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What Is Value Stream Mapping and How Can You Use It Effectively?

Value Streams in scagile - Value Stream Mapping

Contents of this article

Not many people in our agile community have heard of Value Stream Mapping, or they’ve heard of it but don’t really know what to do with it. If you rely on SAFe as the current leading framework for Scaled Agility and have perhaps already looked into it a little, then sooner or later you will stumble across the following statement: “No Value Stream, no Agile”. Period. 

So, if you have not yet carried out Value Stream Mapping in your (supposedly) agile organization, then you run the risk of not being agile at all or not getting there. To prevent this from happening, simply read this article and get inspired by why Value Stream Mapping will do you good and how to do it. It’s not that difficult, but it opens up some wonderful opportunities.  

Back to the statement quoted above. The statement could not have been formulated more uncompromisingly, and I think that’s a good thing. The introduction of Agile methods in organizations serves a specific purpose, the creation of Business Agility, i.e. the ability of companies to adapt quickly to changing market situations, to deliver products faster, to make customers happier, to develop new business models quickly, to outpace the competition, to shake up entire industries with the use of disruptive technologies, etc.  

Agility without a direct link to the business does not serve the purpose, and by business, we naturally mean the primary value chains – Value Streams – of an organization. If you do not align your organization directly with your Value Streams (singular or plural), you are missing the point. Sprucing up matrix organizations and silos with agile practices simply falls way too short and doesn’t really bring you any closer to true business agility. In other words: “No Value Streams, no Agile”. 

What is Value Stream Mapping and its benefits?

Before we continue, we need to clarify a little something so that there is no misunderstanding when you google the term “Value Stream Mapping“.  

Value Stream Mapping is used in two different contexts and means something different in each of them. In this case, I am talking about the “lean” and “agile” contexts. Because lean and agile are often mentioned together (e.g. lean-agile enterprise), here is a very brief distinction between the two strategies.  

Lean is a strategy to make an organization lean, i.e. to design processes in such a way that they are extremely cost-efficient.

Agile, on the other hand – as we have already shown above – aims for Business Agility. 

In a nutshell, Lean is aimed at the internal organization and should lead to a reduction in production costs, while Agile aims to provide customer-centric solutions, i.e. to generate more sales. To put it even more simply, lean = slim (costs), agile = innovative (turnover).  

As a result, Value Stream Mapping is also adapted to the objectives of the two strategies lean and agile, and is therefore quite different.  

Lean Value Stream Mapping

Lean Value Stream Mapping aims to optimize the value creation process (production process) – for example, by avoiding waiting times or warehousing, concerning the flow of material and information, which ultimately leads to cost reduction potential.  

Agile Value Stream Mapping

Agile Value Stream Mapping, on the other hand, has a different objective and approach – it attempts to create an optimal setup for an organization to be able to develop products in such a way that customer feedback can be obtained and processed quickly and at any time 

This is exactly what this article is about, and we will show how it works a little further down. 

Why is Value Stream Mapping important?

Back to our efforts to transform our organization into a truly agile organization with a good response to Business Agility. Being agile does take some effort and it’s not enough to send a few teams into Scrum-mode.  

But don’t worry, it happens to the big ones too. I was recently consulting in a very large organization of an automotive manufacturer who thought they were doing SAFe. When I asked an RTE (Release Train Engineer) which Value Stream his ART (Agile Release Train) was working on, all I got was a quizzical look on his face and a shrug of the shoulders.  

In fact, many supposedly agile organizations are purely Feature-factories and remind me of another clever sentence I read somewhere recently: “Without real Value Stream Mapping, the ARTs of today are the Silos of tomorrow”. This is exactly what has happened to this ART, which was essentially already a money-burning machine.  

The orientation of the entire agile organization towards the Value Stream is so essential for an agile organization that without it, the whole operation remains of futile beauty, to put it politely. Most agile best practices such as self-organized teams, Decentralized Decision Making, Design Thinking, Agile Funding, WSJF prioritization, etc. require exactly this Value Stream Mapping – i.e. the Value Stream alignment of the organization. 

