The enablers of customer value delivery
I’m sure you’ve heard of value stream mapping or VSM — that critical tool used to identify waste, automation, and other opportunities within a process to reduce time and cost or increase quality and accuracy. While VSM is certainly a worthy topic to write about, it is not the topic of this article. The kind of value stream I’m referring to is not a tool; it’s an awareness of how your business serves its customers.
Value streams are made up of chronological activities that begin with a trigger or need and end with some sort of value being delivered to a customer. Value streams are made up of a complex pairing of people, processes, and products or services. To better understand value streams, we must first understand the customer experience journey.
Customer Experience Journey (CXJ)
Any time a customer seeks to purchase, use, or otherwise engage with a product or service, they embark on a journey to achieve some desirable or necessary end. Let’s use a trip to the grocery to illustrate the concept...
At a high level, a customer’s grocery shopping experience consists of four stages: select a grocery to shop; travel to the selected grocery store; shop for the needed/desired grocery items; and check out/purchase the items.
Behind this (overly simplified) CXJ example, there are value streams. Value streams may include individuals or teams of people running multiple various processes in order to provide the necessary products and services that enable customer value delivery. Some value streams may involve marketing to attract the customer, stocking to make sure high-demand products are on the shelves, and manning the check-out stations to ensure an easy purchase experience. Value streams of this sort are referred to as operational value streams (OVS).
Operational Value Streams (OVS)
An OVS is customer-facing, which means the customer interacts with the value stream in some direct way. This could be a customer-to-employee service interaction, a customer reading an advertisement, or a customer selecting a product from a store shelf.
OVS’s apply to both internal and external customers, making identification a little tricky. Here are some questions to ponder as you work to identify your OVS’s:
How do customers describe the value they receive from the organization
What are the organization’s major current initiatives?
What are the products and services provided by the organization?
What are the organization’s key processes?
Who are the organization’s internal customers?
What are the organization’s KPIs focused on?
An OVS is typically supported by another type of value stream, one that actually enables the OVS to function. This type of value stream is referred to as a development value stream (DVS).
Development Value Streams (DVS)
The DVS includes its own set of people, processes, and products or services, the same as an OVS. The DVS is primarily IT-focused, and often involves the design, implementation, and continuous improvement of technologies. Examples may include software development or web hosting. These value streams provide the technological environment in which OVS’s operate and can be a little easier to identify given their nature.
Value Streams in Practice
Value streams are associated with agile and product-focused methodologies or work orientations. For additional information on these methodologies, I recommend the following agencies.
I bring up agile practices and a product work orientation because value streams are at the heart of portfolio organization in these frameworks. Organizing around value streams has been proven to:
Shift focus to the customer experience;
Enable high-performing teams;
Support a leaner budget;
Shrink work batches; and
Performance metrics or key performance indicators (KPIs) that are established for value streams are focused on responsibility, decision-making, and customer value delivery. This focus is arranged into strategic themes through the development of objectives and key results (OKRs). The KPI-OKR alignment enables the improvement or advancement of the value stream while maintaining organizational concentration on the broader strategy.
In the simplest terms, value streams represent how parts of an organization work together to deliver value to its customers, both external and internal. When an organization is focused on the customer experience, value streams become the best guide for organizing teams, identifying objectives, and making important decisions regarding the future of the business. Understanding and incorporating value streams as part of an operating model can be challenging, especially for well-established and highly-complex organizations, but research suggests that the reward can significantly outweigh the effort in terms of net promoter score (NPS) and growth, among other benefits.
If you’re in an organization that is providing a product or service to a customer, then your value streams already exist. You just have to spot them, and then, decide how to design your organization around them. And yes, it’s easier said than done, but it’s worth it!