Driving DevOps with Value Stream Management E-Book

Cecil 'Gary' Rupp

• Herausgeber: Packt Publishing
• Kategorie: Wissenschaft und neue Technologien
• Sprache: Englisch

Seitenzahl: 991

Veröffentlichungsjahr: 2021

Beschreibung

Value Stream Management (VSM) opens the door to maximizing your DevOps pipeline investments by improving flows and eliminating waste. VSM and DevOps together deliver value stream improvements across enterprises for a competitive advantage in the digital world. Driving DevOps with Value Stream Management provides a comprehensive review and analysis of industry-proven VSM methods and tools to integrate, streamline, and orchestrate activities within a DevOps-oriented value stream.
You'll start with an introduction to the concepts of delivering value and understand how VSM methods and tools support improved value delivery from a Lean production perspective. The book covers the complexities of implementing modern CI/CD and DevOps pipelines and then guides you through an eight-step VSM methodology with the help of a use case showing an Agile team's efforts to install a CI/CD pipeline. Free from marketing hype or vendor bias, this book presents the current VSM tool vendors and customer use cases that showcase their products' strengths. As you advance through the book, you'll learn four approaches to implementing a DevOps pipeline and get guidance on choosing the best fit.
By the end of this VSM book, you'll be ready to develop and execute a plan to streamline your software delivery pipelines and improve your organization's value stream delivery.

Leseprobe

Driving DevOps with Value Stream Management

Improve IT value stream delivery with a proven VSM methodology to compete in the digital economy

Cecil 'Gary' Rupp

BIRMINGHAM—MUMBAI

Driving DevOps with Value Stream Management

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To my wonderful wife and children, who stood by my side through all the years of hard work, long hours, and often outrageous travel schedules that came with my career. And to my beloved grandchildren who have blessed me, their Papa Cecil, so dearly. – Cecil 'Gary' Rupp

Foreword

For a while now, I've been referring to value stream management as the next evolution of DevOps. DevOps itself, of course, is an evolution of many software engineering and delivery practices that came before it. It builds on Agile's approaches to solving the problems we experienced with traditional Waterfall ways of working. It combines Lean and IT service management, safety culture, and learning organizations, and it cross-pollinates with site reliability engineering, systems, and design thinking. It addresses cultural aspects in a way we haven't before in the technology industry and has super-charged advances in automation. It undeniably stands on the shoulders of giants.

Value stream management's history goes back a lot further than DevOps' 12 years. It's inherently part of Lean. While some point back as far as the arsenals of Venice in the 1400s, most practitioners look to Toyota in the 1950s as the progenitors of the movement that not only has thrived up until 2021 but is poised to explode. The tipping point is here because digital disruption has raised the stakes for software delivery in all businesses worldwide in this technology revolution (the age of software). We can now connect all parts of our digital value stream; we can harness data to produce actionable insights. Teams are increasingly wanting and able to measure the flow of value they produce to their customers and the value they receive. Organizations can finally measure their progress on a DevOps journey by using value stream management. But we are at the start of the journey of applying value stream thinking to digital value streams.

This book is unique and timely. The first of its kind, it explains specifically how to combine DevOps and value stream management to best effect – to deliver optimum value to customers and assure organizational performance. Readers will experience a journey through the evolution of value stream management to the present day, learning how DevOps practices optimize flow and what it means to focus on customer value outcomes. With practical examples of the principles in action in the field, case stories, and insights from the leaders molding this market, this book promises to find its own place in our history of business improvement.

I met the author, Gary Rupp, when we launched the Value Stream Management Consortium in March 2021 and immediately invited him to join the consortium as a board advisor, so evident was the depth of his knowledge and expertise in this industry. It's been a pleasure to read his work and learn from him and his immense experience with both value stream management and DevOps.

For value stream management, as we move toward impact-driven development, insight-driven business, and continue to augment human intelligence with our machines, the time to act is now.

Helen Beal

Chair, Value Stream Management Consortium

Contributors

About the author

Cecil 'Gary' Rupp brings more than 30 years of practitioner and executive-level experience in applying the methods and tools of information technology (IT) for software development. His roles span IT professional services, executive management, business process re-engineering/improvements, CASE tool software product manager, and the sales and marketing of software development and middleware tools.

In addition, Cecil has directly managed more than 20 enterprise-class IT programs and projects, with the last 16 years having been focused almost exclusively on supporting large federal and commercial health IT programs. He is also the author of the Building Our Digital World (BODW) series of books on software and systems development practices and Scaling Scrum Across Modern Enterprises.

I want to thank the people who contributed their time and expertise to help make this a better book: Steven Anderson, Ahmed Khan, and Jill Buhrfiend (Apptio, Inc.)Helen Beal (VSM Consortium)Richard Dunn and Ben Chicoswi (CloudBees)Lance Knight (ConnectALL)Richard Knaster, Mike O'Rourke, and Gaurav Rewari (Digital.ai)Alec Newcomb (Highwire PR on behalf of GitLab)Brian Muskoff and Al Wagner (HCL Software)Kumar S Rajesh (Institute of Product Leadership)Akshay Sharma (Kovair)Kamana Jain and Chet Marchwinski (Lean Enterprise Institute)

Don Tapping and Todd Sperl (LeanFITT) Christine Ewing (Micro Focus)Charlie Ponsonby (Plandek)Bob Davis and Jeff Keyes (Plutora)Scott Ambler and All Shalloway (PMI)Sean Harris, David Williams, and Colin Fletcher (Quali)Adam Mattis and Marc Rix (Scaled Agile, Inc.)RJ Jainendra, Richard Hawes, Yoav Boaz, and Anand Ahire (ServiceNow)Naomi Lurie and Katherine Jeschke (Tasktop)

About the reviewers

Enrique Gomez is a Federal/Health Care IT expert with 20+ years' experience in full scale enterprise IT systems, software development, content/media development, and Agile/DevOps practices. His passion is problem solving for clients, with particular emphasis on creating memorable experiences, making IT work to improve health and quality of life, and leveraging emergent technologies to tackle the challenges of the human condition. He owns DevVinci Technica LLC. ("DevVinci"), a VA certified Service Disabled Veteran Owned Small Business (SDVOSB) and boutique consultancy serving federal, state, and healthcare IT industries in the US.

Joel Kruger is a Senior DevSecOps professional with experience architecting solutions that scale, reduce waste and increase visibility. He has enjoyed working with Configuration-as-code and Infrastructure-as-code to accelerate his client's business objectives for nearly a decade. Joel considers himself a hands-on and customer-service oriented person who loves to solve a challenge. Technology excites him, from computer servers, to embedded Raspberry Pi projects. He is passionate about being creative with tech and is not afraid to get some hot solder in his shoe laces.