Wherever we have organized and accompanied Value Stream Mappings in organizations, we have found that many employees from production, specialized departments, administration, and even management have gotten to know their organization in a new way by perceiving their daily work from a completely different perspective, namely from the perspective of value creation. For more people than you might think, the direct link between their work and the primary value creation of their company is not present.  

In one extreme case in a large insurance company, employees from two specialized departments, which were working directly on two adjacent steps from the perspective of the value chain and were even located on the same floor, did not even know each other. During the mapping workshop, they had lunch together for the first time. 

I presumptuously assume that I have managed to explain and convince you of how essential Value Stream Mapping is, so let’s now move on to the practical second part. In this part, we will show you how to carry out Value Stream Mapping, for example in the form of a workshop. First, a few thoughts on the setup of the workshop.  

First steps towards Value Stream Mapping?

Value Stream Mapping as a process, which aims to create a suitable setup for an organization, shouldn’t take too long. This is best done as part of a 1 to 3-day workshop. This workshop, however, should be very well-prepared and facilitated by experienced Agile Coaches who have done this before. This is because it involves operating on the open heart of the organization, so to speak, i.e. it affects the entire organizational structure of a company or part of a company. The impact is huge, as it should be, it just shouldn’t backfire. 

This brings us to the next point, the participants. Since Value Stream Mapping is absolutely critical and can (should) have a very significant impact, you would be very well advised to involve as many stakeholders in your organization as possible, basically, all the people it affects. This can easily be several hundred people.   

In return, you only do this workshop once for a fairly long time (if you do it well). As so many people are affected and should be involved, this workshop needs impeccable preparation. 

The advantage, however, is that you have the concentrated expertise of your value creation on board. What’s more, there is no better team-building exercise, and it is usually an exciting experience for everyone involved. If you do it well, a workshop like this works like a motivational rocket, as people love to be involved in essential change processes. Without exaggeration, it can be a magical moment for employees. 

How you organize the workshop is ultimately up to you. What we like to do, especially when the number of participants is large or well into three figures, is to divide the participants into cross-functional groups of around 15 to 30 people each. Each of these groups has the same task, to carry out Value Stream Mapping, and at the end each group presented its results.  

These are very exciting experiences, as the results often differ considerably in terms of systematics, granularity, steps, systems, dependencies, etc. In any case, you have a great library of raw materials that can be used to complete the Value Stream Mapping in subsequent steps.   

It is often the case that only the first steps are completed during the workshop, which are then analyzed for some time and another workshop is then organized for the subsequent steps. There is no doubt that Value Stream Mapping is time-consuming and expensive, but it is definitely worth every penny. 

What are Value Streams and how to map them?

Value Streams are essentially the sequence of activities that an organization performs to deliver business value, usually a product or service for the end customer. The process of mapping them aims to find an answer to the question of how the people involved in this value chain organize themselves and work together to deliver the best possible product or service to the customer from the customer’s perspective.  

Unlike lean Value Stream Mapping, the aim is not to find the most cost-efficient route, but the one that promises the most customer value. Of course, costs also play a role here. An organization does not have to choose lean or agile but ideally finds a way to become a lean-agile enterprise. Ultimately, competitiveness can be achieved through innovation and/or cost efficiency (and competitive prices). The two need not be mutually exclusive.  

I mean, this article now deals with agile Value Stream Mapping in more detail, but we are far from putting agile against lean, or saying that one is more valuable, more important – you name it – than the other. 

Regarding Value Streams, SAFe, for example, makes another distinction that should not go unmentioned here. SAFe distinguishes between Operational Value Streams and Development Value Streams. However, SAFe does not consider the operational Value Streams any further but focuses on the Development Value Streams.  

The Operational Value Streams (in the forms of Fulfillment Value Streams, Manufacturing Value Streams, Supporting Value Streams, Software Product Value Streams) would then also be the subject of a Lean/Kaizen approach when it comes to optimizing them.   

The Development Value Streams consist of the people who build the solutions that support the Operational Value Streams. Their mapping is the subject of this consideration. But don’t be confused, in many SMEs (small and medium-sized enterprises) that develop software solutions or even products in general, both Operational & Development Value Streams may well coincide, and we then only speak of Value Streams. Both the lean and agile practice of Value Stream Mapping can then be applied to these.  

