According to David Norton and Robert Kaplan, authors of The Balanced Scorecard, 90% of organizations fail to execute their strategies. There are many interrelated reasons for this failure rate — enough to write a book about. For a quick rundown, check out my blog on the topic.
One common problem is a lack of strategic focus.
Many folks don’t know what their organization’s strategic objectives are, yet alone how the work they are doing every day supports the strategy, or even how it impacts the team down the hall (so to speak).
“Only 55% of the middle managers we have surveyed can name even one of their company’s top five priorities.” — Harvard Business Review
This is a problem rooted in a myopic view of one’s work and the impact it has across the organization.
How is the work divided up within your organization? Do you have software project teams building out defined scope? Do you have product teams solely focused on their slice of the business?
Maybe you are connecting teams via Scrum of Scrums or Scaled Agile Framework. Lean organizations try to optimize the flow of value by calling that a “value stream” and mapping the most efficient way to deliver to it. The question is, is that optimization for operational efficiencies or strategic alignment?
Like many concepts, value streams can be misunderstood. For example, what many are calling Agile is not Agile. It’s easy for concepts to get distorted, which led me to write my book, Pursuing Timeless Agility: the Path to Lasting Agile Transformation.
Value streams can support a strategic focus within your organization.
Let’s unpack what value streams are, and then how to tie that to your strategies in order to discover and deliver the next right thing.
What is a Value Stream?
Value streams describe how a stakeholder — internal or external — receives value from the organization.
For example, this could be an application process. The value stream starts when the user begins the application intake process and ends when a decision is made.
A value stream could also be the purchasing process, which might begin with browsing for products and ending when the product is delivered.
The goal when a user starts the process defines the end of that value stream. If anything goes wrong within that value stream, the value expected may not be delivered.
Value Stream Stages
Inside the value stream are value stream stages.
Depending on the size of the value stream, it may make sense to break up development and teams based on stages.
Stages represent iterative value that is accrued throughout the value stream. This could be the online form, account creation, shopping cart, payment processing, backend decision and approval, or order fulfillment.
Value Stream Mapping
How you organize around the work to deliver what’s needed to support the value stream is the focus of the Lean concept of value stream mapping — an internal process-based practice.
Value stream mapping seeks to identify and eliminate development waste by building cross-functional teams capable of delivering end-to-end needs for the delivery of a solution that supports a value stream or stage.
This internal process or team is not the value stream. It’s merely the way to deliver capabilities for the value stream in the most efficient manner.
The Strategic Tie-in
Why does your organization exist? What’s its purpose? What areas of focus help your organization provide that purpose?
These are the broader contexts that drive a strategic plan. They focus on the why and what success looks like when achieved.
A value stream represents one or more of the reasons your organization exists.
Your organization doesn’t exist to provide online forms. It doesn’t exist to take online payments. It doesn’t exist to execute fulfillment. All these things, together, support the mission of delivering value to the customer.
Focus on the Why
If your organization provides a way for people to apply for some type of assistance, you exist to support that need.
Your value stream is the flow from starting that process through delivering that assistance. Value is achieved when people are helped, or at least the request is adjudicated.
Value isn’t in what you do. Value is in what is achieved as a result of what you do.
Focusing on the whole value stream helps you stay focused on why you exist — the keystone of your strategy.
Fund Value Streams
Funding value streams provides more flexibility for teams to move to where the need is within the value stream.
Using portfolio management, the team(s) can use data to decide where the next right thing is and shift focus to delivering value where it’s needed to keep the value stream strong.
If one of your strategic objectives is to reduce subscription cancellation rates, you’ll need to identify the value stream that’s falling short of delivering expected value, which is causing customers to drop your service.
You will decide how much you’re willing to invest to reduce cancellations by a certain amount — your strategic objective. Given that investment, you’ll fund the entire value stream and allocate funds when and where needed to address the catalysts for dissatisfaction among your subscribers.
The Next Right Thing
My mission statement is that I help organizations continuously find better ways to discover and deliver the next right thing. That one statement, I believe, defines what every organization, team, and person should want to do — regardless of what they do. The trick is, how do you do that?
I often say, “what you do matters; why you do it matters more.” Many software teams are good at delivering a lot of the wrong things fast and frequently. They would call themselves “agile” because they are great at delivering things. To them, value is delivering on commitments. To them, value is doing more in less time. If this is how you operate, you may not be delivering the value you think you are.
I say value is only known post-deployment. Feedback and data inform whether what you delivered was valuable; it informs the next right thing.
There is an end-to-end experience for users receiving that value. That’s where you should focus. That’s what’s connected to your mission. That’s what is connected with your strategy.
I’ll say it again, value isn’t in what you do. Value is in what is achieved as a result of what you do.
A value stream focus helps you ensure the work you’re doing is aligned with something that matters.
It starts with enterprise strategy.
- Why does your organization exist?
- What is it trying to achieve, and why?
- What are the value streams your organization manages to produce that value?
- How does the work you do support the enterprise strategy and the value streams?
- How does your work help achieve the measures of success for those strategic objectives?
Everyone in your organization needs to know how to answer those questions.
The work you do is important, but when done myopically, it’s easy to veer off course chasing what seems to be valuable within your slice of the business. When all teams operate this way, no one aligns with the overall strategic objectives.
What if you organized around value streams? What if you measured success by the outcomes achieved toward your strategic objectives?