Let's manage your business's value streams better, together.

Table of Contents

Preface

Section 1: Value Delivery

Chapter 1: Delivering Customer-Centric Value

Viewing value from a Lean-oriented perspective

Competing in a digital economy

Diving into the many concepts of value

Viewing value from the context of business assets

Viewing value from the context of business relationships

Establishing business relationships as value networks

Establishing business relationships as value chains

Defining customer value

Developing a value proposition

Aligning business strategies through five questions

Creating a vision for the organization

Delivering value

Creating value

Taking a Lean-Agile view of value

Understanding the values and principles of Agile

Reviewing the fundamentals of Lean Development

Implementing Lean Software Development practices

Delivering value through value streams

Identifying value streams

Mapping value streams

Understanding VSM

Building on the foundations of Lean

Building on Agile

Defining VSM concepts and processes

Learning methods before tools

Implementing VSM in IT

Promising VSM growth

Understanding the role of DevOps in delivering value

Delivering value in IT

Automating value across IT

Collaborating across IT development and ops

Defining IT value chains and value streams

Accelerating Agility

Integrating Lean, Agile, VSM, and DevOps

Summary

Questions

Further reading

Chapter 2: Building On a Lean-Agile Foundation

Instilling the values and principles of Agile

Leading Scrum and Lean-Agile methodologies

Leading the way

Gaining stakeholder support

Implementing useful metrics

Agile quality metrics

Agile productivity metrics

Agile project metrics

Health metrics for Agile teams/Agile performance metrics

Core Lean and Kanban metrics

Measuring software quality in Agile

Improving IT flows through Lean Thinking

Eliminating waste in software development

Creating the Lean-Agile foundation

Accelerating flows across IT value streams

Summary

Questions

Further reading

Chapter 3: Analyzing Complex System Interactions

Resolving IT complexity through systems thinking

Analyzing cause and effects in systems

Calculating potential connections

Limiting connections

Learning the vocabulary of systems thinking

Visualizing the interrelationships of system elements

Reading a CLD

CLD model of analyzing Product Backlog priorities

Open CLD model of Product Backlog refinement activities

CLD model of design and work clarifications

CLD model of analyzing work against team capacity

CLD model of negotiations and trade-off activities

Summary

Questions

Further reading

Chapter 4: Defining Value Stream Management

Technical requirements

Implementing Lean concepts

Implementing information flows

Defining types of value streams

Employing VSM

Identifying value streams

Establishing value stream boundaries

Improving business value

Leading the change

Mapping the value stream

Applying VSM methods and tools

Defining the eight steps of VSM

Summary

Questions

Further reading

Chapter 5: Driving Business Value through a DevOps Pipeline

Breaking down barriers

Sharing accountability

Improving flows with CI/CD pipelines

Tooling to establish CI/CD pipelines

Understanding virtualization

Virtualizing data center resources

Employing hypervisor software for virtualization

Using containers for virtualization

Having it both ways

Defining CI

Encouraging frequent testing

Defining CD

Automating configuration tasks via code

Protecting our software assets

Enabling CI/CD and DevOps pipeline flows

Improving pipeline flows

Understanding the full scope of DevOps

Defining CI/CD and DevOps pipeline boundaries

Expanding the CI/CD model

Resolving issues of mismatched velocities

Scoping DevOps pipeline activities

Integrating ITSM

Delivering service value

Encompassing the four dimensions of ITSM

Defining ITSM delivery flows

Delivering ITSM value

Moving beyond projects and into products

Funding product teams

Summary

Questions

Further reading

Section 2: VSM Methodology

Chapter 6: Launching the VSM Initiative (VSM Steps 1-3)

Committing to Lean – VSM Step 1

Navigating the origins of Lean

Linking Lean to value delivery

Improving production flows without compromising flexibility

Installing the right operating system for VSM

Managing a VSM initiative

Starting a VSM initiative

Sustaining the VSM initiative

Committing to Lean – tools

Choosing a value stream – VSM Step 2

Learning about Lean – VSM Step 3

Summary

Questions

Further reading

Chapter 7: Mapping the Current State (VSM Step 4)

Evaluating the current state of Lean practices

Contrasting business process modeling techniques

Automating business processes

Getting started with mapping

Building a value stream mapping icon standard

Going to see (Gemba)

Starting our map with the customer in mind

Preparing to map

Beginning the map

Drawing the current state map in eight steps

Creating an IT value stream map

Documenting our Gemba walk findings

Mapping the IT current state value stream

Mapping the current state – tools

Summary

Questions

Further reading

Chapter 8: Identifying Lean Metrics (VSM Step 5)

Defining universal Lean metrics

Gathering Lean metrics

Analyzing current value stream map metrics

Breaking down CTs

Improving percent complete to accurate (%C/A) metrics

Assessing Lean performance

Measuring key software delivery metrics

Delivery lead time

Deployment frequency

Mean time to restore

Change failure rates

Adding flow metrics and analytics to VSM

Going beyond the DORA Four

Implementing the Flow Framework

Creating a safe work environment

Implementing the tools of Lean metrics

Summary

Questions

Further reading

Chapter 9: Mapping the Future State (VSM Step 6)

Modeling three future state objectives

Phase 1 – customer demand

Calculating Takt times

Establishing pitch

Understanding production controls

Managing buffers and safety inventories

Improving the work environment

Resolving demand-related problems

Mapping the customer-demand map

Future state – customer demand tools

Phase 2 – continuous flow

Evaluating the value stream as a complex system

Applying the concepts of continuous flow

Evaluating the impediments of flow

Implementing production control strategies

Balancing our value stream flows

Stabilizing work practices

Changing work layouts

Displaying standardized work

Drawing the continuous flow phase map

Future state – continuous flow tools

Phase 3 – leveling

Leveling flows by analogy

Assessing leveling needs

Leveling concepts

Leveling methods

Drawing the leveling phase map

Eliminating Agile-based batch processing

Future state – leveling tools

Summary

Questions

Further reading

Chapter 10: Improving the Lean-Agile Value Delivery Cycle (VSM Steps 7 and 8)

