Updated: Apr 5, 2020
This month we will continue our conversation of Level of Perspectives starting with Perspective 1 - Organization. Martial Arts has really taught me how important understanding the environment in which you are in is. You must be aware of your surroundings at ALL times in order to be prepared effectively. For example, when I go to the movie theater now, I intentionally find the exit areas in case of an emergency. I would say my awareness was not as keen before martial arts. However, I learned that in order to defend myself I need to know the environment I am in, and what resources are readily available to me if I need to defend myself.
The same is true when we work for organizations. We will begin by our series with gaining an overall perspective of an organization by leveraging tools such as; the business model canvas, functional decomposition (prior blog post on this technique), and Value Stream Mapping. In addition, at the end of this month we will have a special feature announced at the end of this post. You won’t want to miss it!!!😁. I must also mention, these 3 tools are not an exhaustive list of what you can leverage to gain understanding, but will give you a great start, and relatively quickly.
Let’s get started, shall we?
I have found as a consultant, and full time employee, many do not spend time understanding the strategy, goals and/or structure of the organization. The lack of this knowledge can lead to decisions that are very siloed, instead of holistic. The result can produce negative upstream, and downstream impact, as well as, solutions implemented that do not meet the needs of, not only the organization, but the customers. It’s imperative to first understand the organization (environment) in which you work. Take time to understand the foundation that runs the organization. The foundation consist of the vision, mission, strategy, goals, cost generators, customer and stakeholders to name a few. Think about it this way, would you marry someone you did not know? Don’t take into account the reality TV shows out there where this is done (🤣), but think about it for yourself. You spend a lot of your time, energy and skill working for organizations. Take time to get to know WHO you work for, and WHY you work and believe in the organization. This builds a strong foundation for you to succeed in the organization. In addition, when there are days that are challenging you can hold onto the foundation in which you believe to get you through.
TECHNIQUE 1: BUSINESS MODEL CANVAS
One tool I have found to be very helpful in gaining organizational understanding is the Business Model Canvas. I like this tool because it’s extremely easy on the eyes, and is a nice one-pager to get an idea of the organizational model quickly. A business model canvas can be used to document the existing business model, or as a canvas for a new business idea. Many startup companies leverage the canvas to help visually show their business plan without all the pages of granular detail involved in a business plan. In addition, it can bring items to light for new business ideas that may need to be vetted more. Going back to the organizational perspective, it can help to bring clarity to team members in a very visual way, and level set the foundation. Depending on the organization, and the different service offerings, there may be multiple business models in play. It is possible to have more than one business model canvas.
The business model canvas consists of 9 main elements/components, and can graphically be represented in different ways. Let’s talk a little bit about each one.
1. Key Partners – identifies who the KEY partners are in the organization. This area may not reflect everyone you would necessarily work with. You can leverage the organizational chart in the organization to identify ALL the players, but the canvas consists of the key partners. By asking some of the below questions you can easily understand who, and why these individuals are the KEY partners. As well as, the value they bring to the organization in a strategic way.
a. Who are the key partners in the organization?
b. What services/or resources do these partners provide to the organization?
c. What activities do these partners provide to the organization?
d. What are the motivations for the partnerships?
2. Key Activities – identifies the key activities needed for the organization to run successfully. Without these key activities the organization may not exist, or deliver the expected value to the customers. These activities are the necessities, and not necessary the additional “nice to haves”. A couple of questions you can ask to determine what these activities are:
a. What are the strategic activities the business conducts to execute its value proposition?
b. What are the most important activities in all the components?
3. Key Resources – identifies the resources the company needs to stay competitive and deliver expected value to the customers served. These resources are critical, and without them the organization would not function as needed. To figure out what the key resources are you can start by asking the below questions:
a. What are the key resources the business needs to have to stay competitive?
b. What resources are required to execute on the value proposition?
4. Value Proposition – a value proposition is the promise an organization makes to their customers to deliver some type of service of value to the customer. Many value propositions are unique, and target certain customer segments. In order to determine the value proposition of the organization you can start by asking the following questions:
a. What is the unique value proposition?
b. What is compelling about the value proposition?
c. Why do the customers buy, or use, the product/services?
d. What customer needs are being fulfilled?
