Understanding how to organize your business around value is one of the key principles of SAFe (Scaled Agile Framework). It is based on the idea of two different operating models: Hierarchy and Network.
Hierarchy provides stability, efficiency, and predictability, while the Network offers speed and adaptability. Both are required for value delivery, but they must be Agile.
This blog post will discuss what this means for you as a business owner and how you can optimize your organization for agility and a continuous flow of value to the customer.
What Is Value?
In the business world, value is defined as a combination of the customer’s benefit and their perception. Understanding customer value is essential to creating a successful business model, as it will guide your strategic decisions moving forward by prioritizing what matters most to your customers.
So, how do you understand value? It starts with understanding your target market and what they need from you for your product to be successful. Understanding their problems and how your business can solve them is the first step in creating value for customers.
Once you have a clearer picture of your customer base, it’s time to understand what they care about most when dealing with your company. Their satisfaction will directly affect whether or not they continue using your product or service; knowing what your customers want is key to providing value and building a business model around it.
Organizing Around Value vs Function
Before becoming Agile, most businesses organize their people in so-called ‘functional silos.’ This traditional approach creates departments, each with its own project manager responsible for a specific function within the business. Sales work closely with marketing to engage customers and generate revenue by selling products or services. Manufacturing builds those sales into finished goods before getting them shipped out to buyers. The product development team tests new ideas, makes improvements, and brings in new features for customers to enjoy.
The problem is that each department works separately, without understanding the big picture of what’s really going on in the business or how their individual efforts contribute to its success. This can cause a lot of issues for businesses as they try to simplify day-to-day business operations and provide value more efficiently. Siloed organizations can be difficult to scale, as they are limited by the number of people who work within each function.
It’s more effective if everyone works together on value delivery and knows what their fellow employees do outside of their direct responsibilities. This creates a sense of responsibility across departments that helps teams stay focused on customer needs while working through any issues that arise.
Dual Operating Model
Traditional companies run based on the Hierarchy operating model, where those in leadership positions are responsible for making decisions that will impact their part of the business while considering how those changes might affect other departments. This helps to create stability, predictability, and efficiency across the business as a whole.
However, it also promotes an environment where employees must compete for resources or face slow progress due to limited availability. It is very costly when you’re trying to scale your company, no matter what size it currently stands at.
For businesses that want more agility, the dual operating model of Business Agility solves these issues. It encourages collaboration between departments and allows value to be delivered at a faster speed for customers.
The dual operating model incorporates the Network model alongside the Hierarchy one. The Network is a set of development value streams. It focuses on speed and adaptability, where employees are encouraged to prioritize their work based on customer needs while also using internal interactions as an opportunity for new ideas or continuous improvement; through these conversations, teams learn how they can do things better than before.
Development Value Streams
Identifying your organization’s development value streams (DVS) is the first step in understanding how your business teams should work together.
The DVS contains the steps and the people who develop the business solutions. They are not to be confused with operational value streams (OVS), which include the steps and the people who deliver value to a customer.
Some examples of OVS would be treating a patient in a healthcare facility, fulfilling an online order, delivering a service, or providing a loan.
Examples of DVS include designing and developing a medical device and developing and releasing an eCommerce site or a CRM system.
Even though both DVS and OVS are integral to the business, they can be independent of each other.
One or many teams may deliver value to end-users through an operational process that is not related with their decision-making processes (which happens within a development value stream). While this independence works well for some organizations, those who want to go the extra mile and achieve a significant advantage over their competitors realize that which operational processes are automated, optimized, or eliminated can considerably affect how quickly more value is delivered to end-users.
Organize Around Value
Now that you’re familiar with the concept of the value and why it is important to organize your business around it, you can begin applying these ideas within your teams.
Here are the three key steps involved in organizing your workforce around value:
- Build technology portfolios for development value streams.
- Product-focused Agile Release Trains (ARTs) create value streams that will provide sustained returns for your organization.
- Create Agile teams that can give value straight away.
In the SAFe framework, each portfolio represents a collection of development value streams. Your market’s needs determine these key business value streams.
The portfolios will help to organize teams around similar work so they can coordinate their efforts more effectively. When there is a need for change, you can use these portfolios to determine if it would benefit more than one value stream and what the best way to approach an integration or implementation might be.
You should also streamline governance processes across technology portfolios whenever possible, as this will help to ensure that decisions made for one value stream are not inconsistent with those from another.
Agile Release Trains
The biggest question in most companies is how to reduce the time from a product or a feature request to delivery.
The answer is Agile Release Trains.
An agile release train is a collection of multiple cross-discipline and cross-functional teams, each with its own value stream in which they can work on identical product features simultaneously. This allows projects to be completed faster by integrating all parts into one cohesive unit that will be released to customers when ready.
With Agile Release Trains, you have the opportunity to build a scalable portfolio of value streams that can help your organization adapt quickly and effectively to changing market needs or other business challenges.
By organizing people into ARTs around common products instead of individual teams, companies will improve their ability to deliver value more efficiently while also improving quality and reducing risks.
The basic building block of Agile is the Agile team.
An Agile team should consist of a cross-functional group of people from different disciplines that are responsible for delivering value across one or more ARTs. The members will be accountable to each other as well as their management, ensuring that all processes and activities can provide value beyond simple task completion.
This gives the team more control over their work and allows them to be proactive in improving or thinking outside standard processes.
While Agile teams are often co-located, you may also consider implementing a distributed version for those that might not have access to required equipment or resources at all times.
You can use SAFe to help you determine the best way to organize your workforce, including which teams or ARTs will be most effective based on product portfolio and market dynamics.
Value is a crucial part of any organization.
It must be the center of decision-making, and everyone involved in delivering value to customers should understand Agile concepts like Lean Thinking and Scrum methodologies. By organizing your workforce around these principles, you will help ensure that every team can work together effectively while also improving communication across all levels of management.
The most successful companies can deliver value quickly while maintaining high quality, low risk, and an environment of continuous improvement. By understanding how customers will benefit from your products or services, you can make more effective business decisions that ensure long-term success for everyone involved in the delivery process. This means not just being responsive but genuinely agile.
Organizing your business around value requires that you optimize both your Hierarchy and Network to be Agile. This dual model ensures that you have the speed and adaptability of your Network while still taking advantage of efficiencies in your Hierarchy. The key is for these two sides to work together to complement one another rather than trying to compete or fight against each other.