Annual Planning in an Agile World

Post 2: Focus on the Value Stream

1.     Understand the needs of your customers

In many process-improvement methodologies there is the concept of “Voice of the Customer” or VOC. It’s critical to know what is important to your customers. And customer means more than just the end customer; it includes internal customers (other departments), suppliers, employees, external stakeholders.  Does your organization ask customers:

• What they must have versus what would be nice to have?
• When/how is it painful to do business with us?
• Is there something, that if done differently, would be game changing?

VOC should provide the high-level, overall prioritization for upcoming efforts. Note that any time VOC is gathered, it should be shared with employees so they understand the *why* of the efforts that will be undertaken.

It’s important to take a formal approach to this process, and it involves more than a survey focusing on NPS. Leveraging your Sales team for informal feedback, customer/ supplier/ employee focus groups, and the results of step #2 (understanding your business processes), can help drive valuable insights into how your organization is exceeding, or potentially not even meeting, the Voice of the Customer.

2.     Understand Business Process

What does your organization do, but more importantly, how does it do it? Doing this step right takes time, effort, and money all on its own, so start it early, do it often, and engage people who know how to facilitate these sessions. This step can/should be done concurrently with step #1, and it can often be driven by a process improvement team. The questions to ask as you gear up for this effort:

• What is the current state of your business processes – are they documented?
• Where are the manual work-arounds, multiple hand-offs, or too many cooks in the kitchen?
• Is there a consistent understanding and definition of key organizational metrics?
• Is there a wide fluctuation of process-based outcomes?
• Do your current processes help you or hurt you when it comes to meeting the VOC?

Note that the people who do the jobs should be led through the exercise of documenting what is actually happening. Do not rely on training materials or Standard Operating Procedures. That will not help you uncover your true root cause issues.

Once your end-to-end processes are documented and understood by all stakeholders in the organization (including and most importantly the Functional and Technical Leaders who are responsible for ideating projects), it’s time to look at the root causes that are keeping you from achieving the needs of your customers. These root causes should be foundational in the overall planning process.

Once root causes are identified, use creative brainstorming to identify solutions to these problems. Engage your employees to help identify solutions and note that not all solutions are technical in nature. Changing a business processes or re-aligning departments to encourage more end-to-end ownership can be great solutions to issues and not require IT investment dollars. Once a set of achievable solutions are identified, it’s time to conduct planning!

3.     Plan by Value Stream

Planning is a multi-step process, and should be undertaken at least quarterly, to assess prioritization and progress on an ongoing basis. If the organization is only planning for project work on an annual basis from a silo’d perspective, there is too much room for ballooning expenses, scope creep, and continuing of efforts where the juice just isn’t worth the squeeze. Six months into a project, when you have already invested millions of dollars, feels too late to change course. At that point the front-line employees start to hear the corporate mandates to work harder, meet unrealistic deadlines, and “do what it takes.” Of course, all of this is compounded by the competing priorities and other projects that often tie up the same resources.  Especially if missing functional or technical dependencies are uncovered.

Conversely, leveraging VOC and root cause analysis from business process to create a backlog of Organizational Epics allows the PMO to pivot and flex as needed. These Epics represent a set of requirements tied to a strategic objective (we’ll cover funding these Epics next week). They also provide structure and hierarchy for work that will be accomplished and allows for an organization to fully complete discrete efforts, enabling a culture of success.

As you are tying these Epics to strategic objectives, ensure these Epics are also clearly tied to a specific Value Stream. An organization can and should plan across value streams, but no organization has the capability or capacity to execute every priority for every value stream at the same time!

• If Procure to Pay is your highest priority value stream, then it makes the most sense to prioritize the foundational and operational Epics for Procure to Pay.
• If Quote to Order is your highest priority value stream, then why would you prioritize a new Supplier portal project?
• Are there items (like infrastructure) that are foundational to all value streams? If so, then these need to be prioritized above strategic value stream objectives.

Epics should be reviewed (progress, completion, velocity) every quarter, and the work should be funded accordingly. That way, if a regulatory requirement is communicated, this work can easily be prioritized above the next set of Epics, resources can be re-prioritized, and smaller Epics can be moved up in priority to allow for full and continuous resource utilization.

When planning by Value Stream, the customers of that Value Stream are clear, their needs and wants are understood from VOC, and the organization knows where and how they are or are not delighting customers. The planning process becomes tied to the efficacy of a business process and the ability of that process to be enabled by the appropriate technology.

This planning process should be a formal process, undertaken at the same time each quarter, and should involve discussion, debate, and alignment. Think of it as Program Increment (PI) planning at an organizational level, as opposed to PI Planning at a project or program level. Each quarter the next set of objectives are undertaken based on teams’ ability to deliver on those objectives, dependencies that change the backlog priority, and overall funding for that Value Stream. Meanwhile, the work is completed in discrete phases of work that are either directly providing value or are setting the stage for value to come.