Building a Foundation for VSM Success: Pointers from a Successful Insurance Leader
A lot is being written about VSM, and for good reason: it offers the opportunity for organizations to benefit from increased alignment, accelerated innovation, reduced risk, and improved competitive advantage. In spite of the clear benefits, it remains a struggle for many leaders to feel confident in taking initial steps and knowing exactly where to start. In this regard, it is invaluable to hear from experts who have been doing this work and realizing success.
While each organization’s VSM initiative will be unique, there are nevertheless common principles and lessons that all can benefit from. In our work with global enterprises, we’ve had the opportunity to hear directly from the executives who are leading the VSM initiatives in their organizations, and who are leading the industry in terms of maximizing the benefits of VSM. We recently had the opportunity to chat with a leading VSM expert working in a large insurance firm. Several years ago, this executive helped launch the organization’s VSM initiative. Here are some of the key lessons they’ve learned in terms of breaking ground with VSM:
Start with clear definitions
In today’s business world there’s no shortage of acronyms and buzzwords. Ultimately, for the insurer, VSM has come to involve people from throughout the organization, especially when working with an international mix of stakeholders, executives, and participants. It is vital to start with a clear understanding of VSM so everyone’s grounded in a common understanding of what it is and why it’s important.
Clearly define value. The good news is that any organization that’s been in operation has value streams. It is essential to gain a clear, well understood, and agreed upon definition of the value being delivered. Ultimately, if teams aren’t clear on value, it is inherently a hit-or-miss proposition as to whether that value can be delivered and improved over time. The VSM leader took a purposeful approach in this case. Start with value, then look to back up from there in terms of decisions that enable that value, and how it is delivered.
Leverage data to gain transparency
Teams need to be empowered with data. Without a real-time view of what’s happening, it takes longer to pivot, and longer to deliver value. When you have fundamentals in place, decisions become faster, and you’re more likely to avoid having to make the same decisions repeatedly.
Quality data provides context, and helps teams navigate complexity. Teams have to navigate thousands of micro decisions. If we don’t have quality data, those decisions become bigger, more complex efforts; we then have to stop and gain input from others, etc. With quality data, we can validate decisions and move forward.
Are you constantly asking, “What can be done to inform an action?” See where there are disconnects and blockages in value streams. Focus on removing things that get in the way of making decisions, from tactical to roadmaps.
Data-based dashboards versus PowerPoint slides: Ensure your dashboards are based on real data, not interpretation. Automated dashboards are much less manual effort than aggregating data and building slides, and if you have thousands of people doing manual rollups – it really becomes a massive cost and drain on efficiency.
For this insurance giant, VSM is very much a team sport; to succeed, many people need to be involved and engaged. Any time someone approaches, it is very useful to share knowledge around what the teams are trying to accomplish with VSM. Invariably, when hearing about the focus on delivering customer value, others get engaged and want to be a part of it.
Ultimately, people from legal, finance and executive leadership, and a range of other areas are part of the delivery of value. On a practical level, bringing in these other teams can be instrumental in avoiding potential roadblocks and speeding up initiatives. It is important to listen to different perspectives and be open to changing your mind.
Don’t be neutral
Value streams already exist – the question is how effectively they are being managed. Staying neutral, or not investing in VSM, means competitors will be getting in front of you. Often, if you put off dealing with VSM, problems don’t necessarily emerge right away. They may start emerging in six to eight months. Therefore, it is essential to take a proactive approach, and get started right away. You have to invest in an umbrella before it starts raining, just like you have to invest in systems, processes, and people. Build trust in those investments before you realize you are facing a catastrophe.
If focus is everywhere, you will be weak everywhere. We all only have a finite amount of time and resources. If your organization is not clearly focused on value, you will be diluting power that exists in an organization. Focusing on everything can be very detrimental. You’ll fall into a trap of focusing on efficiency, while losing sight of what really matters: whether you are gaining traction in value delivery.
Balance continuous improvement and innovation
Continuous improvement is inherently about improving existing processes, while important drivers are very different for innovation. You must be able to accommodate unstructured creativity, experimentation, etc. to foster innovation, without disrupting other workflows. For example, if you have scrum methodology in agile, you are effectively measuring velocity. Ultimately scrum is about stability, and the ability to predict and forecast productivity. You can’t expect to measure on this type of predictability, while at the same time requiring innovation. It creates conflict. If there’s misalignment and you try to scale, you will only scale misalignment. Before you try to scale value, you need to be certain you are delivering value.
VSM makes success far more likely for your organization. By leveraging clear definitions, real-time data, and using an inclusive approach, teams can ensure benefits of VSM are realized – as proven by this real-life example.
For more information, watch this webinar, Resilience Through Rainstorms – How Unum Weathers Any Storm with VSM.