Transitioning from project-based work to value stream-based work is a pivotal step in scaling Agile. Value streams align work directly to customer outcomes, enabling faster value delivery.
But what exactly are operational value streams, and how do you identify them in your organization? This comprehensive guide provides clarity and actionable strategies for getting started.
What Are Operational Value Streams?
An operational value stream represents the sequence of activities an organization performs to deliver a valuable product or service to customers.
For example, a software company’s value stream could include:
- Researching customer needs
- Designing new features
- Developing software
- Testing and validating
- Deploying updates
- Supporting customers
The goal is satisfying an end user need from start to finish. Operational value streams create direct external value.
Meanwhile, supporting or enabling value streams focus inward. They build capabilities that support operational value streams. Examples include HR, Finance, IT, and Facilities.
Focus first on mapping your external-facing, operational value streams. This reveals business priorities to guide further transformations.
Why Identify Value Streams?
Traditional project management structures work fine for small Agile teams. But they fail to scale across departments and value chains.
Projects silo work and optimize locally vs. system-wide. They lack visibility into downstream needs, causing delays, waste and disjointed handoffs.
Value streams take a holistic view to transforming:
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Customer-centric – Focused on end-to-end value delivery, not localized outputs.
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Flow-based – Surfaces handoff issues that hinder velocity
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Outcomes-driven – Shapes initiatives to business goals, not departmental projects.
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Visible – Provides transparency into value chain dependencies and risks.
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Actionable – Allows removing roadblocks and balancing capacity across steps.
Identifying value streams catalyzes moving beyond “pockets” of Agile towards enterprise-wide, customer-driven flow.
How to Identify Operational Value Streams
No standard formula exists for locating value streams. Each organization’s landscape differs. However, the following strategies can guide mapping efforts:
Understand Your Business Purpose
First, clarify your core reason for being. Ask:
- What customer needs do we fulfill?
- What outcomes and experiences do we enable?
- What value do we uniquely provide?
Consult sources like:
- Mission and vision statements
- Marketing messaging and brochures
- Leadership interviews
- Customer research
This frames the business objectives that should steer value streams.
Analyze Product Lines and Offerings
Next, catalog your main products, services and solution areas. Common divisions include:
- By industry or customer segment
- By product categories or SKUs
- By branded solution offerings
- By subscription levels or editions
Avoid getting lost in micro-divisions. Focus on significant categories that represent meaningful value chunks.
Follow the Money
Analyze historical budgets and spending patterns. Where has your business consistently invested money and resources? This reveals perceived importance.
High expenditure areas likely indicate primary operational value streams. But don’t ignore emerging areas with growing priority.
Understand Customer Journeys
Map the end-to-end processes customers go through to research, purchase, use and recommend your offerings.
See where your organization directly interacts and provides value. These touchpoints often mark logical value stream steps.
But also consider behind-the-scenes activities customers don’t see that enable delivery.
Ask Leadership and Employees
Interview stakeholders at all levels to gather perceptions on your business’s core operational value streams.
Leadership brings strategy context. Frontline employees offer implementation insights. Customers provide external validation.
Identify repeating themes to focus further analysis.
Start with One Value Stream
Don’t expect to map every value stream upfront. Begin with one high-priority area to establish the approach.
As you gain experience, the methodology will improve. Gradually expand scope based on learnings before tackling enterprise-wide mapping.
Construct an Initial Value Stream
With an understanding of potential value streams, create an initial draft of a priority area. Involve stakeholders who manage and work on that value delivery process.
Define the Purpose
Articulate the value stream’s reason for being. What outcome does it enable for which customers? Reference your business analysis.
A purpose statement guides priorities and decision-making for the value stream team.
Outline Main Steps
Visually map the workflow from idea to launch to support. Capture key activities, inputs and handoffs.
Look for gaps where value gets stuck. Mark steps clearly driven by internal needs versus customer needs.
Link to Business Objectives
Connect the value stream to relevant business goals and metrics it directly influences. This aligns efforts to enterprise strategy.
Examples include customer conversion rates, market share, revenue, user engagement and satisfaction scores.
Depict on a Canvas
Use a canvas or diagram to depict the draft value stream visually at a high level. Many templates exist to stimulate discussion and iterations.
Important elements to show include customer segments, key activities, inputs, outputs, dependencies and metrics.
Refine Through Feedback Cycles
Socialize initial value stream maps with stakeholders. Ask for input on what’s missing, misleading or low value.
