The Multimillion Dollar Payoff of VSM: HBR Paper Details Real-World Results

Are you trying to move your business forward, but relying on data that provides a stale, imprecise view of where the business used to be? Unfortunately, that’s the predicament of too many business leaders currently. Contending with siloed teams and opaque, disjointed, and manual reporting mechanisms, these leaders struggle to get the visibility they need.

As the demands for fast digital transformation continue to grow increasingly intense, these siloes and poor visibility have come to present insurmountable barriers to success.

The good news is that Value Stream Management (VSM) can help. Essentially, VSM practices and technology are centered on customer value. VSM enables organizations to align teams, workflows, and investments, so they’re optimally positioned to deliver maximum value.

ValueOps is Broadcom’s integrated solution for VSM and it enables large organizations to deploy and execute a “true” VSM strategy. With ValueOps, teams can fully capitalize on the advantages of VSM, and in the process, break down the silos that stifle digital transformation.

New Report Details the Power of VSM

To describe how VSM, and ValueOps in particular, are paying significant dividends in leading enterprises today, Broadcom recently sponsored a briefing paper from Harvard Business Review Analytic Services, Using Value Stream Management to Speed Digital Transformation and Eliminate Silos. This report features the insights of industry analysts and expert VSM practitioners from large enterprises, who share some of the key lessons drawn from successful VSM initiatives. In the sections below, I’ll provide some of the top highlights from the report.

VSM is Delivering Massive ROI

The report features examples of top enterprises that have been leading their industries in terms of VSM adoption. These organizations’ stories provide a dramatic illustration of what’s possible through successful VSM initiatives.

For example, The Boeing Company, the global aerospace manufacturer, has been leveraging VSM for several years now.

“We always thought we were doing a good job of producing value until we started to work through this,” explained Lynda Van Vleet, Boeing’s portfolio management systems product manager. “In our first two years, we saved hundreds of millions of dollars. But that wasn’t our goal. I think a lot of organizations look at this as a way of saving money because you usually do, but if you start out looking at it as a way of creating value, that just comes along with it.”

Using ValueOps, the team at Boeing optimized resource utilization and reduced waste. By establishing cross-team visibility, they were able to spot redundancies. For example, they saw how different IT organizations had their own analytics teams. By creating a central analytics team, they were able to realign work more efficiently and improve consistency. They established cross-functional teams that were centered on delivering customer value. This enabled the organization to speed up its ability to innovate and pursue digital transformation.

The report also describes the success of Verizon, a multinational telecommunications company. Historically, the organization had been built around different business silos. As Jason Newman, senior manager, systems engineering, Connected Solutions Group strategy and operations at Verizon, explained to HBR, “We had some siloed organizations, and everything worked great within the silo, but as the company introduced products that crossed boundaries—the method of everyone focused on their own space wasn’t cutting it.”

By implementing ValueOps, they have fostered the free flow of information across teams and established dramatically improved visibility into value streams. Teams are now able to access rich information that fuels more accurate, data-driven decisions about governance and staffing. Now, when executives are contemplating strategic changes, ValueOps gives them the information to quickly understand “who is impacted and which strategic goals might be jeopardized,” Newman stated. “Just the efficiencies gained from governing and staffing were multimillion-dollar cost savings.”

VSM is a Team Sport

With VSM, organizations can establish cross-functional teams that empower employees to spend more time and effort on delivering customer value. Rather than focusing on their specific business function, such as marketing or product assembly, people start concentrating on the product or service that’s being delivered to customers. Instead of working to improve metrics like the number of widgets produced or the number of press releases created, teams are focused on objectives and key results (OKRs) that move the needle on customer experience, satisfaction, and value. Through VSM, teams can reduce barriers between business units, improve collaboration and scheduling, and eliminate duplicative workstreams.

As employees begin to understand their role in a particular value stream, their engagement starts to improve—and they experience much less burnout. Now, employees at Verizon can “see how everything they do is tied to the overall picture,” Newman explained to HBR. “Knowing and seeing where you add value is a huge value to this process.”

Data is the Lifeblood of VSM

In most organizations, it’s a struggle to shrink the time it takes to go from the articulation of an idea to its delivery as a product. Much of these challenges stem from the lack of data transparency across business units and functional teams. Optimizing value streams is difficult, if not impossible, if teams can’t effectively track the flow of value from end to end.

Through VSM, executives can begin to improve data transparency, which is key to boosting alignment and collaboration across all teams and stakeholders. By gaining visibility into value streams, leaders can better identify waste and bottlenecks, and they can spot the causes of quality issues that arise in manufacturing or development.

These insights are key to helping leaders make more accurate, data-driven decisions. For example, with this visibility, leaders can start to identify redundant workflows that exist across multiple groups.

With VSM, executives at Boeing can now make more informed budgeting decisions. As Van Vleet outlined, in response to macroeconomic conditions, Boeing previously would sometimes implement uniform budget cuts across all departments. “But that was the worst thing you could do because it doesn’t tell you if you are funding the highest-value work,” Van Vleet revealed. “By looking at the value of work, we can budget correctly and not just look at the dollars.”

Conclusion

In a growing number of leading enterprises, the promise of VSM is being made a reality—with ValueOps. Be sure to check out the briefing paper, Using Value Stream Management to Speed Digital Transformation and Eliminate Silos, or visit the ValueOps Value Stream Management page to learn more about the keys to success and the benefits being realized. Access vital insights that can help propel your VSM journey—and accelerate your digital transformation.