In a recent collaboration between Archist and Evergent, we engaged with a multinational manufacturer that was facing the challenge of launching a financially viable version 2.0 of its product. While initially embracing an entrepreneurial “do what it takes” culture to accelerate time-to-market, this approach has led to scattered processes that are now limiting efficiency and scalability. To achieve sustainable growth and bring the new product to market effectively, the company recognized it needed to shift from its ad hoc processes to a more structured, enterprise-level framework that optimizes resources, enhances coordination, and aligns with a mature operational perspective.
Previous efforts to document the company’s end-to-end processes resulted in a fragmented collection of workflows, procedures, and tasks that lacked cohesion and an overarching, connected view. Departmental processes remained isolated, failing to provide a true end-to-end perspective. These documentation efforts, driven by the need to bring the organization together from an efficiency and compliance perspective, ultimately captured only the existing, scattered processes rather than defining the optimized end-to-end processes the company actually needed.
To address the challenge of organizing and aligning hundreds of disparate processes under a strategic framework, Archist and Evergent collaborated with the company to establish a Value-Driven Operating Model. This model provided a common frame of reference to unify processes across the business, shifting the perspective from isolated, tactical activities to a broader, strategic view of operations. Rather than focusing solely on individual processes—akin to looking at individual trees to understand a forest—this approach enabled a cohesive, end-to-end view of the company’s operations, fostering alignment and a deeper understanding of how each part contributes to overall value creation.
Introduction
The reason for any business to exist is to deliver value to its stakeholders. The better, cheaper, and faster a business generates and delivers value defines how successful that business will become in the long term. Although “better”, "cheaper", and "faster" don't always go together. Sometimes a business needs to spend more to create a higher quality product or service or to speed up the operations. The art is to find a right balance between these elements by making smart investments to deliver the best value. But the question is how?
To answer that question, we need to take a step back and zoom out. We need to "connect the dots" to gain a better understanding of how our end-to-end operations work without getting into any details. In other words, we need a birds-eye view of our operations with the focus on value. So how can we create this high-level value-focused view of our whole operations? We use a core domain of business architecture called "value stream" to just do that.
Value Streams
Value streams describe how we organize and orchestrate our operations to generate and deliver "value" to our stakeholders. In business architecture, we call this the "value proposition" of a value stream.
Every element of the business ecosystem that contributes to generating and delivering a value proposition of a value stream is part of that value stream.
Building an Abstract Operating Model
Depending on the business model and how we have structured our operations, we can define the relationships between value streams and value propositions. Value streams are standalone and independent from each other, but the value proposition of one value stream can become an input into another value stream. For instance, in order to manufacture a product, first a business has to design and develop that product.
This simple approach is the secret recipe behind building a value-driven operating model. You can simply think of value streams as components of an operating model, which means that by design we look at our operations from a value delivery perspective at let's say 20K altitude and at an abstract level.
Building on the model above, once we have a ready-to-manufacture product, we need to market that product so that we create awareness and generate lead. To reiterate that value streams don't trigger each other and are independent from each other, note that the relationships below do not indicate that "Acquire Product" is dependent on "Execute Campaign". It highlights that the target market campaign can generate leads or potential customers, which then can result in potential customers triggering "Acquire Product" value stream.
We can further build on this model by adding other value streams into the picture. For instance, we also need a facility to manufacture a product and we ship the sold products to the customers:
If our business model is dependent on partners and suppliers to provide different parts that are used in the manufacturing process, then we need to first onboard those partners and then acquire the parts from them. We use the term" material" for any type of raw material, supplied parts, subassemblies, fuel, etc. that's used to manufacture a product.
We also need assets (equipment, tools, furniture, hardware, software, etc.) to manufacture a product. We need to acquire these assets from our partners and suppliers. To make assets ready to use, they need to be deployed. For software, deploy could mean installing the software and configuring it for the end-user. For equipment, deploy could mean installing them in the facility and make them ready for production. We can add all of these into our abstract operating model as below:
This is a birds-eye view of our operations with the focus on value. Value-driven operating model is a powerful way of understanding and monitoring our whole operations without getting into any details.
Performance Measurement
Now that we have mapped a simplified and abstract view of our operating model using value streams as a frame of reference, we can easily measure the performance of our operations based on the value we deliver to our stakeholders.
Metrics and KPI's are one way of measuring how well value streams generate and deliver their value proposition. Once we attach KPI's to value streams, we can measure if we are doing the right things that contribute to the business outcomes.
