By Saahil Panikar, Pricipal Project & Team (with contribution from Cindy Van Epps, Principal, and Jeff Shupack, President, Project and Team)
There is an ever-increasing push to organize around the value stream to improve the flow of value to customers. The most important aspect of understanding how to do that is first understanding what the actual value is that you create. For many organizations, there is a heavy weight placed on return on investment (ROI), and profit is the driving force behind business decisions.
Consider the example of a Fortune 10 energy company business unit in the process of modernizing its operating processes. They realized that by continually focusing on reducing the cost of producing a barrel of oil, they were actually missing the bigger picture. The value that this business unit created was not a barrel of oil but rather a functioning oil well. Organizing around the successful identification and deployment of an oil well enabled them to better serve the rest of the company more efficiently and with significantly lower costs.
The reality is that we can be good financial stewards of our organization without making profit the highest purpose of the organization. Customers don’t care about your profit. Customers need to know that you’re solving a problem for them and that you’re solving it well. Value stream management allows you to put the customers’ needs first and gain such operational efficiencies that you will turn a profit as a result.
Organizing around value increases collaboration, reduces time to market, and allows you to more rapidly adjust to changing market conditions. The challenge is how to continuously manage optimization without disrupting flow. The following patterns have been found to help practitioners overcome some of the most treacherous hurdles as they continuously organize around value:
- Understand that value stream management is a customer-centric opportunity to engage with your market, not just a lean strategy for optimization of delivery.
- Accept that as you leverage new organizational models, you will naturally be creating new silos and must continuously reoptimize for collaboration and solution delivery.
- Recognize that for large and complex environments, simple does not mean organized around value. You can make something simple and still impede flow.
- Identify digital threads that can be applied with deep understanding of business processes (the who, when, and why) in order to ensure that your organizational capabilities are streamlined in support of your strategic themes.
Problem to Solve 1
The Enterprise is Solving the Lean Problem, Not Addressing the Customer-Centric Opportunity
To become more efficient, the enterprise examines the steps in the current value stream. In traditional value stream analysis fashion, they look for bottlenecks in the process from trigger to result of value for the customer and the company.
“How do we remove the bottlenecks?” and “How do we leverage digital solutions to streamline what we do today?” they ask. These are worthy goals, and addressing these questions does enable efficiency. However, these actions often mask the real opportunity, which is taking a customer-centric view of the value stream and refactoring the steps and interactions to streamline the customer experience.
Consider the case study of USAA, who reorganized their call centers to focus on their customers’ life events rather than the company’s lines of business. They formed a member experience organization to ensure the focus on the customer.
A customer-centric mindset means thinking and feeling like the customer; therefore, we must consider each decision with analysis of how the customer would prefer we spend our time and energies. Certainly, some level of oversight and coordination is required to meet the real customer needs. But an unchecked level of oversight results in a heavily weighted manager-centric culture.
Unfortunately, the behaviors we see most often from managers/leaders focus on their own needs. These are usually a cascade of manager-focused needs flowing top down in the organization. “I need you to give me an update on what the team is doing, so I can consolidate that into what my manager is asking for. I need to interrogate you on every detail in case my manager interrogates me.” And so it flows.
The key to successful value stream optimization is not just understanding and refactoring to enhance the customer experience. Success also comes from giving up the non-customer-value-added elements, unless those elements are critical to sustaining the business
As we attempt to shift from a culture of management-centricity to one of customer-centricity, we can consider these feedback items collectively owned by the organization.
- Leverage design-thinking tools with transparency and collective ownership so that every employee learns to think like our customers.
- Quantify the impact of pathological organizational practices like piecemealing people on projects. The cost of context switching is a significant energy sink in most organizations. Quantifying the impact is often the first step to shifting that energy to customer-focused benefit.
- Speak the language of “energy currency” to reinforce that the time, energy, and innovation opportunities of the people most directly crafting customer solutions are the most valuable assets in the enterprise.
- Train leaders to tune into the organizational performance weight they impose and techniques for demonstrating customer-centricity through their own actions.
- Organize around customer value to remove the frictions on the value stream.
- Extend Lean and Agile principles and practices to the entire enterprise to support the business agility required to be responsive to customer needs.
- Transform continuously. “When’s your transformation done? When you’re ready to stop being competitive,” as Jeff Shupack, President of Global Advisory Practice, Project & Team, has said.
- Thinking customer-centricity and design thinking are only the purview of user experience designers.
- Using Agile as an excuse to overload people—“We are agile so we can accept all new requests/changes, right?”
- Living a double life of Agile and traditional practices. When you are both, you are neither.