Tag Archives: value stream

Digital Transformation, ESM

Is ESM a key enabler for successful Digital Transformation?

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“Digital transformation” is a term that is often abused. Some think of digital transformation as simply moving information and data from an analog format to a digital format. Others think of digital transformation as the implementation of technologies in support of existing business models.

I think of digital transformation as the use of technologies to enable new ways of doing new business or doing existing business in dramatically new ways.

One thing that is certain –  digital transformation is key for competing in the digital economy. But it is often difficult for senior managers to commit to digital transformation efforts. First, there is the fear of the unknown. Digital transformation requires fundamental shifts in business models, culture, and processes.[i]  In other cases, it’s complacency and organizational inertia – the organization is currently successful and is reluctant to embrace the change and disruption that comes with digital transformation.[ii]

Then there are the concerns that the organization will be successful in the digital economy. According to this recent HBR.org article[iii] , many companies are falling short of achieving the expected revenue lift and cost savings goals from digital transformation efforts. Some the obstacles organizations are facing[iv] include overarching issues like organizational change management and budgetary constraints. But other challenges are more foundational. Challenges such as siloed decision-making, the inability to adapt to evolving customer needs in a timely manner, and the lack of a holistic organizational business model, are also impeding success with digital transformation.[v]

What’s in the way of digital transformation?

There are two significant obstacles to digital transformation. First, many organizations considering digital transformation are faced with having a complex technology landscape[vi]. Technology implementations have often been done in the absence of holistic business goals in mind. As result, each department within an organization has its own systems for managing its work and outcomes, leaving the organization with siloed solutions across the enterprise.

The second obstacle is the lack of a holistic strategy for competing in the digital economy[vii]. This has a cascade effect. First, it is difficult (if not impossible) to measure and optimize organizational performance. Secondly, these organizations suffer from a slower time-to-market and a reduced capability for timely responses to changing market conditions. Lastly, this results in a suboptimal customer experience.

Because of the lack of a digitally enabled business strategy and the challenges of a siloed and complex technology landscape, the customer experience is often that “the proverbial left hand doesn’t know what the right hand is doing”.

Digital transformation isn’t ‘technology-first’

“Technology as the solution” is a difficult cultural bias for organizations to overcome. But that is exactly what digital transformation requires.

Perhaps counterintuitively, “digital transformation” is not about taking a “ technology-first” approach to business challenges.  Digital transformation begins with the organization – what does the organization need to do to continue to innovate? Next, digital transformation is about the people – how can the organization  leverage the talents and experiences of its people to achieve this innovation.  Then, it’s about the process – how can the organization ensure that innovation and performance is measurable and enabled for continual improvement.

Once these questions are answered, then a digital transformation initiative becomes about the technology – what technologies are needed to enable the organization to best innovate, leverage the talents of its people, and enable both sustainability and growth of innovation and performance?

That’s where ESM – enterprise service management – can help.

Good ESM enables Digital Transformation

As businesses digitize and transform, an enterprise approach to managing products and services is needed. Product and services must deliver and enable an experience in addition to business outcomes and value. Organizations must remove friction from workflows and deliver an integrated approach for delivering products and services.

This is why good ESM  can be a key enabler for digital transformation. ESM is an organizational capability for holistically delivering business value and outcomes, based upon the use of shared processes, appropriate technologies, increased collaboration, and better communication across the organization. ESM, done well, enables positive customer and employee experiences, improves business agility, and enables impactful digital transformation.

But, like “digital transformation,” the term “ESM” has been mistakenly used as a catch-all term to represent extending ITSM (IT Service Management) practices across the enterprise, or to represent the purchase and implementation of department-specific “modules” within an existing ITSM tool platform.

Neither of these approaches are good ESM.

Benefits of good ESM

A critical factor for realizing true ESM is to take a value stream driven approach. Value streams identify and visualize the steps an organization takes to deliver value to a customer – and those value streams are underpinned by services delivered from across the organization. A value-stream driven approach to ESM provides numerous benefits to organizations.