Combining Lean and Agile practices

Making continuous Lean-Agile improvements

Creating Kaizen plans – VSM step seven

Connecting to a business strategy

Planning Lean improvements across phases

Developing Kaizen plans

Obtaining approvals to proceed

Implementing Kaizen plans – VSM step eight

Addressing the issue of change

Guiding Lean business transformations

Decomposing Lean improvement work

Managing VSM initiatives as portfolio-level investments

Leveraging the tools of Kaizen

Reviewing the VSM methodology

Summary

Questions

Further reading

Section 3: VSM Tool Vendors and Frameworks

Chapter 11: Identifying VSM Tool Types and Capabilities

Leveraging VSM tools and platforms

Enabling VSM tool capabilities

IT and business alignment

Actionable and relevant data

Data-driven, outcome-focused analytics

Dynamic value stream visualization

Workflow orchestration

IT governance

Highlighting important VSMP/VSM tool capabilities

Classifying VSMP/VSM tool vendors

Classifying VSDP tool vendors

Classifying CCA tool vendors

Key issues addressed by VSM tools

VSM tool implementation issues

Breaking down organizational silos

Developing knowledge, skills, and resources

Getting executive buy-in

Overcoming budget constraints

Knowing how to get started

Lacking process maturity

Maintaining governance and compliance

Enabling business transformations

Providing metrics to show business value

Understanding costs across organizational value streams

Understanding value stream lead and cycle times

Managing risks across value streams

Analyzing patterns and trends

Accelerating improvements with AI

Governing the software delivery process

Managing value streams as continuous flows

Visualizing value streams

Improving cross-functional and cross-team collaborations

Improving value stream efficiencies and handoffs

Improved quality

Performing what if analysis

Reusing templates for better standard work items

Unifying data and artifacts

Integrating, automating, and orchestrating value stream activities

Providing a common data architecture

Developing and populating key performance indicators

VSM tool benefits

Summary

Questions

Further reading

Chapter 12: Introducing the Leading VSM Tool Vendors

Putting modern VSM tools in perspective

Improving value delivery

Using VSM beyond CI/CD and DevOps

Listing the leading VSM tool providers

Atlassian

CloudBees

ConnectALL

Digital.ai

GitLab

HCL Software

Kovair

Micro Focus

Plandek

Plutora

Quali

ServiceNow

Tasktop

Apptio/Targetprocess

ZenHub

Summary

Questions

Suggested reading

Chapter 13: Introducing the VSM-DevOps Practice Leaders

The VSM Consortium

Defining VSMC's purpose, mission, and goals

Building the VSM industry through collaboration

Delivering customer value through software

Shepherding the VSM industry

Offerings in progress

Findings from the initial VSMC report

PMI's DA FLEX

Fitting Lean-Agile practices to support your way of working

Scaled Agile Framework (SAFe)

Organizing around value streams

Aligning ARTs around value

Competing in a digital economy with SAFe

Leveraging DevOps to support the digital enterprise

Making Lean-Agile improvements with SAFe

Selecting the right SAFe configuration

Achieving continuous value delivery

Improving pipeline flows in SAFe

Mapping the current and future states

Enabling the CDP with DevOps

SAFe customer use cases

Summary

Questions

Further reading

Chapter 14: Introducing the Enterprise Lean-VSM Practice Leaders

Going all-in on Lean

Introducing LEI

Training and certification programs

Articulating VSM concepts

Implementing the core concepts behind Lean

Getting started with Lean

Improving through experimentation

Reflecting, sharing, and improving

Defining the principles of Lean

Applying Lean across the organization

Implementing Lean to drive business transformations

Creating a Lean action plan

Completing the transformation

Applying LEI's Lean transformation framework

Co-learning partnerships

Training and tools from LeanFITT™

Offerings from LeanFITT™

Implementing a phase-based approach to Lean improvements

Phase 1 – Getting people trained and engaged

Phase 2 – Standardizing the improvement process

Phase 3 – Energizing the team with active involvement and transparency

Phase 4 – Making Lean routine and sustainable

Improving quality with LeanFITT

Summary

Questions

Further reading

Citing LEI use case studies

Section 4: Applying VSM with DevOps

Chapter 15: Defining the Appropriate DevOps Platform Strategy

Avoiding DevOps implementation pitfalls

Interviewing the experts

Interview with Helen Beal

Interview with Scott Ambler

Interview with Pramod Malhotra

Interview with Yaniv Sayers

Interview with Allan Wagner

Interview with Joel Kruger

Deciding on an appropriate DevOps platform strategy

Building a custom DevOps platform

Purchasing DaaS

Employing VSM tools

Building reusable software factories

Dealing with corporate implementation mandates

Dealing with creative versus repeatable pipeline activities

Addressing the pitfalls of DevOps

Avoiding the pitfalls of Conway's Law

Implementing a CALMS framework

Deciding on the appropriate DevOps platform strategy

Avoiding mandates

Avoiding wasted time

Eliminating silos and increasing cross-functional team collaboration

Upskilling becomes critical

Implementing pre-production testing

Separating DevOps engineering from DevOps as a practice

Allowing flexibility in DevOps policies and procedures

Improving velocity with quality

Building DevOps teams from within

Automating database builds

Maintaining incident handling procedures

Integrating security with DevOps

Gaining knowledge of DevOps

Getting fatigued while implementing DevOps

Coding secrets in source control

Summary

Questions

Further reading

Chapter 16: Transforming Businesses with VSM and DevOps

Uniting VSM initiatives

Diverging customer-centric development strategies

Defining VSM as a modern software tools category

Using VSM for DevOps improvements

Implementing the Lean aspects of the VSM roadmap

Implementing the Agile aspects of the VSM roadmap

Establishing a business transformation vision

Implementing tools is not a replacement for people

Creating a VSM team for DevOps transformations

Connecting to enterprise VSM initiatives

Using OKRs to drive business transformations

Aligning VSM initiatives with strategies and portfolios

Understanding how VSM initiatives can fail over time

Expanding the vision for the VSM tool industry

Summary

Questions

Further reading

Appendix A – VSM Charter

Appendix B – VSM Storyboard

Assessments

Other Books You May Enjoy

Preface

I started my professional career as a young engineering project manager at a high-tech manufacturing facility at Texas Instruments. I had no idea then that the basic concepts I learned about Lean production processes would serve me well throughout my career as a software product manager (computer-aided software engineering – CASE and workflow tools) and as a consultant and IT project manager in the development of business applications for business process improvements. However, my work in those areas was always about improving organizational value streams outside of the IT department.

