Defining value: the most ambiguous word in product development
One of my favourite questions to ask any new client is, “How do you measure success?” I pose this question to product teams, discipline heads and executives to understand what the organisation values and what they reward. One hundred percent of the time the initial response is, “That’s a great question.”
After giving it some thought the responses evolve into some variation of “we shipped a [thing]” where [thing] is whatever that person is responsible for creating — a product, a feature, a system, a policy or an initiative. My follow-up question is then always, “How do you know that this was the right [thing] to ship or that it was designed and developed well?” At this point, the answers fall into two camps (in most situations). One half of the responses end up being, “We don’t.” I like this camp. They’re the honest ones. They know that beyond getting [thing] implemented there is no further evaluation of it. The other half inevitably say, “We know it was right because we delivered value.”
And this is where their story starts to fall apart.
“Value” is the most ambiguous word in business. It means something different to every person that says it, primarily based on where they’re positioned in an organisation. Executives talk mostly about business value. Customer-facing product teams use the phrase customer value though there are still many teams I come across who speak in terms of business value. Finally, internally-facing teams — this includes teams like HR, DevOps, security, performance, infrastructure et al — will speak of organisational value as their measure of success.
Which is right? They can’t all be right, can they? Before we can choose a winner (there always has to be a winner) we have to define each of these terms. Let’s take a look at the following:
Term: Business value
Who says it: Executives and other leaders
What do they mean: Something that makes it easier for the business to be successful
What does it look like: In most cases this equates to making money
What gets rewarded? (examples) Increasing profit margin
Term: Customer value
Who says it: Product development teams
What do they mean: Something that makes the customer more successful
What does it look like: In most cases this equates to features or new products
What gets rewarded? (examples)…