  • Economies of scale – Many value streams within an organization can take advantage of solutions already in place, finding ways to lower costs.
  • Enables strategic decisioning regarding longer-term business objectives – Good ESM helps provide answers to questions like “what are our products/services?”, “who is the customer?”, and “what markets are we in/want to enter?”.
  • Opportunities for innovation – ESM can help the organization better use the unique capabilities and competences of its organization to deliver clear differentiation in the market place
  • Help organizations make good investment decisions –Through the establishment and use of an organization portfolio of products and services, the organization can make better decisions about investments. For example, an organization portfolio helps identify products and services that are no longer providing the needed value, outcomes, or experience.
  • Enhances stakeholder communications – what is being done, why it is being done, how it impacts organization revenue/value
  • Shifts service management thinking to beyond IT – Good service management helps the organization align with and meet business goals, improve visibility and communication, increase efficiency, and provide measurability of organizational performance.
  • Make better use of technology – ESM helps the organization to align first on the “why” and not the “how,” which in turn, enables the better utilization of technology.

Why good ESM can enable success with Digital Transformation

ESM done well can deliver significant benefits to organizations. But how does ESM enable success with digital transformation?

First, digital transformation impacts and affects internally facing work, not just externally facing work.  As organizations digitize and transform, they realize that workflow cuts through all parts of the organization, driving the need to become better integrated. Good ESM helps facilitate that integration.

Customer experience is perhaps the most significant driver and differentiator in the digital economy.   And that customer experience is expanding from person-to-person interactions to include person-to-technology interactions as well. Customers expect results from the organization, not friction from the dealing with the disjointed parts of the organization. Good ESM helps drive good customer experiences.

Build the foundation with ESM

Here are four suggested steps for getting started with ESM.

  • Meet with other service providers to learn how they deliver services. IT is not the only service provider within an organization. Other departments, such as HR, Finance, Facilities, and others also deliver services. Understanding how service providers deliver services helps in two ways. First, this helps identify the right opportunities for beginning ESM (ROI, benefits, problems addressed, etc.). Secondly, ESM becomes a collaborative and organizational initiative, not an IT-led project.
  • Establish communities of practice. Co-creation of value can be stimulated through communities of practice that bring together teams from across and beyond the Invite suppliers to participate in these communities, as they have subject matter expertise as well can provide an external perspective.
  • Identify and map critical enterprise value streams. Identify and visualize the cross-departmental work that is happening by focusing on customer results. Again, don’t forget about suppliers!
  • Identify opportunities to optimize and automate the workflows associated with these value streams. Automating these workflows not only will reduce any friction associated with these workflows and enhance the customer experience, it will also begin to breakdown any enterprise siloes.

True digital transformation – not just digitization – can be enabled by taking a value-stream approach to ESM. By following the suggestions above and working in an iterative way, ESM will enable success with digital transformation.

Are your digital transformation efforts struggling? Are internal workflows disjointed and ineffective? Let Tedder Consulting help! We have the expertise to both raise your service management capabilities as well as enable your organization’s digital transformation success. Contact Doug today to discuss!

[i] https://www.accenture.com/us-en/blogs/high-tech/complexity-with-tsia , Retrieved May 2024

[ii] https://hbr.org/2015/08/the-company-cultures-that-help-or-hinder-digital-transformation . Retrieved May 2024.

[iii] https://hbr.org/2023/07/the-value-of-digital-transformation  , Retrieved May 2024

[iv] https://digitalleadership.com/glossary/digital-transformation-challenges  Retrieved May 2024

[v] Ibid.

[vi] https://whatfix.com/blog/digital-transformation-challenges/ , Retrieved May 2024

[vii] Ibid.

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AI, GenAI, ITSM

4 things IT can do to improve Business-IT Alignment – and enable AI success

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A few years ago, I thought that we had finally moved beyond the conversation of “business-IT alignment”.  I thought that business processes and technology had finally become integrated; if not integrated, then at least the boundary between business processes and technology was significantly blurred.

Well, I was wrong. Business-IT alignment – or the lack thereof – is still a thing.

