One of my favorite value-stream walks is with the senior managers of several organizations who share and jointly manage a value-creating process that stretches all the way from raw materials to the end customer. I’ve been taking walks of this sort for more than 20 years and I usually see the same thing: smart, hard-working managers, each trying to optimize their portion of the value stream and wondering why there is so much inventory, interruption, and waste along the stream, and why it is so hard to truly satisfy the customer waiting at the end.

This is what I usually see, because we live in a world where everything is oriented vertically: departments, functions, enterprises, and—most important—individuals, despite the fact that the flow of value to the customer is horizontal across all the departments, functions, and enterprises. And—here’s the really odd part—every manager and employee touching the value stream knows intuitively, just below the surface, that value flows horizontally and that customers have no interest in the vertical constraints interrupting the flow.

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