A value stream is a set of actions performed to add value to customers, from the initial request through the realization of value by the customer. It is defined by SAFe as the primary construct for understanding, organizing, and delivering value in SAFe.
Value streams are composed of iterative value items that we call Value Stream Stages. These stages are accrued to deliver value throughout the value stream, ultimately providing a value proposition.
Previous attempts at describing stakeholder value involved an internal value chain or process perspective. Value streams are far better at highlighting the steps required as they take the perspective of the initiating or triggering stakeholder.
Identifying value streams can be tricky as there are multiple categories of value streams that are then split into subcategories.
When working with SAFe, most will fall into one of two categories: operational value streams and development value streams.
Both types of value streams result in creating value for a customer and can manifest in the form of products, services, or a combination of the two.
Some companies offer varied products and services. For example, airfocus is a business specializing in software for product management. We offer a range of modules, including roadmapping, insights, and prioritization. So, if we wanted to identify our value streams, we would look to group these modules together.
This first step is determining which products use the same processes or share a notable amount of the same process steps. Those products will be grouped to create a matrix that cross-references the process steps with each product line.
The goal is not only to identify all product families but also to identify what process steps each product utilizes.
It’s essential to remember that the process steps define the value stream, not the end-users.
While a product or service may utilize different processes, companies need to concentrate on one process at a time, focusing on processes critical to company goals. After grouping your products, we can focus on one product family.
This decision depends on your business situation and which elements of your company need improving.
A company’s improvement plans may be filled with process improvement projects with no clear link to its overall goals or vision. With limited resources available, efforts need to be concentrated only on those projects that need to be done.
Selecting which product family to analyze will depend on the individual business situation. Examples of areas of interest include:
Highest product/service volume based on sales values
Highest product/service volume in units
Products/services with the highest errors or defect rates
Products/services with the highest customer-related issues
Products/services that require the most management time
Now that we’ve chosen a product family to focus on, we need to see it in action.
When you make the initial walk-through, begin with the customer and work backward through each process. How does the customer receive the product or service? What triggers the delivery of the product or service to the customer? What are the inputs and from where are they supplied?
After walking through, you will be well on your way to identifying and gaining a rudimentary understanding of your value streams and how they flow.
With the data you collect during the walk-through, you can create a current state value stream map to create a more detailed picture of your value stream.
Without a clear picture of what it delivers (and how), an enterprise will struggle to improve how it works. This is the main reason we organize around value streams. Once you establish that clear picture, you can optimize the flow of value throughout the entire system and accelerate the time to market.
By organizing around value streams, teams can experience a wide range of benefits, including (but not limited to):
Fewer handoffs and delays, allowing teams to work with smaller batch sizes
Enable long-lived, stable teams that focus on delivering value instead of projects which focus on task completion
Allows faster learning and shorter time-to-market
Contributes to higher quality and more productivity
Supports leaner development and budgeting methods
There are generally four types of value streams. These are often referred to as operational value streams. These include:
Fulfillment value streams like insurance or eCommerce sales orders
Manufacturing value streams like consumer products, medical equipment, and devices
Software product value streams including ERP systems, SaaS, desktop, and mobile apps
Supporting value streams like supplier contracting and executing the annual budget process
There are two types of value streams described in SAFe. Operational value streams – which is what we have looked at so far – and development value streams.
Development value streams are the sequence of activities needed to convert a business hypothesis into a digitally-enabled solution.
Systems and software developers, product managers, engineers, scientists, and IT practitioners all work in development value streams to define, build, and deploy products and services.
The APMO (Agile portfolio management operations) helps coordinate efforts across the value stream to manage dependencies and exploit opportunities within the portfolio.
SAFe 5.0 defines three critical responsibilities for the APMO:
Coordinating Value Streams – exploiting opportunities and managing dependencies between (and at the boundary of) Value Streams.
Supporting Program Execution – maintaining and developing successful delivery patterns, establishing objective metrics, and reporting on business agility. SAFe suggests the APMO may also take on a sponsorship role in some cases.
Fostering Operational Excellence – acting as a center of excellence that serves as an advocate for change and helps the organization move towards the SAFe view of agile.
If you’re looking to learn more about value streams, airfocus can help!