We’re still struggling with business-IT alignment

This recent CIO.com article discusses seven hard truths of business-IT alignment.  Here are a few of those hard truths:

  • “The business is not your customer.” I agree. For IT to act like non-IT colleagues are ‘customers’ simply drives a wedge between the IT department and the rest of the organization. This behavior also provides IT with an excuse for not understanding the business of the business.
  • “Like it or not, you are responsible for business outcomes.” That’s true. The real value from the use of technology is for the organization to realize business outcomes and value. But too often, IT sees and measures success in terms of projects getting done, or laptops being delivered, or contacts at the service desk being resolved.
  • “The business really does need to understand what you do.” That’s also true. While the IT department is responsible for the installation and maintenance of digital technology, IT must be more than just a technology caretaker. IT organizations must help the rest of the organization understand how the use of technology supports business strategy.
  • “You’re probably talking about the wrong things.” Couldn’t agree more. Many of the measures and reports that are being produced by IT are only because the tools being used by IT make it easy to produce these measures and reports. Do these measures have any meaning or relevancy to the rest of the organization?

Why is this a problem?

Business-IT alignment is not just a catch phrase or buzzword. The digital era is amplifying the importance of having strong business-IT alignment. But within many organizations, business-IT alignment is missing. How does the lack of alignment impact IT and the rest of the business?

First, IT is unable to respond to business demands at the speed of business. Consider the challenge that every modern business faces – serving the digital customer. The digital customer is demanding that businesses provide services at anytime from anywhere. In response, businesses want to leverage emerging technologies such as chatbots and GenAI to meet that demand. But because IT hasn’t been involved in those business strategy conversations, it is forced to play “catch up” to meet these demands – demands for which IT is usually unprepared. IT is not prepared because no one has been trained, much less involved in the selection of this technology – but then IT is expected to make it work as well as fit with existing systems and infrastructure. When IT is forced to play catch up, in-flight projects get delayed as IT resources are shifted to meet new demands.

But this behind-the-scenes work is rarely visible to the rest of the business. To the rest of the business, IT is a barrier to responding to the digital customer.

Secondly, the rest of the organization continues to look at IT as just a cost center. What those outside of IT may not realize is that IT must deliver warranty (security, resiliency, continuity, capacity, performance) as part of its services – regardless if that’s been communicated or specifically requested. Delivery of an expected level of warranty costs money – costs that may not be apparent to non-IT colleagues.

Why ITSM hasn’t helped

Wasn’t ITSM adoption supposed to address issues like the above and align the IT organization with the rest of the business? True, business-IT alignment is a goal of ITSM adoption…but for many organizations, it didn’t happen. Why?

  • ITSM was (and continues to be) an IT initiative with little to no involvement from non-IT colleagues. The initial ITSM project focused internally on IT processes and infrastructure management and excluded defining services and business-IT strategy. Making things worse, IT didn’t map how what it does supports business results or delivers business value. There was (and is) no link established between ITSM goals and objectives and organizational goals and objectives.
  • The ITSM initiative only focused on implementing a tool. This is a suboptimal approach for two reasons. A technology-only focus excludes how ITSM impacts people – both within and external to IT, as well as processes, suppliers, and partners. Secondly, the IT organization only took actions that facilitated use of the tool, not necessarily align with business needs.
  • ITSM is only focused on IT operations – or even worse, just the IT service desk. ITSM is viewed only as a way to deal with end-users of IT products and systems, never considering how technology could be used strategically to deliver business value or results. As a result, not only is ITSM not aligned with the business, IT is not internally aligned.

Successful AI adoption requires Business-IT Alignment

Businesses continue to experience the impact of the digital economy. In the digital economy, the “store” is always open, and customers expect that systems are “always on”.  Customers can (and will) do business whenever and from wherever they want – using any internet-accessible device. Customers expect a differentiated, frictionless experience that provides value. Encountering system downtime or a poor experience is simply out of the question.

And organizations are turning to new capabilities enabled by emerging technologies, like chatbots, GenAI, intelligent automation, and more to meet this ever-increasing customer demand. In the digital economy, the technology managed and delivered by IT is the crucial connector between a business and its customers.

What does this mean for IT? IT can no longer play a back-office role within digital organizations. IT has a critical role as a business operates within the digital economy – and strong alignment between business and IT is required.

The successful use of chatbots, GenAI, automation, and other emerging technologies starts with having strong business-IT alignment. So how do organizations seize this opportunity, avoid the mistakes of the past (as with ITSM adoption), and realize true business-IT alignment?

First, ensure that any AI initiative has clearly defined objectives that are aligned with business strategy.

Second, successful adoption of AI requires strong involvement of business leaders[i]. Successful use of AI-enabled capabilities depends on the AI understanding the business of the business. It’s business leaders that have the knowledge that AI needs.