5. Customer Relationships – this particular element is extremely important. At the end of the day organizations are in business to serve customers. To ensure the customers are receiving the value intended there needs to be relationships built with the customers. To determine what type of relationships have been built, and how strong they are you can start by asking the following questions:
a. What is the customer journey?
b. What is the experience of that customer journey?
c. How does the organization’s service interact with the customer during the journey?
d. What are the customer expectations of the relationship?
e. How does the organization include the customer journey into their business in terms of cost, and the business model?
6. Channels – channels are the different portions of the organization that sell, promote, or deliver certain products/services. There could be 1 channel, or multiple channels. It’s important to understand the different channels to maintain consistency in customer experience, and service delivery. No matter the channel the customer should have a consistent customer experience. In addition, it’s critical to understand the channel(s) in which the customer wants to interact with the organization. Some questions you may ask to understand the channels in your organization are as follows:
a. In what channels does the organization sell their services/products?
b. In what channels does the organization promote their service?
c. In what channels does the organization deliver their services?
d. Through what channels does the organization interact with their customers?
e. Through what channels does the organization’s customer want to be interacted with?
7. Customer Segments – the customer segments divides the customer base into groups based on similar interests such as: age, and/or gender, to name a few. This insight can give you an understanding of the population, and types of customers the organization focuses on. It can also give insights on new segments to be explored.
a. Who are the organization’s customers?
b. What do the organization’s customers want?
c. What do the organization’s customers think of the product?
d. Who are the organization’s most important customers?
e. What category of customers does the organization create value for?
8. Cost Structure – the cost structure is the type of fixed and variable costs a business incurs. Fixed costs are the expenses that do not change as a function of the activity of a business within a certain period. For example, rent. Variable costs are the costs that can increase, or decrease, depending on a company’s production volume. It’s important to understand the cost structure of the organization. This knowledge can help in making decisions on solutions to implement. Also, depending on how large the organization the cost structures could differ in each organization. Some questions you can ask to understand the cost structure is as follows:
a. What activities/resources are the most expensive?
b. What area of the organization has the most cost and why?
c. What are the major cost drivers?
d. How does these drivers and cost relate back to revenue?
9. Revenue Streams – the revenue stream is the amount of money received by the organization from selling its products or services. There could be multiple streams of revenue. Understanding the streams of revenue can drive certain decisions, and strategies, to maximize not only on profit, but value to the customer. Some questions you may ask to understand the revenue streams are as follows:
a. What are the streams of revenue earned by the organization?
b. What value are the organization’s customers willing to pay?
c. How does the organizations customers like to pay?
d. What are the current payment options for customers?
e. How much does the revenue streams contribute to the overall revenues?
You may say, this sounds all great Paula, but how do we find out this information? 🤔
First, start by leveraging existing documentation through internal websites and company information shared with all team members.
Second, talk to your manager about these 9 elements. Your manager will probably know the answer to many of these questions, and if not will know how to get you connected with other individuals.
Third, network with others in the organization who you may believe to have this information. Advise why you are requesting this level of knowledge.
Start building relationships and gaining knowledge. The information contained in the Business Model Canvas is powerful. As you work on projects/initiatives, it can help to drive key decisions to deliver phenomenal business transformations for the organization. The projects/initiatives should align with the value proposition, and model of the organization. If it doesn’t then the question should be asked, “why is it being done”? There may be a very good reason why it needs to be done, but at least you have the data at hand to ask the question.
At the end of this post you will find a link to the business model canvas template I created, and have used in the past. I hope you find as much value in it as I have.
TECHNIQUE 2: FUNCTIONAL DECOMPOSITION
We discussed this tool last year and you find it here on my blog as a refresher: Breaking The Complex Down to Simple
TECHNIQUE 3: VALUE STREAM MAPPING
I’m sure this is a topic familiar to many, but for those who may not be familiar with the term, value stream mapping is a lean manufacturing technique. The purpose of value stream mapping is to analyze, design, and manage the flow of materials, and information, required to deliver a product to a customer. There are standard symbols used to demonstrate various work streams, and flows, of information. Value stream mapping is also used to identify waste, process cycle times, as well as, help to implement process improvement. The original value stream template, for value stream mapping, was created by the Toyota Motor Company. There are many different ways I have observed individuals approach value stream mapping; however, the concepts, and tools used are relatively the same. Here are some of the main concepts of value stream mapping I have observed and used in my career.
