What are Value and Value Streams for?
The Value System Sponsor forms the value stream itself and makes efforts (material and organizational) to increase the value in the stream. At the same time, all participants in the stream are voluntary, including the sponsor, and expect to receive value from the stream.
There are streams in which participation is involuntary, or the stream does not tend to produce more value. Such streams are stable, but due to certain circumstances, they can contain a lot of Anti-Value. The use of the Aeilus methodology in such streams does not make sense.
The Value System Sponsor, and then the Value Stream Owner, defines value, and this definition will change over time. The entire stream must be ready to change the definition of value and be able to quickly and accurately adapt to new circumstances.
The entry of any participant in the stream into an existing or new transformer implies that it receives a certain value from the stream, and the stream receives value from the participant.
What is a value stream?
Value Stream consists of Transformers, Stream Segments, and Value Elements. Segments can link 2 or more Transformers so that the stream can be split and joined.
The stream can best be displayed in a Sankey diagram, where the nodes A,B,C,.. are Transformers, and the elements connecting them are Segments.
The Cyclical Stream includes only the value described in it and does not take into account the accompanying streams of value that can inevitably flow in or out of the system. It presents the Value Streams that are of interest to the Owner in terms of control and influence.
For example, for an enterprise, taxes may not be described as a flowing value stream, but they may be described for the purpose of tax optimization. The value that customers receive from the outside may not matter to the system and may have if you follow the principle of knowing your customer.
The Cyclical Stream of value is best captured in a cyclical Sankey diagram.
Value stream design
The Value Stream Owner is responsible for designing and redesigning the stream in the system. It is necessary to note the role of the Sponsor, without him, the system would not be able to work. The system can be successfully supported by the Value Stream Owner without the participation of the Sponsor. In terms of business, the role of the Sponsor is usually performed by the founders and the Value Stream Owner - the CEO. The methodology assigns roles to those who actually perform these duties, this may be a collegial body.
Stream separation most often has the following goals:
- Parallel value creation
- Transferring responsibility for creating a certain type of value to individual transformers
The transformer is an organizational and technical unit that may include people, technical means, as well as necessary resources. The transformer can be the State, Company, Client, Software Product, Department, etc.
Each transformer converts an input value into an output value. Estimation of the incoming and outgoing flows of value is given by several stakeholders in the system (to ensure the fairness of the estimation). Aeilus does not specify a list of roles to review estimates but does highlight that they should have interest or concern. For example, each estimation will involve the Value Stream Owner to maximize the value for the entire stream in the estimates and the Owner of the next Stream Transformer (value consumer).
Transformers can divide the received value into many different outflows, in which case the process of separation and the proportions based on value nature itself create value. So, it is important to how the value stream in the Transformer will be divided to maximize the value in the system. Just like value streams joining, it is a process of creating additional value.
Value elements are containers for transferring value by moving along the flow. The elements in each flow segment represent different entities. For example, this could be money received by the company from a client or a closed position by the HR department for the IT department within the company.
An element is a unit of value, each element can have its own value in terms of business value points. Such value estimation can be negative. Moreover, the value can be set by a complex relationship.
An anti-value or an element with a negative value is an undesirable result for the Value Stream Owner, it reduces the total value supplied by the transformer.
The element value model allows us to describe value element dependence on time or other parameters. For example, running a New Year's advertising campaign after the new year itself would have no value.
Planning and decomposition of value
The execution of plans can also carry additional value or anti-value for an unfulfilled plan (to be decided by Value Stream Owner).
The value plan is the expected value outcome for one of the stream segments over a period. According to concrete results in the plans, we can measure value and set a value plan. Thus, one transformer has an obligation to deliver not a specific result but the equivalent of its value before another transformer. This is caused by two factors:
- Plans keep changing
- In the case of complex value models, it is important to get the result on time and in due quality.
The decomposition of value is caused by the need to achieve significant results, requiring the production of many elements of value. Then a set of elements is designed and, when it’s ready, assembled into a single result.
It is necessary to use the parent value element and the child ones, so there will be the following relationship between them:
- Parent element has a given value, value model.
- Child elements can carry their own value if they are separately useful in the absence of a parent element. But often, child elements have no value without a parent element.
- When the parent element is delivered, it will bring its value, and the value of all child elements with their separate value should be nulled (because they are part of the parent element)