IT organizations must make the investment in building skills and competencies, in both AI technologies and in understanding the business of the business. Technology-only skills are no longer sufficient. IT must become that trusted advisor to help guide business leaders as the organization navigates the challenges of an AI-enhanced digital economy.

Lastly, good ITSM is an enabler for AI adoption. Good ITSM means aligning activities with business goals and objectives, defining services to ensure a shared understanding how technology delivers business value and outcomes, and providing business-relevant metrics and reporting.  As a result, good ITSM enables fact-based decisions regarding AI adoption, such as where intelligent automation would improve a customer or employee experience.

Nothing will change – unless there is change!

Let’s be clear. Business-IT alignment challenges will not just go away, nor will they fix themselves. It’s up to IT to align with the rest of the organization, not the other way around. And it’s not just the CIO alone that can drive business-IT alignment – the entire IT organization must also drive it as well.

It’s time to break the pattern. Here are some suggestions for breaking through those alignment barriers– all of which can be initiated by IT.

  • Establish and nurture the guiding coalition. To demonstrate its commitment to overcoming the challenges of business-IT alignment, IT must form a team to drive change. This early step in Kotter’s 8-step model demonstrates IT’s commitment to driving improvement in business-IT alignment.
  • Map business value streams – plus. Value Stream Mapping is a great way to identify how value flows through an organization. But don’t stop there – identify and map how technology supports each step within each value stream. Review these value streams with all IT personnel to raise awareness of how IT enables business success. Then, take it one step further. Review value stream maps with non-IT stakeholders and decision-makers. Not only will this illustrate the role of IT in business success, but those stakeholders may also even be surprised to see how technology enables value flow through the business!
  • Look at what you’re reporting to whom. If IT is sending reports full of technology metrics to business colleagues, then IT is reporting the wrong things! Identify and define ways to measure and report on metrics that directly reflect the organization’s mission, vision, and goals. By measuring and reporting on metrics that are important to the business, IT demonstrates how its contributions lead to business success.
  • Get serious about continual improvement. IT organizations can positively influence non-IT colleagues by fixing those things that cause constant irritation when interacting with IT products, processes, and services. Establishing a regular and on-going continual improvement practice to remove these irritants – then publicizing those efforts – will begin to change the perception of IT.

Business-IT alignment has long been a critical success factor for the modern, digital-age organization. Success with AI adoption is raising the need for alignment to a new level. Taking these first steps will set you on the path of business-IT alignment – and AI success.

Does your IT organization continue to struggle with alignment to “The Business”? Let Tedder Consulting help you establish the strong foundation you need so that your organization will realize the business results required from its investments in and use of technology.  Contact Tedder Consulting today for a no-obligation discussion about how we help!

[i] https://www.forbes.com/sites/forbestechcouncil/2023/10/06/why-business-leaders-should-understand-ai-alignment, Retrieved April 2024.

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ESM

Three reasons why now is the right time for ESM

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Enterprise service management (ESM) is an organizational capability for holistically delivering business value and outcomes, based upon shared processes, appropriate technologies, increased collaboration, and better communication across the organization.[i]  ESM, done well, enables positive customer and employee experiences, improves business agility, and enables impactful digital transformation.

ESM is nothing new. ESM, as discussed as early as 2005, was characterized as simply extending IT service management (ITSM) practices across the organization. Since then, organizations have realized that ESM needs to be an enterprise capability and competency – not just the domain of a single department.

Effective ESM gets the entire organization on the same page. Good ESM practices reflect and support the entirety of enterprise value streams, not just the IT portions. This enables teams to have clarity around how work and value flows through the organization, and how technology underpins that workflow and enables value realization. And in the digital age, knowing how work and value flows through an enterprise provides the organization with the ability to quickly shift and react to changes in market spaces – critical for business success.

But herein lies a couple of challenges.

Many organizations are “process poor,” so there’s been little effort in defining and documenting processes, depicting how inputs are transformed into measurable outputs. Secondly, individual departments often operate in isolation or function as if they’re at least somewhat isolated from others within the organization. Organizational workflows and value streams are poorly understood, and if value streams are defined, those value stream definitions are often limited to a single department.

Three reasons why now is the right time for ESM

Why is now the right time for ESM?

