Historically, organizations that develop software are often managed around common functions like; “Marketing”, “Portfolio Management”, “Product Management”, “Project Management”, “Compliance”, “Hardware” and “Development”, etc. For a product or service to be successfully designed, produced, and delivered, work must progress through all these separately managed, functional areas. Often these functional areas contain members who prioritize their own local optimization, are disconnected from each other, and otherwise act as “siloes”, inhibiting the flow of work, information, feedback, etc. to the detriment of meeting customer expectations and delivering what they value. In fact, Conway’s law (named after computer programmer Melvin Conway) states that “organizations which design systems … are constrained to produce designs which are copies of the communication structures of these organizations.”

How can organizations improve teamwork, optimize processes, and leverage technology to deliver value quicker, with higher quality and compliance? The answer is through visualizing, organizing, and optimizing organizational Value Streams.

Let us take a moment to examine:

  • What are Value Streams?
  • What are the Benefits of Value Streams?​​​​​​​

What are Value Streams?

The concept of Value Streams reorients thinking from the vertical to the horizontal, where people, resources, tools, information, and even finances are managed, and at times organized, horizontally across the vertical functional areas aligned for the same common purpose of delivering a product or service. It reorients “top-down” hierarchical organizational thinking, to “right-left” or preferably, “left-right” thinking with a bias towards removing barriers to value flow.​​​​​​​

value streams diagram
Hierarchical Organization
Graphics2 01
Value Stream

Value streams exist in nearly every organization that creates products or delivers services. Value Streams can be conceptual, virtual, or physical. But in all cases the definition of a value stream is simple. A Value Stream is the end-to-end set of activities performed to deliver value to a customer through a product or service from “Ideation to Adoption” or “Concept to Cash”.

“A value stream is all the actions (both value added and non-value added) currently required to bring a product through the main flows essential to every product: (1) the production flow from raw material into the arms of the customer; (2) the design flow from concept to launch.”

(Rother & Shook, 2003)​​​​​​​

Value streams exist in different types, shapes, and sizes based on the agency’s organizational structure and value proposition. Generally, there are two main types of values streams: Development and Operational.

Operational Value Streams consist of all the activities necessary to deliver services to customers. As an example, in HHS agencies, operational value stream activities may involve the application intake, eligibility determination, payments, and case management.

Development Value Streams consist of all the activities necessary to build or develop a new product or service. The visual diagram above represents a high-level view of a sample development value stream one might see in a public or private entity that develops software product(s) to sale or service delivery.

For leaders interested in transforming their organization, identifying value streams is the first step to rethinking how improving enterprise-wide operational, financial, informational, and psychological flow. (“Tameflow”, Tendon and Doiron, page 28, 2020).

What are the Benefits of Value Streams?

There are numerous benefits to value streams. But perhaps the greatest is how their use orients teams and team members to better see and understand their role and responsibilities within the bigger picture, sharing a common vision, of delivering value to customers.

Coaching youth soccer is a very interesting endeavor. What pre-adolescent players lack in multi-dimension and situational awareness, they make up in enthusiasm and passion. Surprisingly, when given the proper environment, they seem to have an innate ability to buy into the team concept and learn to suppress their self-centeredness for the good of the team in pursuit of a common goal of playing to win with passion. The challenge is to help them come to a common understanding, a common vision, of how to achieve that goal.

Now for the salient line of questioning.

Often when a youth coach asks, “What is the goal to soccer?”, one often hears in a loud chorus, “to win, coach.”

Then when asked, “How do we win?”, the kids answer, “By scoring goals!”

Great, the coach then asks, “How do we score goals?”

Often the players yell out enthusiastically, “Teamwork!”

The coach then asks, “What position do you play?”

The players start yelling out like a fire-cracker show gone wrong; “goalkeeper, defense, midfield, striker!”

“All right then” the coach presses on, “who’s responsibility is it for scoring goals?”

Every hand shoots up and they simultaneously and impulsively yell; “it’s the striker’s job to score goals coach!”

To which the coach replies, “Are you all not soccer players? If the goal of soccer is to win, and to win we must score goals, then are you all not responsible for scoring goals?”

Crickets.

Inevitably, after a moment of silence, a single hand will rise from the back of the group. “Coach, I am a goalkeeper. Am I responsible for scoring goals?”

The coach smiles and says, “well, what do you think?” Immediately, a broad smile covers the goal keepers face with the realization that they too can share in the glory of winning through scoring goals.


Remarkably, this same mentality is not uncommon for one to experience in organizations that develop software systems. If one were to ask representatives from “Marketing”, “Portfolio Management”, “Product Management”, “Project Management”, “Compliance”, “Hardware” and “Development” whose responsibility it is to deliver quality, secure, compliant software, on time, (and in budget), predominately the answer will be “why of course, it’s the Development Departments job to deliver the software.”

Identifying value streams and assessing their performance for organizational leaders is not unlike that of a soccer coach. Leaders, like coaches, certainly must provide training and other resources and tooling for the team to learn, grow and perform. But it is the leader’s primary responsibility of providing the vision of how all the collective skills and wisdom of the team members can be harnessed to “score goals” and win.

