Value Management or Value Stream Management: That is the Question
Lance Knight: Hello, and welcome to the VSM con, sponsored by the SD Times and ConnectAll. I appreciate you joining my session today. I'm gonna start out with a little story. You know, I've been talking to a lot of people in the industry. You know, ConnectAll is a well known to be part of the VSM marketplace, and market segment. And, you know, we're pretty loud in what we talk about. So I was talking to a customer the other day, a prospect, about value stream management. And he said, “you know, Lance, some of the other people are saying different things than you are saying.” And I said, “yeah, I mean, there's a lot of different messaging going out there.” And that's where I came up with this thought of, the question is, as we're growing the value stream market, is this, is it value management or value stream management?
And I think we need to answer that question. When you think about value stream management and what a value stream management platform can do for you. So I then went out and I looked at a whole bunch of different organizations and how they defined value stream management. And I found each one said it was different and said different things. Now, some were close and some were on target to what it is, but some wrote things like, “value stream management is a lean principle that helps determine the value of software development and delivery efforts and resources.” It didn't quite make sense to me. I have to admit that I was a little confused by that one. You know, here's another “value stream management helps teams document, analyze and manage the measurable value of their dev ops projects and processes.” Again, confusing.
And, and that one actually continues on to say, similar to requirements management, “value stream management enables customers to fund schedule, track, and manage work from investment planning to execution.” This has all the definitions out there and I could see where it would be confusing, you know, and that's where I came up with this question that we need to answer. Is it value management, or is it value stream management? And consumers are completely confused by this. And some of the times they don't even know to be confused. They don't have enough information. They're only taking what we're talking about from a marketing perspective. Now, I've always followed the exact real-world definition that comes from the years and years of my time in manufacturing. And the value stream management platform itself, really doesn't care what you're doing or whether what you're creating is valuable.
It doesn't really look at that. It's really all about value added and non-value added activities in the value stream. The value stream, yes, is about delivering value to the customer. But it's more about the efficiency of that value. Not what you're doing, not whether what you're doing is valuable or not. And the real definition of this is really in defining the value stream. And then we can talk about value stream management relevant to that. So right out of Gemba Academy, I'm a huge fan of their work, if you ever want to learn about value stream management, lean principles, go right over to their website and you can sign up for all kinds of videos on lean value stream and all those things, there. And it's very simply put, “a value stream can be defined as all the steps, both value added, and non-value added required to take products and services from raw materials into the waiting arms of happy customers.” That's a value stream.
It doesn't say whether what's going through the value stream is valuable or not. That's a whole other list of things that you have to determine what to do. And, you know, I mean, this is standard material flow. I'm sure you've seen this value stream, picture, you know, across all of the different organizations. So again, it's important value added and non-value added activities, not whether what you're working on is valuable or not. So for example, non-value added and value add activities, for example, rework fixing bugs defects, finding bugs defects. That's a non-value-added activity, but necessary. Don't misinterpret what I'm saying. You do need to find and fix bugs, and work on those. But as a non-value added activity, you need to figure out how to automate that. And that's why we have so many great test, testing solutions these days that do all kinds of things.
So, you know, it's really important to get the point that it is necessary, but it's a non-value added activity. So can you automate that? Can you get a solution to help you, make that quicker for you while you automate your value stream? Which is about removing, which is those non-value added activities. So for example, here's a quick level example of something we can do in the value stream, just to add a new button, right? You get the request, a ticket gets approved, that approval then goes to a technical lead, a technical assignment, developers, all this stuff takes time and there's steps in here. They're just non-value-added and there's processes that are non-value-added as well. So can we automate those? Can we reduce those? Can I take the time down and save time to make it quicker to market? But again, to my first point is, nothing here is saying, is that button that's being created valuable to the customer?
And, and here's another traditional view that I've talked about as epics move through the system, right Intake approval design goes into development. All these steps take time. And these are artifacts that go through the system and you can find waste in these processes. For example, approvals are non-value-added to the customer, but necessary, right? So how can I automate that? How can I do something different? How can I understand my risk in a different way, or capture that with all, all of that non-value added work? Then it goes into your backlog. It goes into planning delivery and all the way through it. All of these things take time. And when you look at them in this way, this is cycle time. And I have a lot of interesting opinions about cycle time and some of the flow metrics. What'd you see the goal is to look at this and figure out where am I wasting time?