Lean production concepts began to find their way into software development in early 2000 through the insights of people such as Mary and Tom Poppendieck in their book Lean Software Development: An Agile Toolkit. By 2010, the concepts behind Lean-Agile practices began to make their way into software development methodologies, such as the Scaled Agile Framework and Disciplined Agile. Finally, we began to see the practical application of Lean production improvement concepts applied to IT-oriented value streams in the form of modern value stream management (VSM) software tools and platforms.

As you will discover in this book, VSM is an approach to make Lean improvements across all development and operational value streams. A value stream is simply an end-to-end sequence of activities where work and information flow in a coordinated and streamlined manner to deliver value (for example, products, services, and results) most effectively.

In its modern reinvention, the software development industry applies VSM tools to integrate, automate, and orchestrate work across DevOps pipelines to improve the end-to-end activities involved in software deliveries across both the development and operations functions. Rather than manually collecting data, modern VSM tools capture critical performance metrics in real time and provide a common data model and analytical tools to assess both current and desired future state conditions.

In short, modern VSM tools offer a convergence of data and analytical capabilities that are necessary to make informed decisions to improve your software delivery flows. Implementing DevOps methods, configurations, and tools on an enterprise scale is not trivial or inexpensive. On the other hand, VSM tools provide the data you need to get the most out of your IT investments.

It's been an arduous journey to bring the thoughts and ideas together for this book, including input from the VSM Consortium, 16 tool vendors – with research on 24 software tool companies in all, plus the two leading Lean-Agile Framework companies and two of the leading Lean training and methodology companies.

Sometimes, it was like herding cats pulling all the information together from these disparate sources! However, the result, I believe, represents the most comprehensive source of VSM methods and tools to date. Moreover, this book also helps explain how DevOps and VSM go hand-in-hand to help drive competitive outcomes in a digital economy.

Recall that VSM is not a new concept, though more recently applied to help make lean-oriented improvements across IT value streams. Organizations that practice Lean production improvement concepts use VSM practices to improve all development and operational value streams. As a strategic enabler, VSM initiatives help discover and prioritize many potential improvement opportunities across the enterprise, to deliver value more effectively. And many of those identified value stream improvement opportunities are digital enhancements best realized through software applications.

For example, in our digital economy, businesses create software applications as commercial offerings or to deliver information or entertainment services as web-based services. However, software can also enhance physical products, such as the navigation and control systems in automobiles. Finally, businesses, government agencies, and non-profits use software applications to improve the flow of value across their critical business processes and value stream activities.

Through my research and discussions with many of the leading VSM, DevOps, and Lean organizations, I have concluded that organizations must integrate their IT-based VSM tool strategies into their corporate strategic VSM initiatives. While Lean is a relatively new concept in IT, the rest of the organization has likely been practicing Lean concepts for decades – or, at least, they should have been. That's not true just in manufacturing, as many service companies and healthcare providers have implemented Lean practices.

In this book, you will learn how to apply a generic VSM methodology that can help identify improvements in organizational development and operational value streams, not just IT. This approach was taken purposely for the reasons noted above. Organizations use VSM methods and tools to identify and prioritize improvement opportunities across all value streams, many of which require software to make the improvements.

In other words, VSM methods address two broad areas to make value stream improvements. First, modern VSM methods and tools help improve DevOps-based software delivery capabilities. Second, the same VSM strategies and techniques help identify digital improvement opportunities across other organizational value streams to direct the organization's improved software delivery capabilities.

So, VSM is not limited to making value stream flow improvements in DevOps. From the perspective of systems thinking, making value stream improvements to DevOps is a form of making localized optimizations. In other words, if software delivery is not the bottleneck in our business system, or if we don't know how to apply our improved software delivery capabilities, then the time and resources spent on the effort to improve our system as a whole may have little or no impact.

You have experienced this situation first hand if your organization has spent time and money implementing DevOps toolchains and platforms, but you have not seen a justifiable return on investment.

You may not know much about Lean practices yet, but that's OK. You will learn in this book that it's all about discovering and eliminating wastes that hinder flow, which in turn cause bottlenecks, delays, excessive work in process, and ultimately higher costs that your customers don't want to pay. For these reasons, Lean practitioners always have a cost and time to market or delivery advantage over their competitors.

The main point is that an enterprise can spend much time and effort on their DevOps and VSM tool initiatives but not see a justifiable ROI – unless they use those software delivery improvements to help improve the organization's other operational and development value streams. So, DevOps teams should align their activities to help make improvements across all organizational value streams. Moreover, it's the Corporate VSM initiatives, through their Kaizen Bursts (future state improvement opportunity scenarios), that help identify and prioritize the areas where the improved DevOps capabilities can have the most timely and beneficial impacts.

For these reasons, this book introduces the historical foundations behind the concept of adding value, Agile's values and principles, systems and lean thinking, and VSM and their modern context in IT. You will discover how to use VSM as a methodology to discover areas for improvement across all organizational value streams, while simultaneously using VSM tools to make Lean-oriented improvements in your DevOps-based software delivery pipelines. But ultimately, you will find that it's the integration of DevOps to support Lean-oriented improvements across all organizational value streams that help justify the time, expense, and effort associated with installing VSM tools and DevOps toolchains and pipelines.

The book logically divides into four parts, subtitled as follows:

Value Delivery – what it means and how to go about it

Chapters 1 – 5

VSM Methodology – a Lean-oriented and proven approach to make Flow improvements across an enterprise

Chapters 6 – 10

VSM Tool Vendors and Frameworks – to improve your software delivery pipeline capabilities

Chapters 11 – 14

Applying VSM with DevOps – to drive digital business transformations

Chapters 15 and 16

Feel free to skip around between the four parts of the book. Also, if you want to understand the issues organizations face when implementing DevOps platforms, start with a quick read of Chapter 15, Defining the Appropriate DevOps Platform Strategy, where you will hear from six experts on this topic.

I hope you enjoy this book as much as I've enjoyed writing it.

– Cecil Gary Rupp

Who this book is for

This book was written for corporate executives, managers, DevOps team members, and other stakeholders involved in digital business transformations to improve the flow of customer value through their organization's value streams.

What this book covers

Chapter 1, Delivering Customer-Centric Value, defines what constitutes the delivery of value.

Chapter 2, Building on a Lean-Agile Foundation, explains what it means to be a Lean-Agile enterprise.

Chapter 3, Analyzing Complex Systems Interactions, looks at software development activities as a complex system and explains the impact of interrelationships between participating elements.

Chapter 4, Improving IT Value Streams with VSM, explains the history and fundamentals behind value stream management.

Chapter 5, Driving Business Value through a DevOps Pipeline, assesses end-to-end activity and the information flows and integrated toolchains that make DevOps pipelines so complex and expensive to implement on an enterprise scale.

