Business- and Product Owners Have to Act Value Driven
In the daily business practice I often notice that more is being acted on requirements than on prioritized value. This means change “requirements driven” in stead of “value driven”. You ask for something and it is delivered without asking why you really need it. Acting this way you shoot in all different directions and you can wonder if there is a plan? A vision?
That is why you have to “start with why!”. You find out who your stakeholders are, ask what they want and why. Conversely, they approach you with urgent requirements and wishes. Your job is to set priorities based on 1 — added value (return on investment), 2 — the risk you take if you do nothing, and 3 — the delivery times (deadlines).
A tough job!
Let’s first look at the various type of stakeholders with different voices*:
- Consumers, customers or users, whatever you prefer to call them, use your products and services. They provide feedback, they have new ideas and want improvements. These demands and wishes are called the requirements.
- Business leaders and management have additional ideas on products and services. They need to define a strategy based on the mission of the organisation. Will we grow and expand to new markets? Do we need to be more efficient and effective in order to lower the cost?
- The voice of the regulator can be a (local) government with rules and regulations where you have to comply with. Compliance is often seen as external but you can have internal compliancy as well in agreed standards and policies.
- The delivery process and the people working to create new products or deliver services come with ideas as well. They want improvements and have suggestions for more reliability, better maintainability, higher security, better performance, improved stability, etcetera.
- One particular voice which cannot be found in the Lean descriptions but which we encounter all too often is the voice of the Individual. This person says to you: “I want this, and I want it now!”, and if you ask “who are you?”, then you get a reply like “I am your new manager”. It turns out that your new manager has made some promises and does not want to lose his credibility. Compliance with these changes is called participating in politics.
It can be a very challenging job to keep all the stakeholders satisfied. You have to analyze who and what is more important, who your ally is, and who makes the decisions. You cannot listen to all the voices at the same time so you need to prioritize in order to deliver value. The trick here is to learn to say “no” sometimes (of course with an explanation), and to cut their change requirements into smaller pieces to create a healthy mix of value delivering stories. These stories are then put on a prioritized backlog. People can argue here and tell you that compliancy is always most important (highest priority). But how important is it to be compliant if you lose all your customers because they don’t like your product or service? The art is finding balance.
Delivering products and services as an organisation is your core business. This core business needs to be efficient and effective so continuous improvement is one criteria for making priortization choices. Another important choice is innovation; new products and services. To stay competitive in the current market you need to invest in new ideas and make sure to transform your idea into new business choices. You need to take empowerment here as a Business- or Product owner.
In his book Zone to Win, Geoffrey A Moore explains the need for product oriented companies to invest in change based on the Performance Matrix. There are 3 horizons for Return on Investment: 1 — ROI in 0 to 12 months, 2 — ROI in 12 to 36 months, 3 — ROI in 36 to 72 months.
There are four zones in the Performance Matrix:
- Incubating Zone (ROI horizon 3) — experiments and new product development with a change of moving to the Performance Zone.
- Transformation Zone (ROI horizon 2) — product or service with total organisation focus on it becoming a material part of the Performance Zone.
- Productivity Zone (ROI horizon 1) — Provide efficient systems and effective programs that improve the return from the performance zone as well as other zones when required.
- Performance Zone (ROI horizon 1) — Deliver results through effective marketing, sales and delivery with adjustments to suit needs of known customer base.
You can have an Incubation Zone full of great ideas but if you fail to shift one to the Transformation Zone and put the energy to make this work you will not be an innovator. Organisations that did not survive the digital disruptive competition had too much focus on the Productivity Zone and the change initiatives to make the organisation efficient and effective. This cost reduction without investing in the Incubation Zone and most important the energy in the Transformation Zone made these Business- or Product owners fail or even go out of business.
Being “agile” can help Business and Product Owners. Agility is all about making balanced choices based on your transparent interaction with the stakeholders and their honest feedback. This will determine what to do, when and why. These are the important questions when talking about balanced value delivery.
The use of Evidence Based Management (EBM)** helps by measuring value. Four Key Value Areas (KVAs) have been defined for this.
Evidence Based Management (EBM) — figure 3
Key Value Area (KVA)
Current Value (CV) — Measure the value delivered to the customer or user today.
Unrealized Value (UV) — Measures the value that can be realized by meeting all potential needs of the customer or user.
Ability to Innovate (A2I) — Measures the ability to deliver new capabilities that better meet the needs of a customer or user.
Time to Market (T2M) — Measures the ability to quickly deliver new capabilities, services or products.
EBM fits perfectly with “Zone to Win”. The Incubation Zone is equal to the “Unrealized Value” (UV) and the Transformation Zone is “The Ability to Innovate” (A2I). These are located in Return on Investment horizon 2 and 3. The CV and T2M are located within horizon 1 and are comparable to the Productivity Zone and the Performance Zone.
Discovering Agile Value
To discover where added value can be developed, you can conduct evaluations, conduct interviews or hold joint brainstorm workshops together with your stakeholders. You can also walk through your customer process in a structured way, by making a Customer Journey with your stakeholders. What you want to achieve is to elicit requirements and wishes.
A simple way of recording requirements and wishes is the 3C method; Card, Conversation and Confirmation. You write a story together — “the Card”. The conversation conducts what you mean and what added value it provides — “the conversation”. And finally briefly describe the acceptance criteria on the back of the card — “the confirmation”.
Design thinking is a more extensive way of looking for added value together with stakeholders. You define the challenge and the solution in a number of steps;
- Understand the problem.
Empathize — discover together with your customer.
Define — define what you want or need.
- Design the right solution.
Ideate — develop a solution.
Prototype — provide and test a solution.
When designing the right solution, you can work iteratively with agile teams, to deliver value.
Agile Value Delivery
To work agile successfully, you need powerful delivery teams. Make decisions on the level where the knowledge is. We refine the change (project, theme, epic, feature or story) into smaller items, and make iterative steps to deliver quality products and services, use feedback and learn. With that we make sure that we always still follow a plan. You can put that plan in a timeline, what comes first and what can be done later. This so-called visual Roadmap provides insight. We place the items that we pick up in the correct order on the Backlog.
Creating a minimum viable product (MVP)*** is the way to do this, starting with a Business Case, a Product Vision and a Roadmap — the plan. Don’t forget to show courage and experiment with new ideas in the Incubation Zone and transform them to the Performance Zone. And then create great value by using validated learning and balanced priorities.
Discovering the added value, together with the stakeholders, can be done in different ways. The strength lies in combining the different models. With Customer Journey, Design Thinking and a Lean Start-up MVP we can learn what value is validated (Value Discovery). By linking the validation to the measurements from Evidence Based Management, and by choosing the right balance with Moore’s model in the ongoing operation (Run) versus innovation (Change), we ensure that added value is also delivered (Value Delivery).
In his book “the Art of Business Value” Mark Schwartz explains the different angles of business value based on ROI, NPV and Shareholder Value. He uses the models I describe above and comes to the nice conclusion “…Business value is what the business values, and that is that”.
* More on these stakeholder Voices (except for the politics) can be found in Lean and Lean-IT frameworks.
** https://www.scrum.org/resources/evidence-based-management-guide — Download the EBM guide from Scrum.org
*** More on working with a MVP can be read here.