Back to the agile Value Stream Mapping workshop. 

How to conduct a Value Stream Mapping workshop?

Step 0: Identifying Value Streams

It is usually obvious what the Value Stream in a company is, especially for SMEs that create a product, and this product is the actual business case. This is why we give this step the number 0; it forms the basic understanding of Value Stream Mapping, so to speak.  

Let’s not make it complicated here, the question is, how does your organization earn its money, and what customer value does it bring with its product? This step should still be quite easy, but it makes sense to formulate this value proposition clearly for everyone in the workshop and to create alignment between all those involved to make sure of this.  

Step 1: Identify the necessary activities.

This step is the main work of the workshop and will take some time. In this step, all activities are listed, starting with the trigger and ending with the delivered end value (customer value).  

All activities are then listed and described in individual steps between the trigger and the delivered final value. The individual groups in the workshop will certainly work at very different levels of granularity here. It is also a good idea to work at different levels to make the resulting map clearer. 

A wonderful variation is to describe each of these activities as a “customer journey”. You will appreciate the value of this technique later, but we won’t go into it here. 

Value Streams in scagile - Value Stream Mapping

Step 2: Identify the people involved in each step.

Since agile Value Stream Mapping is ultimately about getting the people who make up a Value Stream to work together in the best possible way, step 2 is essential. In this step, all the people who are somehow involved in each activity are listed. 

Think not only of the people who build the internal solutions but also those who look after external systems, the marketing team, sales, legal department, etc. After all, that’s what it’s all about: all these people should work closely together in the future and possibly even form a team. 

Value Streams in scagile - Value Stream Mapping

Step 3: Organize the participants into ARTs (Product Forces) and assign them to the respective steps.

If the number of people involved in all steps is more than 100 to 150, we need to segment the organization working on this Value Stream. SAFe calls this ART (Agile Release Train), but you can also call it Vertical, Chapter, Tribe, or whatever. 

We call it Product Force because it’s about the team that usually produces a product. So why not call it that? 

An ART/Product Force will cover a range of activities in the Value Stream. The cut of which activities are sorted into an ART/Product Force is not so simple and should be considered.

Indicators for this include:

- The type and number of dependencies between the activities
- The skills of the people required
- The question of whether some of the same people are needed in different activities
- The proximity of activities in terms of content

When forming ARTs/Product Forces, they must be cross-functional, i.e. that they include all(!) players who map the relevant activities of the Value Stream end-to-end. The result is the transformation of a classic matrix organization into a vertical agile organization. So, people will move from their traditional departments to the new ARTs/Product Forces.   

To put it bluntly, the old departmental structures will be dissolved and transferred to the vertical, cross-functional ARTs/Product Forces. You shouldn’t do things halfway; if you don’t want to commit to this, it will be very difficult to create a genuine agile culture.  

Value Streams in scagile - Value Stream Mapping

Step 4: Division of the ARTs/Product Forces into agile teams.

What we did in step 3 on a large scale, we now repeat on a small scale. An ART/product force usually consists of several teams, each with a maximum size of 10 members. These are the typical SCRUM or Kanban teams. These teams should also be cross-functional. They should primarily be Featureteams, i.e. teams that can take end-to-end responsibility (both responsible and accountable) for one or more activities in the Value Stream as part of product development. In the case of large activities, several teams can also work on this one large activity. 

Value Streams in scagile - Value Stream Mapping

Final thoughts

If you have taken all these steps, then you have a very, very good setup for creating real business agility in your organization.  

To emphasize it again in conclusion: A company that does not organize around value creation (SAFe Principle #10: organize around value) will hardly experience the benefits of true agility. Remember “no Value Stream, no Agile”. 

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Klaus Riedel
As an agile coach, Klaus Riedel, together with his team, supports the digital transformation and the introduction of Scrum and SAFe in large organizations such as Deutsche Bank, Conrad Electronics, Volkswagen, PWC and others.

All his gained practical experiences in more than 15 years of agile transformation have been incorporated into the articles of his blog.

In Scagile Academy he trains young Agile Experts and since 2016 he teaches agile project management at the German Faculty of TU Sofia.
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