Business Value

It is great to notice many organizations taking off with agile/SCRUM teams. It is even more great to watch these teams (if setup and coached properly) deliver the right working software to production after the very first sprints. It will also be great to watch these teams gaining velocity, producing even more tangible results after each sprint.
But to what end are we speeding? Do we actually have a feel for the value we are producing?
It is vital for an agile organization that focus is, in all cases, directed towards creating value. One of my favorite artists, Roger Waters (Pink Floyd) once wrote:
“(…) It all makes perfect sense, expressed in dollars and cents (…)”
Now, where mister Waters was quite cynical in his lyrics, it actually does make sense in a business environment.
In general, businesses grant value to several ‘types’ of investments.
First and (certainly for agile organizations) foremost there is customer value. Be attractive to the (potential) customer and they will buy (more), stay longer and hopefully advocate for the company. Thus increase sales figures.
Second, there is operational excellence. Work smarter, so that minimum effort is needed to create customer happiness. Thus, increase efficiency and effectiveness.
Doing things right, preferably the first time, is important. Yet doing the right things seems to be the winner nowadays. This is the nature of the third investment type: Strategic Probe. Investments made in the uncertain future, like new product development and new competitive market strategies. Some claim that the highest goal of our future successful companies should be the ‘Ability to Change Fast’. Why? You might wonder. Given the recent disruptive way in which some industries are forced to transform quickly, due to new players who obviously use Information Technology as a Competitive Advantage, a wide spread awareness has evolved that ‘Adaptability to Change’ is a must to survive in the near future.
Last, there is always the KLO type of investment: Keep the light on. All necessary investments to ‘stay in business’: compliance to law and regulation, keeping the installed base up to date, that kind of stuff. Results are often stated in costs avoided or fines not ‘granted’.
We need to emphasize that Business Owners can (and should) continuously evaluate whether they will continue current activities or might start (or focus on) other activities that deliver more value or might be in a growth market, whilst other business activities are in mature or declining markets. That is why offering full functional increments to the market, fast, is so important. Our users’ feedback enables us to learn if we are doing the right things (right).
There is even more to value. One of the most important factors for team happiness is the assurance that what they do really matters. When the created value becomes visible (the sales department showing that the product delivered in the previous sprint is generating vast revenues), the team(s) feel involved in the success and will think with business on next opportunities to new success. Staff will have a greater sense of belonging and will stay in the team (longer). The benefits from that can, eventually, be expressed in currency again.
So, all these different types of value can, one way or another, be related to …. dollars and cents. Now, this is not a plea for spelling out the value of each epic or story to the last cent. This is however a plea to have a measure for business value. This could be a range (like the Fibonacci range used for story pointing) that expresses the relative value for initiatives, epics and stories. Tangible and intangible value can then be expressed in one statement.
In doing so, it becomes possible to judge initiatives, epics and stories on their return on investment; compare ‘value points’ to ‘story points’, and you’ll know. Of course, only picking ‘low hanging fruits’ must be avoided. But challenging business-owners and product-owners to really consider value as a determinant for prioritization, is worth aiming for.
Adding business value to initiatives, epics and stories is therefor, an essential next step for harvesting benefits from ‘being agile’.
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