Demystifying value stream management (VSM) starts with a shared understanding of the approach's background, meanings, and defining characteristics. Central to VSM is viewing business processes as value streams that deliver value to customers rather than merely individual tasks or activities. Improving efficiency and customer satisfaction depends on managing the entire value stream—not simply separate processes.
The first installments in this series provide insights into VSM in the context of "Value," "Stream," and "Management." After comprehensively introducing critical concepts, including deconstructing the diverse meanings and definitions for VSM, its history, and its origins to understand its evolution better, we provided a practical example that applied VSM principles to improve the business. By mapping out steps in the value stream in our example, identifying waste and suggestions for improvement, and streamlining the process, the company in our example could look forward to better customer value, such as faster processing times and better service.
The first installment of this series also stressed the importance of mapping out the entire value stream and involving all stakeholders while acknowledging the challenges of getting everyone on board simultaneously. One way to overcome that challenge is by starting small and focusing on improving one area instead of waiting for all sponsors and stakeholders to prepare for VSM. This way, the business can build on success and bring in support over time. In addition, making some improvements sooner rather than waiting for the perfect time to make significant changes is preferable to staying on track. In the next installment of the series, we drill down into each key concept of VSM for a deeper understanding of the framework.
The key is to start making improvements sooner rather than continuing to wait for an auspicious or perfect time for making significant changes, as we all know that ideal time seldom arrives. Let's face it, the path to perfection is paved with disappointments.
Value, Work and Goals are the core elements of a Value Stream. By examining how Value streams exist in organizations today and how they are interconnected to these elements and how they flow across different levels in the organization, we can provide a better understanding of how work gets done within organizations. This knowledge is invaluable in trying to understand why organizations need VSM and how it can help them optimize their processes and improve customer satisfaction.
The flow of value, goals, and work
In any organization, the flow of value, goals, and work always moves from the top to the bottom. However, as these elements flow through the organization, their scope, definition, perception, influence, and responsibilities morph to align with the levels and functions of the people they encounter. This is a crucial distinction that many fail to understand: while everyone is part of the same big virtual value stream, the way they perceive and experience it is unique.
To understand the interconnectedness of the various systems, people and sub streams or processes, it's essential to recognize how they work across the different levels. Goals are set by leadership at the top and communicated down to each level, where teams define their own work items to help achieve those goals.
Since each level defines its own work items, the series of activities, processes, people and systems that make up their value streams will also be unique to that level. However, value streams can also exist at different levels in an organization, each delivering value to a parent level value stream.
Therefore, it's important to have a framework that bridges different levels of the organization and enables everyone to understand the overall value stream and how their contributions fit. If this framework exists – VSM is an example of one such framework—the entire organization will continue to function as one unit, despite the different definitions and perceptions of value, objectives, and work across different levels and functions.
In this diagram, different levels contribute to value generation through their work in alignment with the goals and objectives of the company. Value is driven from the top where objectives are set and percolated downstream. To meet the objectives, work items are defined and decomposed into granular pieces as work moves down the organization. Every level contributes towards value generation by completing the work items.
In an ideal organizational setup such as the one in the diagram, value, goals, work, and value streams interconnect with a seamless flow of processes, systems, and data within and across levels. for complete alignment, increases transparency, and improved trust in the organization. Most organizations are far from this ideal state, challenged by organizational silos, lack of collaboration, disjointed processes, and lack of meaningful insights within and across value streams. This is where VSM comes in to transform the organizations, which is explored later in this series.
When exploring value streams and the interconnectedness of value, work, and goals across different levels, it is evident that many organizations currently face significant challenges. These challenges are due, in part, to siloed ways of working, process gaps, and a need for more visibility across all levels. These challenges can lead to a lack of understanding of whether there is progress in generating value.
In the next installment, we will take a deep dive into the typical layout of value streams in any organization and how the key dimensions of value, objectives, work, flow and change across organizational levels.
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