The best organisations are highly collaborative across departments and use multi-disciplinary teams to deliver value. More than that however, their people leave their job titles at the door, roll their sleeves up and solve problems. They understand that their functional skills are there to enhance innovation and enable value creation.
At a strategic level, these organisations understand that the most important thing is creating an organisational structure built around value streams. Think of horizontal flow of value rather than vertical business units..
The best organisations think in horizontal flow of value rather than vertical business units.
So what’s a value stream? It’s the sequence of actions required to deliver value to a user from the first point of contact to the last, as part of what I call ‘value exchange’. This manifests in different disciplines as Service Blueprints in UX and Service Design; marketing funnels, and product story maps to name but a few.
From my experiences in marketing, ecommerce, and IT, I see the value stream as the fundamental pattern which everything should adhere to. The act of mapping together across disciplines is a powerful and significant event.
Building a value-led organisation requires some significant strategic decisions and changes whether you are transforming an existing or scaling a new organisation.
Structure around value
A common anti-pattern I see is focusing on the multi-disciplinary agile team formation part (often using SCRUM) and ignoring the wider business value structure, which can cause issues for product teams stuck in the middle of different departments. Organisations try to become ‘product led’ within their existing organisation structure- but for established organisations, this can lead to being siloed to some degree. The result of this is often conflict, frustration, constrained innovation and agile theatre.You can learn about ways to better align Product Managers with stakeholders in my recent whiteboard video where I also discuss the confusion between being product led as a function and a mindset.
The squads and tribes model helps with this challenge to some degree by matrixing the two aspects of product – the community and discipline related with the value and customer centricity related. You can read more about how eCommerce company ManoMano adopted this model and adapted it to their own business context and how Digital Product helped Distrelec start their journey towards this new structure.
Understanding your value proposition
One common challenge is that there’s no universal definition or understanding of what constitutes value to users of an organisation’s products. Senior leaders may have this in their heads but to drive the value engine this needs to be encoded into vision, mission, and goals. At a more tactical level, this also needs to be broken down into the steps where exchanges of value occur and then used to prioritise product discovery and delivery activity.
It’s clear how people think about value and their role in generating it. Running a VMOST or canvas session can be a great way to quickly identify gaps, with people responding to questions on ‘how they generate value in their department or role’ with answers focused on generating outputs efficiently, meeting deadlines or other internal measures that don’t explicitly relate to user value. The outcome is that the individual may not be working to these value goals, and the structure around the teams often doesn’t exist to motivate them to do so.
Value based goals
This is a CEO sponsored activity that all leaders and teams should subscribe to. Get all leaders and departments working together on the definition of value for your organisation and then aligned to value.
Establishing value based goals and metrics is an important starting point for this process, in working with a number of organisations to help them put OKRs in place and have found that this step helps shape the initial mindset and mental model as it links strategic value goals and drivers to roles in the organisation. Each department, team and individual can then be empowered to deliver against strategic goals, be accountable for delivery of value and understand their contribution towards that goal. Developing measurement frameworks requires leadership AND delivery teams to go through the same process, goals must be aligned to value at all levels.
Moving from traditional accounting to lean accounting is another critical step, the traditional cost centre approach conflicts with the value mindset. P&Ls based on value streams and capacity-based-funding models can help here along with a move away from the traditional budgeting process.
Leadership collaboration
Finally, another common issue I have observed is that the doers and makers in an organisation are grouped into multi-disciplinary teams yet leadership continues to work in a traditional, siloed way. Great leaders should know how to put their departmental priorities and aspirations to one side for the common goal of delivering value.
Getting leadership regularly shaping and planning together is key, from weekly walk the whiteboard (strategic roadmap, enterprise kanban or similar) to quarterly roadmap planning, this opportunity for collaboration helps drive the organisation using the value engine. It demonstrates to those that they lead that this way of working is just ‘the way people work here’.