In a recent engagement that I had with a large department at the Government of Canada, I was asked to explain the concept of value streams and how they relate to business capabilities. That's reminded me of this Lego story.
I am passionate enough about Lego that I made a trip to Billund, Denmark few years ago to visit the LEGO® HOUSE. It's a magnificent structure designed by the world-renowned Danish architect, Bjarke Ingels. Inside the lobby of The Lego® House, there is a huge machine that makes the classic 2x4 Lego bricks and as a visitor, you can pick up a free bag including 6 of these bricks, right from the “production line”. The idea is to have a souvenir but also to build something out of these 2x4 Lego bricks. You might ask, in how many different ways one can put these pieces together? Well, it happens that there are only 915,103,765 ways! Mine apparently was combination 219,886,648.
Flying back home, I remember thinking about the Lego Architecture Studio that I have, which includes over 1200 white pieces to build and prototype different structures. It made me wonder how many different ways one can put those 1200 pieces together?! The answer is quite simple, almost unlimited. But what struck me was that it's not only about how many pieces you have, but also how many different ways you can think of putting those pieces together. And that was a powerful message for me to take home.
We are all familiar with the Lego concept: let's build something from a set of Lego bricks. When you open a Lego box, you find different pieces of Lego and an instruction on how to connect those pieces together to build the final structure. Quite simple, right?
As a business architecture practitioner, I always relate with this simple concept of Lego. We talk a lot about business capabilities as the "building blocks" of the organization, which is not so different than the Lego bricks after all.
Each organization has different types and number of building blocks, mostly depending on which industry they are in. And same as Lego pieces, each of these building blocks are used for a specific purpose (i.e., achieve an outcome). That signifies the importance of capabilities. We simply do need the building blocks to build something. And that's why we put all of these organizational building blocks together on a map that we call a capability map. That's our Lego organizer!
While the capability map is a very powerful tool, it's just a collection of an organization's building blocks. How about the instruction on how to put these building blocks together to build something? Well, thankfully, business architecture also has an answer for that, and that's value streams.
Value streams illustrate how an organization orchestrates its business capabilities step-by-step to generate and deliver value to its stakeholders. That's a powerful view to understand the high-level operating model of the organization without getting into the operational details, which typically includes myriad of processes with complex relationships, which by the way are constantly changing as the business evolves.
Same as the 6 2x4 pieces analogy, an organization also has a finite number of capabilities but can generate different values simply by putting a different subset of the same set of capabilities together using different value streams. Think of a Lego car that might have 20-30% same Lego bricks that can also be used to build the Lego house, but these same bricks are put together using different instructions.
Now imagine you are trying to build a Lego house and find out that few pieces are missing. That's the scenario that an organization is trying to generate a value for its stakeholders but does not have the capabilities needed to enable that value stream. Here comes the insight into what we need to invest in (the capabilities) and why (the value we want to generate).
How about you find out that few of the Lego house pieces are broken? You might still be able to build the house depending on how badly the pieces are broken but the house might not stand well and might collapse at some point. That's when we find poor performing capabilities that cause challenges in generating and delivering value to our stakeholders, hence another insight into what we need to invest in (the capabilities) and why (the value we want to generate).
Back to my Architecture Studio set, did I mention that there is no instructions that comes with it? Here is the imagination that's the limit to build almost anything from the same set of pieces (though you might still need a new piece here and there to build some structures). But with the same token, innovation and transformation does not necessarily require new set of capabilities, it could simply be in a different way that we orchestrate our capabilities to generate and deliver value to our stakeholders. Think of two organizations in the same industry that most likely have a very similar set of capabilities, but one might be struggling with winning the market while the other leading the competition.
Therefore, having high performing capabilities does not necessarily guarantee success in today's more-than-ever complex business ecosystems. Organizations also need to rethink their value streams and capabilities relationships to facilitate innovation and transformation. And that includes everything from customers' (and other external and internal stakeholders') interactions to business rules and events and to the final value proposition that gets delivered by that value stream to the stakeholders. And that's why we leverage the value streams to capabilities cross-mapping (which is what we call the "core baseline" of the business architecture knowledgebase) for any type of strategy execution and business transformation scenarios. It's perhaps the most insightful view that we can build to inform decision makers and guide the execution of strategic directions and transformational journeys.