Structuring an Organization Using Value-Based Teams

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Structuring an Organization Using Value-Based Teams

Changes in organization structure can be a critical part of an organization's agile transformation. One such change is the construction of value-based streams or teams rather than using traditional silo functions. Hereunder are four steps to shift an organization's structure from traditional silo functions into an agile one using value based teams and streams:

1. IDENTIFY VALUE DRIVERS
   To change an organization's structure into value based teams, the first thing to do is to identify the value drivers of the organization in order to structure the business into appropriate value streams. Value drivers are values that distinguish the company's products and services in its customers' point of view, such as customer segment, product category, geographic area, or sales channel, etc.
2. IDENTIFY VALUE CREATION CONTRIBUTORS
   The second step is to identify the contributors in each value creation process or value chain. Basically, anyone that is indispensable in converting the resources to a new product or service is a contributor in the value chain, such as a business line product manager, an engineer, a relevant R&D person, and a marketing expert, etc.
3. CONSTRUCT VALUE-BASED TEAMS
   The third step is to realize the structure of value-based teams, or "squads," which are the essential cornerstones of an agile organizational design.
   
   • "Squads" are usually composed of 6 to 12 people each.
   • They are "end-to-end" covering the whole chain, from generating a business idea to delivering value-creating products or services to the customers.
   • They all include the critical role of a client representative to make sure that the person who talks to and understands the customers is in the team.
   • "Squads" must be autonomous and sufficiently empowered to make operational and tactical decisions without hierarchical approvals.
   • And "squads" members must be dedicated and permanent.
4. DISAGGREGATE THE PRODUCT INTO SMALL CHUNKS
   Finally, when we decentralize the structure into small, autonomous, and multidisciplinary squads, we also have to simultaneously disaggregate the product into small chunks, each with intrinsic value in terms of the product feature or the production phase, etc. By using small teams to work on small chunks of products, we have a strategy to manage complexity and volatility at the same time.

Source: Collet, B. (2018a, May 28), From functional silos to value-based streams (agile value-oriented enterprise)

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		0 Meheresh Management Consultant, India
	Decentralized Strategy 1. This allows the organization's strategy to be transferred down till it reaches the bottom layer of its organization structure. 2. This also supports scaled agile methodologies (SAFe principles).

		1 Molokanova Professor, Ukraine
	Personalities of Members of Value-Based Teams Ms. Hong Sun has done a great job. Nevertheless, I think that irrespective if a person is working in a silos structure or in a multi-disciplinary squad, people are still very complex systems. Implementation of changes is not only about setting strategic goals and communicating their rationality to each team member. Any person can declare common goals, but still give priority to personal goals. Anybody can even secretly sabotage the changes if they do not meet his personal goals. So building an effective team is impossible without taking into account the personal characteristics and competencies of each of its members. I think the project manager should also be a good psychologist.

		2 Hong Sun Management Consultant, Canada
	Value-Based Teams is But One Out of the Multiple Shifts Towards Agile @Meheresh: You're right. An organization needs to adopt multiple fundamental shifts towards agility, and structural shift is only one of them. Some other shifts such as "from traditional managers to servant leaders" and "from functions to flexible roles" covering leadership and culture aspects of agile transformation are of equal (or even more) importance. In other words, the shift from silos to value based teams alone does not offer the entire solution, nor is it a one-size-fits-all recipe for structure change. It is just one of the tools that an organization can use in their efforts of trying and learning to find its unique way towards agility.

		2 Raymond V. Hall Consultant, United States
	Support Functions for Value-Based Teams With this or any organizational team there are support functions traditionally identified as "back office operations" or "staff" rather than line functions. Are staff operations included in these teams or as ad hoc resources? Training, Technical Services, Human Resources, Security and other Operations staff may be able to contribute to success of each team, but would be stretched thin without careful assignment of responsibility and accountability. I like this approach, but not including staff functions could lead to disinvestment by support staff as they may feel left out or only be used as extra hands on a task.

		1 Hong Sun Management Consultant, Canada
	Shared Functions (Competences) Along with Value-Based Teams @Raymond V. Hall: In shifting the organizational structure from silos to value-based teams, it is important to understand that not all functions are permanently included in the squads, only those directly involved in value production processes are squad members. Functions that support the squads at divisional levels or corporate level are not part of the squads, instead, they are (remain) centralized and shared. Actually there are three major reasons for shared functions: - The existence of expertise only periodically or occasionally used; - The necessity for corporate visions like a corporate strategy or portfolio management strategies; and - The necessity for independent controls, such as compliance to the laws and regulations. In a value-based organizational structure, about 70% of the functions are in the squads that are really close to and in direct contact with the clients, only 30% are shared supporting functions, either at divisional, business line levels or at corporate level. Remember there are no bad or good functions, all functions are important and have their own reasons of existence. I hope that these answers your questions raised.

		0 MICHAEL RAVAIN HR Consultant, United States
	Value-based Teams -- Chapters and Interdependence I find the value based teams org design to be very interesting, one I am interested in learning more about. I have 1,000 questions (kidding) but will post 2: - What is the function of the "Chapter" a...

		3 Hong Sun Management Consultant, Canada
	Squads, Tribes, Chapters and Guilds @MICHAEL RAVAIN: In the organizational chart (of ING Bank in Netherlands) we can see: SQUADS: multidisciplinary autonomous teams called "Squads", each of which is responsible for a certain part o...

		2 Jaap de Jonge Editor, Netherlands
	Strategic Reasons for Organizing Using Value-Based Teams Thank you for this very interesting post! Still missing in this innovative way of organizing companies by creating Value-based Teams is: Why? In other words, what are the strategic business scenarios/...

		1 Anonymous
	Value-based Streams or Teams? Should we call this approach "value-based streams" or "value-based teams"? Does a stream include multiple teams or tribes?...

		1 Molokanova Professor, Ukraine
	Value-oriented Team Management Here are the basics of value-oriented team management. The core business of value creation is the joint effort of individuals, project teams, and entire corporations. The team works to achieve the goa...

		1 Hong Sun Management Consultant, Canada
	Value-based Streams or Teams @Anonymous: In fact, a value-based stream is usually composed of multiple value-based teams, each of the teams is in charge of a chunk of the product. A tribe can be a business unit that contains seve...