Why Are Processes, Not Value Streams, Business Architecture Building Blocks?
By Bernard Gagnon and Pierre Hadaya
In our recently published book entitled Business Architecture – The Missing Link in Strategy Formulation, Implementation and Execution, we describe, among other things, the business architecture framework we have developed over the years to help organizations implement their strategies. Since our book launch last May, several members of the business architecture community have asked us why we consider processes, rather than value streams, to be business architecture building blocks. The objective of this article is to answer this important question.
To lay the foundations needed for our explanation, we briefly describe what a business architecture, a business architecture building block, and a process are. Next, we examine the nature of value streams as originally defined by Womack and Jones (1996) and how, by changing the name of a type of diagram invented at Toyota from “material and information flow diagram” to “value stream map”, they unintentionally created a widespread confusion that persists today. We conclude with our full explanation of why processes, and not value streams, are business architecture building blocks.
Business architecture and business architecture building blocks
The concepts of business architecture and business architecture building block originate from the concept of architecture. According to the ANSI/IEEE 1471-2000 standard, an architecture is “the fundamental [arrangement][1] of a system embodied in its components and the relationships that each of these components have with each other and with the environment.” The architecture of a system determines how its components function together as an integrated whole but does not determine how these components function individually. For example, the architecture of a mechanical watch is the fundamental organization of that system embodied in its casing, gears, spring, and hands, and the relationship these components have with each other (e.g., gear X is engaged in gear Y and makes it turn). This architecture determines how the watch functions as a whole but does not determine how its components function individually (e.g., how its spring functions).
In the case of a business architecture, the system of interest is an organization. This organization can be of any sort (e.g., company, agency, government) and may or may not have legal standing. It can be a whole enterprise, a business unit or a department; private or public; and for-profit or not.
A business architecture determines how the organization functions. The components that make up an organization are called business architecture building blocks. Just like the components of a watch, all business architecture building blocks are distinct from each other and can be transformed (i.e., can be fabricated, modified, replaced or discarded). We have identified nine types of such building blocks: capabilities, processes, functions, organizational units, know-how assets, information assets, technology assets, brands and natural resource deposits[2]. Our book provides examples and a full definition for each of these nine types of building blocks.
Processes
The definition of process is central to the subject of this article. According to the Object Management Group (2008, p. 463), a process is “a set of activities, methods, and practices that transforms a set of inputs into a set of products and services.” There are two main types of processes. Those of the first type are made up of chains of tasks (Figure 1), each of which is performed by either a person, a machine, a software application, or a combination thereof. They are by far the most common. Processes of the second type are made up of chains of lower-level processes (Figure 2). They are called macro-processes. The processes that make up a macro-process are, in turn, made up either of tasks or of even lower-level processes.
Value streams
The concept of value stream was first introduced by James P. Womack, Daniel T. Jones and Daniel Roos in their book The Machine that Changed The World published in 1990. Unfortunately, the world had to wait until Womack and Jones published their acclaimed book Lean Thinking: Banish Waste and Create Wealth in Your Corporation in 1996 to get a full definition of the term. According to Womack and Jones:
“[A] value stream is the set of all the specific actions required to bring a specific product (whether a good, a service, or, increasingly, a combination of the two) through the three critical management tasks of any business: the problem-solving task running from concept through detailed design and engineering to production launch, the information management task running from order-taking through detailed scheduling to delivery, and the physical transformation task proceeding from raw materials to a finished product in the hands of the customer.” (Kindle Locations 245-250)
The diagram reproduced in Figure 3 and the following passage from the same book further clarify what they mean by “value stream”:
“We apply the term “value stream” to the entire set of activities running from raw material to finished product for a specific product and we seek to optimize the whole from the standpoint of the final customer (the ultimate consumer of the good or service).” (Kindle Locations 6015-6016)
Thus defined, it is clear that value streams are macro-processes, as defined earlier. That is, value streams are processes made up of lower-level processes. Because a value stream encompasses all the activities from raw materials to finished product in the hands of a customer, multiple organizations usually take part in executing a full value stream. The only exceptions to this rule are organizations that are fully vertically integrated and service organizations such as our own firm ASATE Group.
