stream mapping is a very pragmatic technique in which the activities of a specific value stream are mapped without too many technical bells and whistles, but with useful variables such as the time required for each activity. This often sheds light on work that is normally hidden from others.
For successful mapping, it is crucial to first correctly identify the value stream in question and then get the right people involved in the exercise. The team that focuses on mapping the value stream, with the assistance of an experienced facilitator, must at least include a representative of every activity. However, in the interest of efficiency it is also important to keep the group as small as possible.
The most obvious deliverable of a value stream mapping exercise is an “as is” value stream map. In other words, you take a snapshot of the current situation. An example of a this sort of value stream map is shown in Figure 3. It contains the activities from Figure 1, but this time they are shown in the standardized format of a value stream map. This includes all the characteristics of the various activities, such as lead time, value add time, %C&A, activity ratio, etc. All this makes it fundamentally different from a simple process description.
In the ideal situation for a software delivery product team (see Figure 2), the value stream map includes all the activities from concept to cash. As previously mentioned, the real situation is usually more complex. Activities are often split between several teams. For example, a team may be responsible for all activities related to delivery of a particular software product, starting with its development. This means that some of the activities are bundled in a single team, but the input they need to start their activities comes from different links in the chain. As you can see from this figure, this is a hybrid form of the two extreme forms of flow we discussed earlier in this blog.
It is interesting to note that value stream mapping of your own activities (i.e. your part of the entire concept to cash flow) can be useful. It may well lead to improvements for a team or for an activity.
Maximizing business value
Value stream thinking is an extremely powerful, even essential, tool for improving the way that ideas are converted into business value in a pragmatic way. It forms the basis for attempts to make an agile approach scalable, as presumed in the Scaled Agile Framework for enterprise (SAFe).