Value Streams Focus On The More Formal Deliverables


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What would Dr. Deming Say? Dr. W. Edwards Deming advised us that a supplier is a partner and our relationships must be based on cooperation and trust. Adversarial relationships result in waste. Supplier relationships based on Dr. Deming’s teachings change fundamentally and, even better, both suppliers and customers win. Dr. Deming showed how customers and suppliers are brought into, and become part of, the production system. System’s thinking is the key. The supplier-producer-customer network (value stream) works together as a system. The outline he so often used is depicted below.

Deming Process Flow

Dr. Deming would also talk about how we sub-optimize an organization by looking at each component above as an adversarial position. He talked about how each person, plant, supplier, work unit are pitted against each other and have little care for its impact on another part of the unit. When something goes wrong these isolated units strive to protect themselves from blame.

Deming Process Flow Isolation

Dr. Deming’s description of a system:

A system is a series of functions or activities within an organization that work together for the aim of the organization.

The components are necessary but not sufficient to accomplish the aim of the system. There is in almost any system inter-dependence between the components thereof. The greater is the interdependence between components, the greater the need for communication and cooperation between them.

The aim, the values and beliefs of the organization, as set forth by top management, are important. The aim of the system must be clear to everyone in the system. Without an aim, there is no system. The performance of any component is to be judged in terms of its contribution to the aim of the system, not for its individual production or profit, nor for any other competitive measures.

If the aim, size, or boundary of the organization changes; the functions of the subcomponents will change for optimization of the new system. Management of a system, therefore, requires knowledge of the interrelationship between all the sub-processes within the system and of everybody that works in it.

Management’s job is to optimize the entire system. Sub-optimization is costly. It would be poor management, for example, to optimize sales, or to optimize manufacture, design of product, or of service, or incoming supplies, to the exclusion of the effect on other stages of production.

-Deming, W. Edwards, Foundation for Management of Quality in the Western World

I would believe that a Lean enterprise or organization follows Dr. Deming’s teachings. It is also why I believe a Lean Enterprise has the best opportunity in this social world. It is the essence of what Dr. Deming has taught us.

Deming Process Flow Social

Above, I drew a few red lines to show that the social interaction has become a little more complicated than what Dr. Deming first proposed. However, it does not need to be all that complicated. The Value Network maps of Verna Allee can make this process much easier.

Example: My preference from a service design or a marketing perspective is to first review my existing value stream. I prefer making it stronger versus trying to add more suppliers and consumers. For example, if I review the tangible and intangible outputs for a given supplier. Are they delivering value at multiple stages of the value stream? Can that value be used in other areas? If I do this, will their value streams strengthen and as a result grow my value stream?

This is not anything more than what Dr. Deming told us:

Management’s job is to optimize the entire system. Sub-optimization is costly. It would be poor management, for example, to optimize sales, or to optimize manufacture, design of product, or of service, or incoming supplies, to the exclusion of the effect on other stages of production

The Deming Quotes were found in Four Days with Dr. Deming: A Strategy for Modern Methods of Management.

Value streams are anything but linear any more. They are collaborative in nature with overlapping responsibilities. Most of us are not looking at the production process as Dr. Deming addresses, rather we are viewing social collaboration. We are looking at how vendors, customers and others that may even be hard to classify can provide value to our network. In fact, we may have a hard time establishing if they are a customer or vendor.

How good are you at managing the relationships that your organization builds? As we move from a Product Dominant to a Service Dominant market, the relationships we create are at the core of our business model. However, how many of us understand these relationships? How many of us know what collaborative networks the other members of our team or organization are creating? Can we be successful, can we be social without this understanding?

In Lean you try to find the one best path – the value stream map. In the marketing, we have created the marketing funnel. However, Organizations can no longer feed products to customers, as I described in the blog post, Kill the Sales and Marketing Funnel. Customers have the ability to access resources and information comparable to their suppliers and choose suppliers by their own definition of value and how that value should be created. Organizations must adapt to the networks our customer chooses to find value in the use of our products and services. Our world is increasingly more collaborative driving changes in the way decisions are made. Our organizations need to change to a more collaborative structure but the question is where do we begin? From Value Networks and the true nature of collaboration by Verna Allee with Oliver Schwabe is a digital edition book located at

Roles and interactions – providing focus for collaborative work

Role-based exchange networks are the natural way that people organize and collaborate to create value and achieve outcomes. In such a network every single person executes a chosen role. Through that role they provide value contributions to others and receive value in turn. Further, as long as people experience a sense of reciprocity and perceived value or accomplishment from the interactions – people will stay engaged.

The collaboration patterns that make things work have been pushed to the background through more than two decades of focusing on business process models. Now, with the growing use of social networking and collaborative technologies, the importance of those patterns is finally being recognized.