Unfortunately, Womack and his associates at the Lean Enterprise Institute (LEI) later involuntarily created confusion about the meaning they attributed to the term value stream. This confusion originated in their renaming of the “material and information flow” type of diagram developed at Toyota, “value stream map” (Rother and Shook, 1999; Rother and Harris, 2001; Jones and Womack, 2003). This type of diagram can be used to represent a value stream using predefined icons and a number of performance metrics (see Figure 4 for an example). As researchers at LEI and other authors have demonstrated, this type of diagram can also be used to represent a fragment of a value stream, namely a single process or a group of related processes. In fact, this is the most common use of value stream maps.
The name change made by Womack and his associates at LEI falsely suggests that every process, or group of related processes, that can be represented using a value stream map is a value stream. Unfortunately, this is the incorrect understanding many people have of the nature of value streams. They wrongly think that value stream is a synonym of process. Although these concepts are closely related, they are not identical. Indeed, all value streams are processes but most processes are only fragments of value streams.
Processes are the real business architecture building blocks
Let us now return our attention to the question at the origin of this article: Why are processes, not value streams, business architecture building blocks? As defined by Womack and Jones (1996) in Lean Thinking, the concept of value stream is very powerful and definitely interesting to business architects seeking to optimize the value generated by their organizations. However, value streams, as defined by Womack and Jones (1996), are not business architecture building blocks. There are two reasons for this. The first is that most value streams span multiple organizations. However, for something to be an architecture building block of a system (an organization or anything else), it must be a component entirely contained within the boundaries of that system. The second reason is that value streams often overlap (e.g., the exact same processes at the can maker in Figure 3 can be part of the value streams for both a cola can and a tomato soup can). They are therefore not distinct from each other as architecture building blocks should be.
On the other hand, all organizations have their own processes. Even though these processes may be connected to the processes of other organizations, they are entirely contained within their respective organizations. In addition, properly defined processes do not overlap [3]. Furthermore, processes are the types of components that make up value streams when they are chained together, according to Womack and Jones’ (1996) definition. That is why we consider processes rather than value streams to be business architecture building blocks.
Notes
[1] The original text uses the word organization. We have substituted a synonym in order to avoid any possible confusion with our own use of the word organization.
[2] It is important to mention here that a business architecture identifies an organization’s natural resources and most important technology assets but does not define their key features including the functioning of the technology assets. Their key features are only described in an enterprise architecture (see Hadaya and Gagnon, 2017)
[3] Although processes made of tasks should not overlap, those that are made of lower-level processes may.
References
George, M.L., Rowlands, D., Price, M., and Maxey, J. (2005) The Lean Six Sigma Pocket Toolbook. McGraw-Hill, New York.
Hadaya, P., and Gagnon, B. (2017) Business Architecture: The Missing Link in Strategy Formulation, Implementation and Execution. ASATE Publishing, Montreal.
Jones, D., Womack, J., (2003) Seeing the Whole (Version 1.1). Lean Enterprise Institute, Brookline.
Object Management Group. (2008) Business Process Maturity Model (BPMM), version 1.0.
Rother, M., and Harris, R. (2001). Creating Continuous Flow (Version 1.0). Lean Enterprise Institute, Cambridge.
Rother, M., and Shook, J. (1999). Learning to See: Value Stream Mapping to Add Value and Eliminate Muda (Version 1.2). Lean Enterprise Institute, Brookline.
Womack, J.P., Jones, D.T., and Roos, D. (1990) The Machine That Changed the World: The Story of Lean Production – Toyota’s Secret Weapon in the Global Car Wars That Is Now Revolutionizing World Industry. Free Press, New York. Kindle Edition.
Womack, J.P., and Jones, D.T. (1996) Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Free Press, New York. Kindle Edition.
© 2017 ASATE Group Inc.