It is the role of the leader to overcome the collective tendency of team members to only focus on their localized responsibilities and ignore the bigger picture of the entire team delivering value; that it is not just the responsibility of any single department or group of individuals to produce software. It is a collective team effort. Therefore, it is the leader’s responsibility to get the team properly organized to think, act, and deliver synergistically.

Value Stream analysis enables leaders an alternative prism to view how their enterprise is organized and to think how all the respective parts work together to deliver value to the customer. It provides an alternative perspective in assessing software development and service delivery activities from departmental efficiencies, to that of the customer. When leaders envision value delivery in terms of value streams, numerous benefits can surface.

Focus

When leaders ask themselves “who is responsible for increasing value, improving processes, and achieving business outcomes (make more money, increase compliance, security, quality, improve user adoption, etc.), what is their answer? If the answer to that question is a laundry list of functional areas instead of a definitive ‘the value stream team’, is there any surprise that an organization struggles with bureaucratic morass?

By analyzing and thinking in terms of value streams, leaders can help their team members increase their focus on the goal and improve collective understanding of team member responsibilities relative to the big picture of delivering value to the customer.

Accountability

Accountability builds trust. Trust improves teamwork. Good teamwork enables a safe, fun and enjoyable environment to work in. When searching for ways to improve teamwork, leaders should attend to individual, team, and organizational accountability. To grow accountability, is it easier to work within each department which has its own goals, or with value stream team(s) that shares a common outcome?

When leaders find that team members identify more closely to their department than the value stream, it requires greater effort to bring all the team members to appreciate a shared sense of accountability. However, when team members more closely identify to a value stream than their assigned department, it enables leaders to help team members hold themselves accountable to the collective value stream performance.    

Simplicity

One of thehardest things to manage in software delivery are dependencies between teams, components, and products. Lean-Agile leaders strive to simplify operations to help either remove or more effectively manage those dependencies.

Moving from department (silo) organization towards value stream orientation allows team members to share common objectives, communicate and collaborate more easily and know where they should focus their work to manage dependencies more effectively. It is also simplifies performance-reporting, organizational structure, resources, tools, and finances into a unified system of delivery.

Visibility

Once Lean-Agile leaders see in terms of value streams and use that prism to gauge team performance and organizational success, then visibility to the value stream(s) within the entire organization become more evident for everyone to see.

Practices (i.e. Kanban), tools (i.e. Application Lifecycle Management, UX design applications, delivery pipeline automation, etc.), resources (Lean-Agile Center of Excellence), and performance metrics (Lead Time, Cycle Time, etc.) can all be designed to support and make transparent the value stream through which value is delivered to the customer.

Networks

Software development is complex. Lean-Agile principles and practices exist to help leaders deal with the high variability, non-repetitive, and the non-homogenous flow-nature of software development. But the principles and practices alone insufficiently deal with the inherent, immutable fact that software is not designed, developed, and delivered linearly.

It takes leadership to view software development systems as complex collaboration of networks, more akin to aircraft control systems than a linear manufacturing line, for the organization to structurally deal with this complexity. Once those leaders understand that rich networking is a necessary enabler of successful software development, then the imperative is for those leaders to take action to break down silos and grow networks. In fact, Metcalfe’s law states that a networks value grows with its connectedness. Team network connectedness improves when team members see themselves as part of a value stream.

Continuous Improvement

There is no argument that traditional, functionally organized “siloed” organizations cannot or should not be pursuing continuous improvement activities to improve work quality, compliance and reduce costs. But, training, coaching, mentoring, learning, and implementing continuous improvement along value streams is easier and generally more effective, because the focus of the improvements cuts across the functions of the organization, improving activities systemically throughout the value stream.

It is clarified by asking team members; “are we quantifiably improving the delivery of more value to the customer through our continuous improvement activities?” In a siloed organization, one department can make significant improvements, while another one, upstream or downstream, does not. Despite the first department demonstrating significant improvements and cost savings, value delivery from the customers perspective (and leadership’s expectations) may not be realized because the second department has not made sufficient progress to make an overall difference.

Certainly, localized optimization does deliver some cost savings to the organization. But it does not generally end in comprehensive, systemic value delivery improvements to the customer. Continuous improvement within a value stream focuses on the delivery of value through the entire value stream preventing localized optimization.

Summary

A Value Stream is the end-to-end set of activities performed to deliver value to a customer through a product or service from “Ideation to Adoption” or “Concept to Cash”.  It provides an alternative means of viewing how an organization delivers value from “top-down” to “right-left” or preferably, “left-right” thinking that improves enterprise-wide operational, financial, informational, and psychological flow. It provides leaders the ability to cast a vision to team members of how all their collective skills and wisdom can be harnessed to deliver more, higher quality value to the customer.

Value Stream orientation improves focus, accountability, and visibility of team members throughout the organization. It grows networks and enables a continuous improvement culture that delivers greater results in team performance and business outcomes.

In the end, it makes for a trusting, helpful environment where everyone knows their role, shares a common vision, and can play their part in the systemic pursuit of business agility.