Chapter 6, Launching the VSM Initiative (VSM Steps 1–3), explains why an organization must commit to Lean, how to choose a value stream, and what VSM team members and other stakeholders need to learn about implementing Lean.

Chapter 7, Mapping the Current State (VSM Step 4), explains how to construct a current state value stream map using a CI/CD pipeline flow improvement use case as an example.

Chapter 8, Identifying Lean Metrics (VSM Step 5), explains the common Lean metrics used to identify waste that contributes to poor performance across value streams and those that most apply to assessing IT and DevOps-oriented value streams.

Chapter 9, Mapping the Future State (VSM Step 6), explains how to construct a future state value stream map and Kaizen Burst (production improvement opportunities) using a CI/CD pipeline flow improvement use case as an example.

Chapter 10, Improving the Lean-Agile Value Delivery Cycle (VSM Steps 7 and 8), explains how to develop and execute a Kaizen Plan that addresses the improvement opportunities identified in the future state value stream maps.

Chapter 11, Identifying VSM Tool Types and Capabilities, introduces the three primary types of VSM tools and their general purpose and capabilities.

Chapter 12, Introducing the Leading VSM Tool Vendors, offers descriptions of the capabilities provided by 16 leading VSM tool vendors, along with their individual strengths and areas of focus.

Chapter 13, Introducing the VSM-DevOps Practice Leaders, introduces the VSM Consortium and two of the leading Lean-Agile frameworks that promote VSM – Disciplined Agile and the Scaled Agile Framework®.

Chapter 14, Introducing the Enterprise Lean-VSM Practice Leaders, introduces two of the leading Lean training and certification organizations – the Lean Enterprise Institute and LeanFITT™.

Chapter 15, Defining the Appropriate DevOps Platform Strategy, provides interviews with six expert DevOps practitioners to explain the potential DevOps implementation pitfalls that organizations need to be aware of. This chapter also introduces four DevOps platform implementation strategies and the pros and cons of each.

Chapter 16, Transforming Businesses with VSM and DevOps, explains how to use VSM and DevOps tools and related implementation initiatives to transform businesses into viable entities to compete in our digital economy.

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We also provide a PDF file that has color images of the screenshots and diagrams used in this book. You can download it here: https://static.packt-cdn.com/downloads/9781801078061_ColorImages.pdf

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Section 1:Value Delivery

Chapters 1 through 5 introduce the core concepts behind adding value, Lean-Agile practices, systems thinking, and value stream management. They apply to modern IT practices and other value streams that deliver value across the enterprise. These concepts are also foundational to the knowledge you need to learn how to apply the concepts in section 2 of this book – VSM Methodology – a Lean-oriented and proven approach to make flow improvements across an enterprise.

In the first three chapters, you will learn how to focus on adding customer-centric value across an enterprise by blending Agile, systems thinking, and Lean development practices. Then, in Chapter 4, Improving IT Value Streams with VSM, you will learn about how value stream management (VSM) is an approach to improve Lean production capabilities across all value streams, including IT. Finally, in Chapter 5, Driving Business Value through a DevOps Pipeline, you will learn what a DevOps pipeline is and why it's the best approach to deliver value in a digital economy.

Modern VSM tools support implementing Lean improvements across IT value streams and improve DevOps pipeline implementations. In that context, these chapters help explain why the effective implementation of a DevOps pipeline – as an efficient software delivery system – is the necessary “table stake” that allow an organization to compete in our modern digital economy.

This section includes the following chapters:

Chapter 1, Delivering Customer-Centric ValueChapter 2, Building on a Lean-Agile FoundationChapter 3, Analyzing Complex Systems InteractionsChapter 4, Improving IT Value Streams with VSMChapter 5, Driving Business Value through a DevOps Pipeline

Chapter 1: Delivering Customer-Centric Value

This chapter introduces the many different definitions of value and explains how Agile, Systems Thinking, and Lean Development work together to deliver customer-centric value. With this base of understanding, Value Stream Management (VSM) and DevOps(development-operations) are also introduced as complementary Information Technology (IT) practices and tools to support Lean-Agile practices.

You will learn how VSM helps maximize the flow of customer value across an organization's software development and delivery processes. For example, VSM helps improve the flow of work across systems development life cycle (SDLC) processes when developing applications supporting business operations.

However, VSM cannot be just about improving software development and delivery practices for business systems in a digital economy. Many commercial businesses, government agencies, and nonprofits offer information-oriented products and services delivered as web-based services. Additionally, many physical products incorporate computing devices, software, and internet access to deliver new features and enhanced functionality on demand and throughout their life cycles.

For these reasons, the use of VSM methods and tools must go beyond IT to help improve workflows and information flow across operations and development-oriented value streams.

DevOps improves communications across IT departments in a complementary fashion, while integrating and automating IT processes to enable a continuous flow of customer-centric value across all organizational value streams. As a result, a modern DevOps team can deliver value orders of magnitude more efficiently, rapidly, and error-free than with traditional SDLC and Agile practices.

In this chapter, you will learn how these practices work in concert to deliver customer-centric value. The topics covered include the following:

Defining the term value in its many formsDeveloping a value propositionCreating valueTaking a Lean-Agile view of valueUnderstanding VSMUnderstanding the role of DevOps in delivering valueIntegrating Lean, Agile, VSM, and DevOps

Defining the term value in its many forms

This book is fundamentally about creating digital transformations to deliver customer-centric value efficiently, rapidly, and at a lower cost. Such a strategy involves including and aligning IT with the value stream transformations occurring across the enterprise. VSM is a Lean production improvement strategy that's found new applications in IT. Since VSM is the primary focus of this book, let's start with definitions of value in a VSM context.

Viewing value from a Lean-oriented perspective

Value streams are a Lean production concept that describes the series of product life cycle activities required to guide product deliveries from ideation through creation, deployment, support, retirement, and sustainment. As the name value stream implies, the whole point is to ensure all product delivery activities add value. From the perspective of Lean, adding customer-centric value means going beyond the provisioning of features and functions to also eliminate all forms of waste that customers don't want to have added to their costs.

VSM is an approach to methodically eliminate waste and improve productivity and efficiency while lowering costs. More precisely, you will learn that VSM encompasses Lean-oriented methods to improve work and information flow across value streams. Modern VSM tools support the VSM methods initially developed by Toyota as an approach to map material and information flows, and then later introduced to the rest of the world in the early 2000s (Jones, Womack, 2003).

