What is Value Stream Transformation

There are a number of different ways to transform an organization at an operational level. Some have much greater chances of success than others. In three decades of driving transformation in both public and private organizations, I have found that the “Value Stream Transformation” approach is the one way to deliver consistent, sustainable results. This approach works so well because it provides us with a highly repeatable model that is aligned with the strategic intent of the organization, is visually managed, and is simple. The approach is behavior-based, scalable, empowering, and includes a daily management system. Using a transformation pace of three to six month cycles, assures that we achieve both rapid result and rapid organizational learning.

The Value stream transformation model engages the culture of the organization in a way that I have not seen in any other implementation model. Both huddle meetings and small group activities are not just encouraged by this model, they are in fact a requirement of the approach. By targeted implementing Lean concepts across an entire value stream we can avoid sub-optimizing a portion of the value stream by improving a single process step with no consideration of the upstream and downstream processes. We also involve personnel from all departments that interact with the targeted value stream.

This engagement at all levels allows employees to understand their work as a process, how the output of their process becomes the input to someone else’s process, and how all of these processes connect to deliver value to the customer.

This perspective allows us to focus our efforts on the things that matter most to both our customers and our business. The Value Stream Transformation model is outlined in figure 1.1.

The Value Stream Transformation Model in Action.

Step 1- Understand the strategic need. The Value Stream Transformation model starts in the strategic development process. Alignment is a key transformation principle. We are asking our people to change the way they work, and our managers to change the way they manage. Our people need to understand why we are asking them to transform. Leadership must make a clear case for transformation including realistic KPI’s, visible leadership support, and commitment to the process.

Step Two – Choose the Process to be mapped.  Representatives from the leadership team select specific value streams for improvement based on their importance to the business strategy. The area(s) selected have been identified as an important element to the overall business strategy and the leadership team is aligned on driving transformational improvement in these areas. With the strategic intent understood and the value stream selected, the team is assembled, and the work of the transformation begins.

Included in step one is the need to assure that the team is aligned and understands what will be happening and why. This kicks off the transformation process and usually is associated with a one-week transformation event. Typically, this event will start with level one training. This will be a high-level overview of the Value Stream Transformation process, basic problem solving, and visual management. This is the base level information that all workers (regardless of job function) in the value stream need to have to perform their jobs in the system.

Step Three – Map the Current State. With the training complete the team will map the process usually starting with the customer order and ending at the delivery of that order to the customer. Every step along the way in incorporated into the map. Now that we can see the process in its entirety, we can identify key metrics such as total lead time, wait time, number of people working in the process, inventory and rework. This map will help us to see the places in our process where flow stops, and brain of our transformation. It is a data rich picture of our process.

Step Four – Create a Future State. In this step we apply our training to look at the process through a new set of eyes. Using our newly acquired lean knowledge, we visualize what the process could be. Our goal is always the same; reduce the lead time required to convert a customer order into cash by 50%. We find where the process Using this vision, we construct a future state map. The Future State VSM will help us visualize what our process will look like in a “Transformed” state. The Future State VSM becomes our roadmap and helps us to align our team on our destination.

Step Five – Create the Value Stream X-Matrix. The X-matrix as used for this purpose gives us a one-page project plan that allows us to better manage our transformation. At a glance we can see

  • What activities are planned and how they align to the top-level strategy.
  • Who is responsible for completion?
  • When the activities will start / finish & current status.
  • KPI’s for the transformation.

 

Step 6 – Learn by doing. The Value Stream Transformation model deploys a number of different approaches to driving the projects that have been identified. All of which are driven by the X-Matrix.

Just-do-it projects that can be executed by anyone on the team with little or no training. These may be an additional responsibility a team member has taken on, or a part of normal responsibilities with an aligned priority.

Small team projects executed by lean practitioners. In this approach we will conduct level two training that arms the practitioners with a deeper understanding of Problem solving and Lean tools (Bronze Level). These projects are conducted a small-groups that are formed to complete an A3 on the problem.

Kaizen Events are an intense, focused events to drive projects to completion. By this approach we can get a small group of people together with a well-defined problem and goal statement. The group will usually follow the PDCA methodology in a 3 to 5 day event. Kaizen events are activity based. The objective is not to get in a room and develop an action item list that someone else has to complete, rather the objective is to make actual changes to the process. The Kaizen team is empowered to change the process as necessary to achieve the results they have been chartered to achieve. Kaizen events are the preferred approach where possible due to the magnitude of impact both on the process and the culture in a very short time.

Six Sigma Projects. Often in the journey to increase the velocity and eliminate the waste in our process, we run into significant problems that require a much more comprehensive approach. When these issues arise, we deploy the Lean Six Sigma Black Belt. The specialized training allows a deeper examination of the problem using inferential statistics. This type of project will often require the Black Belt to work on the project for longer due to the rigor of the DMAIC process.

Step Seven – Daily Management System. Now that we have a clear direction for improvement, we create the visual management system. The visual management system consists of a performance management board, located in a highly visible area that displays critical information about our transformation.

This system is the backbone to the transformation. It shows where we are (Current state VSM), where we are going (Future State VSM), our plan to go from current to future (X-Matrix), and how we are doing so far (KPI’s). We use the performance management board to communicate and drive accountability. This is done by huddle meetings at the board as part of our daily management.

The system is owned and driven by the Value Stream Leader after they have received Silver level training. In this training the Value Stream Leader will learn how to drive transformation using a principle based approach. They will deeply understand the concepts of Alignment, Cultural Enablement, Continuous Improvement, Stability, Built in Quality & Velocity and will have the tools available to lead the transformation.

Step Eight – Seek Perfection. When the process has been completed (where what was once the future state is now the current state), we start the process over again. The performance management system is in place, the team has the training, and the habits have started to develop. The next level of transformation will require deeper thinking and more sophisticated tools. But the team now has the skills. This is the critical point. Whether or not your culture will look at work from a value stream perspective and drive real velocity depends on consistency.

Step eight is the hardest part. The transformation cycle should never end. It is a prescribed way for the entire organization to learn, grow, and be able to do much more with the same resources. Leadership engagement is critical during this time to assure the next future state is defined, and the next level of performance is targeted.

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