In analyzing the Fresh Value Stream Management 2023 report, it becomes evident that the practice of value stream management (VSM) is witnessing a gradual but significant uptake. A growing number of companies are reorganizing their processes and teams around value streams, with an encouraging number of leveraging tools to measure critical performance metrics.
However, the report uncovers a puzzling trend: the adoption of VSM is not correlating with the substantial performance improvements one might expect. Consider that 36% of organizations categorized as 'Elite' performers still report lead times exceeding one month, compared to 50% of their 'Low' performing counterparts—a gap that seems less than profound. Similarly, the cycle time performance differential between these groups stands at a mere 12 percentage points.
While the report validates the premise that VSM can enhance performance parameters, the question arises:
Why are the improvements relatively marginal?
I propose that the current emphasis of VSM practices is misaligned. There is a disproportionate focus on metrics collection and measurement—with a 7% versus 14% growth—while undervaluing the critical aspects of VSM: reengineering and optimization. Notably, there is a stagnant growth rate in adaptation among organizations that have already established a value stream, remaining at 8%. It is during the reengineering phase that most value is potentially unlocked, yet we observe no significant progress in the areas of continuous improvement, hypothesis formulation, and experimental implementation.
I offer two hypotheses to explain this conundrum:
- The initial value stream mapping exercise typically yields immediate value by identifying and addressing performance bottlenecks. However, once the data collection and measurement systems are integrated—effectively 'wiring' the value stream to a dashboard—this can inadvertently create resistance to further changes, as they would necessitate an overhaul of the data architecture.
- Implementing changes to the value stream usually demands a new investment. A robust financial and process performance projection is essential, yet organizations often default to opportunistic, short-term decisions rather than conducting comprehensive impact evaluations.
An intriguing development from the Flowtopia conference tied to the report was the focus on value stream simulation. This shift underscores a critical insight: merely monitoring dashboards fails to provide the analytical depth required to enhance specific metrics. For instance, how does one effectively reduce cycle time? What performance gains can be anticipated from such an investment? What are the potential outcomes of transitioning to cross-functional team structures, test automation, CI/CD etc?
This is where I anticipate the further evolution of VSM practice: moving from a measurement-centric approach to one that supports strategic decision-making.
As practitioners and leaders seek to navigate these complexities, I recommend exploring tools such as 'vsoptima'. This solution facilitates informed decision-making by enabling users to simulate changes within their value streams and assess the resultant performance and financial impacts.
By embracing a more nuanced approach to VSM, organizations can unlock the full potential of their value delivery, driving substantial improvements in business performance that are both measurable and meaningful.