How can I be more efficient at delivering right? And if I look at my operational flow, there's all kinds of things I can do to remove this waste. I mean, six days to go through regression testing, to staging deployment, and so on. That could be trimmed down. That can be trimmed down quite a bit either by automating that from happening, automating the testing. There are all different things that you can do in order to improve these timeframes. And you do a value stream management optimization system session. So, this in itself is value stream management. Looking at how artifacts flow through your organization. How they get deployed the time they’ve waited states, looking for areas where you can remove steps in order to be more efficient and have a better flow through here. And that's value stream management. I'm going to come back to the point.
I said earlier, though, nothing here says whether what's going through is valuable or not. And you know, when you're looking at this and you're doing value stream management, lean principles come into, there are seven areas of waste. What's great about these areas of waste or Muda, is you can use that as a way to have a discussion about that as waste. It gives you something to talk about, not just saying, well, that's wasting time. You said, well, that’s talent waste, meaning that I'm using the wrong resources to accomplish these goals. So if I'm using, you know, full stack developers, to write test cases all the time, that might be talent waste. And I can figure that out, inventory waste, I've got too much of my backlog. Movement waste, moving artifacts from one to the other, wait state waste. How long do these things stay in waiting?
And all of these are pretty self-evident right? Right here, I've got defects too, like I said, defects are non-value-added, fixing them are non-value-added. Over-processing waste. Now we run into that a lot where, you know, you have five quality checks now that's an issue, right? That's over-processing waste, transportation waste. That's moving things between systems. So these areas, it just lets you talk about that, right? You can, when you're working with organizations and you're doing value stream management, you can say, “okay, that looks like that's movement waste. Why am I moving things from one place to the other? Or why am I transporting that piece of code from here over there? That seems like that's a little wasteful.” So that's what's really great about these systems. Now, again, none of this says what we're working on is valuable, right?
And all the way back to where, value stream management lean principles began with a Toyota production system, which is the first book I read on this a long time ago. And the founder of that, he's simply saying this, this is value stream management. “All we are doing is looking at a timeline from the moment a customer gives us an order to the collection of cash.” So it's all we're looking at and trying to remove non-value added waste. Now again, I know I've said that too much in this presentation already. Not whether that's valuable or not. We're trying to move waste to deliver that value that the customers asked us to create in the most efficient way possible in the definition. And again, this is a really great book we've been talking about, which is The Eight Steps of Value Stream Management.
It's commit to lean, choose a value stream, learn lean, map your current state, identify waste, map your future state, do Kaizen and then create an improvement plan. So when you're looking at these diagrams that you've laid out of your value stream, if you're committed to understanding lean and you can look where you can find waste, you can then figure out how to remove it. And you're also going to measure along the way you need to identify your metrics. That's number five there. So this is doing value stream management. According to the company I referred to earlier and what I've read about, this “value stream management enables organizations to deliver goods and services to their customers more rapidly, at higher quality and lower costs by streamlining the flow of value across the enterprise.” That is the best definition of value stream management I have seen. And the interesting part, doesn't say what you're delivering is value, it’s the flow of value that you're improving.
So that's why I often talk about see, measure, automate. You'll be able to see the value stream, measure it with metrics, analytics and so on. And then I can go and automate and I can use a value stream management platform to do all these. So a VSP should allow you to see your value stream, measure, and remove waste. All those different types of waste we talked about earlier, whether that's movement waste, whether that is transportation waste and so on. So let's talk about value management for a second. Here's where the water's getting muddy. Here's where things get a little ambiguous. Here's where you're not really sure because how do you measure value? It's not like I can just put it on a scale and say, “this is valuable or not valuable.” There's all different ways of doing this. And I've been working in this area of requirements management and value stream management for a long time now.
