Value Stream Management vs. Value Stream Mapping: Opportunities and Pitfalls

by Kamaria Hill | May 10, 2022 | Blog

Value Stream Management allows you to determine the measurable flow of value, where value delivery is slowed down, as well as create opportunities for better alignment & collaboration among teams. It's a critical aspect of lean operations that contributes to the success of agile product development and delivery. But how do you know if you're having the impact? What happens if you don't manage your value stream?

Listen in as Scrum Inc.'s Andrew Robbins shares the pitfalls (and opportunities) that arise when you engage Value Stream Management.

Andrew Robbins: I work at Scrum Inc. as a Business Transformation Consultant. Before my career at Scrum Inc. I had a long career in insurance. And throughout my career I was working with groups ranging from legal to underwriting to the folks involved with retirement plans to finance, taking them through lean transformations, and had a chance to really dig deep with each of those groups on what their value streams are and using that to help them transform the organization.

We're going to be talking about Value Stream Management today so let's start with the basics. What is Value Stream Management and Value Stream Mapping?

Andrew Robbins: Value stream mapping is the first step to achieve management of the value stream. That event takes place usually over a few days, where you get everybody who is critical to a given value stream in a room. And even defining value stream, you want to get everybody to agree what those fence posts are. Where the customer demand starts and where the purview of your organization begins that first step. And then, what that final step is that delivers whatever outcome of the value stream, whatever that is to your end customer.

Now throughout the value stream, you have multiple phases and internal customers as well, so you need representatives in the room for the mapping session that can speak to each of those. You'll also need leadership during this value stream mapping event so that they can look at the trajectory of where the conversation is going, what ‘ahas’ are being gained in the room. And after that event is over, you usually do have one coherent picture that aligns everybody on how value is created in the organization. That includes the flow of materials, the flow of information and overlays it with some critical data. That's the value stream map that's created through that multi-day session. 

Now you also asked about Value Stream Management. That's what happens after the initial map is created. The value stream management is when the leadership or another team that's created specifically to manage that value stream comes together and at a regular cadence looks at the value stream map, figures out where those metrics are. For example if there was a quality issue, what's the movement on that bend, how are we trending and starts asking questions about it in order to bring the organization closer to wherever they're trying to go. 

Management of the value stream is more than just looking at data and taking action though, it also involves the people who are doing the work. Managing the value stream effectively, of course, includes managing the culture and helping the people to understand where they are in that line of how value is created. Kind of like a map that says, you are here, so they know everything that happened before the work got to them and where that work is going after. 

That's how you manage the value stream both quantitatively and somewhat qualitatively with the people.

What are some of the signs that would signal to a team or organization that this is something they need?

Andrew Robbins: A lot of times what starts a value stream mapping session and subsequent value stream management, it's usually something that happens to the business that leadership is reacting to. That could be anything from a disruption in the market where suddenly somebody has a new way of giving the customer what they value. I mean the iPhone is a textbook example of giving the customer the value of many products that the customer needed before but really all rolled into one right now. With that competitor companies had to rethink how they were providing customers that same value and creating a current state map of where your value stream is today is the first step towards doing that. 

If an organization wanted to be more proactive rather than waiting for that burning platform to create a value stream map and manage it after, they could start looking at how segmented the different phases of their value stream are. How much of a silo mentality is there between each major segment. 

And just using insurance as an example, if the person over the call center where somebody submits a claim in the first place, has very much a kingdom building mentality, they might be trying to reduce the amount of time on the call, the amount of time that their people are working [in order] to reduce their expenses. But later down the line that could end up with not getting enough information about the claim. Maybe somebody was injured in the accident and that was missed causing a lot more work for the person who picks up the claim and actually works it later, maybe even routing it to the wrong team. It's those sorts of siloed mentality and people really trying to either game the system or trying to move the metrics that are only in their favor, rather than in favor of the entirety of the organization.

I mean it's almost, I just ate lunch it's like my stomach taking all of the food and keeping it there to say ‘look at all the work I'm doing, look at all the food that I have there’ and not passing it on to that next part of my body, just to tell my brain ‘hey I'm doing a lot of work and I'm awesome as the stomach,’ it needs to be the entire digestive system.

We see the value in value stream management and mapping. How would we measure that value? What kind of things should you be looking at to know that it's working the way that it should be?  

Andrew Robbins: There are a few different measures that you can use and it depends on what you're trying to use the value stream map [for] and how you're trying to manage the value stream. And, for example, one thing that the value stream map provides is alignment across the entire organization, so that everybody understands where they are in that flow of value.

