The Taxonomy of Value Part 1 of 3
Reading time: 7 minutes 51 seconds
What is “value”?
Companies gain a competitive advantage and higher revenue by providing more value. Value can be customer-facing, e.g., improved customer experience. Value can be internal, e.g., lower costs, reduced defects and rework. It can be objective (and quantified) or subjective, explicit or implicit.
Start off on the right foot
”Value“ and ”agility” are intertwined topics. The holy grail of agile is to deliver business value faster, in cadence, and in a predictable manner [1]. Embracing the basics of value generation is a pre-requisite to going agile. Companies that fail this pre-requisite are bitter about their experience with agile.
By understanding the basics of value generation, you can:
- Set proper expectations for value creation (what and when), and
- Identify the work that creates value.
You can create value by adopting agile principles. These principles were born out of frustrations with the software development process. But they are applicable to all types of work. It is a mindset. Once you adopt the agile mindset, you will wonder how you were able to function without it.
It will take me time to explain the “what” and “how” of a big topic like “value”. I used a principle of agile—smaller batch size—to get faster time-to-market for this essay. Here is Part 1 for you to read while I work on Parts 2 and 3.
In Part 1 we’ll review the foundation and context of value. In Part 2 we’ll review the disadvantages of working in a non-agile fashion (i.e., waterfall). Finally, in Part 3, we’ll review how you can ask for and know what value you will receive even before work begins.
Why does value not get created in a predictable manner?
The first principle of value creation is to work on the right thing, and then do them right. A simple version of a typical process to create value looks like this.
The diagram reveals the first problem—companies assume agility is only for execution. Agility applies to both sides of the Rubicon [2]. There is very specific guidance [3] available on how to be agile leading up to the Rubicon.
The metaphor of the Rubicon for non-agile teams is striking. Organizations spend time on generating ideas, assessing feasibility, and assigning a priority. Teams then commit [4] themselves to an initiative or project. Armed with budget and resources, project teams have permission to “cross the Rubicon.” A.k.a. the "point of no return." Success becomes the completion of a project on time, within budget, and delivery of scope.
The Rubicon is often crossed in both directions
Once the initiative or project begins, things may not go as planned. Delays in the schedule, cost overruns, and change in scope trigger a reassessment. The principle of working on the right thing still holds. The below diagram describes a typical reassessment scenario for non-agile teams.
When teams cross and re-cross the Rubicon both ways, it results in unplanned stops and starts. This further leads to employee turnover and dissatisfaction. Without continuity in teams and with context switching, the J-curve [5] effect increases costs.
Unplanned crossing the Rubicon both ways create friction with a domino effect. In Part 2, we’ll describe why the above practice impedes value creation.
Leverage the power of teams to create value
Different teams are working before the Rubicon and after the Rubicon. When these teams work in silos and don’t align on the priority, it creates organization gravity [6]. Thus, all teams need to come together to create value.
High-performance teams partner with empathy. They understand and adjust to each other’s different realities and mindsets. A summary of these differences is below.
How agile teams use the Rubicon to their advantage
Agile teams create a Rubicon as a guardrail to create value. The below diagram is a simplified overview of how agile teams recalibrate to work on the right thing.
Agile teams work in iterations (a sprint [9] or a program increment [10]). A Rubicon separates each time-boxed iteration. At the end of a time-boxed iteration, the team prepares to cross the next Rubicon. Agile teams use time-boxing to retrospect, inspect, and adapt (more Agile practices).
Agile teams welcome and embrace change. Working in iterations reduces the domino effect of changes. Teams can change direction during a time box or at the end of it. Non-agile executives expect the teams to work on the current scope and work on the new request. This creates waste and triggers unproductive and dysfunctional behaviors in teams and individuals.
Agile teams create an increment of value in “small batches” between each Rubicon. All tasks they work on will create value in itself. The next Rubicon is not a surprise or a hardship or disruptive, the teams know in advance they will cross a Rubicon.
How to minimize the pain and maximize the gain
Even without change, work life can be hard. Change makes work life gut wrenching. While there are no silver bullets, teams can avoid self-inflicted pain.
The Agile Manifesto [11] appeals to teams on either side of the Rubicon with three principles:
- Business people and developers must work together throughout the project
- Value individuals and interactions over processes and tools
- Value customer (and stakeholder) collaboration over contract negotiation
Organizational culture may be the biggest impediment to creating long term, sustainable value. Organizations and leaders who work on tough problems want to go fast, and they tend to go alone. Command-and-control brings them short term relief. Such leaders ignore the advice, “If you want to go far, go together.”
