Value Chain & Stream Management

It’s a healthy management discipline to gain a comprehensive value stream view, leverage value models to make wise investments and manage multidimensional business value effectively. 

Businesses value view is multi-faceted and it’s interesting to see how business value is in the eye of the beholder. The business value stream/ modeling/mapping, once built, is a good tool to visualize the end-to-end enterprise. 

In fact, enterprise has many value streams, from ‘opportunity to vision’; from ‘vision to blueprint’; from ‘blueprint to roadmap’; from ‘roadmap to plan, ’and from ‘plan to solution,’ etc.

A Business Value Stream View: To preserve "business value," you need to have a very clear idea of the "product/service" - its life cycle, the overall "value proposition," where it fits into the overall "product portfolio," the wider competitive landscape and your price/business model. A value stream view should allow you to demonstrate the capabilities necessary to deliver each and every product/service and then the capabilities that are necessary to support them. The value stream to capability mapping identifies the capabilities to be considered as you design your processes and stakeholder mapping, identifying the roles required within that stage as input to process role definition.

Value streams can break into stages; each stage decomposes into routing maps or can map to a process, process underpins capabilities to deliver products/services and enable value stream stages. A given capability can enable 0-to-many value stream stages. As capabilities are heat-mapped to determine if they are working well, not working, or non-existent. Sequentially, capability maps to business units, stakeholder maps to Value Stream (triggering stakeholder to stream and participating stakeholders to stages) and Process maps to Value Stream Stage.

A Value Stream Map is a bigger picture requirements analysis: Everyone's doing their best so focusing on completion of technical implementation details can make it hard for you to capture a “big picture,” see that some of the work being done is not necessary. One of the benefits of mapping products/services delivery is making the work being done and its impact on the whole system more visible. The value chain processes produce goods and services and deliver them to the customers. Therefore the value chain process is the flow of activities, which include what managers, employees and applications do.

Practically, look at capability-products/services delivery mapping from a 'value streams' perspective with logical steps:
-Identify major business value streams (end-to-end processes that deliver customer value).
-Map information technology related products/services that support these or are missing (untapped capability).
-Estimate the “capability leverage,” preferably in dollars, provided, or potentially so, by each of these services to each value stream (greater agility etc.).
-Estimate the business capability (preferably normalized to dollars) represented by each value stream.

The value-based management needs to be driven by concepts like multidimensional collaborative value or collective advantage and multi-layer ROIs: Organization has a set of capabilities that enable it to achieve successful outcomes, whether financial, brand, or double bottom line. So it needs to create the alternative value index-comprising multidimensional value lenses. Business value is demonstrated through the rate of productivity increases, the rate of new product development, the rate of market share gains, the rate of customer approval and satisfaction gains, the rate of sales gains, etc.

Business management needs to properly understand all elements of value that are translated to the organization, and how all the pieces and parts of the organization are ultimately impacted, for good or bad, by each new business initiative, in order to run a value added business with pragmatic advancement. Value streams is inside-out; it’s also important to build a “behavioral value chain” between the inputs - intermediate steps - outcomes. Ask your teams to define business value in terms of outcomes they're helping the organization & customer to achieve, unpack the employee inputs - product quality - customer satisfaction chain to determine what constitutes each of the parts and the strength, and direction of the various links in the chain.

A "Business Value Model" is used for assessing the value of an investment objectively in order to achieve high ROI: A "Business Value Model" is neither a model of intent (business model) nor a model of actual value creation (business architecture model), it is a model used for assessing the value of an investment, to the business. Business Value Models are decision aids and investment tools. In a literal sense "what value does this investment provide the business," and how to improve ROI.

As the value of the firm goes beyond economic value or shareholder value, to include other forms of value such as employee value, customer value, supplier value, channel partner value, alliance partner value, managerial value, and societal value, etc. with a clear business value stream view, all parties can agree on the common value proposition. In broader ecological scope, the business management should understand deeply the value chain of business, value chain of the industry segment and value chain of the business ecosystem in which it competes. It can find areas to innovate in the way certain tasks are done with the help of technologies that allow rapid testing of processes and outcomes.

It’s a healthy management discipline to gain a comprehensive value stream view, leverage value models to make wise investments and manage multidimensional business value effectively. When organizations mature, a key transformation must take place from “entrepreneurial to purposeful” transformation. When highly driven, the initiative driven roles are replaced by a ‘value chain.’ The value chain is staffed by people that can do their jobs really well because of training and experience in those roles. Successful business initiatives are about creating really good value chains, getting the right people in the right positions, to make right decisions at the right times to solve the right problems.

Posted in: Business Process Management,EA,Enterprise Capability,Strategy