Adaptive Value Streams
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What are Adaptive Value Streams?
Background
Every company delivers value to its customers through its products or services. In large organizations, value-bringing solutions often come from a combination of different products, with each initiative needing a unique set of changes across those products. The real value is in how these changes combine for each initiative, meaning every initiative effectively has its own unique value stream. This is particularly relevant in today's digital landscape, where customer journeys are complex and often span multiple touchpoints and systems.
Today, resilience and adaptability are essential characteristics for business survival and success. Organizations must be able to withstand disruptions, pivot quickly in response to new opportunities and threats, and continuously evolve to meet the changing needs of their customers. According to a McKinsey report, the Covid pandemic accelerated the adoption of digital technologies by several years, and many of these changes are expected to be permanent[1]. This underscores the need for organizations to be adaptable in their digital strategies. Also, according to Gartner, "By 2023, organizations that have invested in business resilience will outperform their peers by 30% in operational efficiency"[2],[3].
Without transparency into how value is generated in their organization, businesses can face challenges like high costs, unpredictable timelines, and - most importantly - an inability to pivot in the face of new or changing needs. Therefore, businesses need to identify value streams and map business capabilities to these streams to understand the key steps in value generation. This understanding is essential for better performance, collaboration between business and IT, and informed decision-making - the prerequisites for fast and good decision making.
The concept of value streams is rooted in lean thinking, which emphasizes the flow of value to the customer. However, traditional value stream mapping often focuses on static, product-centric flows. In contrast, Adaptive Value Streams acknowledge the dynamic and initiative-driven nature of modern business. They recognize that value streams are not fixed but evolve with each project or initiative. This aligns with the principles of adaptability and continuous improvement, where organizations must respond quickly to changing market conditions and customer needs[4].
Definition
Value streams are the combination of value creation steps (from idea through to value delivery) that an organization takes - from need through to value delivery. For example, a customer order, fulfilling that order by delivering a service and then charging for it. Another example is opening a new online service, it goes through steps such as conception, design, development, test and finally release where it is made available to customers[5],[6].
Adaptive Value Streams acknowledge that in today's dynamic business environment, value delivery is initiative-driven and constantly evolving, requiring a flexible approach to enable value to be created quickly. To effectively manage these adaptive streams, organizations must master a few key elements which are described in the next section.
Recognizing that value streams are not static but change with each initiative, Adaptive Value Streams provide a framework for understanding and optimizing how value is generated in complex organizations.
Key Elements of Adaptive Value Streams
Business Capability Layer:
This layer separates technical requirements from solutions by defining requirements in a solution-independent business context. Business capabilities represent what a business does, not how it does it. This abstraction allows for greater flexibility and agility, as changes to underlying systems do not necessarily require changes to the business capability layer.
For example, a "Customer Order Processing" capability can be implemented through various systems and technologies. By focusing on the capability itself, organizations can ensure that all relevant systems and processes are aligned with the overall business goal.
This concept is closely related to business architecture and capability-based planning. Using a business capability layer is an essential step towards a standardized service, or digital platform architecture[7],[8].
Standard Language:
Using a standard language to share information about requirements, business capabilities, and solutions is crucial for transparency and communication. This language should be consistent and unambiguous, allowing all stakeholders to understand the value stream and their role in it[9].
Standardized Mechanisms:
Employing standardized mechanisms in value stream workshops ensures consistency and efficiency. This includes using standardized templates, tools, and processes for mapping value streams and identifying bottlenecks. Standardized mechanisms also facilitate collaboration and knowledge sharing across different teams and departments.
A tool is recommended to manage and maintain the value stream and business capability organization, and a number of commercial solutions such as LeanIX are available.
These concepts enable organizations to identify redundancies and overlaps, providing a clear view of value creation. This, in turn, allows them to respond more quickly as value streams evolve.
Benefits
Accelerated Time to Market:
Adaptive Value Stream maps enable you to identify the right teams to implement different requirements. The use of a business capability layer improves communication between business and IT. This ensures faster delivery of high-impact solutions, addressing the problem of lengthy project timelines and enabling quicker response to market demands.
Reduced Costs, Increased Value:
Adaptive Value Streams help identify overlapping functionalities and bottlenecks, allowing you to eliminate waste and reduce operational and development costs. This directly tackles the issue of high operational costs and ensures resources are focused on value-added activities[10].
Increased Customer Satisfaction:
By providing clear insights into how value is generated in your business, Adaptive Value Streams allow you to optimize it for greater customer satisfaction and impact. This addresses the challenge of poor customer satisfaction by aligning your processes with customer needs and expectations[10].
Enhanced Collaboration, Improved Efficiency:
Adaptive Value Streams streamline cross-functional collaboration within your organization, improving operational efficiency and increasing responsiveness. By fostering efficient collaboration between business and IT, you can overcome organizational silos and improve overall performance[10].
Educated Strategic Decision-Making:
Adaptive Value Streams employ value stream mapping to inform strategic decisions, optimizing governance and ensuring resources are focused where they can create the most impact. This empowers you to make informed strategic decisions, optimize governance, and ensure resources are focused on high-impact areas[9].
By adopting Adaptive Value Streams, organizations can unlock their potential for improved efficiency, reduced costs, and increased customer satisfaction, leading to a more agile and responsive business, which is essential in today's disruptive business environment.
Adaptive Value Stream Workshop
An Adaptive Value Stream Workshop helps organizations understand how value is generated and delivered to customers. By mapping value streams and linking them to business capabilities, participants can find bottlenecks, improve workflows, and better align business and IT[11].
References and further reading*
[1] How-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever - McKinsey
[2] How to Drive Business Resilience, Growth and Profits in 2023 - Gartner
[3] Gartner Says Infrastructure & Operations Leaders Must Shift Their Focus ...
[4] Build Organizational Resilience for Today and Tomorrow - Gartner
[1] Value Stream Mapping Overview - Lean Enterprise Institute
[2] Understanding the Fundamentals of Value-Stream Mapping - Lean ...
[7] Process Framework (eTOM) - TM Forum
[8] Domain-Driven Design: Tackling Complexity in the Heart of Software
[10] Flexible-release-trains-at-deutsche-telekom
[11] Adaptive Value Stream Workshop - Rimagin
*Rimagin is not responsible for contents provided in referenced sites.