End to end optimisation with Value Streams

Takeuchi and Nonaka’s original vision in “The New New Product Development Game” was of business agility, not a narrower interpretation of solely Agile software development.  Business agility is generally understood to mean that a business – a whole enterprise or a part of that enterprise – can adapt to changes.  A part of a business’s ability to adapt depends on the flexibility of its development teams.  However this is not the whole story and we need to look much wider.

Local optimisation of one part of any overall process will not generate agility while there are bottlenecks in the other parts.  Business agility requires us to step back and look at the delivery of value through the whole business. The integration of multiple business areas as a cross-functional whole is a key part of making agility effective.

Lean focusses on the end to end flow of value.  If we are to be effective at delivering value to customers, we must look at the whole organization.  If we understand from the process map how the business functions, we can extend from the development flow of work to looking at the flow of value across the organization.  We will continue to use Lean thinking, focussing on value, flow and minimising waste.  We now need to broaden the view and to focus end to end on how value flows.

Over optimising

I worked with one team that were very talented and hard working.  They decided on one project they were going show how good they were.  They made a product that outperformed the goals by about 20%.  At the end of the project they were understandably delighted, and a little stunned, by what they had done.

But viewed as business value, the position was different.  They had become wholly disconnected from the strategy.  The business had wanted a product to fit at a specific point on a long-term roadmap.  What the team had made had destroyed that roadmap.  This is a lesson which I have never forgotten.

What is a Value Stream?

A backlog represents an ordered list of work.  Although this includes work for products, it is also a way for the team to be clear about their priorities.  How then should we best represent the programme of work for a product?

A Value Stream is a path through your organization.  It leads from the start of an idea to the delivery of that idea as an implemented reality which generates customer value. 

Before the idea, there is not even any potential value.  At the other extreme, at the point of delivery the customer is willing to pay for a product.  By this point there is a creation which (if well planned) has a clear value to a customer. The path from one to the other is the value stream. Along the value stream we put in effort and cost.  As we do so, value accrues as the concept moves through the business.  The value stream represents how and where value is generated. 

Stages of a value stream

Typically there will be a value stream for each product or service which you deliver.  Each one shows the flow from an idea to a deployed solution with all the steps which are taken in achieving this.  How this is broken down depends on the organization, but typically might involve ideation, creation, deployment and operation.

• Ideas are generated based on an understanding of the customers and the market to identify something the customer would value. 
• The idea is developed into a created form, typically as a feature within a piece of software. 
• The idea is delivered to the customer in some way, perhaps integrated into a SaaS product which they are licensing. 
• And finally the idea is managed operationally so that the customer has access to, and can reliably use, the idea.

Good practices

Value Stream Management, which is the control of these business value streams, is a critical activity for an agile organisation.  First you will need to identify the value streams in the organisation, and how they function.

Then you need to measure the flow of work through the streams and look at areas for improvement. This is separate from ensuring teams individually work in efficient ways.

A value stream will include value generating activities and waste activities. You should identify the areas of waste and aim to reduce these, looking across the whole stream for the greatest impact.  Mary Poppendieck suggested some broad categories to consider. 

• Partially Done Work – how much is the smooth flow of value impacted by excess work in progress?
• Extra Features – are we creating features which do not represent value?
• Relearning – is knowledge well managed in the flow or does each step re-learn information?
• Handoffs – how frequently and efficiently is a new team involved in the value stream?
• Delays – does each stage pick up immediately from the last?
• Task Switching – is everyone focussed on the most important items of value?
• Defects – How often is progress stalled or customer value impacted by rework ?