Written by Kevin Heisey
on January 25, 2023

In Organizing Around Value Streams: Preparing Your Teams, I wrote about how organizations are adopting a Value Stream approach to improve collaboration across teams and functions and provide the ability to quickly pivot to take advantage of opportunities to drive value as they arise. Organizing around Value Streams instead of projects requires a shift in thinking not only about how your teams work but also about how work is funded.

Traditional projects have starting points and end points, with teams assembled for the project and disbanded upon its completion. When the project is done, it’s done. With Value Streams, the general idea is that typical product initiatives are ongoing as teams are organized around products to continuously deliver business value and continuously improve.

Funding Projects

Traditional projects are funded based on an estimation of scope and timelines for project completion. Cost overruns and work taking longer than expected often lead to further delays as funding and resources are recalibrated. With traditional projects, teams:

  • Are assembled and assigned to a project and disbanded upon completion.
  • Are incentivized to complete their work within the timeline and budget.
  • Don’t get a chance to learn and grow into high performing, normalized teams.

Funding Value Streams

Value Streams are funded by providing a budget for Product teams that establishes financial guardrails. After the initial product delivery, teams continue to build, innovate and improve the product and value delivered to customers. The guardrail structure gives teams the flexibility to react quickly to customer needs and changing conditions and positions teams to continuously deliver business value. With Value Stream funding:

  • Teams don’t disband. They stay together, learn and improve as long as they continue to create business value.
  • Teams are incentivized to deliver desired business outcomes.
  • Teams can make quick decisions and pivots driven by data, learning and meeting customer needs.
  • Product Managers guide work prioritizing business value delivery.

Align Budgets to Your Work

Value Streams align your teams, tools and processes with customer-focused, value delivery and business outcomes. They allow for better collaboration and push decision making down to the team level, providing teams the ability to quickly pivot to take advantage of opportunities as they emerge and improving speed to value. Teams stay together and get used to working together while amassing knowledge of customers and products, improving overall productivity.

Modern software products don’t have a clear beginning or end. They require continuous work and improvement, which requires ongoing investment. Value Streams provide a better way to think about work, budgeting and the nature of modern product initiatives. Funding Value Streams keeps development in progress, continuously improves products, delivers value to customers and brings the optimal business value to your organization.