Value stream is a term from Lean Manufacturing that describes the activities a business conducts to create and deliver value to a customer. Once a value stream is defined, the business can use Lean techniques to continuously improve the activities and reduce waste in the stream, so to speak. Streams may extend outside the business to suppliers, distributors, other partners, and even customers—to continuously improve the entire journey of delivering value to customers.
Value Stream Discovery is a Lean Innovation framework to help discover the value stream. The framework’s point of view is from the customer’s perspective, since a business is optimal if it can provide the least amount of friction between the states of becoming aware of a product to being passionate about it. A business strives to meet customers where they are, in other words, focus on the best, most efficient activities, as opposed to whatever they imagine or whatever worked last time.
When experiencing a product or service, a customer goes through these states:
From the business’s perspective, the journey includes demand creation; a marketing funnel that includes product marketing; a sales funnel that includes conversion; product engagement; and finally, what different people might describe as the brand experience, customer delight, or loyalty.
The Value Stream Discovery output includes hypothesizing the behavior your customers will exhibit that demonstrate the state they are in, the business activity necessary to get the user to behave that way, and how you will measure the behavior. With this information, you test and validate the assumptions, and optimize the activities based upon the metric. The metric evolves over time, as you start with pure learning mode and then scale the activities that work along the seven states. At any one point in time, you have one or more lesser-performing conversions between specific states, which points to where you should focus on new learning efforts to achieve growth.
I go much more in-depth about Value Stream Discovery in the second half of the book.