Value Stream Management Adoption is Advancing and Drives Performance

Time flies when you’re having fun, right? We have just released our THIRD annual State of Value Stream Management (VSM) Report and I’ve had the best time writing it. Why? Because our data is living up to our hypotheses—in particular, that VSM practices correlate with organizational performance. We are seeing it over and over again—higher-performing organizations are more likely to be:

• Organizing around value streams
• Working with digital products
• Creating value hypotheses—across the full scale of work items
• Defining value hypotheses earlier in the product life cycle
• Putting the customer first when they think about value
• Accelerating flow—lead and cycle times are shorter
• Measuring the actual value realized by their work
• Using a Value Stream Management Platform (VSMP)
• Visualizing their organization as a value stream network

The Value Stream Management Consortium exists because we wanted to create a space for a community to build and meet to nurture what was, when we incepted back in early 2021, a nascent marketplace. At our first in-person flagship event, Flowtopia*, in October 2022, we talked about whether VSM was crossing the chasm, something we also addressed in our 2022 report. Influencer member, Tracy Bannon, memorably said:

“I think we can see the chasm in the distance—our toes aren’t at the edge yet.”

Fast forward to a fortnight ago at Flowtopia 2023 and we featured amazing enterprise speakers talking about how they are using VSM practices and tools in their organizations to improve efficiency and effectiveness—people from BECU, Deutsche Telekom, Netflix, Parchment, Shutterstock, Telstra, and Unum—in a wide range of roles, all VSM practitioners. VSM adoption is gaining momentum—and we see this in our data, detailed in the report too indicated by:

• Advancements across the VSM implementation roadmap
• An increase in the practice of creating value hypotheses
• More organizations organizing around value streams
• More people aligning to value streams
• Value being measured more frequently
• DevOps toolchains increasingly connected to value streams
• Increased adoption of Value Stream Management Platforms (VSMPs)

We have some favorite findings in the report—we call these “wow moments” because they are the ones that make us sit up and get excited enough to say “wow”. These are the ones that made it to the final cut:

1. A 15% increase in the practice of continuous value measurement
2. Teams are twice as likely to have connected their value streams in 2023 than in 2022
3. Connecting value streams means teams are 4 times as likely to have a lead time of less than one hour
4. Elite performers are twice as likely to be using a VSMP as low or medium-performers
5. Elite and high performers are 20% more likely to measure value outcomes often or always than low or medium performers
6. Elite and high performers are 3-4x more likely to align people to value streams than low performers

The VSM renaissance is underway—the question is, when will it be mainstream? VSM adoption is increasing because it drives organizational performance. Here’s how it does it:

• Aligning teams and organizations: makes it possible to cascade strategy and OKRs, while allowing teams to have autonomy over how they do the work. Connecting people from idea to value realization keeps the focus on the goals and feedback that will positively influence customer experience. Dependencies are surfaced and risks can be managed.
• Making work visible: is essential if you want to improve it. It’s particularly hard to see work in digital value streams where code is largely invisible. It’s also very difficult in large and complex environments where multiple teams and handoffs are needed. Most organizations have the data available—even if it’s currently hidden—that makes it possible to see what’s happening where and when. 

• Generating insights: from both flow and value realization data means teams can actively target improvements around both efficiency and effectiveness. This combines the removal of waste, delays, and dependencies with the ability to respond to real-time feedback on customer experience. Tools that collate this data can analyze it and find actionable insights teams can use to adapt their work in response to behavior in real-time.

• Measuring progress and journeys: is central to understanding how investments are paying off and creates and satisfies the need for organizational, team, and individual purpose. Knowing when to pivot or persevere—and when to celebrate and share success—drives organizational momentum for change.
• Having joy at its heart: VSM captures total experience. It starts with customer-centricity and connects employee experience from product management to software engineering. Customer joy is the foundation of organizational performance—if the people we are serving get what they want, when they want it, they will remain customers, buy more, and recommend our products and services.