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Lean Value Map

 

Lean Value Map



Lean Value Map



What is The Lean Value Map?

The Lean Value Map is a simple, streamlined representation of how the cycle of value creation and delivery is implemented in a Lean Intelligent Enterprise. Think of it as a set of tangentially nested circles, where the inner cycles repeat more often than the outer ones.NestedCircles This implies a continuous flow of value at each organizational level (enterprise, business unit, and value stream), but at different speeds.

 

The Lean Value Map is based on empirically-proven lean tenets and repeatable patterns that organically create value and corporate wealth. These fundamental lean constructs allow an enterprise to rapidly adapt to changing market needs and opportunities, while communicating those adaptations across the organization in near-real time. This approach addresses one of the most challenging aspects of running a company: that is, accomplishing enterprise goals while the market is continually evolving, and without locking resources into a fixed plan.

 




Stages 1 through 3

So how does the Lean Value Map address modern corporate challenges? The cycle begins at an annual or semi-annual board meeting where enterprise goals are defined for a specific time period. Stages 1-3Then, executive leadership identify strategies designed to meet those goals. Strategies are what set the organization in motion, leveraging business capabilities to implement those strategies. Business processes animate this set of business capabilities through which valuable products and services are delivered to end customers. If the chosen strategies are not supported by existing business capabilities, then new ones are created, perhaps through a vendor purchase, building them in-house, or acquiring another company.

 

Stages 4 and 5

Stages 4-5The strategies themselves drive how corporate capital is spent over a specific period of time, by investing that capital in the new or existing business capabilities that are needed to implement each strategy. This approach allows for equitable allocation of funds, both CapEx and OpEx, to the business units within which those business capabilities are managed. Each business unit manages its funds in portfolios of work designed to implement the corporate strategies, or parts thereof, for which they are responsible.

 

Stage 6

Lean enterprises are organized around value streams, which represent all the activities, materials, and information flows that contribute to the value of a product or service that customers are willing to buy. Value streams have been shown to readily expose the latent fiscal leakage present in most business processes, because anything that does not directly or indirectly contribute to the value of a product or service is identified and expunged.

 

As a key component of a lean intelligent enterprise, value streams cut across many business functions and are responsible for a specific set of business capabilities and the technical capabilities that enable them. Stage 6Most modern entities are a heterogeneous mix of goods, services, and knowledge, thus necessitating continual operational adjustments depending on the fluctuating composition of that mix. And as the technological landscape continues to rapidly advance, those entities that can quickly exploit new technologies to their competitive advantage will own the market.

 

Here’s where things happen operationally. Business units and the value streams they contain have P&L accountability, and are judged on their internal rate of return relative to the portfolio funding they receive. Value streams must optimize internal resources, vendors, suppliers, and other supporting business functions to develop and deliver goods, services, and knowledge using the business and technical capabilities for which they are responsible.

Stages 7-8

 

Stages 7 and 8

How that work gets done is loosely correlated to a manufacturing plant using a pull system. In this scenario, portfolio work is prioritized and sequenced to be pulled as capacity of operational groups becomes available. This approach leverages key lean constructs such as theory of constraints, product development flow, organizational velocity, fast feedback and learning cycles, and continuous delivery, to name a few.

 

Technical Capabilities Enable Business Capabilities

Because many intelligent organizations’ business models are primarily built on electronic-based delivery systems, its technical capabilities are extremely important. But because people are still involved in the development, delivery, and support of those products, technical capabilities do not stand alone—they are an integral part of a larger set of business capabilities. And it is the business processes that deliver products and services using those business and technical capabilities.

 

Stages 9 and 10

Stages 9-10Now we have come full circle, where the suite of business and technical capabilities, along with the business processes that utilize them, are the strategic assets needed to provide the necessary capital (through sales) to implement strategies and achieve enterprise goals. This is the cyclic, continuous-flow nature of a Lean Intelligent Enterprise as represented in the Lean Value Map.

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