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Only about 14% of transformation efforts succeed at all and only 3% of those successes are sustained, reports a major analyst firm. A major reason for this overwhelming lack of success is the failure to establish an operational model aligned with a world in which strategic pivots need to happen quickly.
Value Stream Management (VSM) has become increasingly prevalent as the best operational model for those few organizations that have successfully transformed. Through effective implementation of VSM, cross-functional teams collaborate more effectively and execute more efficiently so they ultimately deliver more value to customers. The following sections outline the five key steps business leaders can take to ensure success with VSM:
A value stream is a self-sustaining organization that contains all of the necessary people and roles to deliver value – from the “concept” to “cash” – marketing, legal, procurement, sales, IT, R&D, and of course, the business. You may not call it a “value stream” – maybe you prefer domains, journeys, platforms, towers, jobs-to-be-done, or some other moniker – but the primary principle remains: Can you independently deliver value? This streamlined delivery model reduces complexity and friction and accelerates time to market. It’s also often a board-level decision to reorganize this way, so be prepared for the political battles involved.
Once you have your value streams (or whatever you choose to call them), you next need to fund at that level in the annual planning process. In many organizations, traditional project- or initiative-based funding approaches stifle the payoff of building an agile, value-oriented organization because they lock down resources, allocations, and timelines. Instead, you want to fund value streams and establish broad operating plans, which enables the managers in those value streams to both more effectively prioritize and adapt the plan as needs and requests change.
One of the toughest, but often hidden, challenges in many organizations is striking the correct balance between delivering new strategic value and maintaining existing value. VSM allows your business groups and delivery groups to get onto the same page around the balance between these two competing priorities. In some quarters, you may go 60% strategic work and 40% keep-the-lights-on/technical debt; in other quarters, you may decide to allocate 30% to strategic work with 70% keep-the-lights-on/technical debt because you’re concerned about reports on stability or performance. Resolving the balance between what business leaders want versus what technology leaders feel is needed is a critical aspect of VSM success.
You can’t just set the plan for a quarter and forget it. It’s essential for business leaders to monitor work, track progress, and steer execution on a continuous basis with full visibility into potential risks and impacts, so priorities and allocations remain aligned with changing demands. As both innovation and architectural efforts evolve, business and technology leaders make all steering decisions in concert, not as independent entities.
Value doesn’t exist if it’s not recognized. Through VSM, value can be delivered and outcomes can be measured. When that starts happening, business leaders need to ensure that successes, lessons, and customer accolades are communicated across the organization to establish a reputation for the value stream. These communications help teams build up the trust of leadership, make continuous improvements in delivery, and articulate the power of VSM.
Effective implementation of VSM tools and principles can ensure that your organization doesn’t become a statistic and successfully transform your business with streamlined funding, enhanced innovation, optimal balancing resources, and scaled adaptability.
To learn more, be sure to read our eBook, 5 Steps to Value Stream Management.
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