  1. Digital age organizations can’t afford to have siloed departments working in isolation. Everyone within the organization must understand not only how their work contributes to success, but also the upstream and downstream impacts of their work. ESM facilitates this shared understanding of how work is done within an organization.
  2. Automation and AI adoption benefit from effective ESM. Generative AI (GenAI) could be used to generate and maintain knowledge across the organization. Capturing, generating, and maintaining knowledge is among the most tedious activities within an organization. Robotic Process Automation (RPA) and Intelligent Automation (IA) could result in improved customer experience and more resilient and efficient operations of customer-facing activities.[ii] Good ESM standardizes workflows that underpin enterprise value streams, enabling the capabilities of these and other emerging technologies.
  3. The world is mobile. Despite recent organizational return-to-work mandates, the work-from-anywhere genie is out of the bottle. And if the workforce is mobile, it only makes sense that the customers of an organization are also mobile. Both employees and customers expect a frictionless experience when interacting with systems and technologies. Again, good ESM underpins enterprise value streams and workflows that enable efficient and effective workflows and experiences for both employees and customers.

The opportunities are here – is your organization ready?

Today’s digitally driven, consumer-focused economy demands that organizations conduct business at digital speeds.  At the same time, organizations must deliver a differentiated customer experience over their competitors. And if that’s not enough, organizations must also ensure that risks have been optimized as both employees and customers interact with technology. Seems impossible, doesn’t it?

But that is what effective ESM can do for an organization. ESM, done well, results in increased operational efficiency, improved collaboration between departments, reduced costs, enhanced customer satisfaction, and the capability to adapt quickly to changing business needs. ESM helps enforce better governance and compliance. And improved service delivery resulting from good ESM enables a differentiated customer experience.

There are two critical success factors for ESM adoption.

First, implementing ESM usually involves significant changes to existing processes, roles, responsibilities, and workflows. Organizational change management becomes crucial to address resistance, communicate the benefits of ESM, and provide proper training and support to employees. Managing this organizational change effectively can pose a significant challenge. But the result will be having enabled and confident employees that are more engaged, more invested, and that have and deliver a better experience.

Effective ESM requires integrating data and systems from various departments and teams. This can be challenging due to disparate systems and legacy technologies within an organization. Ensuring smooth data and system integrations is crucial for effective ESM implementation. Taking an iterative approach provides the opportunity to “learn by doing” and realizing some quick wins, while at the same time, optimizing risk to the organization.

Get started with ESM

The sooner that organizations begin ESM adoption, the sooner the organization will realize the benefits of an integrated and responsive organization. Here are four suggestions for getting started with ESM.

  • Define your digital strategy. How will digital technologies enable the organization to achieve its mission, vision, and goals?
  • Make the business case. Document the reasons why the organization should adopt ESM. Define the specific objectives for ESM, including opportunities, benefits, financials, and risks.
  • Establish a guiding coalition. Having a group of committed people to guide, coordinate, and communicate ESM efforts is a critical early step for success.
  • Map value streams. Understanding how value moves through an organization is critical if an organization is going to elevate itself above siloed work and into true enterprise service management.

The differences between organizations that are internally siloed and those that are truly agile and integrated will only become more pronounced as technologies such as automation and AI become more mainstream in the world of digital organizations. Now is the time for ESM.

If your organization is struggling in its digital evolution, it is time to develop your digital strategy, map value streams, and adopt ESM – and we can help. Contact Tedder Consulting today to find out how.

[i] https://www.dougtedder.com/2021/02/01/esm-business-strategy

[ii] https://omdia.tech.informa.com/om019736/more-vendors-squeeze-into-the-intelligent-automation-space-as- enterprises-embrace-the-technology

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ITSM

When In Doubt, Follow the Value Stream

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Every day, IT leaders address questions to help keep their team moving forward, which in turn keeps the organization moving forward.

Questions like:

  • Where should the IT team spend their time?
  • How should IT allocate resources?
  • How can IT justify larger budgets and more investments?

In the past, IT leaders have taken a straightforward approach to answering these questions. They have broken down each question and explained in technical detail everything their team has accomplished and completed, no matter how small or mundane.
In other words, IT delivered outputs.

But in today’s world, outputs aren’t enough. The old approach to making decisions based on outputs is over. Because today, IT must deliver outcomes.

