The document discusses value streams and the need for organizations to take a shared, cross-functional approach to analyzing and optimizing them. It notes that while departments aim to optimize their portion of the value stream, this often sub-optimizes the overall stream. It recommends forming cross-functional teams to map current and future states, and developing shared key performance indicators and leaders to continually assess and improve value streams. Taking this approach can help organizations escape local optimizations and instead maximize value while minimizing waste across the end-to-end customer experience.

1. Northeast Shingo Prize Conference September 25, 2012
Worcester, MA
Learning to Share
Your Value Streams
James P. Womack, Chairman, Lean Enterprise Institute

2. Who Am I?
• Founder and now Senior Advisor, LEI
• Long-time gemba walker along many
value streams.
• Looking for ways to maximize value
while minimizing resource use and
waste ( = lean.)
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3. Who Are You?
• Line managers? (Of departments,
functions, whole enterprises?)
• Consultants?
• Members of improvement teams?
 For the whole enterprise?
 In operations?
 In product development?
 In purchasing?
 In sales?
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4. Some Simple Observations
• All value is the result of a process – a
value stream – with many steps.
• Value streams flow horizontally across
departments, functions & enterprises.
• Value streams are shared, whether
managers realize this or not.
• Departments, functions & enterprises are
organized vertically, facing the top of the
organization chart.
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5. CEO (The Boss) Vertical Orientation
Stamp/ Weld/ Paint/ Assemble/ Inspect/
Market/ Engineer/ Purchase/ Manufacture/ Sell/
Raw Parts Assembler Distributor Retailer
Material Supplier
Supplier
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6. The Paradox of Optimization
• Each department, function, and firm tries
to optimize its portion of the value stream.
• Indeed, senior managers often incentivize
department and function managers to
optimize their portion of the stream, with
KPIs for each.
• This often – usually – causes the whole
stream (which is what the customer cares
about) to be sub-optimized.
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7. Authority Versus Responsibility
• Lots of vertical authority for departments,
functions, and enterprises.
• No horizontal responsibility for optimizing
the flow of value across organizations.
 The lack of responsibility is particularly
pronounced for the end-to-end flow of
value across independent organizations,
where there can be no “boss”.
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8. Sum-Up of the “Current State”
• Most managers face a “prisoner’s
dilemma”:
 They would like to optimize the value
stream for the benefit of the customer
and their enterprise.
 But they have no means to do so – they
are locked in the “cell” on the org chart.
• What can we do about this?
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9. A Way to Get Started
• Pick a value stream for a product family.
• Form a team from every “vertical” the
value stream crosses.
• Make someone responsible for
determining the current state and leading
a discussion about a better future state.
• Take a walk as a team.
• Draw a map together.
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10. Current-State Value Stream Map
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11. Future-State Value Stream Map
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12. Future States Require Change
• To move one plant’s operations to the
Future State, many things had to happen
effecting departments, functions & firms:
 The supplier had to make frequent
deliveries to kanban signals.
 The welding and assembly departments
had to be combined and cellularized.
 Production control had to switch from
push scheduling to pull replenishment.
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13. What About Extended Value Streams?
• These cross the boundaries between
independent enterprises – raw materials
supplier, parts maker, assembler,
distributor, retailer, etc.
• They are typical in the today’s world.
• No one has – or can have – authority for
the whole.
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14. Current-State Extended Value Stream Map

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17. What Will You Find?
• A cross-function, cross-enterprise value
stream walk always shows enormous
opportunities for creating more value with
less resources and waste.
• In the extended value stream example,
activities in all of the firms will need to be
reorganized.
• Many activities will need to be relocated.
• Some firms will need to be replaced.
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18. 18
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19. What Can You Do?
• Have a discussion involving every firm
about the right thing to do for the value
stream to optimize value while minimizing
resource use and waste.
• See if it is possible for everyone involved
to be made whole by winners
compensating losers.
• Ask what KPIs will be needed for each
department, function, and firm to motivate
behaviors optimizing the stream.
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20. What Else Will You Need to Do?
• Develop a role for value stream leaders
who will continually assess the state of
every stream by periodic walks to
develop action plans for creative sharing.
(A great job for improvement teams!)
• Create a means for value stream leaders
to compare methods and results.
• Repeat value stream analysis, forever!
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21. Final Thought
• Do many (any) organizations practice
shared analysis of their value streams
today?
• Formal analysis is very hard to find!
• Someone must start somewhere.
• How about you? How about now?
• Sharing is not natural. But it is necessary
to escape the prisoner’s dilemmas we all
face everyday.
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