The Value Stream of the Effective Organization

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One of the main tenets of Lean-Thinking is to attend to the work not the people. Some of the reasons for this are:

  • We trust our people so we want to provide them with the best environment we can. This requires improving the environment – we don’t need to improve our people.
  • Our goal is lowering the cost of delay of value being realized. Looking at the value stream provides an overall view that cannot be achieved from looking a single steps.
  • Focusing on people tends to have us think the people are the problem when almost all of the problems are due to the system people are in.
  • To lower cost of delay we must lower the delays at the critical steps in the value streams. Delays are caused by hand-offs, interruptions and rework.  The causes of these cannot be seen by looking at any one step.
  • Many delays are caused by dependencies between different parts of the value stream. A person may have a problem doing their job that’s been caused by someone else.
  • Focusing on people leads to local optimization both directly and by rewarding people for being locally optimized.

Since we trust and respect our people, micro-managing them shouldn’t be needed in the first place.

Understanding this means that we can understand what an effective organization must look like. That is, what does its workflow look like and how does its people collaborate with each other. A depiction of the value stream of the effective organization is shown in figure 1.

Figure 1 depicts the steps work goes through from concept to realization. It does not intend to suggest that the work done is linear or in batches.  To simplify the main concepts, it has intentionally left out feedback loops as well as places where work is done in parallel and then re-converges. The replicated streams in the middle of the diagram illustrate how several value streams can exist in parallel.

Two new roles are also presented – the value stream network architect and the business architect. Both of these will be described in their context. Each of these parts of the value stream will be discussed in the rest of this part of the book.  It is important to see how each part is affected by parts upstream as well as affects downstream parts.

The Effective Enterprise of the Future

In Steve Denning’s Article in Forbes, Understanding Fake Agile, he describes:

The three laws of Agile are thus:

      • the Law of the Customer—an obsession with delivering value to customers as the be-all and end-all of the organization.
      • the Law of the Small Team—a presumption that all work be carried out by small self -organizing teams, working in short cycles and focused on delivering value to customers—and
      • the Law of the Network—a continuing effort to obliterate bureaucracy and top-down hierarchy so that the firm operates as an interacting network of teams, all focused on working together to deliver increasing value to customers.

For a few select organizations the enterprise of the future is here today. It is no longer a question of what to do, it’s a question of getting there. The goals of the effective enterprise are:

  • create value for its customers
  • achieve business agility – the quick realization of value predictably, sustainably and with high quality
  • be a great place to work with engaged employees
  • have the ability to deliver products and services on a continuous basis with the management of release  being based on business value and not development limitations.

Achieving this requires the best of both the Lean and Agile mindsets. Agile focuses on the creation of self-organizing teams that create value for the customers they are responsible for in a semi-autonomous manner. Lean suggests taking a systems-thinking point of view and looking at the entire value stream.

The result is connectivity between the strategies of the business to the teams creating the value. The most effective arrangement is for teams to be accountable to only one business stakeholder. In this way when a requirement comes in they can work on that and get it done. This not only enables teams to build new functionality without interruption, it greatly simplifies the budgeting process. In this scenario the business stakeholder requests some functionality to be built, technology builds it and then the business stakeholder requests something else. In order to deliver value quickly, smaller chunks of value can be requested. This results in a stream of small items being built and released. If quick releases are not desired, they can be held back, but their quick validation can be used to get feedback on what they are building.

This connectivity enables budgeting to be done on a frequent, even continuous basis. As business increments are built and released the next most important business increment can be started and worked on.  The budgeting process can range from continuous to quarterly.  Teams have end-to-end responsibilities for products and services. They collaborate within a network that supports them. They use Team-Agility tailored as appropriate for them. Shared service teams and DevOps are integrated into this network.

The ability for teams to work in a semi-autonomous way increases innovation while accelerating development. It also enables taking risks with new products since it can be determined if they will return value quickly. This enables the company to innovate in a safe manner and get low loses on bad ideas but great returns on good ones.

To learn more about value stream mapping, see Mapping Your Value Stream.

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Note

Two online FLEX courses are now being offered – FLEX for SAFe, and Adopting FLEX (the first course in becoming a FLEX trainer).

If you want to learn about how to adopt FLEX in your organization please contact the author, Al Shalloway.