Unpacking The State of Value Stream Management Report 2023

VSM Adoption

In December 2020, I introduced Value Stream Management (VSM) and Flow Metrics to our teams. Our journey of adoption has been a continuous learning experience, drawing insights from the Value Stream Management Consortium and other industry leaders as we exchange experiences. Over the past three years since our initial adoption, VSM has made significant strides in the industry.

VSMC State of Value Stream Management Report

Since 2021, The VSM Consortium¹ annual State of Value Stream Management Report² offers a comprehensive overview of the recent evolution in this field. This year’s report covers valuable insights that deserve careful analysis and distillation. I want to highlight three aspects that have captured my attention regarding measuring and prioritizing value and the accompanying advice provided.

Measuring Value:

1. Value Reporting Lines Matter (slide 19): Teams reporting to CEOs indicate higher Performance and a closer connection between software engineering teams and the rest of the organization.
2. Value Metrics (slide 20): Organizations prioritize business over customer metrics. Typical metrics include sales/revenue, active users, feature usage, NPS, and profit margin.
3. Key Practices (slide 21): The report highlights the importance of measuring the value achieved, taking into account observability and customizing metrics based on the nature of the work.

Leading with Value:

1. Visualizing the Entire Organization as a Value Stream Network is Key (slide 25): According to the data, one-third of the respondents have visually documented their organization as a network of interconnected value streams. The findings indicate that higher-performing organizations and larger companies are inclined to perceive their organization as a value stream network.
2. VSM Implementation Roadmap (slides 23–24): VSM practices have evolved, and organizations can use an implementation roadmap to track progress. The “Connect” step has experienced significant growth. Respondents who complete the ‘Connect’ steps are 5–10% likelier to achieve a lead time of less than one week. Conversely, those who haven’t completed any roadmap steps are over three times as likely to have the longest lead time, exceeding three months, compared to those who have completed any step — and four times more likely than those who completed the Connect steps. Next is the inclusion of the Assess stage in the roadmap this year. Establishing a baseline of the current state when starting a journey and measuring progress as an organization progresses is important. This new step provides a comprehensive understanding of the journey and enables effective progress monitoring.
3. Organizational Performance (slide 26): VSM adoption drives organizational Performance by aligning teams, making work visible, and using insights for continuous improvement.

Advice Section (slide 27):

1. For Change Agents: Emphasizes the importance of visualizing work, taking data-driven actions, focusing on value realization, and understanding that flow and value realization are equally important.
2. For CXOs: Advocates for aligning teams, visualizing value stream networks, connecting product management and software engineering, and adopting a data and insight-driven approach.
3. For Product Creators and Software Engineering: Encouraging collaboration between product creators and software engineers, adopting VSM as a framework, and having a dedicated value stream lead (something we will consider for 2024).

Final Thought

This report sheds light on the evolving world of Value Stream Management, its impact on organizational dynamics, and its importance in the broader business landscape.

The adoption of Value Stream Management (VSM) is gaining momentum, and organizations must stay current with this trend. The VSM Consortium is a fantastic hub for VSM knowledge, education, and assistance. It’s an invaluable resource for anyone looking to dive into the world of VSM!

References:

1. Value Stream Management Consortium, https://vsmconsortium.thinkific.com/
2. The State of Value Stream Management Report 2023, https://www.vsmconsortium.org/state-of-value-stream-management-reports

The article was originally published on October 22, 2023.

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