When we get to the sections on Lean-Agile views and VSM, you will also find there are two forms of value streams: operations and development. Let's take a quick look at the differences between these two types of value streams.

Differentiating development from operations

Operations-oriented value streams deliver products and services to an organization's external customers, while development value streams create things used or delivered by the organization's operations-oriented value streams.

Let's put this another way, as follows:

Operations value streams include the work and information flow that define how your company—or its product lines or lines of business (LOBs)—conducts business, earns revenue, and delivers services to its customers.Development value streams include work and information flows to build and support the products, services, and other artifacts used by the operations-oriented value streams to deliver value.

Operations-oriented value streams enhance customer experiences by providing products, information, and services, either online or through personal contacts. In contrast, development-oriented value streams create products and services for either internal or external customers. In other words, development value streams build stuff, while operations value streams need to sell, deliver, and support the organization's customers.

Both functions are necessary and value-adding. However, making a distinction between development and operations is important in terms of purpose, planning horizons, and who controls and funds the activities. For example, LOB executives and product owners have accountability over investment priorities in their operations-oriented value stream activities. In contrast, portfolio management team controls investment priorities over development-oriented stream activities.

Another way to look at this distinction is the operations-oriented processes of selling, delivering, and supporting products. These are tactical activities that provide value to our customers, usually over relatively short planning horizons. Development value stream investments tend to be larger, are critical to the organization's long-term survival, and require longer planning and implementation horizons. In contrast, development-oriented value streams help ensure the organization has the infrastructure, products, and services to meet its strategic objectives.

At first glance, this distinction between development and operations seems to support the traditional IT organizational model. Development teams create software products for both internal and external customers or users, and operations teams exist to keep systems running, secure, and available, while also resolving customer and user issues via helpdesk services.

Later in this book, you will learn that an IT organization implementing Lean-Agile practices should consider moving traditional IT development and operations functions within dedicated product teams. But that is getting ahead of ourselves. We'll come back to that subject later in Chapter 4, Defining Value Stream Management.

For now, let's take a look at some examples of how an IT development-oriented value stream can develop and support software applications for use by other organizational value streams, such as a customer order entry or product fulfillment.

Developing applications to support organizational value streams

The following diagram displays three organizational value streams: order entry, fulfillment, and software development. Order entry and fulfillment are operations-oriented value streams, while the software development activity is a development-oriented value stream:

Figure 1.1 – Value stream examples

Each activity block identifies the activity's name, process time (PT), lead time (LT), and percent complete and accuracy (%C/A) metrics. You learn how to use these metrics later in Chapter 8, Identifying Lean Metrics(VSM Step 5). The main point to understand is that IT is a critical development value stream that improves other operational value streams' delivery capabilities and efficiencies.

This book purposely opened with a discussion on operations- and development-oriented value streams. The current trend is to speak of VSM as a tools-based approach to improve DevOps pipeline work and information flows. DevOps pipeline flow improvements are a great application of VSM. However, your organization is missing the point if its VSM strategy is limited to DevOps. The discussion surrounding the value stream examples depicted in Figure 1.1 clearly shows how IT-based development value streams help improve operational value streams.

This book provides instruction on integrating Agile, Lean, VSM, and DevOps practices to enable business agility on an enterprise scale. These are the methods and tools that allow organizations to provide the right set of products and services customers want rapidly, efficiently, and at the lowest cost. Those organizations that do this successfully, and enterprise-wide, have a leg up when competing in our increasingly digitized economy.

We discuss all these concepts later in this chapter and throughout this book. Before we do, it's essential that you first have a clear understanding of what it means to compete in a digital economy and IT role.

Competing in a digital economy

Don Tapscott introduced the term digital economy in his book The Digital Economy:Promise and Peril in the Age of Networked Intelligence (1997). The book's key focus is on how digital technology changes the way individuals and societies interact.

Later, in 2001, Thomas L. Mesenbourg, then Associate Director for Economic Programs at the United States (US) Census Bureau, delivered a paper titled Measuring the Digital Economy. The paper describes an effort initiated by the US Census Bureau to measure the economic impact of electronic devices as the basis of our then-emerging digital economy.

In his paper, Mesenbourg describes the digital economy as having three primary components, listed as follows:

E-business infrastructure: This includes all participating computing, network, communication, security, and software systems.Electronic business processes that support the digital economy.Electronic commerce transactions that support the selling of goods and services online.

Building products for the digital economy

The term digital economy implies something much more significant than Mesenbourg's original e-commerce-centric views in a modern context. For example, digitally enhanced technologies now allow organizations to conduct business on the internet and mobile technologies while providing near-real-time and global access to information and knowledge-based services.

Moreover, digital technologies enhance physical products with new features not possible through simple modifications in materials or mechanical components. Broadly classified as the Internet of Things (IoT), product features and capabilities can be updated, even after delivery to customers.

The key differentiator of an IoT capability is the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. At a conceptual level, IoT is a system of interrelated computing devices with unique identifiers (UIDs) that make them visible to other computing systems and digital devices via the internet and mobile connections.

IoT devices include mechanical and digitally enhanced machines and embedded objects within manufactured goods, people, or animals. As modern examples, your automobile gets factory updates to its computing and navigation systems via mobile connections. Telehealth-based IoT solutions enable real-time monitoring of patient health at long distances via external and embedded monitoring systems. As a final example, embedded biochips with transponders help identify animals and monitor their health and location in the wild and within farms, and can even identify your pets.

Connecting in the digital economy

Our modern digital economy is also more than the scope of e-commerce and digitally enhanced products. The internet has opened up extraordinary communication avenues, information sharing, and collaboration via social media tools and platforms.

Web-based social media tools enable people to interact and share information and experiences across multiple media formats (for example, audio, video, text, photos, images, and so on). Social media is all about leveraging content to drive human-to-human and business-to-human engagements.

Holly Gibbons, President of Gibbons Business Solutions, LLC., lists six categories of social media content that drive engagements (https://gibbons-business-solutions.com/6-types-of-social-media-content-that-drive-engagement/), outlined as follows:

Promotion: Informing on products and servicesEducation: Establishing expertise and enabling self-helpConnection: Delivering an "insider" view of your businessConversation: Specifically targeted to engage customersInspiration: "Feel-good" messages with quotes, facts, and personal stories of success that reflect the vision and values of the person or entityEntertainment: Connecting with audiences through sharing holiday wishes, jokes, comics, funny but informative videos, contests, and giveaways

Social media is a transformative capability that helps drive our modern digital economy. The following subsection lists other digitally enhanced business transformations.

