Modelling Value

It’s been a number of years since the publication of BABOK v3 and the Business Analysis Core Competency Model (BACCM). In that time, thousands of BAs have used it in their work to better understand the situation they’re in and the forces driving it. 

The BACCM was the idea of Julian Sammy, a member of the BABOK v3 team, and was developed further by the core team. In the years since the publication of v3, Julian has been working on an improved approach to the challenges that caused us to adopt the BACCM in the first place, and developed a new model of value that is easier to understand and explain than the original BACCM. 

The Sammy Value Concept Model

First of all, the term “business analysis” has been dropped from the name of the VCM, because it’s not limited in relevance to business analysis. The VCM is applicable to business architecture, product management, agile teams, project management and more. 

Each of these disciplines makes use of a similar set of methods to describing, analysing, and improving how enterprises create, transform, and transfer value. It takes three concepts to describe value, allowing most important ideas in those professions to be described as derivatives of just four concepts. Unlike its predecessor, which required precise definitions to make sense, the Sammy VCM works perfectly well using the standard English definitions of these terms. They are:

Person: anybody who interacts with or uses a particular thing. We might refer to them as stakeholders, customers, or users. 

Thing: any object that a person uses to produce a result or outcome. A thing might be a solution, system, process, outcome, product, service or even an enterprise. 

Context: any circumstances that affect the interaction between the person and the thing. 

Finally, we have Value, which represents an assessment of the worth or usefulness of the Thing. Value is specific to a given person (or persons) who exists in a particular context. It is not absolute, and exists only for a specific point in time. 

I’m sure a lot of people are reading this and thinking that what I’ve set out here is obvious. Yes, it is. A lot of important ideas are. Once you start to explore the implications, however, it exposes a lot of problems with common practice. 

For instance, we often talk about “needs” as if they have objective reality, that there is such a thing as a “business need”. However, as we've all seen, needs change. That's because a need is a derived concept. When our stakeholders talk about needs, what they're really describing is a potential gap between the value they're experiencing and the value they desire (or the value they need to continue to experience to avoid a loss).

Ultimately, “value” is determined by a person or a group of people who share similar views. When we talk about concepts like business value, that's still the case. Value is a judgement about what's important. We may choose to measure value in money but that doesn't make value objective. Someone has to decide that money is the primary driver of business decisions, and I've found in practice there are always non-monetary considerations affecting that judgement. A "business need" is a gap in value experienced by people who are in a position to assess needs from a broader perspective.

It’s also important to keep in mind that value is a judgement made at a particular point in time under specific circumstances. The value of a thing changes as time passes and as the context alters. As that happens, the value relationship changes and new needs may be created. 

That connection to the content explains the “diamond-water paradox”. Briefly, the paradox is that diamonds are valued more highly than water by most people who are likely to read this, even though we need water to live and diamonds are just shiny rocks. However, in my context, I have ready access to plenty of water but I don’t have plenty of diamonds. That scarcity, even if artificial, raises the value of diamonds because people value things that are rare.

"Change", then, is the alteration of a thing (process, solution, enterprise etc.) to address a need. It can also be used in the ordinary sense of a change to people, things, or context driven by external events. The key for our purposes is that change alters value, because it changes the balance that determines value in some way.

Overall, I've found that Julian's simplified VCM is a significant improvement over the original BACCM. It explains all the relationships that its predecessor did, but is much easier to communicate to people, apply in practical situations, and focuses on the concept that matters the most. I hope you find it useful too. In the near future, I'm planning to follow this up with some other core models that I've developed over the last few years that apply the VCM.

The Sammy VCM, and this article, are licensed under a Creative Commons Attribution License.

Recently, Julian's cancer has returned and the prognosis is terminal. He has asked that people who want to do something for him instead do something kind for people around them and let him know. Feel free to post those stories here, if you wish.