If an IT leader was to list only outputs without connecting them to any business outcomes to the C-suite in the hopes of securing more resources or larger budgets, the C-suite will look at them and ask: “How did this drive business value?”

Closing tickets, upgrading technology, and troubleshooting technical issues are an important part of the success of an IT organization. But IT leaders must do more than just list outputs. IT leaders must show how these outputs connect to the organization’s bottom-line goals, and IT’s role in delivering needed business outcomes.

Before an IT leader can decide on how their team should allocate its time and resources or how IT can obtain larger investments and partake in bigger initiatives, they must answer these questions:

  • How did IT’s outputs reach the end customer?
  • How did IT’s outputs help the customer achieve their goals?
  • How did IT’s outputs increase revenue or decrease expenses?
  • How did IT’s outputs help the business achieve its goals?

To find the answers to these questions, you have to follow the value stream.

What’s a Value Stream?

Steve Bell and Mike Orzen, authors of Lean IT define a value stream as a “sequence of activities required to design, produce and deliver a good or service to a customer and it includes the dual flows of information and material.” According to Bell and Orzen, a value stream consists of “all processes, tasks and activities used to bring a product or service from concept to customer and includes all information, work and material flows.”

In short, value stream is the steps taken by an organization to meet customer demands and bring value through a product or service to that customer. The value stream is the big picture look at how value flows through the organization.

How To Follow the Value Stream

Following the value stream means exactly that – following how value flows through an organization and identifying where there may be improvements that can be made. It is about gaining clarity around how value is delivered to the end user, and how to use value streams to help you make decisions in your IT organization.

For every initiative or project, IT leaders must be able to step back and ask, “where and how does this fit in a value stream?” If you’ve followed the value stream and there is no fit for the initiative, then why is it a priority?

Often when you’re following the value stream to determine the importance of an initiative, you will end up involving other departments and stakeholders. As noted above, the value stream is how value flows through the entire organization, not just within one department. Value streams will cross departmental boundaries and a collaborative approach is mandatory. Working in a vacuum will simply waste time and resources — time and resources that could have been better spent contributing to the value stream.

Now, in this digital world, this means understanding how technology contributes to the value stream. IT manages technology and technology will always play a role in the value stream. Understanding this relationship will give you a context for certain services or initiatives.

Map your Value Streams

How do you know if a technology, a specific investment, or an initiative is contributing to a value stream?

The answer is simple: map that value streams. A value stream map is a visual representation of how value flows through the organization. This visualization enables you “follow the value stream.”

Mapping value streams will:

  • Identify cross-functional nature of work, which can avoid “siloed thinking”
  • Identify waste such as bottlenecks or delays (very important for IT!)
  • Allow teams to visualize the work and help the entire organization recognize how individuals and teams contribute to value.

How to Follow the Value and Map the Value Stream

No matter where you struggle with defining value or identifying the value IT drives, a value stream map is a place to start.

Mapping a value stream requires a cross-departmental team that includes IT. Silo thinking must not get in your way when you’re following the value stream, so include all stakeholders and make this an exercise in discovery.

To map a value stream, you have to define the focus of the map. A Value Stream Map doesn’t necessarily map all the paths that a process can take. It tracks one service or part of a process. So when mapping your value streams, start with services that have a role in the products or services that have the most impact on the organization. Ask yourselves what is the most valuable thing to the customer, what brings in the most revenue, or conversely, what costs the most for the organization? Start with focusing on the value streams where you get “biggest bang for your buck,” so to speak.

Map all the information including all the tasks being performed, who is performing them, and the technology involved with all of these tasks. It helps if you work backward. Work with the end outcome of a value stream and map out the process from there. Start with the end customer and the process will probably become much clearer.

In addition to mapping out each step in a process, be sure to map how information flows through each step in the process. Remember, you want all the key stakeholders in the room while you do this so that everyone knows how information flows and what is expected of them during each step of the process.

It’s also important to include timelines involved in each step of the process. Include lead time and actual time spent on production or in the product lifecycle to get an accurate view of how much time is needed for value to flow to the customer.

Finally, remember that value stream mapping is never a “one and done” activity. As new technology is introduced or customers’ needs change, your value stream maps will be revisited.

The next time you’re faced with a decision about an investment or project, take a look at the value stream. Using a value stream as your compass Following the value stream will always lead you to a path where you can contribute value to the organization.

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