Most companies still run like they did in the 1980s. Departments operate in separate boxes-marketing here, engineering there, customer service over there. Each team has its own goals, metrics, and tools. But customers don’t care about your org chart. They want a seamless experience from first click to post-purchase support. That’s why operating model redesign is no longer optional. It’s survival.
Why Functional Silos Are Killing Speed and Innovation
Think about the last time you called customer service because a product didn’t work. You got transferred three times. Each rep asked you to repeat your problem. Meanwhile, the engineer who built the feature had no idea it was broken. Why? Because marketing sold it, engineering built it, and support got blamed for it. No one owned the outcome.
This is the cost of functional silos. Teams optimize for their own KPIs-marketing for leads, engineering for bugs fixed, finance for cost cuts. But the customer’s journey? That’s invisible. A 2024 McKinsey study found companies with siloed structures are 40% slower to respond to market shifts than those with integrated teams. That’s not inefficiency. That’s obsolescence.
What Are Value Streams? (And Why They Matter)
A value stream is the end-to-end sequence of activities that delivers something the customer actually pays for. It’s not a department. It’s a flow. For example:
- From when a user signs up for a fitness app → to when they complete their first workout → to when they renew their subscription.
- From when a hospital patient schedules an appointment → to when they get test results → to when their doctor follows up.
- From when a manufacturer receives a raw material order → to when the finished product ships.
Each of these is a value stream. And each one crosses multiple functions. You can’t deliver it with separate teams working in isolation. You need people from design, engineering, data, marketing, and operations all aligned on the same goal: making that journey faster, smoother, and more valuable.
How to Redesign Your Operating Model Around Value Streams
Switching from functions to value streams isn’t a reorg. It’s a cultural reset. Here’s how to do it step by step.
- Map your key value streams. Start with the top three customer journeys that drive revenue or retention. Use real data-not assumptions. Look at support tickets, churn points, and feedback. Where do things slow down? Where do customers get frustrated?
- Assign end-to-end ownership. Pick one person to own each value stream. Not a manager. Not a committee. One person with budget, authority, and accountability. They don’t need to be a VP. They just need to be able to say “no” to conflicting priorities.
- Build cross-disciplinary teams. Pull together people from all functions needed to deliver the stream. Include a designer, a data analyst, a developer, a customer success rep, and someone from supply chain or logistics if relevant. Keep the team small-5 to 8 people max.
- Give them shared metrics. Stop measuring “calls handled” or “code commits.” Start measuring “time to first value,” “subscription retention at 30 days,” or “support tickets per user.” These are the outcomes customers care about.
- Reallocate budgets and resources. Budgets still follow functions in most companies. That has to change. Move funding to value stream teams. Let them decide how to spend it-on tools, training, or hiring. Trust them to know what’s needed.
Real-World Example: How a Health Tech Company Turned Things Around
Amedisys, a home health provider, was losing patients after discharge. Their old model had nurses, therapists, and billing teams working separately. Patients got confused. Bills were wrong. Follow-ups were missed.
They created a single “Post-Discharge Care” value stream team. It included a nurse, a physical therapist, a billing specialist, and a patient liaison. They used one shared dashboard showing patient progress, medication adherence, and payment status. Within six months:
- Readmissions dropped by 27%
- Patient satisfaction scores rose 34%
- Revenue from repeat visits increased by 19%
They didn’t hire more staff. They just stopped letting departments work against each other.
What Changes When You Make the Switch?
When you shift to value streams, everything changes.
Leadership stops asking, “How many reports did your team produce?” and starts asking, “What did your stream achieve for the customer this quarter?”
Performance reviews shift from “Did you meet your department goal?” to “Did you help the team deliver better outcomes?”
Technology stops being siloed too. You need one system that connects sales, support, and operations-not five different tools that don’t talk to each other.
Conflict decreases. When everyone is working toward the same outcome, blame games fade. People start helping each other because they need to-because the customer’s experience depends on it.
Common Pitfalls (And How to Avoid Them)
This isn’t easy. Most attempts fail because people treat it like a project, not a transformation.
- Pitfall: Creating “value stream teams” but keeping functional managers in control. Solution: Remove the old reporting lines. Let value stream leads hire, fire, and budget.
- Pitfall: Measuring output instead of outcome. Solution: Drop metrics like “tickets closed” and track “customer satisfaction per journey.”
- Pitfall: Trying to do it all at once. Solution: Start with one high-impact value stream. Prove it works. Then expand.
- Pitfall: Assuming tech will fix it. Solution: Tools help-but culture drives change. If people aren’t aligned, no software will save you.
Who Should Lead This?
Not HR. Not IT. Not the CFO.
The CEO or COO must own this. Why? Because value stream redesign breaks every traditional power structure. Functional leaders will resist. Budgets will be challenged. Old KPIs will be scrapped. You need someone with the authority to say, “This is how we’re going to operate now.”
And if your CEO doesn’t understand value streams? That’s your biggest problem. No amount of consulting or training will fix that.
What Happens If You Don’t Change?
Customers will leave. Competitors will move faster. Talent will walk out the door.
Younger workers don’t want to work in silos. They want to solve real problems. They want to see the impact of their work. If you keep them trapped in departmental boxes, you’ll lose them to companies that let them own outcomes, not tasks.
And your customers? They’ll find someone who delivers a seamless experience. They won’t wait for you to get your act together.
Next Steps: Where to Start Tomorrow
You don’t need a big budget or a consultant. Start today.
- Grab your top three customer journeys. Write them down.
- Ask five frontline employees: “Where do things break?”
- Find one person who’s already solving cross-functional problems. Give them a small budget and 30 days to test a new way.
- Measure what matters to the customer-not your department.
Change doesn’t come from PowerPoint decks. It comes from small teams solving real problems, together.
What’s the difference between a functional structure and a value stream structure?
In a functional structure, teams are organized by discipline-marketing, engineering, finance-each with its own goals and leaders. In a value stream structure, teams are organized around end-to-end customer outcomes, like onboarding or delivery. People from different functions work together under one leader with shared metrics. The focus shifts from doing tasks well to delivering results for the customer.
Do value streams mean we don’t need departments anymore?
No. Departments still exist for deep expertise-like legal, HR, or cybersecurity. But they become service providers, not gatekeepers. Instead of marketing asking engineering for help, a value stream team includes both roles and decides together how to move forward. Departments support, they don’t control.
How do you measure success in a value stream model?
You measure customer outcomes, not internal activity. Examples: time to resolve a support issue, percentage of users who complete onboarding, repeat purchase rate, or Net Promoter Score tied to a specific journey. Avoid metrics like “number of meetings held” or “lines of code written.” Those tell you nothing about customer value.
Can small businesses use value streams?
Absolutely. In fact, small teams often find it easier. A local bakery might have one value stream: “Customer Experience from Order to Delivery.” That includes the person taking the order, the baker, the delivery driver, and the person handling feedback. They don’t need a fancy org chart. They just need to focus on making the whole experience good.
How long does it take to redesign an operating model?
You can see results in 90 days if you start with one high-impact value stream. Full company-wide adoption takes 12 to 18 months. The key isn’t speed-it’s consistency. Pick one stream, fix it, prove it works, then expand. Don’t try to boil the ocean.