Now if you're trying to improve that alignment, a metric could be just behaviorally. The ability of somebody on the front line to speak to where their work comes from and where it goes after them. The ability for them to articulate how the work they're doing is helping build that value for the customer.

Another way that value stream management can help an organization is through identifying as all sorts of either quick hits, Kaizen events or projects that the organization can do to improve critical metrics on their value stream. That could have a whole different set of key performance indicators to say whether you're incrementally getting better.

An example of a tried and true metric on value stream maps, are this idea of percent complete and accurate. How much of the work is completely good and has the quality that the next phase in the value stream needs before it moves on to that next phase. You can measure how much gets passed back, how much rework you have.

And if you've identified a given phase that has a very low percent complete and accurate you've implemented some improvement activities to make that better. Then you could just start watching that metric and hopefully that'll tick up and make the quality of the entire value stream better.

Other key metrics could be the amount of value added time compared to the amount of wasteful time that you're spending on various activities. You could look at the total lead time from when the demand is generated to when that customer actually gets their product.

Really that value stream map can be a starting point to take your organization wherever both the strategy of the organization determines that should go and where the needs of the customer determine you should go. 

One other thought…value stream mapping and the subsequent management can also help the organization envision a future state. I had mentioned that an impetus for this can sometimes be disruption in the marketplace where somebody has a totally new way of creating value and if other competitor organizations don't change then they're going to start losing market share. 

If the organization envisions some future state, has the current state, and they can quantify that gap in between. How close we're getting to that future state and a given period of time is another really good way to measure whether that value stream management is having the intended effect.

Let's talk more about that, more about some of the ways that you measure its success. What are the ideal markers that you can use to measure success?

Andrew Robbins: Under the theory and the summary metrics you get from a value stream map those markers are value added activities compared to non value-added activities or even business non value-added activities which are things that we have to do legal, compliance related, but are we getting more efficient on those so that we're doing a higher percentage of those things that the customer wants and needs in order to be satisfied with the product.

Percent complete and accurate, that's another really good one that you can measure on an ongoing basis to hopefully produce something with quality and consistency every single time. Now when you're actually practicing it, getting off of summary metrics and the theory, an organization needs to ask themselves are the improvements that we're making from the ‘Ahas’  we gained in the value stream mapping session are those bringing us closer to our strategy, to our annual goals. And are those annual goals bringing us closer to break through objectives that the organization has?

Hopefully, an organization can say we know where we are now, but in order to be world class, we need to achieve some sort of expense ratio, or we need to achieve a certain quality measure or customer enthusiasm score. Seeing whether the improvements you're making are having an impact on those lagging indicators, that's a good way long term, to see whether you really are having the impact that you want, and if you're not to start to ask yourself well, for one, do we have the wrong goals and if we have the right goals but we're not making progress, then why is that are we measuring the wrong thing?

Is there anything that you would like to share with the listeners that we haven't discussed already ?

Andrew Robbins: If an organization doesn't utilize the value stream map and manage their value stream, seeing it as what it is, this continuous flow. Especially for older organizations that are in a very hierarchical structure and have a very siloed mentality, they will start to see themselves probably even becoming more siloed over time. They'll start to, not even start to, they'll continue to be separated and have each phase, as its own kingdom oftentimes looking at key metrics that aren't aligned with each other.

And that gets even worse if the incentive within the organization how people are paid and how bonuses are structured promote that kingdom building mentality. Try to make each part of the value stream, for example, as profitable as possible. I mean sometimes there are parts of the value stream that aren’t profitable - that have to be done in order to service what happens. 

For example, if a product has a defect in it the customer gets it and calls to either claim on a warranty or give feedback. That part of the value stream isn't adding direct value to the customer and the initial product they receive.

That said, it's still a critical aspect that needs to be incorporated and needs to be supported by everybody else. If that part of the value stream is only focused on profitability and their own profitability, they're probably not going to exist pretty soon.

That said, if we take a step back and look at the entire process, I mean a toy that keeps getting broken or causes some sort of hazard for a kid. If that feedback goes unheard, that puts the entire organization at risk, not to mention the market share and possible legal action.

So it is key for the value stream to understand the different parts of each other and when there is something that goes wrong, to really dig in and understand why that happened and give feedback across to whatever group that was.

When you don't have a value stream mindset that feedback is one a lot harder to give and two it's a lot less likely that a leader, especially if that leader is in competition with you is actually going to take that feedback, trust your intent and respond to it. That’s one of the pitfalls of not managing your organization to a value stream and if that goes on too long, that could be one of those burning platforms. One of those things that happens that makes an organization react and say oh ‘OK, we really do need to start thinking in this way.’

Now let's talk about Scrum and Scrum@Scale with regards to how it complements value stream management, what are your thoughts on that.

Andrew Robbins: Organizations that have already adopted Scrum and Scrum@Scale really are ripe ground for value stream management and thinking. You've heard me mention the  pitfalls of an organization that's in a very hierarchical structure and Scrum is the antithesis of that. It's as flat as we can make it with a minimum viable bureaucracy.

The Chief Product Owner really does have a mind for the entirety of the value stream. They care about every phase of it, they don't just care about one of their phases, because if you tried to pull out everybody who's in charge of, let's use a hospital example, everybody who's in charge of triaging people as they come in.

And a scrum organization you're probably picking out one person on each Scrum teams among many different Scrum teams. Whereas if you're in a hierarchical structure it's possible that there is a triage team that very much sees themselves as only in control over that phase, and once they've triage the patients, and it goes to the next emergency room and there's another team that's in charge of that. That sort of hierarchical thinking, that sort of siloed mentality makes it a lot more difficult to give feedback across.

Now, like I said when we have a Scrum structure, you have a T-shaped team that is very cross functional and has deep knowledge. That team could be over an entire value stream, in themselves. In fact, you could have multiple teams, each one over a different value stream with the Chief Product Owner having purview over each of those teams. Another reason that it fits really well is because we have a division of responsibility within the Scrum framework. We have the Product Owner cycle, we also have the Scrum Leader cycle. 

Now the product owner, of course, is going to be focused on key metrics profitability, making sure that we are serving our customers as best we can. That leaves a whole other section, though, of the people within the value stream, the engagement and how well they are working with the process.

How much do they care about the work, how are we communicating any changes to them and how are we having conversations, so that they really grasp the future state that we're working towards. 

Within scrum scrum at scale, we have a Scrum leader or a Scrum of Scrums leader who is very much over that awesome people side. In a typical organization, where you have a value stream manager or a value stream champion, those accountabilities of the PO and the Scrum leader really are all put into one and combined onto one person. Which is a lot and requires not just time but a very diverse set of skills that very few people have all of.

So, within the Scrum framework, you still have people who are accountable, you can still go back to the Chief Product Owner to the Scrum of Scrum leader and start asking questions if things go wrong or celebrate if things go right. That said, they divide the accountabilities of the product and the people, and that makes it a lot easier for a group of people to have accountability over the value stream, while still not falling into the trap of everybody having accountability, so no one does. That's why Scrum and Scrum@Scale works so well with value stream mapping and value stream management.

Who would you say a Value Stream Management workshop is best suited for?

Andrew Robbins: The ideal candidate for this course it's really anyone with purview over multiple stages of the value stream.

Especially if the rest of their organization has bought into trying this new way of thinking, if they're a new organization that's trying to set up their structure in the first place, this, this is the way that an organization should start thinking. Or if they have a senior leader who understands this mindset and wants to start influencing the rest of the org.

Anyone within those environments could come to this course, start learning how the work that they're connected to fits into the overarching value stream. How to start having conversations with partner organizations and then, once they get that buy in and have a current state value stream map how to manage it effectively afterwards. It could be for anybody in those environments. 

Now if we do have a candidate for this course, who is in maybe an older organization that has a lot of different silos that where they see the value of this sort of thinking, but the rest of the organization might not. This course could start giving them some tool sets to start optimizing the processes within their part of the value stream.

Now that said, it's going to be a much bigger lift for that sort of candidate to start influencing people around them and start influencing senior leadership. And they might have to accept that they're going to sub-optimize what they have control over to start. Get some easy wins and show the rest of the group 'hey look at what this mindset has done for my group, we’re producing' maybe they're producing let's keep using the toy example, maybe the production of Legos is producing two times more than they were able to before. But the team that actually distributes them to various stores suddenly has a bunch of inventory piling up. They could be identified as ‘hey there's a bottleneck there.’ 

If you start thinking in this value stream mentality as well, we could all see these sorts of improvements we can start to level load how - who should be doing what so that we're meeting customer demand and producing at a steady rate, with no one part of the value stream shooting too much work, shooting bad work out or producing a bottleneck, where they have inventory just piling up before their phase.

So it could be for anyone, it's going to be of the most use for that first group that I mentioned. But even even mid-level managers who are trying to change the organization, they can at least get the language and the methods to start improving their part and try to get buy-in for the rest of the organization around them.