In one way or another, many organizations are busy becoming lean and agile. You hear the term a lot: lean-agile enterprise. Agile working is a trend that began in the world of software developers. They wanted to be able to respond better to the changing needs of the business and new insights acquired by the business. Customer value is key in this, inspired by the Lean philosophy. Waste – anything that does not add customer value – is ruthlessly eliminated.
A nice image but one that is far from a universal reality. At any rate, lean-agile enterprises seem to be running at full speed: agile or DevOps teams are working in value streams that run end-to-end through the organization. But…all this is not delivering the expected value. How can that be? The disappointment is enormous.
There can be many reasons for underperformance. However, in this blog I want to focus on value streams. Value streams are built around a product or service that creates value for a particular customer or market. They ‘flow’ through organizations from start to finish, from marketing right through to delivery and service and maintenance. A number of multifunctional teams ensure that every value stream runs through the organization unimpeded.
A value stream is also an organizational unit with its own mission, vision, KPIs and budget. It is preferable to minimize dependencies between value streams and other organizational units. The starting point in all activities is to create value for the customer. The approach is therefore ‘outside-in’, from the customer’s requirements to the organization’s products, services and processes. Anything that doesn’t create value is eliminated. Every step in the chain leads to creating value for the customer which also translates into value for the organization.
Let’s return to the disappointing results. It’s quite common for value streams not to be fully implemented. There are also value streams that don’t flow properly, but instead advance sluggishly from silo to silo. Truly lean-agile organizations bid farewell to the silo structure that so many companies and institutions have in place (e.g. for sales, marketing and production). Silos slow things down, prevent customers from having a single contact and make it necessary to share a great deal of information internally.
And when I say ‘bid farewell to silos’ I really mean farewell: get rid of them! You can’t create value streams by using all kinds of tools and partnerships to tie silos together. You’ll end up with a horse-drawn carriage without a horse instead of a Formula 1 racing car. What else is happening? Let’s look at incomplete value streams. An organization starts out in a very modern way with lean-agile working methods in R&D, with proofs of concept, autonomous teams and in collaboration with the customer. Once the product or service is delivered, maintenance delivery is the next step in the value stream. It’s like a statue being delivered with only a head and feet. Everything in-between – business operations – is missing. Part of the organization is still working in the old way.
Sometimes you see that a value stream almost reaches its target, the customer, but doesn’t quite make it. This means the value stream was designed to deliver value to co-workers. Even if these co-workers are close to the customer, they should not be the final target.
Just a few examples of incomplete value streams that don’t begin and end with the customer. Not to mention failure streams. Ostensibly, these are value streams, but ones that the customer neither expects nor wants. Classic examples include fault resolution and complaints handling. No client is truly looking for this. Every customer wants the flawless delivery of functioning products and services – that keep functioning.
What can you do about this? To start with, senior management needs to be aware that choosing to be a lean-agile enterprise is a radical choice. It is a choice that means taking courageous steps and requires intensive communication with all staff and every department. Everyone has to be working towards the same goal, going with the value stream flow.
In terms of tactics, when mapping the value stream it is sensible to think about the points in the value stream where things could go wrong. A transfer problem, a late delivery… Get input from your organization’s experts and together explore what measures would be appropriate in such instances in order to get the value stream back up to speed. Value streams only turn their potential into value when they truly flow. End to end.
Author: Niels Loader, Partner & Principal Consultant at Quint Wellington Redwood.