Indeed, people, and their very human exchanges and interactions are at the heart of value creation. People, not processes, are the active agents in organizations. Only people have the unique capacity to identify opportunities, innovate, and provide value.

Value streams typically only focuses only on the more formal deliverables. But in a collaborative world it is not only the formal deliverable but the informal, which in value networks are called tangible and intangible. Value network modeling is something that allows us to understand the pattern of different activities within organization or within the same basic value network structure. It’s a very, very different way of thinking about who delivers value. I like to use red and black checker after creating a map and stack them on the individual roles. I use black for tangible and red for intangible. This way you can have a better visual on what role the customer derives the most value from and what kind of value the customer is seeking.

Verna defines these deliverables:

When we model business activity we get into the very specific kinds of exchanges that are critical for success and we define two types of exchanges. We call them tangible or intangible.Tangibles are those things that are formal, contractual. If you don’t do these somebody’s going to want their money back. The things you must do, the value that must be delivered. We also are modeling all of those intangibles or informal exchanges that really build relationships and help things run smoothly. That is what is missing from process modeling.

Recently my use of the relationship diagram in particular has started to increase. Maybe not in the traditional sense of cause-and-effect relationships but the input/output connections between selected parts of the organization and the value that is created. The eerie part of this is that after creating several of these and one rather elaborate relationship map; I compared it to the Value Network modeling that had been introduced to me by Verna Allee, M.A., co-founder and CEO of Value Networks LLC. It was strikingly close to her model depicted below. (Verna introduced me last year to Value Network Mapping through this Business901 podcast, What’s behind Collaboration and Value Networks?) and the transcription,Where does a Customer Find Value in your Organization?

PDF Download of Map

P.S. More about collaborative work structure in the upcoming Hoshin Planning section

Today cooperation is replacing competition in more and more work situations. We are even seeing a rise in co-creating products with customers. Yet few of us have any training in cooperative thinking or group problem solving. Our typical introduction to teamwork is being picked to be part of a team. In Agile software development the use of pair programing has been used for many years. They consider that the defects are significantly reduced when there is another developer looking over ones shoulder. Because of this the overall rate of development is increased even though you may consider that efficiency has been decreased.

There have been other gains that have been attributed to pair programming. One is substitution as programming is tiresome, so that the developers together can program for longer hours than a single person. The other gain is knowledge or skill transfer. But maybe the most important, working as a pair or even in a larger setting as a team, assists in taking tacit knowledge and making it explicit.

From the book, Problem Solving & Comprehension, the authors state:

Pair problem solving is also an excellent system for building skills for team thinking, creativity, trouble shooting, and design. Often when a group of people meet to discuss an issue, each individual strives to show off his or her own competence or cut down other people’s ideas. To counter these tendencies a technique known as Brainstorming forbids criticism. But this does not really solve the problem, because criticism is essential to building an effective solution. Pair problem solving encourages constant criticism without degenerating into personal bickering.

Most people, including highly talented people, have very little conscious awareness of how they produce creative new Ideas or how they reach decisions. When you have little understanding of how you think yourself, the conclusions reached by others can be completely baffling In the highly charged, competitive environment of the corporate rat race it is easy to see other people’s ideas In a bad light. Pair problem solving develops both an understanding of your own reasoning processes and an appreciation of those of other people. Furthermore it shows you how working with other people, you can refine ideas and problem solutions so that the end result is better than any single contribution This experience and the experiences of sharing your thought processes create a feeling of intimacy and trust. It establishes the base for a group to move from bickering to brilliance.

We have a significant amount of team building exercises but I believe it can be boiled down to one thing: Respect for people. If your organization has that built into its culture and externalized to its customers and vendors, you may have mastered the most powerful ingredient for success. As my Friday Video counterpart, Dr. Balle suggests, “As an individual are you taking the time to see how easy you are making someone else’s job.” A simple exercise that can be interesting is for the rest of the day do not solve a problem without asking someone for an opinion. Knowledge is not created in a vacuum.

Five Dysfunctions of a Team Workshop Deluxe Facilitator’s Guide Package is outstanding and can be a great start for not only sales and marketing but your entire organization.

The relationship between Quality and Collaboration, Quallaboration was the topic of a podcast with Jim Benson, the person behind Personal Kanban.

Video on Quallaboration Quallaboration Video

Podcast: Quallaboration Podcast with Personal Kanban Founder

Republished with author's permission from original post.

Joseph Dager
Business901 is a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He has authored the books the Lean Marketing House, Marketing with A3 and Marketing with PDCA. The Business901 Blog and Podcast includes many leading edge thinkers and has been featured numerous times for its contributions to the Bloomberg's Business Week Exchange.


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