This article is written with the aim of contributing lessons learned from work on forming team-based organizational structures in organizations that want to use Lean Agile principles in their digital product development. The intention is not to deep dive into how Value Stream Identifications are done.
The article is based on the practical experience of the authors who have been involved in running and performing this type of work on several occasions and in several types of organizations. We hope that it can help the reader to avoid common pitfalls and be a guide in the work.
What is Value Stream Identification?
The way you set up an agile organization is fundamental to harvesting the benefits of using agile work-methods. If the organization is not designed to create the conditions for efficient collaboration and customer focus, the impact of agile ways of working is likely to be low.
Traditional organizations are often functionally organized around the resources, capabilities, and competencies of the organization, rather than around the flow of value to the customer.
For example
- A sales function
- A marketing function
- A technical architecture function
- An IT development function
- A testing function
- A compliance function
Value Stream identification – VSI, is a structured approach that, based on how an organization meets its customers and operationally delivers (or wishes to deliver) its products and services to them, guides users step by step to form agile teams and teams of teams.
Work in silos – prevents flow of value
Why is Value Stream Identification needed?
There are many reasons why organizations want to do a Value Stream Identification. A common driving force though is the need to deliver more and faster. Shorter time to market to maintain relevance for customers and a need to handle a backlog that is far bigger than available capacity.
From our own experience, some common challenges in daily work that prevent the above are present in most organizations.
Some examples
- inability to collaborate efficiently
- big need for dependency management and coordination
- costly bottlenecks
- unclear priorities
- unclear ownership/responsibility
- a lot of handovers to get work done
Some organizations are also shaped in such a way that the actual customer is far away and unknown to many of the people who develop the products that customers use.
A Value Stream Identification can provide insights into how the organization would need to look and be reorganized to improve flow, create better alignment around desired value deliveries. The result is improved coordination with fewer bottlenecks associated with handoffs and dependencies among the people who build, improve, and maintain the (often) digital products and services that the organization provides to its customers.
By organization, we refer to the setup of agile teams and possibly team of teams that build, improve, and maintain the products and services (often digital), that the organization provides to its customers.
An important sidenote is that a Value Stream Identification (or an Agile Transformation in general) shines a spotlight on problems that have often been in the organization for a long time. This is an opportunity to do something about them. The goal is to make informed decisions about the best possible and most logical changes needed to improve the flow of value. The goal is not to solve all the organization’s challenges.
The teams and team of teams will naturally have to continue to evolve as the organization and architecture change, creating a need to revisit the setup and use VSI regularly.
What are the main steps involved in a Value Stream Identification?
To find the best possible way to organize teams and team of teams, you must understand how the organization operationally interacts with its customers, and the internal processes involved – the Operational Value Streams. This will serve as the base for a collective understanding of what participants are aiming to improve and optimize for. You must also understand the complexity of the technical architecture and the social network required to build the products. An understanding of who needs to collaborate, how often and the complexity involved in this collaboration, is a base for understanding how to improve.
The following are in short, common steps involved when doing a Value Stream Identification.
- Identify the Operational Value Streams
An Operational Value Stream (OVS) is the sequence of activities (steps) needed to deliver a product or service to a customer. The OVS shows how customers connect with the organization, how the organization captures value for that customer, and everything that needs to happen for a customer to be satisfied. The starting point for an OVS (the trigger) is an event that triggers the flow of value, a customer order or request. It ends when some value, a product shipment, customer service, or a solution deployment has been delivered. - Identify Solutions the Operational Value Streams use or provide to customers
In the different steps in the OVS, solutions are used by customers directly and/or by internal users. These are the solutions that agile teams build, improve, and maintain and that we want to optimize our team setup around. A solution could be a product, system, or service that provides value to internal or external customers. - Identify the people who develop and maintain the Solutions
People develop the solutions. To understand the current setup and the people involved in handling the as is complexity, this step aims to create a collective understanding of the number and locations of the people that build and maintain the solutions. - Identify the steps needed to build the Solutions
Developing a solution means going thru a series of steps as part of the development flow. From initial ideation & design to ready solution. Since these are different value streams from the Operational Value Streams, the trigger is often different. The solutions support and enable better operation within the OVS and as such the value is often a new features or capability. The triggers, then, are the requirements and ideas which drive these features. - Form possible team setups
The last step is to use the information from the previous step and translate it into a proposed team setup. As agile teams are the cornerstone of an agile setup, we strive to form long-lasting cross-functional and autonomous teams. In cases where more teams are needed to develop one or more solutions, several teams are grouped together into a team of teams constellation. There is often no perfect setup. Tradeoffs due to architectural limitations or competence are often needed. It is important to find the best possible setup and understand the constraints preventing an optimal solution. Investments should be made to remove the constraints.
What are common challenges and pitfalls in value stream identification?
In our experience, it is common to encounter challenges and pitfalls that can significantly affect the outcome of a value stream identification if not handled properly. Here are some that we came across and how they can be handled.
Lack of consideration for future scenarios
It’s a common pitfall to overly focus on current conditions and neglect future needs and changes, especially at the architectural level. To avoid this, it’s essential to integrate a long-term strategy and involve architects and other experts who can provide insights into future development plans and opportunities.
Focus on systems rather than the customer
Another challenge is losing sight of customer needs and getting stuck in technical systems. It’s crucial to restore balance by including representatives from the customer side in workshops and discussions to ensure that value streams genuinely support and deliver value to end-users.
Difficulty comparing options
During the identification of value streams, objectively comparing different options for team setup can be challenging. To address this, introduce clear criteria and use measurable metrics to evaluate and compare various alternatives to make informed decisions.
Incomplete coverage of the entire operational value stream
If some parts of the organization or processes are not covered during the identification phase, it can lead to biased or insufficient information. Involving representatives from all relevant areas and conducting comprehensive interviews and analyses can help ensure that the entire value chain is considered.
Unrealistic expectations for workshop results
It’s crucial to clearly communicate the expectations for workshop results. Considering limitations and setting realistic goals for what can be achieved during a workshop is vital to avoid disappointment and frustration among participants.
Non-alignment around purpose and end-result
The need to anchor and ensure that decision-makers understand the purpose and possible end-result of VSI is important. Changes to team setup often also means a change for people in leading roles around the teams. These changes can affect their role, mandate, and power. Not seldom, we see that politics or misplaced expectations become barriers to acting on the result. Hard and good work from many participants ends with an inability or willingness to do needed investments.
Avoid total makeover – focus on business-critical aspects first
Avoiding an attempt to make a total makeover from the beginning is a wise strategy. Instead, prioritize and identify the most business-critical areas for improvement, focusing resources on creating quick and measurable results.
Renaming
Directly transforming or even renaming parts of the existing organization into value streams is an antipattern we have seen in some cases. This often results in value streams that are not optimized for efficient flow, potentially leading to reduced effectiveness in delivering value to the customer. By being aware of these challenges and proactively addressing them during the Value Stream Identification process, organizations can increase the likelihood of successful improvement initiatives and ensure that their value streams are effective, customer-focused, and sustainable over time.
Background of the authors
Andreas Johansson is an experienced lean-agile coach with extensive practical experience in guiding the creation of valuable organisational capabilities. He is an experienced trainer, mentor and guide for those leading or participating in change work.
Anders Fresk is an experienced lean-agile coach and change leader who has worked in large-scale development organisations in various leadership roles for more than 20 years. His strength is in combining his long experience in change management with his vast knowledge in lean-agile approach and working methods to achieve sustainable transformations.