Such leaders believe that transparency is a double-edged sword. They fear people who don’t have the emotional resilience to deal with ambiguity and stress. Isolating this audience is not helpful in the long run. It is a better practice to empower teams to deal with the ups and downs of running a business.
Teams that collaborate create value
Transparency sets the stage for teams to balance the competing realities described earlier. Teams that collaborate can resolve almost any difficult situation. High-performing agile teams are powerful and rare [12]. They are the ultimate competitive advantage. Organizations that cannot increase engagement between their teams will struggle to achieve agility.
Some more suggestions are below:
Be mindful when crossing a Rubicon
The laws of Ancient Rome forbade crossing the Rubicon at the head of an army without permission. It was a capital offense. This is true in modern times as well, but justice appears to be uneven. But improving the justice system (a.k.a. portfolio governance) is only part of the answer.
Organizations improve value creation by reducing organizational gravity. Organizations foster value with a culture of high performance. Organizations will create more value by being mindful about crossing a Rubicon. They adopt the agile processes or create a Rubicon to ensure they are always aligned to the right thing.
“Doesn’t matter how fast you cross the finish line if you’re running the wrong race.”
― Richie Norton
Wait! There’s more!
So where does this leave us? What should the teams do after they agree to collaborate and be mindful when crossing a Rubicon?
To quote W. Edwards Deming, “It is not enough to do your best; you must know what to do, and then do your best.” The next two articles will have more details on what it is that you must do to create value.
- Part 2 — Agile vs. Waterfall. The method you choose will set you up for success or failure at the very start of your endeavor. Why is Agile considered “better” or “superior”? When should you prefer waterfall? What should we do when our customers don’t know what they need but can tell when they have not received value?
- Part 3 — How to ask for Value. “Ask and it will be given to you; seek and you will find; knock and the door will be opened to you.” [14] You will get value only if you ask for it properly. How to ask for value in a way that it is easy to provide? How to ask for value when you don’t really know what you want?
Organizations and individuals care about value [15] to be relevant and competitive. They are also consumers of value. Thus if everyone focuses on value, we get a virtuous circle to make the world a better place.
References
[1] Denning, Stephen. The Age of Agile: How Smart Companies Are Transforming the Way Work Gets Done. AMACOM, 2018.
[2] “Crossing the Rubicon.” In Wikipedia, July 13, 2020. https://en.wikipedia.org/w/index.php?title=Crossing_the_Rubicon.
“Dilbert Comic Strip on 2005-07-30 | Dilbert by Scott Adams.” Accessed July 29, 2020. https://dilbert.com/strip/2005-07-30.
[3] Scaled Agile Framework. “SAFe 5.0 Framework.” Accessed June 15, 2020. https://www.scaledagileframework.com/.
[4] The implication is that teams commit irrevocably to a risky or revolutionary course of action. Ibid.
[5] “J Curve.” In Wikipedia, June 9, 2020. https://en.wikipedia.org/w/index.php?title=J_curve.
[6] “Beware: Organizational Gravity | LinkedIn.” Accessed July 29, 2020. https://www.dhirubhai.net/pulse/beware-organizational-gravity-angus-frame/.
[7] Scaled Agile Framework. “Principle #3 - Assume Variability; Preserve Options.” Accessed July 29, 2020. https://www.scaledagileframework.com/assume-variability-preserve-options/.
[8] Colan, Lee. “Be More Reliable--and Keep a Balanced ‘Say-Do’ Ratio.” Inc.com, September 6, 2017. https://www.inc.com/lee-colan/whats-your-say/do-ratio_1.html.
[9] Intro to the Scrum Framework, 2019. https://www.youtube.com/watch?v=ZiEcq9uvi4Y.
[10] Scaled Agile Framework. “Program Increment.” Accessed July 29, 2020. https://www.scaledagileframework.com/program-increment/.
[11] “Manifesto for Agile Software Development.” Accessed May 14, 2020. https://agilemanifesto.org/.
[12] Inspired by a Patrick Lencioni quote
[13] Scaled Agile Framework. “Features and Capabilities.” Accessed July 29, 2020. https://www.scaledagileframework.com/features-and-capabilities/.
[14] Matthew 7:7
[15] Vital, Anna. “The History of Creating Value - How Humans Made Money [Infographic].” Adioma (blog), April 24, 2013. https://blog.adioma.com/the-history-of-creating-value-infographic/.
Venkat Narayanan is the Agile Coach for Cisco's Data & Analytics organization. His mission is to demystify business, compliance, and operational challenges in extracting value from data. He believes data is a strategic asset, almost all enterprises (big and small) have a “data problem”, and that bad data is just a symptom of the real business issues.