Modify based on feedback, adding detail and clarity. Treat maps as living artifacts to evolve with the business.
As understanding improves, move from drafting one value stream to interfacing related ones. Explore exchanges of resources, inputs and outputs between value streams.
Transition to New Ways of Working
With draft value streams established, use them to guide real change:
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Organize teams – Establish Agile Release Trains (ARTs) around value streams for persistent groups.
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Shift funding – Allocate budgets to value streams based on business priorities, not departments.
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Assign ownership – Empower value stream leaders to make decisions for their stream.
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Improve flow – Address delays and waste through process changes and automation.
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Optimize performance – Manage value streams to key business metrics and OKRs.
Keep iterating as you execute new processes until stabilized. But expect the maps themselves to continually evolve as the business does.
Key Takeaways
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Operational value streams center work on fulfilling customer needs from end-to-end. This drives enterprise agility and alignment.
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Analyze your business, historical spend, offerings, customer journeys and processes to reveal potential high-priority value streams.
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Start small by constructing an initial value stream in detail for one product line or solution area. Expand scope gradually.
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Use lived value stream models to organize teams, allocate funding, assign ownership, improve flow and optimize outcomes.
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Continually refine the maps based on learnings and business changes. Value stream identification is an ongoing journey, not a one-off exercise.
Embracing value stream-centric work lays a foundation for achieving enterprise agility at scale. But it requires moving beyond theory to actively applying value stream mapping insights through new ways of working. Use the strategies in this guide to start translating potential into reality.
Identify Operational Value Streams
For some organizations, identifying operational value streams is easy. Many are just the steps to produce the products, services, or solutions that the company sells. In the larger enterprise, however, the task is more complicated. Value flows through various applications, systems, and services—across many parts of the distributed organization—to internal and external customers.
Identifying operational value streams in a large enterprise is not a trivial undertaking. It requires an awareness of the organization’s broader purpose and an explicit understanding of how specific elements of value flow to the customer. The below questions can help stakeholders through that identification process.
- Who are your users and customers? Are they internal, external, or both?
- What products and services do you market, sell, and support?
- What solutions do you provide for internal users?
- What triggers the flow of value?
- What value do your customers perceive you deliver?
Most generally, operational value streams fall into one of four types shown in Figure 3:
- Fulfillment value streams represent the steps necessary to process a customer request, deliver a digitally-enabled product or service, and receive remuneration. Examples include providing a consumer with an insurance product or fulfilling an eCommerce sales order.
- Manufacturing value streams convert raw materials into the products customers purchase. Examples include consumer products, medical devices, and complex cyber-physical systems.
- Software product value streams offer and support software products. Examples include ERP systems, SaaS, and desktop and mobile applications.
- Supporting value streams include end-to-end workflows for various supporting activities. Examples include employee hiring and retention lifecycle, supplier contracting, executing the annual budget process, and completing an entire enterprise sales cycle.
And although companies need strong, functional departments to build and share knowledge, sales, marketing, purchasing, legal, finance, and manufacturing engineering are not value streams. However, many of the people in these departments participate in one or more operational value streams.
It stands to reason that large enterprises typically offer their customers a wide variety of products and services. That’s one of the ways they grow. As such, it follows that there are substantial value streams within those enterprises. Figure 4 illustrates how the ‘consumer loan’ value stream is just one of a large commercial bank’s offerings and operational value streams [2].
Realize Development Value Streams into ARTs
The final activity is to define the ARTs that realize the value. Experience has shown that the most effective ARTs have the following attributes:
- 50 – 125 people
- Focused on a holistic solution or related set of products or services
- Long-lived, stable teams that consistently deliver value
- Minimize dependencies with other ARTs
- Can release independent of other ARTs
Depending on how many people do the work, there are three possible scenarios for the ART design, as Figure 11 illustrates.
- Multiple development value streams can fit within a single ART – When several related products or solutions can be produced with a relatively small number of people, a single ART may deliver multiple value streams.
- A single development value stream can fit within an ART – Often, a Value Stream can be realized with 100 or fewer practitioners. Many development groups are already organized into units of about that size, so this is a typical case. In this case, the ART is roughly the same as the value stream. Everyone is in that ART!
- Multiple ARTs are required for large development value streams – When many people are involved, the development value stream must be split into multiple ARTs, as described in the next section, and form a Solution Train.
