Value Stream Management in SAFe® – Agility in Business

Defining and effectively managing value streams can translate to satisfied customers and competitive advantage. But what is value stream management and how does it relate to SAFe? In this episode, Richard Knaster, SAFe Fellow and vice president and chief scientist at Digital AI, and Marc Rix, SAFe Fellow and principal consultant at Scaled Agile, explain what value stream management is, why it’s important, and how it can help organizations succeed in the digital age.

Melissa, Marc, and Richard discuss elements including:

• Defining a value stream
• Why value stream management is critical
• How an organization can get started with value stream management

Follow these links to learn more about topics mentioned in the podcast:

• History:
  • Blog post: Where do Value Stream Maps Come From? 
  • Article: What is Value Stream Mapping?
• Ebook: Value Stream Management for the Digital Age
• 15th Annual State of Agile Report
• Article: Value Stream Management in SAFe
• Blog post: 10 Tips for Value Stream Identification

Transcript

Speaker 1:

Looking for the latest news, experiences, and answers to questions about SAFe®? You’ve come to the right place. This podcast is for you, the SAFe community of practitioners, trainers, users, and everyone who engages SAFe on a daily basis.

Melissa Reeve:

Welcome to the SAFe Business Agility podcast recorded from our homes around the world. I’m Melissa Reeve, your host for today’s episode. Today is the first of a two-part series on value stream management. I have two guests joining me today, Richard Knaster, SAFe Fellow and vice president and chief scientist at Digital.ai, and Marc Rix, SAFe Fellow and principal consultant here at Scaled Agile. Thanks for joining me on the show today. It’s great to have you both here.

Marc Rix:

Thanks a lot, Melissa. I’m very excited to be here.

Richard Knaster:

Thank you, Melissa. It’s great to be here.

Melissa Reeve: So, in this episode, Marc and Richard discuss value stream management, explaining what it is and why it’s important, as well as how it can help organizations succeed in the digital age. Let’s get started.

Speaker 1:

Value stream mapping as a practice is believed to have originated at Toyota as a “Materials and Information Flow diagram”—and became a foundation of the Toyota Production System. Other records indicate that diagrams showing the flow of materials and information date back to a 1915 book called “Installing Efficiency Methods.”

By the 1990s, value stream mapping was extremely popular, and the practice quickly spread from manufacturing into areas including IT operations, marketing, and software development. For more value stream history, visit the show notes for this episode at scaledagile.com/podcast.

Melissa Reeve:

So, Richard, value streams can sometimes mean different things to different people. How do you define a value stream?

Richard Knaster: Yeah. So a value stream is simply the series of interconnected processes that you need to deliver a product or service to a customer. And value streams also contain the people who do the work, the information, and the tools that are necessary for creating value. And there are two types of value streams. There are operational value streams, which sell a product or a solution to a customer. And there are development value streams that are used to develop the solutions used by the operational value streams.

Melissa Reeve:

Thanks for that. Why do you think organizations are focusing on value streams at this point in time?

Richard Knaster:

From what I can see, organizations who have adopted Agile and DevOps, they’re finding that it’s not enough. They’re not getting the full benefits of their Agile transformations. So even though they’ve implemented Agile and they’ve implemented DevOps, most organizations are still releasing less than monthly. So how agile is that if you’re releasing just, you know, less than monthly?

And the other problem that we see is that, for example, if you’re using a scaling framework like SAFe, you can’t get the full benefits of the Framework without value stream management. You need to be able to connect things from left to right, have that visibility across teams, data, and tools. Otherwise, you still have silos. When we apply value stream management, we’re focused on improving flow, whereas projects focus on completing tasks. And that’s a big difference between the two.

Today, we really want to focus on delivering more value instead of just becoming a feature factory, where we deliver lots of features, but we’re not even sure whether or not those features actually deliver business value. So, I think we have to stop the obsession on speed and really focus on delivering more value, even if that means that our velocity of delivery is slightly slower. Because the more important thing is getting that value.

And a lot of transformations fail because organizations haven’t defined what value means in their org, or they don’t focus enough on improving the flow of value and eliminating bottlenecks, handoffs, and also the way they organize people in the value stream. And the other big cause is that there’s a lack of alignment between strategy and execution. So, for me, the way I define value stream management is it also includes managing a portfolio of value streams.