And there's different ways of creating two by twos to help you guess if something's valuable or important to the business or important to that customer. And you can always tie it back to the business and projected revenue or to customers. And you can say that it's dollars and cents value, but value is different to everybody. The word value makes it more complicated. So am I delivering value? Well, it might be valuable to me, but not valuable to somebody else. What I suggest is this, because it's so muddy and murky, why don't we look at that through the same lens that I talked about earlier, right? And as we look at these artifacts, you could say, okay, so there's all these things going through the system. How do I know if they're valuable again? There's that word, but my point is this, why don't we look at it like this?
Why don't we look at it through that same lens? Am I delivering something? A value is a value added thing or a non-value-added thing that I'm delivering to the customer? For example, requirements that fix technical debt are non-value added to the customer. However, it's necessary to fix technical debt. It's something you definitely should be doing. And looking at, depending on a bunch of things. Now, years ago in Y2K, I had a whole system that was a heat treat and the system was based on a four GL green-screen system. And we looked at the Y2K problem and solved it. And we kept using this system and we used it for decades after it served its need. Was it older technology? Yeah. It was a technical debt. Absolutely. Was it still effective? Yes. So you have to think about it through all those different points of view.
Now I brought up the flow, you know, this flow load because it's an example of a good thing to look at whether you're delivering value or not. And flow load shows you, you know, am I fixing technical debt? Do I have more defects? Am I delivering new features and new capabilities that can be determined in this way? Am I putting more value to the customer, into the system? And you can make some guests and say, normally that's new features and capabilities and different things like that, that the customers are gonna be able to use. And that's just kind of a guess because you never know. One thing that's valuable to you might not be valued by customers. And there's all kinds of different metrics that you can capture from your value stream to help determine that, right? We can do waiting, we can do all these things that different systems have.
And you can bring all that together. And, you know, there's different types of metrics, that you can get to do that. And, you know, we have some at ConnectAll that really helps you understand, you know, how important this is to this market. Second against this one. Am I delivering more through my system that are feature driven or organizational driven? So I guess where I'm going from here and going to is this, this is value management. This is value stream management. Value management is, am I delivering value? Am I doing that sustainably? Am I delivering it to the customers? And what the demand value stream management is. Am I doing it effectively? Am I removing waste both value added and non-value added? It doesn't care what you're putting through it is valuable or not. It just wants to make sure that you're doing it efficiently. And in value management, is that, is it valuable? Am I giving something to the market, to my customers that they'll want? Is it valuable to them as an organization? And that has an effect on larger scale companies as well.
My bottom line point on all of this is, you have to be able to do both. You need to be able to look at the things that are going into your value stream, ensure that they're valuable, whether they connect to business outcomes and OKRs, right? Those have to get down into your value stream delivered, and you can look at, you know, how many things am I delivering against this initiative or that initiative in order to promote your business from a business perspective. And you need to do both. That's just the bottom line. You have to be able to use a value stream management platform and that will allow you to both. To make sure that you're delivering value and give you the insights. You need to know whether you're doing that efficiently and how you can use the platform to remove waste, and some of the best value stream management platforms out there today help you do both with their metrics, with our analytics, we'd be able to see flow by being able to integrate, inter-operate work, with other solutions, and make sure that you're delivering the best of both worlds to the customer.
And so really this is where I re-introduced this thought too, because value stream management is human. The value stream leader needs to think about these things, and use a platform to put it together, right? Use, you know, think about a governance model. And I showed you a sample of a three tiered architecture. You have to look at, both the material flow and the information flow. The information flow is the artifacts to me, the material flow is code to release, to package, to, things into production and so on. So you have to look at both, both the material flow and the information flow, and then you need to look at that and figure out how can I remove waste there? How can I be more effective, by streamlining the time I'm using to do anything in both of those flows?
So, you know, it's, it's not that complicated either. And I just want to leave you with this thought of, just map your value stream. Look at it, improve flow, remove waste, just take it out one piece at a time, capture the information you need. So you get information and analytics to make sure that you're delivering value to your customer, and you're managing your value stream to do that efficiently by removing waste. So again, thank you for joining me. And if you have any questions, I'll be here in chat. And if you want to talk more about value stream management with me personally, you can contact me here, at ConnectAll. And, I look forward to talking to you throughout the conference. Enjoy the rest of the great presentations that are coming up.
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