Shortest sustainable lead time with the best possible quality and value to people and society.
—House of Lean
Value Streams represent the series of steps that an organization uses to implement Solutions that provide a continuous flow of value to a customer.
A SAFe portfolio contains one or more development value streams, each of which is dedicated to build and support a set of solutions. In turn, these development value streams help the Enterprise achieve its business strategy by either:
- implementing systems that enable the enterprise to carry out its business operations, which SAFe calls an operational value stream (e.g., loan origination, invoicing, onboarding new hires)
- delivering value directly to customers, such as the development of a product or service (e.g., iPhone, Netflix)
Many enterprises organize people in functional silos, causing value delivery to be inhibited by hand-offs and delays (Figure 1).
Without value stream thinking, organizations often lack Customer-Centricity and fail to optimally organize people in a way that enables Lean’s goal of delivering the maximum customer value in the shortest sustainable lead time, while providing the highest possible quality to customers.
Types of Value Streams
In the context of SAFe, there are two types of value streams present in the enterprise, as shown in Figure 2.
- Operational value streams – Contains the steps and the people who deliver end-user value using the business solutions created by the development value streams
- Development value streams – Contains the steps and the people who develop the business solutions used by operational value streams
A trigger starts the flow of value, and there’s some form of monetization or value delivered at the end. The steps in the middle are the activities used to develop or deliver the value.
Why Organize People in Value Streams?
The reason we organize around value streams is simple. We want to accelerate the time to value (or market). We do that by optimizing the flow of value through the system as a whole. After all, if the enterprise doesn’t have a clear picture of what it delivers and how—is it possible to improve?
To this end, organizing SAFe portfolios around development value streams enables visualizing the flow of work to produce solutions, and it offers the following benefits :
- Fewer handoffs and delays, allowing the teams to work with smaller batch sizes
- Enables long-lived, stable teams that focus on delivering value, instead of projects, which focus on task completion
- Allows faster learning and shorter time-to-market
- Contributes to higher quality and more productivity
- Supports leaner development and budgeting methods
Agile Release Trains (ART) within each value stream develop the business solutions used by the operational value streams. ARTs are cross-functional and have all the capabilities—software, hardware, firmware, and other—needed to define, implement, test, deploy, release, and where applicable, operate solutions.
It’s important to note the value stream construct in SAFe replaces the need to organize people around projects.
Defining Development Value Streams
Defining development value streams and designing ARTs is one of the most critical steps in implementing SAFe and is described in the Identifying Value Streams and ARTs article.
Moreover, once a value stream is identified, additional analysis is required to define the development value stream boundaries, people, deliverables, potential ARTs, and other data. Figure 3 provides a Development Value Stream Canvas, a simple tool that stakeholders can use to capture their emerging understanding .
Lean Budgeting for Development Value Streams
Identifying development value streams and understanding the flow through the organization is an essential step in improving value delivery. It also offers the opportunity to implement Lean Budgets, which can substantially reduce overhead and friction and further accelerate flow.
Each development value stream has an approved budget (Figure 4), which Lean Portfolio Management (LPM) manages following Lean-Agile budgeting principles, and over time makes adjustments, based on changing business conditions.
Value Stream KPIs
Value Stream Key Performance Indicators (KPIs) are the quantifiable measures used to evaluate how a value stream is performing against its forecasted business outcomes.
A Lean budgeting process can substantially simplify financial governance, empower decentralized decision-making, and increase the flow of value through the enterprise. It’s a bold move to go from funding projects to allocating budgets to value streams. Naturally, this new approach raises the question, how does the enterprise know it’s achieving an appropriate return on that substantial investment?
To that end, each value stream defines a set of criteria, or key performance indicators (KPIs), which can be used to evaluate the ongoing investment. The type of value stream under consideration drives the KPIs that the business will need, for example:
- Some value streams produce revenue, or end-user value directly, in which case revenue may be an appropriate measure. Other metrics such as market share or solution usage may provide additional insight.
- Other value streams, or elements of a value stream, are creating emergent new offerings. In this case, the potential return on investment (ROI) is a lagging economic measure. Instead, using nonfinancial, innovation accounting KPIs to get fast feedback may be a better choice.
- Some development value streams are merely cost centers, which serve internal operational value streams and are not independently monetized. In this case, measures such as customer satisfaction, net promoter score, team/ART self-assessment, and feature cycle time may be more relevant.
- In the most significant scale, a value stream may establish an even broader set of measures, such as those represented by the sample Lean-Agile portfolio Metrics.
Value Stream Coordination
Value streams, by design, should be as independent as possible. However, there is likely to be some coordination required to ensure that the enterprise moves forward with each value stream in lockstep with the enterprise and portfolio objectives. Value stream coordination is the entire subject of the Coordination article.
Reducing Time-to-Market with Value Stream Mapping
Finally, there is another significant benefit to identifying the value streams and organizing release trains around them. Each value stream provides an identifiable and measurable flow of value to a customer. As such, it can be systematically measured and improved to increase delivery velocity and quality using value stream mapping—which is an analytical process, teams can use first to understand, and then improve, time-to-market. Using value stream mapping combined with root cause analysis, the maturing Lean enterprise can systematically improve time-to-market aggressively and continuously for its benefit. Reducing delays in the value stream is always the fastest way to reduce time-to-market.
Learn More Thanks to SPCT Mark Richards for contributing the Value Stream Canvas concept.  Martin, Karen, and Mike Osterling. Value Stream Mapping. McGraw Hill, 2014.  Poppendieck, Mary, and Tom. Implementing Lean Software Development: From Concept to Cash. Addison-Wesley, 2007.  Ward, Allen. Lean Product and Process Development. Lean Enterprise Institute, 2014.  https://en.wikipedia.org/wiki/Value-stream_mapping
Last update: 19 January 2020