Boosting Productivity: Optimizing the Value Stream

In an increasingly competitive and dynamic business environment, financial companies constantly look for ways to improve their operational and development processes to stay ahead. In this blog, we will explore how lean practices supported by VSM (Value Stream Mapping) can transform financial companies' processes, providing a solid foundation for continuous improvement and innovation. From optimizing value streams to activating key metrics, we'll discover how these practices drive success in the financial sector. 

The following table shows industry numbers on VSM, consolidated through a survey conducted by Broadcom and Dimensional Research (November 18, 2021). 

How VSM Helps with Value Streams  

Two types of value streams are distinguished: Operational Value Streams (OVS) and Development Value Streams (DVS). The former focuses on delivering products or services to the customer, while the latter focuses on creating and supporting solutions used by OVS. 

OVS

Let's consider the consumer lending process in a financial company. Identifying the flow of value from loan application to approval and disbursement can reveal areas for improvement, such as reducing wait times between steps and optimizing efficiency in credit evaluation. 

Similarly, in the case of investment account management, mapping the operational flow from account opening to trade execution can help identify bottlenecks and reduce processing times. 

Additionally, by applying tools such as customer journey maps, these financial institutions can visualize the customer experience across operational flows and improve key areas to provide more satisfactory services. 

In conclusion, operational flow assessment offers a valuable opportunity for these financial institutions to identify and improve processes, resulting in greater efficiency and better customer experience. 

Example: Value stream map for a marketing campaign 

Source: Operational Value Stream, © Scaled Agile, Inc. 

DVS

A development value stream is the sequence of activities necessary to convert a business hypothesis into a digital solution that delivers value to the customer. 

For example, in compliance, a DVS can streamline the evaluation and approval of consumer loans. By identifying and eliminating bottlenecks, such as manual document review, processing time can be significantly reduced, improving customer experience and increasing competitiveness. 

In the scope of software products, a Development Value Stream focused on mobile banking application can accelerate the delivery of new features and improvements. By implementing agile and DevOps practices, updates can be released more frequently and reliably, keeping customers satisfied and engaged. 

Additionally, the use of value stream metrics can provide valuable information for decision making. For example, identifying areas of delay in transaction processing or credit approval allows improvement efforts to be directed more effectively. 

Example: Value Stream Mapping applied to a development value stream 

Source: Development Value Streams, © Scaled Agile, Inc. 

Beyond VSM Implementation  

With metrics, a project’s outcome can be measured and assessed. To measure and improve business agility in this context, financial organizations can use specific metrics in three key domains: Outcomes, Flow and Competition. 

Measuring Outcomes 

In the financial field, results are crucial and can be measured through Key Performance Indicators (KPIs) and Key Result Objectives (OKRs). For example, a financial institution can measure the success of a digitalization initiative through KPIs such as the adoption rate of online services, the increase in customer satisfaction and the reduction in operational costs associated with transactions in physical branches. 

Measuring Flow

To measure flow, a financial institution can use metrics such as flow distribution, flow velocity, and flow time. For example, flow distributionanalyzes the proportion of time spent processing new loan applications versus resolving customer service issues, identifying areas where greater attention is needed to optimize the workflow. With flow velocity, we can measure the amount of work completed and assess the team's productivity.  

For instance, if a risk analysis team completes 20 credit evaluations each week, we will use this metric to plan future workloads and improve efficiency. With flow time, we will measure the process from when a loan application is received until it is approved, including document review and risk assessment. This way, it is measured and optimized to reduce the response time to the customer. 

Measuring Competency  

Organizations can use specific assessments to measure their level of competency in different areas and guide improvement initiatives. For example, during the project's execution, we were supported in the execution of evaluations that showed the maturity of agility in the company and its improvement opportunities. Likewise, a financial entity could carry out a competency assessment in financial innovation to identify areas of opportunity when introducing new digital products or services. 

Success Story:Applying VSM in a Financial Institution in Latam 

As an Encora agility consultant, I had the experience of being part of a project in the microfinance sector that sought to help improve processes and increase operational efficiency. After conducting an initial evaluation, the team identified a series of bottlenecks and significant waiting times in various processes. For instance, the long waiting time involved with loan grants was impacting both customer satisfaction and profitability . 

The project decided to implement the Value Stream Mapping (VSM) technique to visualize and analyze in detail the flow of value from the moment the possibility of credit to a client is studied, through the loan software application, until the approval and disbursement process. Various meetings were held with different teams and units , including representatives from different domains like----sales and credit analysis to operations and customer service. 

During the Value Stream Mapping sessions, we used Statik for Kanban techniques collecting data on cycle times, lead times, and the steps involved at each stage of the process.  

Statik focuses on understanding and analyzing the existing work system before making changes. The process includes identifying and understanding workflows, visualizing current processes, defining work policies, and establishing mechanisms to manage work in progress. The goal is to improve the efficiency and effectiveness of the team, promoting a gradual and controlled transition towards more agile and visual management practices. 