Melissa Reeve:

Yeah, that makes a lot of sense. I mean, we’ve really got to focus on those outcomes and the value that we’re delivering to the customer over the outputs. And you can only do that when you’re thinking about the organization holistically, rather than thinking about one section of the organization. So, I get what you’re saying there, and thanks for sharing that.

So Marc, why don’t you talk to us about value stream management and why it’s so critical.

Marc Rix:

Sure. So I share a lot of Richard’s views, and I think he hit the nail on the head when he pointed out the fact that it’s really all about value here. And enterprises everywhere are still struggling with delivering on time, delivering at the right cadence, getting to market effectively. Whether they’re delivering on Agile initiatives or traditional projects, I think there’s still a lot of struggle in the industry around getting products to market as quickly as possible and efficiently as possible. But the game is changing a little bit.

So I think we need to definitely focus on value over speed. And there’s a reason we need to do that. And to understand that reason, I think we need to have a look at the environment, the market, the global economy and what’s happening there that’s creating the need to deliver value and to focus on value.

I’d like to go to a report that I know that Richard is familiar with. It’s getting a lot of press. It’s been getting a lot of circulation this year. And it’s the Gartner study from about this time last year, October of 2020, where they state that by the year 2023, 70 percent of organizations everywhere are going to be using value stream management. So, to me, that represents a huge amount of adoption of value stream management concepts in a very short amount of time. So something’s got to be driving that.

And what I read into that is, now more than ever, every business is a technology business, and no longer is there any hiding from that fact. No more do we have technology divisions or separate departments. It’s really the whole company that comes into focus when we talk about value delivery and how we get products to market. So now more than ever before, the whole company needs to know how to deliver on products and services, which are increasingly digitally enabled.

And this forces a bit of a change in how value streams have been traditionally defined and executed. It forces value streams to be more crosscutting. Crosscutting not only the technology teams but more of the enterprise: finance, marketing, legal, procurement, other areas, internal and external suppliers. Value streams are getting more complex as companies think about how to win in today’s marketplace. And to win really means to deliver that value.

But this change in value streams is introducing many complexities. You know, how do we cross departments? And how do we cross functions in teams and manage handoffs and dependencies? It’s been a challenge for a long time. But now more than ever we’ve got to be able to move through those bottlenecks and reconcile those differences. And that’s the purpose of VSM. It’s really to bring that process under control and to bring order to that chaos. The benefits there, of course, are reduced operational costs and faster time-to-market, and better business outcomes, as you expressed, Melissa.

So I think today if you deliver a product or a service, you have a value stream. So it’s not a matter of creating or defining value streams. It’s discovering the value streams that you have and applying VSM to make sure that you are converting that value stream into an asset for the company. Because if you are not applying VSM, there’s a good chance that those complex value streams can easily become a liability for your business.

Melissa Reeve:

Well, that’s a relief to me to hear you say that these value streams already exist and it’s a matter of uncovering them. Because just hearing you and Richard talk about the need for them, I was feeling a little bit overwhelmed, feeling like, wow, I understand how critical this is, but how do I even start this? This feels a little overwhelming.

So, Richard, for our listeners who are looking to get started with value streams and value stream management, what advice do you have?

Richard Knaster:

My advice is to start with one value stream, and first, understand the steps in the operational value stream. And then from there, you can identify the developers who are needed to create the solutions that the operational value stream uses or sells. And get a team together to do that mapping, understand where the bottlenecks are, understand where other delays and handoffs exist, and focus on how those bottlenecks could be resolved.

Now, I do agree that these value streams already exist in an organization. However, the development value streams are another story. We have to design those value streams based on being able to serve those operational value streams. So that’s a little bit different. I just want to make sure that everyone is clear about that. SAFe has a great toolkit on value stream identification and that workshop will really help you identify your value streams and as well as how to map them.

Really, identifying value streams isn’t all that hard when you think about it. It’s simply the products and solutions that your organization sells. So I often go to the company’s website and I look at what products and services the company provides, or go to their annual report and see what products and services they provide. I then take a look at the Agile teams and what solutions they’re currently working on and kind of create a matrix between the teams and then the solutions that they’re working on. And that’s another way, another signal that I can understand how to organize the development value stream.

