The kingfisher was about this far away!

Each mapping layer, value chains, value streams, and process maps serve related but different purposes. As an organization drills down from a value chain to a process map different measures and metrics are exposed. One could summarize value chain metrics as high-level cost, revenue and speed while process mapping as variations on effort, delay, and work-in-process. Each metric set is highly related but targeted at different levels of the organization.

Value Chain Metrics Pallet (more…)

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The simple cumulative flow diagram (CFD) used in Metrics: Cumulative Flow Diagrams – Basics  and in more complex versions provide a basis for interpreting the flow of work through a process. A CFD can help everyone from team members to program managers to gain insight into issues, cycle time and likely completion dates. Learning to read a CFD will provide a powerful tool to spot issues that a team, teams or program may be facing. But to get the most value a practitioner needs to decide on granularity, a unit of measure, and time frame needed to make decisions.
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Listen to the Software Process and Measurement Cast at www.spamcast.net

Listen to the Software Process and Measurement Cast at http://www.spamcast.net

Listen to the Software Process and Measurement Cast 281. SPaMCAST 281 features our essay on value chain mapping. Value is generated through the transformation of raw materials into a new form, which is represented by a value chain. Driving effective change requires an understanding of your organization’s value chain.

Value chain mapping is a representation of how an organization transforms raw materials into a product and then delivers that product to its customers.  Value chains are developed so that the organization can get a full understanding of the process to see how they can generate the greatest possible value for the organization and the customer.  Once you understand the flow, it is far easier to improve it. Value Chain Mapping is a lean technique. Like Kanban, which focuses on the flow of work and which steps add business value, Value Chain Mapping helps to target process improvements.

Listen to the rest on SPaMCAST 281.

The SPaMCAST 281 also features Kim Pries’s column. The listeners have spoken and Kim’s column now has a name: The Software Sensie. In this edition, Kim tackles big data in his illuminating and technical style.

Here are the related value chain mapping blog entries:

Value Chain Mapping
Value Chain Mapping: Value Chain or Process Map?
Value Chain Mapping: Components
Value Chain Mapping: A Simplified Process
Value Chain Mapping: Troubleshooting
Value Chain Mapping: Creative Tension

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Next week we will feature our interview with Ben Linders (this is Ben’s second appearance on the podcast) and Luis Gonçalves.  We discussed retrospectives and their great new book Getting Value out of Agile Retrospectives – A Toolbox of Retrospective Exercises. Retrospectives power the continuous improvement all project and organizations need to deliver more value over time.

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Creative Tension

Creative Tension

When developing a Value Chain Map, as with any mapping technique, there is an almost irresistible urge to spin into the weeds.  There will be a tension between focusing on the details and remaining at a high-level in your overview. This creative tension, a term coined by Peter Senge, author of “The 5th Discipline,” is a scenario where disagreement ultimately gives rise to better ideas or outcomes. The goal of Value Chain Mapping provides a baseline for you to pull against. However managing the creative tension requires leadership.

Managing that tension begins with clearly articulating the goal or vision of the Value Chain Mapping exercise. The goal not only defines the analysis is done, but it also will help you determine where more detail will be counterproductive and less will not satisfy the purpose. The gap between the micro and macro approach creates an emotional and energetic tension that the team naturally will seek to resolve.

Techniques like the cyclic, short-term planning, daily stand-up meeting, and demonstrations will provide the team feedback mechanisms to help address the tension. Cyclic, short-term planning, like a sprint planning in Scrum, allows the whole team to use the goal as an anchor and to discuss the level of granularity necessary. For Value Chain Mapping projects of medium to high complexity, I suggest one week planning iterations.  For small exercises, a single planning exercise is all that is needed. Daily stand-up meetings provide a platform to perform daily planning, such as the appropriate level of granularity, while exposing any issues that are in the way of the team.  Finally, demonstrations, in which the team’s work products are shown and reviewed with the product stakeholders, provide a feedback mechanism to ensure the exercise stays on track.

Senge suggests that creative tension is an ally to driving change.  Like the three bears, the tension between a too high level and too low level Value Chain Map can be used to motivate the team to a level of analysis that is just right (to meet the goal of the exercise).

It is all about perspective

It is all about perspective

Developing a Value Chain Map can provide substantial value. It is a profile of how raw materials are transformed into a product and delivered to the organization’s customers. The structured process used to develop the map helps to identify bottlenecks that can be removed to increase efficiency, or at least areas for further investigation. Unfortunately developing a Value Chain Map represents an investment of time and effort and problems can occur on the path to development. I generally see three basic problem areas.

  • Approaching Value Chain Mapping as a single pass effort
    • Developing a Value Chain Map is generally done as an iterative process, much like peeling an onion.  While this might sound like a style issue, I have found that a more complete map is generated if the person or team developing the map gets through the entire process once and then goes back to debate and fill in the gaps. It is easy to get bogged down on a specific step or topic and then rush to generate an overall view.  The only step in the process described here that I would obsess over is setting and understanding the goals.
  • Pursuing the wrong perspective
    • The greatest potential error is that of perspective. The focus of a Value Chain Map needs to be on the creation and delivery of an external product. A service delivered to clients is equivalent to a development and development of a manufactured product. Focusing on an internal or intermediate product, for example on an internal data warehouse of client information, shifts the focus off improving and understanding the flow of the ultimate product. Therefore improvements may or may not improve the amount of delivered value. You often see this problem if a support process has been mistaken for a core process, or the goal of the Value Chain Mapping exercise is too restrictive (too narrowly focused) so that you can’t examine the whole process.
  • Complexity
    • The examples of Value Chain Maps in textbooks and articles are generally not overly complex. Explaining complexity is difficult, so the examples (like our publishing model) tend to be simple. Real life value chains tend to be more complex, because organizations tend to have more than one product causing parts of the Value Chain to intersect and interact. A comprehensive map needs to describe interacting and competing channels. You must take care to ensure that any simplifying assumptions do not simplify away the value of the exercise.  You need to validate all simplifying assumptions against the goals of the exercise.

Value Chain Mapping provides value by exposing the direct product flow, how indirect process support delivering value and bottlenecks. I am not sure it is an overstatement to say that the value that understanding your Value Chain is incalculable.  But only if done correctly. Approach the process iteratively, focus on real products and respect complexity and it will be difficult to miss the mark.