Delivering value in a digital economy

Other names for the digital economy include the internet economy, new economy, or web economy. The evolution of the digital economy has forced traditional brick-and-mortar companies to rethink their business strategies or face being driven out of business by fierce competitive disruptors such as Amazon.com (retail), Airbnb (travel accommodations), Google (information searches), Netflix (home entertainment), Lyft and Uber (transportation services), Tesla (automobiles and aerospace), and YouTube (video-based information and entertainment content sharing).

Given their legacy investments in brick-and-mortar-based infrastructures, companies need to rapidly find creative approaches to leverage their traditional economies of scale to compete in the digital economy. In some cases, this means finding different ways of engaging with our customers. In other cases, a blended approach to integrating traditional and digital infrastructures may provide the most competitive advantage.

In any case, companies must define and execute their competitive value propositions. They must evaluate all their investments and activities to ensure maximal contributions to adding customer-centric value. Ultimately, this book introduces many interrelated concepts that help an organization deliver value in a digital economy, but before we get to those sections, we need a shared understanding of what value means. That is the topic of the following subsection.

Diving into the many concepts of value

Semantics is essential in computer science—so important that an entire IT discipline called ontology is devoted to the subject. If you look up the word ontology, you will find that the term's origins come from a branch of metaphysics that deals with the nature of being or what exists. Ontology is a compound word that combines onto (Greek ὄν) and "being; that which is" (gen. ὄντος, ontos). In other words, it's a discipline that seeks to discover what is real.

In the field of information science, Ontology deals with semantic meanings. The problem is that humans have this annoying habit of using the same terms but having very different views on what those words actually mean. Our life experiences, education, and intellectual capabilities greatly influence our understanding of the words we use. This is a primary reason why we humans so often get our communications wrong.

In contrast, traditional information systems must have a precise contextual understanding of the terms and values they employ; otherwise, they cannot correctly exchange information. The same issue applies to human-computer interactions. The words we want to use may not fit the computer's understanding of the term. This dichotomy is what drives much of the research in artificial intelligence (AI). In other words, part of AI research seeks to help computers understand the contextual meaning of words in specific types of human-to-computer interactions.

The word value has many business meanings that support various business practices or desirable business outcomes based on contextual use (that is, the term value means different things, depending on the term's application). As an example that's relevant to this book, Agile, Lean, VSM, and DevOps all share the idea that organizations must deliver value from a customer's perspective. However, they have different strategies to achieve that goal. Moreover, IT specialists and business analysts need to understand that the folks they interact with within other departments may have entirely different thoughts on what the word value means.

Using an analogy, we have a situation a bit like the story of the blind men describing an elephant. Because they cannot see, the blind men have a limited understanding of what an elephant looks like, based only on what they can experience through touch, as shown in the following diagram:

Figure 1.2 – The six blind men and the elephant

For those not familiar with the story, the first blind man touches the trunk and exclaims, "The elephant is like a thick snake"; however, the next blind man touches the ear and says, "No, it's like a fan". Next, another touches one of the elephant's tusks and says, "I don't know what you guys are talking about; it's a spear". The next blind man in line touches the elephant's leg and proclaims, "The elephant is like a big and stout tree trunk", but the blind man who touches the side of the elephant believes they have come up against a wall. Finally, the blind man who touches the tail believes he has caught hold of a rope.

There's only one elephant, but the blind men have different theories of what the elephant is, based on their particular "hands-on" experiences and their lack of a holistic view. The same issues face business analysts when they seek to understand what adds value to a business. So, before we can talk about how Agile, Lean, VSM, and DevOps improve value, we need to spend some time understanding the term's many contextual uses.

This chapter explores the many variants of value with that goal in mind, spanning ownership, accounting, marketing, supply chain, Agile, Lean, and DevOps.

Viewing value from the context of business assets

In its most straightforward context, the term value implies an asset's worth expressed from a monetary, material, usefulness, or personal view—for example, there are many ways to express public companies' business value, such as shareholder value, a firm's monetary value, value capture, fair value, and market value.

Shareholder value relates to the price of a company in terms of the value given to stockholders' shares. The shareholder's value fluctuates on the market's perception of its ability to sustain and grow profits over time. From this perspective, a company's value is roughly equivalent to the number of outstanding shares times the current share price.

Monetary value is an expression of the money an asset—such as a company, product, property, land, or service—would bring if sold. In other words, monetary value is an expression of how much money something is worth on a free and open market. Monetary value determinations come from the dynamics of supply and demand—for example, increasing the supply of a product relative to demand decreases its value. In contrast, limited supplies with high demand drive the price up.

If you talk to a Master of Business Administration (MBA) graduate or an accountant, they may use the term value capture. In their context, value capture describes a process to retain a percentage of the value provided in every business transaction, most often in the form of profit-taking. However, in matters related to public financing, value capture implies using public financing to develop infrastructure that improves a municipality's value as a whole and the value of adjoining commercial properties.

Fair value is an evaluation of business assets (and liabilities) for financial reporting in line with a country's standard accounting practices, often used to assess value in sales, mergers, and acquisitions. The International Financial Reporting Standards Foundation (IFRS Foundation) is a nonprofit industry standards group that defines globally accepted accounting standards, published as IFRS standards. IFRS standard 13 (https://www.ifrs.org/issued-standards/list-of-standards/ifrs-13-fair-value-measurement/) defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price)".

Finally, market value is a determination of what a company is worth under current market conditions. Market value is the estimated price that an asset has in the marketplace or the value that the investment community gives to the equity position—that is, the price a third party pays to obtain a position within a business or other asset in exchange for its stock or securities.

We now have a broad understanding of the term value as it applies to the ownership of businesses and other assets. But the term value can also have a contextual meaning that identifies the importance of specific business relationships, such as value chains and value networks. Value-added (VA) relationships are the topic of the next section.

Viewing value from the context of business relationships

The concept of value in terms of the ownership of business assets is straightforward in contextual use. People and businesses invest time, money, and resources to improve their business asset value, but businesses also gain value by leveraging relationships with suppliers and other partners.

In the most general sense, all external partners provide products or services to support another entity's business goals, though both partners receive value from the relationship. But here, again, we need to carefully define the types of partner relationships to understand the value each provides. For example, a business may have suppliers that deliver components and materials used in their products and deliver them to the consumer. Other partners may resell or rebrand another company's products. There are multiple variants of these relationships, such as reseller, VA reseller (VAR), and original equipment manufacturer (OEM).