1. Education – First and foremost, ensure everyone understands what value stream mapping is, the purpose of value stream mapping, and what is a “value-add activity”. I want to spend a quick moment on the term of “value-add activity”. A value add activity adds value to the customer. That sounds pretty self-explanatory right? Wrong!!! I have found more swirl, debate, and confusion when conducting continuous improvements around this term than I would like to admit. According to “GoLeanSixSigma.com”(2) a value add activity has three criteria:
a. “The step transforms the item toward completion
b. The step is done right the first time (not a rework step)
c. The customer cares (or would pay) for the step to be done”
It’s important the individuals working with you on value stream mapping understand what is a "value-add activity" before you do the work in hopes to eliminate confusion during the process.
2. Observation – observe the process in motion. This step brings so much clarity. You will identify steps that were probably never mentioned to you during discussions. Every time I observe the process in motion, especially after creating a current state process map, I learn something new. To experience the process, and the pain points, gives you a new appreciation for the work you will be doing. It will also help you to provide the right level of consultation the business needs to make the process more efficient, with the elimination of waste.
3. Conduct Kaizen Work – this is the fun part!!! This is where you start to drive potential change and gain efficiencies.
a. Scope – like with the majority of the work done for projects, you must first identify your scope. It’s very important to not confuse value stream mapping to a process flowchart, or process map. A value stream focuses on one part, or a group of parts, services or transactions. Determine the process family to focus on.
b. Current State Process – draw out the current state process map. In this 6 part series I will get deeper into the topic of process mapping. In addition, we will have a special guest providing insights on this topic during this series as well. So more to come on this topic.
c. Create Basic Value Stream Map – There are 4 main elements of a value stream map.
The 4 elements are as follows:
i. Customer – the customers are the first elements to draw on a value stream map. It’s important to understand who is receiving the service.
ii. Supplier – the suppliers are the next elements that are drawn out. The supplier supply the service to the customer.
iii. Product – the product flow depicts how materials are moved through the process. Each box has another box that outlines detailed information such as: cycle time, # of resources, as examples. Depending on your organization will determine what additional data elements will be needed.
iv. Information Flow – the information flow depicts how the process is controlled.
d. Calculate Cycle Times – cycle time is the time elapsed between when an activity starts and when the activity finishes. From a Kanban perspective the cycle time formulas are:
i. “Cycle Time = End Date – Start Date”
ii. “Cycle Time – End Date – Start Date + 1” where the “+1” represents the start and finish of the activity on the same day.
e. Create Future State Process – determine the future state process map. This will include areas of improvement for the flow , as well as, where wastes can be reduced.
f. Create Plan – create a plan to arrive at the future state process map.
This is a very high level introduction to Value Stream Mapping. This particular topic could be many blog posts. However, for the purpose of this blog I wanted to quickly introduce you to another tool that can be leveraged to understand the organization at a high level. This information can help you understand where there are some opportunities to be more efficient in your organization. Then there are other tools that can be leveraged to get you there (which we touched on a little bit, i.e. Process Mapping).
TECHNIQUE 4: BUSINESS ARCHITECTURE
Business Architecture will be coming later this month with a special interview with my friend Columbus Brown.
In the meantime, I hope you found this information helpful, and relevant. I look forward to continuing this series throughout the year. As always, leave a comment in response to any of the topics discussed.
Until next time, signing off!!!
The BA Martial Artist
Paula Bell, CBAP | B2T BA Certified | Forrester CX Champion Certified | Gratitude Leader Lab Certified Trainer
2 - Article - https://goleansixsigma.com/value-adding-activities/
Article was also posted on iGrafx - Levels of Perspective
P.S. - Leave a comment 👈🏾 to let me know your thoughts and if you have ever used these tools in the past.
P.S.S - Leave a comment and let us know if you have ever used any of these tools.
Template: Business Model Canvas
Instructions: Click on "Open" then click on "Download"