I recently presented a workshop on value chain mapping to the NE Ohio Scrum Users Group (note for those who say user groups are passe – this is one of seven heavily attend users group that I attend in multiple cities). Preparing for the workshop and then based on the reaction of the attendees, it became very apparent that three terms are often conflated or confused. The three concepts are value chain, value stream, and process map.  Each concept is a reflection of different level of analysis each are necessary to develop a solid understanding of how a piece of work is transformed into a shippable product and identifying the customer you are trying to serve.

Value chain, a term coined by Michael Porter in 1985, takes a high-level view of how value is delivered by an organization beginning with ideas and raw materials entering the organization to the delivery of the product or service to a customer. A value chain plots a departmental view of transformation and shows the supporting groups that enable the transformation.  For example, a software firm decides on what software to build, creates software, markets and sells that software, delivers that software and then supports that software. These steps are the value chain. Human resources, facilities, and community services are examples of support groups that support and enable the value chain but are not central to the transformation and delivery of value.   Three critical questions value chains answer:

  1. How do products get to market?
  2. Do all products follow the same process flow?
  3. What are the most significant deviations in the flow of value to market?

Value stream decomposes the departmental view of a value chain into an activity-level view of the flow of work required to deliver a product. Unlike the value chain, support areas are only referenced when they interact with the product being delivered.  The Scaled Agile Framework Enterprise (SAFe) uses the concept of value streams to define Solution and Agile Release Trains (a coordination technique for delivering large products or releases). The two primary differences between value chains and streams are focus and granularity. Four critical questions value streams answer:

  1. Who needs to plan together?
  2. Can teams share a single backlog?
  3. Are there shared stakeholders?
  4. Where are the bottlenecks?

Process maps drive processes down from process steps or activities into the flow of work through tasks.  Process maps focus on a specific segment of work. For example, test-driven development is a process comprised of a number of activities which can be decomposed into a set of related tasks that every team implements differently.  At this level of granularity, several questions can be answered. For example, the delay between steps can be evaluated to determine how to improve flow. Each step can also be evaluated as to whether they add value (transform) to the product or exist to control the flow or review the work so that the burden of overhead and review can be evaluated.  The evaluation includes answering:

  1. Where do transformations occur?
  2. What tasks or steps do not add value?
  3. Potential constraints and bottlenecks?

Rather than conflating the concepts of value chains, value streams, and process maps, a better approach is to embrace each layer’s differences and use all three.