by Lio Grealou, senior advisor to QR_ and founder of Xlifecycle Ltd. Origionally written and based on conversations taking place in July 2022. Thanks to Romit Samani, Business Leader at QR_ for his valuable input to this discussion.
Image: Keeping the big picture in mind implies alternating between multiple lenses to understand different perspectives across the business and deep dive as necessary, alternatively using a wider angle, fixed focal length, or zoom lens when appropriate. (image credit: UNSPLASH)
Business value drives decisions, as well as improvement and change requirements. Value mapping encompasses all activities across the entire value chain, from suppliers to customers and end-users, looking at the big picture to identify and prioritize opportunities for improvement.
In terms of lean operations, value stream mapping is the glue between data flow and decision-making process. It is not about telling people what to do when, or about efficiency by making people work faster or harder. Instead, it aims at empowering stakeholders at all levels to plan how and when to implement improvements and changes which will add value to the organization—and ultimately meet or possibly exceed customer expectation.
It helps business leads, process owners, and management teams understand problem statements and consider them strategically in wider business context. In parallel, it helps data stewards and key users understand data and process interdependencies and deep dive into improvement opportunities.
The idea behind value stream analysis is to look beyond individual processes and individual roles, focusing instead on upstream and downstream data flows, and the processes they impact. That said, such analysis typically goes beyond data and business processes into considerations such as skills, knowledge, team and organizational structure, training and education, onboarding, operations, governance, business analytics, etc.
In this article, I elaborate on how value streams can be interpreted to develop business cases and drive transformation roadmaps.
Beyond process continuous improvement
The concept of value stream mapping (VSM) was introduced in the late 90s by Rother and Shook as a way of “seeing” (visualizing) business value across multiple perspectives (processes, teams, personas, organizations, data sets, systems, interfaces, etc.). It initially focused on manufacturing production waste identification and elimination (process kaizen), whereas the approach can be applied beyond the shopfloor and up to the management top-floor.
Value-stream improvement can help build better product development operations, even if the link between business metrics and decision-making processes is less tangible than with production execution.
“Wherever there is a product for a customer, there is a value stream. The challenge lies in seeing it.”—Rother and Shook (1999)
Rother and Shook refer to “learning to see” and describe future-state VSM as a visual “blueprint for Lean transformations”, in continuous improvement terms. Simply put, it is a way to frame contextual problem statements, brainstorm accordingly on opportunities for improvement, and create the business case for it (justification).
VSM consists of a current-state versus future-state fit-gap analysis. Future-state ideas can come from industry lessons learned and / or enterprise platform best practices (externally benchmarked), or by looking at new solution opportunities within the organization (internal creativity). There is often a combination of the two. It is also driven by the maturity of the organization, cultural factors, and its ability to drive (small to large) changes. VSM is contextual to a set of stakeholders, it is typically performed as part of a broader enterprise architecture initiative.
In addition, start-ups or new product development projects might not have a current state to map, consciously seek to do things differently by building on creative opportunities and partnerships with the relevant subject-matter experts. This implies a combination of inside-out and outside-in learning and leadership to tailor a workable solution. Inside-out and outside-in value assessments bring new perspectives to the table while accounting for and leveraging how teams currently work.
Defining core business value statements
Value statements inform expected business benefits (even if aspirational, or to be validated) with top- or bottom-line results that can be measured across multiple personas. Each persona represents a high-level business function or role in the business which drives sets of perspectives and expectations.
“Effective value management requires an understanding of what is valuable to one or a group of stakeholders, and the activities to create value should be focused on successfully delivering the anticipated value. In this context, value can have many different meanings [to different people].”—Grealou (2016)
As highlighted by Nash and Poling (2008), it is often wrongly assumed such value statements are highly speculative or subjective (not data-driven), relying on stakeholder opinions. VSM contributes to showing where data comes into play, how it is collected and shared, and which decisions are based on it (operational data analytics). Business value is typically derived from a balanced combination of improvement steps and enabling capability introduction (or re-implementation).
Nash and Poling (2008) expand on the fact that VSM techniques are easier to use with product or transactional processes; they describe process mapping as “a stream of activities that transforms a well-defined input or set of inputs into a predefined set of outputs.” Business benefits are what drives implementation prioritization per an enterprise improvement backlog.
Furthermore, it is preferred to under-estimate benefits to set realistic expectations while aiming at over-delivering and containing any foreseen risk mitigation within budget, time, and quality expectations. Expected return on investment must remain initially conservative while being sufficiently attractive for top management to commit to the business transformation—as well as providing robust boundary conditions towards guided and concerted process re-engineering.
In some cases, organizations might prefer to define a utopian ‘change vision’ to promote their aspirations to their workforce, with the hope that the implementation roadmap would eventually end-up driving the business in the right direction—a risky approach that does not align well to the VSM philosophy and practice. As a matter of fact, the so-called change vision must be set with SMART and achievable objectives to avoid depicting an unrealistic vision that might over time hinder trust and mobilization (reversing the expected effect).
Building business change roadmaps
VSM combines methodologies and techniques to start down the path to continuous change and improvement; it is an ongoing journey, not a one-off study. Most agile frameworks refer to value streams as a phased approach to implement a “continuous flow of value to a customer” (also referred as customer-centricity by Scaled Agile).
“This concept we call value stream mapping is intended to be an integral part of the journey. Understanding that this is a repetitive tool and promoting the concept to all employees is essential to creating a culture that embraces the technique. With it, you can see the flow, understand the issues, and create a vision of the future. Without it, it is easily possible to muddle along without goals or a destination. Success relies on staying focused. Value Stream Mapping provides the tools to start down the path to success.”—Nash and Roling (2008)
VSM is an effective way to gather business requirements when implementing, configuring, or improving enterprise digital platforms (PLM, ERP, MES, etc.). When it comes to value identification and realization, data analytics are a core input / output to quantify value opportunities and compare improvement outcomes:
- Which data is more relevant across personas / stakeholder perspectives?
- What are the relevant data sources, and how do they connect?
- What data is essential for which decisions?
- Is there sufficient data to quantify the process effectiveness and efficiency?
- How to make sense of the core data, and separate it from the noise?
- Is there industry benchmark data to fill the gaps when current metrics do not exist?
- How to address start-ups where there is not much data to look at in the first instance?
Such questions (and many others) are essential discussion topics with business stakeholders when mapping information flows, systems and process landscapes, value drivers, etc. It is also important to avoid pushing a specific VSM methodology onto an organization, but rather adapting the approach to the context, leveraging both internal and external perspectives. Being able to concurrently define, run, improve, and when needed, re-engineer business processes and operational governance all together (while ensuring business continuity) is clearly a rare skillset.
What are your thoughts?
- Grealou L (2016); Value is in the Eye of the Beholder; virtual+ditital
- Nash MA, Poling SR (2008); Mapping the Total Value Stream: a Comprehensive Guide for Production and Transactional Processes; CRC Press.
- Rother M, Shook J (1999); Learning to See: Value Stream Mapping to Create Value and Eliminate Muda; Lean Enterprise Institute.