First, a little bit of history. The first recorded production line was at the Venetian Arsenal around 1320. Quite a bit later, Henry Ford propounded the flow of production by experimenting with interchanging and movement of different parts so as to achieve standardization of work around 1913. In 1915, Charles Knoeppel published his book ‘Installing Efficiency Methods’. In 1937, Toyota was inspired by Ford’s flow of production concept and invented the Toyota Production System including information and materials diagramming. In 1984, Eliyahu M. Goldratt published ‘The Goal’. James Martin published ‘The Great Transition’. Peter Hines published ‘Value Stream Management’ in 2000.
In 2021, we founded the Value Stream Management Consortium.
Why now, when so much has come before? It started with an analyst, Forrester, publishing their first Value Stream Management Wave. In it, they defined value stream management (VSM) thus:
“Value Stream Management is a combination of people, process and technology that maps, optimizes, visualizes, measures, and governs business value flow through heterogeneous software delivery pipelines from idea through development and into production.”
What’s new? The digital value stream. The technology. And the heterogeneous software delivery pipelines (thank you DevOps!).
- Value stream management optimizes value flow and realization
- Optimizing value flow and realization results in sublime customer experience
- Delighted customers mean higher organizational performance
Flow emerged from manufacturing’s success in building factories and supply chains that made build, deliver, distribute, install easy. Software began with a project approach because build, deliver, distribute, and install were massive efforts. Cloud and SaaS operating models have eliminated all that friction and made flow possible and necessary to compete. Recent software delivery improvements have eliminated bottlenecks within development and operations, and now the focus lies beyond.
Value Stream Management is a way of working that encompasses a number of practices and techniques to organize, map, measure, manage, improve, govern, and accelerate the flow of measurable valuable outcomes to the customer. It makes work visible and in doing so surfaces insights into where delays, waste, and non-value adding work can be removed in order to improve customer experience.
It starts with identifying the value streams themselves, the people involved, and the steps in each value stream. It recognizes that most organizations will have many value streams and that often these value streams are interconnected and have dependencies on one another. It is enabled and supported by technology in the form of Value Stream Management Platforms (VSMPs).
VSMPs enable organizations to simplify building and managing CICD pipelines and DevOps toolchains. They minimize the overhead involved in orchestration, integration, and governance, thus maximizing value by providing visibility, traceability, and observability into the flow of work. VSMPs:
- Drive business agility
- Reduce the overhead of managing complex toolchains
- Maximize flow in digital value streams
- Support rapid innovation
VSMPs offer several capabilities to achieve these goals:
- A common data model with data normalization
- Tools integrations
- Value stream visualization
- Real-time metrics into flow and value realization
- Deep analytics and actionable insights
- Governance and continuous compliance
- Simulation and prediction
- Workflow orchestration
- Personalization, collaboration, and coordination
VSM seeks to improve organizational performance by optimizing the flow of value to the customer. Our research shows that VSM practices correlate with higher organizational performance. VSM relies on the principle that customers who receive the things they want and need when they want them will be loyal and refer their contacts to the product or service provided.
There is a duality in VSM between flow and realization:
- FLOW is the journey of work from idea to value realization
- REALIZATION is the fulfillment of desired outcomes for customer experience
VSM makes it possible to:
- Know how long it takes for customers to receive valuable experiences
- Trace work through the DevOps toolchain and access meaningful data
- Gain insights into how to accelerate that flow and see improvements
- Have insight-driven conversations and make insights-based decisions
- Collaborate on the end-to-end product or service lifecycle
- Estimate and measure the value delivered from the work done
The key principle of VSM is that if we can satisfy customer demand for value outcomes at optimum speed, their delight results in the consumption of the product and services and referrals that lead to organizational success. Harnessing VSM enables businesses to outcompete.
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