Melissa Reeve:

And I know a lot of our listeners sometimes struggle with the differences between value stream identification and value stream mapping. In fact, we’ve done, I believe, a whole episode around that. It seems like it could be a little bit of a chicken and the egg. But in your opinion, which comes first? Do you identify your value streams and then start to map them, or should people start where they’re at and take something they’re doing and start mapping that out, and then try and tie that up to some sort of value stream that gets identified at a later point in time?

Richard Knaster:

Yeah, that’s a good question. So the first thing we want to do is we want to identify the value streams first before we map them. And we also want to select, of all the different value streams that we could be working on, which one would be the best one to start with. And that often lies at the intersection of four different criteria, such as is there a significant opportunity or challenge? Are there Agile teams that are already cooperating? And these factors help you decide which value streams to begin with. And then once you decide which value streams to begin with, then you can begin mapping that value stream and understanding the things that we discussed earlier.

Melissa Reeve:

Yeah. Thanks for that. So, Marc, I know you also are deep into value streams and value stream management. What guidance would you have for a newbie?

Marc Rix:

So my advice would be very similar to Rich’s. First, we need to identify those value streams. After all, we need to know what the steps involved are in moving a concept all the way through our delivery pipelines to final delivery to the customer. We can’t map anything if we don’t know those steps. So a key input to value stream mapping is the value stream itself, the value stream definition, the steps, the people involved. So that needs to be laid down beforehand. Then we can do the deep analysis that’s involved in value stream mapping to really understand the health and the performance of those value streams and make determinations about where the critical bottlenecks are, where we should be applying our efforts, and how we should be developing an action plan for optimizing those value streams.

Melissa Reeve:

So Marc, is there a method to this madness? I mean, it sounds like it’s simple, but it seems like there’s more to it.

Marc Rix:

Right. Exactly. There are always a million places to start. And with something like value stream management, which requires a full end-to-end value stream view, which stretches across the organization, we’re talking about managing a value stream that crosses a lot of different people, a lot of different organizations, a lot of different processes and technologies. So it can be a little bit overwhelming if you don’t know where to start.

So here within Scaled Agile, we’ve outlined a mini framework within value stream management that folks can apply to start thinking about value stream management in pretty simple terms. At least it’s a starting point. And we basically boil it down to three key areas—principles, practices, and tooling—a three-pronged approach to developing a value stream management discipline.

So we start with principles. We like principles here at Scaled Agile and in the Lean-Agile community. Surprisingly though, the principles I’m talking about here are not the SAFe principles. We need to go back to foundational principles. We need to go back to first principles with principles of Lean thinking. I know that Richard incorporates these five principles of Lean thinking in his work at Digital.ai too, so I think we have alignment there. It’s good to have principles understood across the organization to drive alignment among all of the people who are involved in the value stream, not only technical people but non-technical people as well, from end to end.

Then there come the practices. These are the things that we do from day to day to optimize the value stream, move product forward, and maintain flow. And then a critical piece of value stream management, which is becoming more and more not only popular, but critical in VSM as a discipline, is the tooling that’s involved. So because of the size and the complexity and the reach of today’s value streams, we really need to apply tooling to provide the monitoring, the observability, the traceability, and the tracking and the reporting, and the analytics that can help us optimize those complex value streams over time.

So it’s really, from a SAFe perspective, those three key areas: principles, practices, and tooling. Understand those. And understanding those and applying them across the value streams across the entire organization can help you as an enterprise know your customers better, have a more direct understanding of what products they need versus which products we want to push to them, or which products we feel they should adopt or should need, and how to define and measure that value over time.

So, all of these kind of work together to set the stage or set a foundation for beginning a value stream management journey—which, by the way, is not something everybody is starting from ground zero with. Everybody has a level of value stream management happening in the organization today. It’s a matter of where they’re going to go with it next and how best they can leverage principles, practices, and tooling to get them to where they need to be to support their businesses and customers.

Melissa Reeve:

Thanks for listening to part one of our deep dive into value stream management with Marc Rix and Richard Knaster. Be sure to tune in to part two when we discuss what value stream management means to people in different contexts and describe what value stream management looks like in the real world.

Be sure to check out the show notes and more at scaledagile.com/podcast.

Revisit past topics at scaledagile.com/podcast.

Speaker 1:

Relentless improvement is in our DNA, and we welcome your input on how we can improve the show. Drop us a line at podcast.scaledagile.com.