In Ardoq, there are 3 complementary perspectives that are important to Business Architecture modelling. The purpose of this article is to help you understand what we mean by the terms Value Stream, Capability, and Process and how they relate to each other.

First, we look at what the different terms mean, and then we will provide a comparison.

A Value Stream is a high-level, end-to-end sequence of activities that delivers value to a customer or stakeholder. It represents the flow of value creation from start to finish. It is like a river, flowing from its source to its destination, with each tributary and bend representing a stage that contributes to the overall journey and the value delivered at the end.

A Value Stream is initiated by a triggering event, such as a customer request or an internal need. It consists of a series of value-adding stages, each representing a set of activities that transform inputs into outputs, incrementally creating value for the stakeholder. Value Streams are typically expressed in verb-noun format e.g., Acquire Product or Fulfil Order and focus on the customer's perspective, highlighting the value delivered at each stage. They provide a holistic view of the business, enabling strategic analysis and optimization. (1, 2)

Capabilities

Business capabilities represent the core functions or abilities an organization needs to conduct its business.

Key benefits include creating a common language across the organization, clarifying the business model, enabling strategic planning and transformation, identifying redundancies, and aligning people, Processes, and technology to realize capabilities effectively. Well-defined Capabilities serve as building blocks for optimizing Value Streams and operational excellence.

More about Capabilities here: What Are Business Capabilities? | Ardoq Help

Processes

A Process is a series of interconnected activities or tasks that transform inputs into outputs, following a defined sequence and set of rules. It represents the operational flow of activities within an organization. It is like a recipe, with a series of steps and instructions that must be followed to achieve the desired outcome.

Processes are typically expressed in verb-noun format e.g., Receive Order or Ship Product and focus on the specific sequence of activities required to complete a particular task or deliver a specific output. They provide a detailed, operational view of how work is performed within an organization and are often used for Process improvement, automation, and compliance purposes.

While Value Streams, Capabilities, and Processes are interconnected concepts, they serve different purposes and provide distinct perspectives on an organization's operations:

To better understand these 3 concepts, it is helpful to compare them according to their perspective, level of abstraction, and purpose.

1. Perspective:

Value streams represent the customer's perspective and the flow of value creation

Capabilities represent the organization's perspective of their own internal abilities and competencies

Processes represent the key stakeholders’ perspectives of their operational activities and workflows.

2. Level of Abstraction:

Value streams provide a high-level, end-to-end view of the business

Capabilities offer a high or mid-level view of organizational abilities

Processes provide a high level, mid level or detailed, operational view of specific activities.

3. Purpose:

Value streams are used for strategic analysis, optimisation, and customer-centric transformation

Capabilities are used for strategic planning, Capability gap analysis, and resource allocation

Processes can be used in conjunction with or as an alternative to Capabilities and have similar purposes i.e. strategic planning, Capability gap analysis, and resource allocation. They are also used for operational improvement, automation, and compliance.

Understanding the roles and relationships between Value Streams, Capabilities, and Processes is critical when trying to:

Value Streams represent the end-to-end collection of activities that create value for a customer or stakeholder . Mapping out these Value Streams provides a customer-centric view of how value is delivered through the core operational Processes.

Capabilities define what the organization can do, while Value Streams show how those capabilities are leveraged to produce value . Mapping Capabilities to the stages of a Value Stream helps identify the key Capabilities required to execute each value creating activity effectively .

Value Streams combined with Capability mapping provide the context for strategic analysis, prioritisation, and decision making around investments, operating models, and business solutions . They enable a value-based approach to business architecture and transformation roadmaps.

While Value Streams are often higher-level than Processes, they can be decomposed into underlying Process flows . Analysing Value Streams highlights opportunities to streamline, optimize and reengineer Processes to enhance value delivery .

Value Streams offer a framework for capturing business requirements in the context of how customer value is created, facilitating more effective solution design and case management .

In essence, understanding Value Streams illuminates how an organization delivers its core value proposition. Mapping Capabilities to Value Streams bridges the strategic "what" with the operational "how", while Processes provide the execution details. Collectively, this enables holistic analysis, optimization and transformation of the end-to-end value creation model for an organization aligned with customer needs.

It should be noted however that a Process could sit across more than one Capability and even Value Stream. So in some ways it's not a simple hierarchy but may have some complexity. For example A Process like "Order Fulfilment" can span across multiple Capabilities such as Order Management, Inventory Management, and Delivery Management.

The Order Fulfilment Process would involve activities from different capabilities:

So while each Capability represents a distinct organizational ability or competency, the end-to-end Order Fulfilment Process cuts across and leverages multiple Capabilities to deliver value to the customer. Also a single Capability could sit across more than one Value Stream. For example a Capability like "Product Management" can span across multiple Value Streams such as "Develop New Product" and "Enhance Existing Product"

The Product Management Capability would be involved in activities across these Value Streams:

So while each Value Stream represents an end-to-end flow of activities delivering value to the customer, the Product Management Capability provides the necessary skills, knowledge, and resources to enable critical stages across multiple Value Streams.

This highlights how Processes provide an operational view that transcends individual Capabilities, orchestrating the activities required to achieve a specific business outcome or deliver a particular Value Stream. Also how Capabilities represent the cross-functional abilities of an organization that can be leveraged across various Value Streams, providing a stable foundation for delivering value to customers through different Processes and activities.

In summary, Value Streams, Capabilities, and Processes are complementary concepts that provide different lenses for understanding and optimizing an organization's operations. Effective business architecture and transformation efforts should leverage all three perspectives to achieve a comprehensive and holistic view of the enterprise.

We recognise that the relationship can be messy. However, we recommend modelling with the intention of achieving a purpose. For example, many Ardoq users aggregate and roll-up information from IT to display it in a business context. For instance, the Cost Modelling use case that aggregates cost information from IT to the business capability map.

In order to support automatic aggregations and roll-ups it is necessary to be more strict about the relationships in order for the calculations to work. That is why we make this recommended approach

There isn’t one way to approach the relationship between Value Streams, Capabilities and Processes. What we have articulated above is the Ardoq way. Your organization may have a different approach and that’s okay. For example: