Sunday, April 24, 2016

“CIO Master” Tuning XVI: The Multidimensional Value from Agility Lenses

Business value assessment depends on the context.

The purpose of business is to create customers. But how to create value to customers, shareholders and beyond? Value is a very broad concept in any organization. Some investments don't yield a direct return on investment. Business value includes both monetary things such as an increase in sales, reduction in costs but also includes less tangible things such as security, compliance, brand awareness/recognition. What are the multidimensional value perception via agility lenses?

Business value assessment depends on the context: From a strict business / finance perspective, business value is that increases the equity or shared value of the company. And the equity value of the company is the value of all of the dividend payments to the shareholders because that's what owning equity or shares gives you. So financially, business value is what increases the earnings of the company, because earnings are paid out, in some portion of dividends. The question, of course, is how to increase earnings; that is usually what people talk about when they talk about business value: how to increase the earnings of the firm. This is generally done by (1) selling more things to your current customers, (2) selling things to new customers, (3) increase the price at which you sell things, (4) decrease how much it costs to sell things or (5) some combination of the above.

Value has so many dimensions, both tangibly and intangibly: Anything that can increase top line and bottom line of the business, increase customer satisfaction (and thereby get more customers), time critical (that can be a great advantage compared to the competitors) are all business value. Business value is often seen as the value perceived by the end user. That is far too narrow. For example, it can be of great value to be able to deliver swiftly.  Another example is about building marketing value by being able to share on social networks. Things organizations might value:
- Selling things to customers
- Avoiding risk
- doing their daily work more efficiently
- attracting and retaining the right people
-making money and
-improving customer satisfaction

The 'monetary' impact is the result and not the goal of 'business value.' Business Value lies in existing customers' satisfaction, attracting new customers, happy employees, lower risk, avoiding waste etc. Look at value as the intersection of risk and return, much like an investment portfolio manager will. Each organization has an array of investments it can make, and their portfolio of choices affects overall long-term return value.  Business value" tends to be created when a product or service does one of the following:
- saves money
- makes money
- save time
- reduces risk or increases safety
- is more durable
- is more convenient
- increases comfort
- pride of ownership (prestige value)

From IT management perspective, what is the responsibility of the development team to validate the business value? IT leaders are business leaders who should make continuous inquiries about the business value because every IT project is the business initiative for problem-solving. If the development team must understand the business value, who is responsible for ensuring that understanding? the determination of value rests entirely with the product owner (PO), assuming strategic alignment with corporate goals, etc. If so, is there any responsibility of the development team to act as a check and balance on the business value delivered, or assume an ethical stance? What to do if the PO thinks something is of business value and the team do not? If it's a common occurrence then feedback from those who should be seeing the value in the delivered product should be accruing; let that be the arbiter. Not getting that feedback? Then you're working at risk. On the other side, what if the team thinks a feature is valuable, the PO does not? What quite a few organizations do is to allow the team members take a proportion of their time to use on things of their own choice. The feature can be 'your choice' for that time.

The highest business value stories tend to be the ones that achieve multiple outcomes. Business value is a collection of value internal to the organizations and external to the customer. It is contextual and multifaceted, with the goals to achieve long-term business prosperity.


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