A reseller is like a retail outlet that purchases and then resells products to its customers. A retail partner may be a traditional brick-and-mortar company, an online reseller, or a hybrid blend.

A VAR is a firm that enhances the value of another company's products with customizations or services. For example, a recreation vehicle (RV) manufacturer typically buys the bare truck chassis, engine, and tires from one or more primary automotive and truck manufacturers. It then adds the body and internal furnishings that make the vehicle fit for camping. VARs can also provide services around another company's products, such as installation and configuration services, consulting, troubleshooting, repair, or customer support.

An OEM firm typically takes another firm's products and rebrands and sells the original product under their company's name. The OEM can also provide product and service extensions, similar to the VAR type of business VA relationship. Regardless, the OEM procures the primary manufacturer's additional rights to rebrand its products as their own.

Establishing business relationships as value networks

A value network includes any set of connected organizations or individuals working in an integrated and collaborative manner to benefit the group as a whole. A business-oriented value network helps members buy and sell products, organize and distribute work, and share information. While there are many types of value network relationships, they all fall within two broad categories: internal or external value networks.

Internal value networks include people within an organization collaborating to achieve mutual or reinforcing goals. These internal value networks usually work within the bounds of established business processes or value streams. Both business processes and value streams describe structured approaches to work.

The term business processes tends to be associated with traditional cross-functional and bureaucratic organizational structures. The value stream concepts came out of the Lean and Lean Six Sigma approaches to product delivery. Later sections of this book provide much greater detail on the subjects of Lean production and value streams. For now, think of value streams as a series of activities that deliver products and services aligned with customer needs. Moreover, Lean production is an approach to improve product and information flows across value streams.

An organization that scales multiple but small agile-oriented teams, working in an integrated, coordinated, and synchronized fashion to develop and deliver large products, is another example of an internal value network. The Agile teams may also employ Lean product development concepts, often referred to as Lean-Agile methodologies or frameworks.

External value networks describe the cross-organizational interactions of third parties that lie outside the primary business entity's bounds but contribute to its success. In other words, the external value network has a mutual interest in supporting or benefiting from the goals of the primary business entity. In this context, external value networks include agents, business partners, customers, consultants, product users, stakeholders, suppliers, and any other person or entity participating in a value-adding relationship.

Internal or external value networks create value through their relationships, cross-functional or value-stream-oriented processes, and their specific roles within a business enterprise relative to products and services. The relationships must be mutually beneficial—in other words, all parties within the value networks receive value from their relationships. When this is not the case, the networks fail to meet their goals and expectations, and the relationships usually become disruptive. In extreme cases, the networks fall apart and the participants exit their business or employment relationships.

Additionally, participants within value networks must hold up their end of the deal. Ineffectual participants weaken the entire network, and others must step in to fill the void—assuming that is possible. On the other hand, one advantage of having a value network is that the participants can provide the resources, skills, experience, and redundancy to step in and help the weaker elements get up to speed or overcome their limitations.

This section concludes our discussion on value networks. In the next section, we look at a complementary concept referred to as value chains. Instead of looking at VA relationships as networks, value chains describe a company's activities to add value to its products and services.

Establishing business relationships as value chains

Value chains are the processes or activities by which a company adds value to its products and services. Value chains include product life-cycle activities, spanning product ideation, design, receipt of raw materials, and adding additional value through production processes at a more granular level. Value chain processes also include promoting a product, taking an order, and then selling the finished product to consumers.

Michael Porter coined the term value chain in his book Competitive Advantage: Creating and Sustaining Superior Performance (1985). Porter describes the primary value chain activities for adding value and competitive advantage in terms of the following five elements:

Inbound logistics: Receiving, storing, and processing raw materials and inventories.Operations: Converting raw materials into a finished product.Outbound logistics: The distribution of products and services to customers.Marketing and sales: Including advertising, promotions, and pricing strategies, and managing all sales channels (online, inside direct, outside direct, indirect through resale partners).Services: These help maintain products and improve consumer experience—including customer support, product maintenance and repair, refunds, and exchanges.

Value chain analysis offers a strategy to use value chains for competitive advantage. Value chain analysis evaluates the activities involved in changing the inputs for a product or service into an output valued by a particular customer type. A value chain analysis starts with identifying every production step required to create a product and then discovering ways to increase the overall value chain's efficiency.

Michael Porter's view of value chain management (VCM) theories supports the traditional views of using business processes, best practices, organizational assets, and human resources (HR) to achieve a competitive advantage, driving further growth in the market. Michael Porter notes explicitly that his approach is to implement an activity-based theory to drive competitive advantage.

Though his approach sounds somewhat similar to Lean Development concepts, Porter's orientation is oppositional to Lean's initial focus on the customer. Porter advocates a strategy of building and delivering a product cheaper and faster than your competitors, which, in his view, automatically drives new customers and growth. However, Lean practitioners believe we must first focus on customer needs before refining activities to deliver what our customers want—otherwise, we'll miss the mark.

Now that we've made that point, let's explore value from a customer's perspective.

Defining customer value

Customer value is the value received by the end customer of a product or service. In the previous section, you learned that Lean Development strategies emphasize assessing activities to add value and eliminate those that do not add value.

Lean Development strategies make sense because, ultimately, customers are the sole arbitrators of what value means to them. Customers perceive value in terms of utility or usefulness, quality, and benefits. Our ability to deliver what they want is the determinant of customer satisfaction.

But customer value is a tricky thing. It would be nice if all our customers valued the same things. In such a homogenous world, we would only have to produce one variant of a product and be the most efficient producer. Of course, we would also have to be competitive across marketing, sales, delivery, and support processes. Such a market supports Michael Porter's view of using value chains to create a competitive advantage.

But that's not the world in which we live. Instead, customers have different budgets and different desires in terms of the features and functions they prefer. In a traditional mass-production model, marketing and sales organizations try to influence customer behavior by telling customers what they should like about their particular products and services. That strategy allows the producers to follow Michael Porter's guidance on improving value chains.

That strategy might work for a while, but only up to the point where other competitors start asking customers what they want and then deliver better offerings. As a result, customer-oriented value delivery strategies had to evolve. By the 1980s and 1990s, customer relationship management (CRM) and Lean Development strategies became mainstream practices, to focus on adjusting product development and delivery efforts to address customer needs for mass markets and profitable niche markets.

Lean manufacturing, also known as lean production, is a modern instantiation of production methods derived initially from Toyota's operating model, known as The Toyota Way and the Toyota Production System (TPS). The term Lean did not come from Toyota but was instead coined in 1988 by John Krafcik, who was then studying mana