In the end, the project created a visual value stream map that clearly showed pain points and opportunities for improvement. 

By analyzing the VSM map, we identified several key issues, such as lack of effective communication between teams, migrating processes between teams or areas, among others. Using this information, we identified some opportunities to address these issues and improve the process. 

Some changes we implemented are:  

• More Timely Refinement Sessions: \We implemented refinement sessions that allowed for better clarity about dependencies and ensured compliance with the DoR (Definition of Ready), facilitating better preparation and planning of tasks. 

• Automation of Repetitive Tasks: Automation was introduced in certain repetitive tasks, reducing cycle times and minimizing human errors. 

• Improved Communication: We established regular follow-up meetings to improve communication between teams, resulting in more effective coordination and faster resolution of problems. 

• Increase in Key Performance Indicators (KPIs): New KPIs were implemented to ensure that improvements were maintained in the long term, and we provided concrete data on process performance. 

In addition, this information allowed us to understand the possibility of increasing some Key Performance Indicators (KPIs) to monitor the process's performance and ensure improvements are maintained in the long term. 

After implementing these improvements, the company experienced significant results. Some processes improved their time by up to 20%, clients reported greater satisfaction in their experience, and dependencies were better managed. 

Specifically, this experience as an agile consultant for Encora was satisfactory since it allowed me to guide and support the organization in various phases of the project. From identifying problems to implementing solutions and promoting a culture of continuous improvement, our collaboration ensured that improvements were not only effective, but also sustainable over the long term. This synergy contributed to the project's success, showing the importance of a comprehensive and collaborative approach. 

Doing More with Less: Value Stream Accelerators 

When executing actionable improvement opportunities identified during the VSM implementation and inspection, we used SAFe, a value flow accelerator proposed by one of the best-known frameworks on the market. 

Flow accelerators are tools and techniques that increase the efficiency and speed of business processes. Implementing flow accelerators in an organization allows you to identify and eliminate bottlenecks, optimize resource allocation and improve team productivity, ensuring faster and more efficient delivery of value to customers. Here are some examples of how they were used and how they can be used according to the context presented by the organization: 

1. View and limit work in process (WIP): It was applied in the production incident department. A WIP limit of 15 was set for simultaneously open support cases.Agents focused on resolving current cases before accepting new ones. This ensured faster and more efficient service, reduced problem resolution time and improved customer satisfaction.
2. Address bottlenecks: Bottlenecks in a financial organization can manifest themselves in areas such as processing loan applications, approving transactions, or customer service. For example, if loan processing is slowing the delivery of value, you can allocate more resources or automate certain stages of the process to improve efficiency.
3. Minimize handoffs and dependencies: In organizations, handoffs between departments or teams can cause delays and errors in transaction processing. For example, integrating systems and processes to allow one team to handle a request from start to finish can reduce the need for handoffs and improve efficiency.
4. Get faster feedback: Rapid feedback is crucial in areas such as developing financial products or improving customer services. For example, piloting new products with a select group of customers can provide valuable feedback before a full launch, allowing for quick adjustments and continuous improvements.
5. Work in smaller batches: Working in smaller batches can mean breaking down large projects into more manageable tasks or processing transactions in smaller batches to speed up processing time. For example, breaking down a software implementation project into incremental deliverables can allow for faster implementation and earlier feedback.
6. Reduce queue length: Waiting in line can cause customer frustration and delays in service delivery. For example, implementing queue management systems or assigning additional staff at times of high demand can reduce wait times and improve customer satisfaction.
7. Optimize “In the Zone” time: Minimizing interruptions and providing a focused work environment can increase productivity, and the quality of work performed. For example, setting designated time periods for tasks that require intensive concentration and limiting unnecessary interruptions can help staff stay “in the zone” and improve results.
8. Remedy legacy policies and practices: In many financial organizations, outdated policies and practices can hinder efficient workflow. For example, reviewing and updating compliance policies or approval processes can remove unnecessary obstacles and promote greater agility and efficiency throughout the organization.

Source: 8 Ways to Accelerate Value Stream Flow Based on SAFe 6.0® 

Key Takeaways

• Leveraging VSM to identify and eliminate waste in processes allows financial institutions to improve their operational efficiency and the ability to quickly adapt to market changes. This allows them to offer products and services more quickly and effectively, so they can stay competitive in a dynamic environment. 

• By tailoring metrics to the specific needs and objectives of the organization, we recognize that what works for one company may not be relevant for another. Contextualizing metrics ensures a more accurate and meaningful assessment of progress toward business agility. 

• Measuring the flow of value through various metrics and using this data can help drive continuous improvement.Organizations must be committed to constantly evaluating their performance and implementing adjustments to optimize their processes and increase customer satisfaction.