Let's take "Execute Campaign", as tactical indicators, we can always measure how many campaigns we run in a month or a year or how many leads our campaigns generate. But a more strategic indicator is net promoter score, where we look at the customer loyalty and satisfaction with our brand in the long run.
Business architecture also offers a well-known technique called heatmapping, where we assess value streams by applying a color-code based on the level of the performance of each value stream. An example is below:
Heatmapping is an effective way to quickly pinpoint the hot spots and challenges across the operations. You can think of the view above as a dashboard of a car with each value stream representing a component of the engine under the hood of the car and the sensors are monitoring the performance of those components and feeding that back into the dashboard. By checking the lights in the dash, the driver can quickly find out if and where there are any issues with the car. Similarly, using the view above, executives and decision-makers can quickly identify if and where there are issues "under the hood" of the business.
As the above heatmapping indicates, "Execute Campaign" value stream is performing poorly, highlighting that there are operational issues that results in poor delivery of our target market campaigns. "Acquire Product" for our customers is also performing suboptimal. Partly, the poor performance of Execute Campaign might have an impact on this value stream, but there could also be operational challenges when customers are purchasing a product. Note that heatmapping is always done in a specific context. "Acquire Product" might be suboptimal for a specific product, product line, or line of business but it might be working well or even optimal for another product, product line, or line of business.
"Manufacture Product" is also suboptimal, which should be concerning as this is at the heart of the operations for a manufacturing business. This would trigger investigating further to find out what's the root-cause of this suboptimal performance, which we will cover in the following section.
Business Capabilities
As we saw above, value streams orchestrate a set of business ecosystem elements towards delivery of a value to our stakeholders. The challenge is that inside one value stream there could easily be hundreds of elements interacting with each other. How can we group and organize these elements to provide a simplified view of "what the business does" to generate and deliver the value proposition of a value stream? Here comes the well-known core domain of business architecture, namely, business capabilities.
Business capabilities are enabled by a group of people, processes, information, and assets/technologies. In a way, business capabilities provide an aggregate view of a subset of these elements across the business ecosystem that contribute to generating and delivering the value proposition of a value stream.
This cross-mapping provides a very simple representation of how a business orchestrates (value streams) what the business does (business capabilities) to deliver value to its stakeholders.
Note that in practice we break down value streams into their stages and then map the capabilities under each stage of a value stream. But the rolled-up view shown above is useful especially for executive audience and where the focus is on a high-level view of an operating model. This view can also be used for a quick impact assessment and scoping exercise for any strategy execution scenario or any type of change, from small to large business transformations.
When it comes to finding the root-causes of operational issues, value streams' heatmaps don't identify the root-causes of the issues but they narrow down our focus on the right areas of the operations. To get to the root-cause we need to look into each business capability that enables the value streams and then do a heatmapping on those capabilities. Below is an example of a capability heatmapping to identify where we see challenges in delivering a ready-to-sell product.
As the above heatmapping indicates, the low performance of "Manufacture Product" is mainly due to poor "Schedule Management" and suboptimal "Product Management" capabilities. Once we narrow down our focus, we can then look at the enablers (people, process, information, and asset/technology) of these capabilities to further drill into the root-causes of the issues. That will then help us to identify the actions that we need to take to improve these capabilities. Examples of actions are:
People: Upskilling and learning and development for current resources; recruiting new resources;
Process: Improving or reengineering processes; removing duplicate and redundant processes; improving alignment and consistency across processes;
Information: Improving the quality of information including completeness, timeliness, accuracy, and consistency of information which is critical for advanced analytics and decision-making; and
Asset/technology: Improving maintenance and updates of current assets and technologies; acquiring new assets and technologies to enhance functionalities and level of automation; considering technologies such as RPA, AI, and digital twins.
This is a typical capability-based planning approach where we use business capabilities to identify where we need to make investments across our operations. Investments are always made on business capabilities; the impact of those investments are reflected on the value streams that those capabilities enable.
In summary
Value-driven operating models give us a high-level strategic perspective on how the end-to-end operations work to deliver value to the stakeholders.
Coupling this with the business capability-based planning approach provides a methodical and systematic way to:
support operational excellence efforts to improve and enhance operations,
effectively operationalize and measure the results of business strategies and transformational journeys,
achieve desired business outcomes,
ensure compliance with standards and regulations,
stay ahead of the competition, and
enhance customer experience.
Want to find out more about how Archist and Evergent can apply business architecture and value-driven operating models to your business? Reach out to us to book a consultation.
Navid Kheradmand, Archist, Inc. | navid@archist.com | www.archist.com
David Oh, CEO Evergent Enterprises Inc. | david.oh@evergent.ca | www.evergent.ca