A shift from Project to Product requires a holistic view of the enterprise, augmented by value stream thinking and the end-to-end visibility of the Product Development process it provides. Organizing around value streams requires a new organizational approach to Program and Portfolio Management that can be challenging, especially where there are deeply established practices, regulatory environments, technology stacks mixed with old and new tools and a resistance to change.
What are value streams and what role do they play in Product Development? Value streams are the sequences of activities performed to provide value to a customer or end user. They include the entire end-to-end process from the initial idea, strategy, implementation and delivery through feedback and improvement.
Organizing Product Development around value streams provides many advantages over a traditional Project approach. With value streams, resources are organized around a product or solution for the duration of its usefulness. Stable, long-lived teams “own” the product and focus on delivering value to customers, including internal or external. Long-lived teams with a value delivery focus accelerate time to value, improve end-to-end visibility throughout the value stream and optimize the flow of value through the system.
Traditional Project Approach
Using a traditional Project approach, short-lived teams are organized in functional silos and assigned to work on a specific problem until completed. Teams and individuals focus on optimizing the work within their localized tasks rather than focusing on value delivered. The “ideate-build-run” functions are separated and distributed throughout the organization.
Potential drawbacks to the Project approach include value delivery being delayed by hand-offs between teams; organizational and internal political boundaries preventing overall system visibility; and poor communication and cooperation between teams. Management’s challenge is to connect the silos and shepherd the project through a sequence of disjointed teams working on separate tasks. Funding is designated to a pre-defined solution and success is defined by being on-time and under budget.
Shifting to Value Streams
With value streams, long-lived, stable teams are organized around a product or solution for the duration of its usefulness. Teams focus on delivering value to customers and exist as long as the product is active and delivering business value. The “ideate-build-run” functions are the responsibility of a single, unified team dedicated to the product and value stream.
Benefits to organizing around value streams are fewer handoffs and delays resulting in accelerated value delivery and greater end-to-end visibility along the value stream. Since teams remain focused on the product and value, they benefit from their prior knowledge and can quickly apply their learning to improve the product. The approach supports Lean development and budgeting methods. Rather than funding pre-defined solutions, teams are funded to build, run and iterate on a solution in a continuous improvement effort or to pivot to a different solution to the customer’s problem when necessary. Success is measured by improvements in metrics tied to business outcomes.
Organizing Around Value Streams: A Use Case
To illustrate how organizing around value streams can perform better than a Project Management approach when working with digital products, consider the following case:
Users determine that a recently implemented Business Process Management (BPM) Workflow Automation Tool isn’t fully supporting the organization’s hybrid integration environment and they provide feedback to management. With a traditional Project approach, there wouldn’t be a team in place ready to respond. The issue would have to be raised to the appropriate level, submitted to a project approval process and assigned a priority. Resources and staffing would be designated to the solution and a team would be formed. The newly formed team would be unable to hit the ground running because they would need to become familiar with the BPM Tool implementation.
By contrast, in Product-mode, with teams assigned to value streams, long-lived, dedicated and knowledgeable teams are in place, ready to act on any new feedback or issues that arise. For management, it would simply be a matter of diverting some team capacity to addressing the problem. Teams can grow and retain system knowledge when they are assigned to value streams and working in the same general area over time which better prepares them to hit the ground running with a quicker solution.
The Benefit of Organizing Around Value Streams
The example above illustrates that knowledge of the product, customer and context accumulated by long-lived teams organized around value streams can lead to better outcomes for growth, innovation and efficiency compared to short-lived Project teams that ramp up and down from assignment to assignment. Managers shift from being responsible for executing projects on time and under budget to setting the strategic vision that drives Product Development and acting as a liaison between Stakeholders, particularly Business and IT. Teams build cohesion from working together over time and practitioners gain deeper knowledge and expertise. A Product-centric approach with teams organized around value streams is a better fit for the digital environment due to improved responsiveness and a focus on rapidly delivering increased value to customers.