#3: Make Better Decisions
I am often asked, “How do I know the business value of an iteration or chunk of work?” It is the wrong question. The question ought to be, “Do we have enough business value to go to market?” This is always followed by, “What, then, is business value?”
Business value is not a number. In the past, companies focused on cost/benefit analyses. There are several things wrong with this approach:
- First, this analysis considers only costs, which are an estimate, and benefits, which are a guess. What happens when you apply some mathematical formula to an “estimate” and a “guess”?
- Second, we often figure this out at the beginning of the initiative when we know the least amount of information and never revisit this tenuous calculation. How does our analysis change if the market window moves or if our competition beats us to the punch?
How can marketing awareness move across an organization the size of IBM to the hands of the right engineers in order to remain competitive and respond quickly to the evolving markets of today? How do both teams (marketing and engineering) decide what needs to happen as the market moves and customer want something else? I suggest using the Accelinnova Business Value Model3 for making better decisions. While this model does take into account “estimates” and “guesses,” it improves its effectiveness by adding into the conversation two additional factors:
- Whether the initiative is differentiating or parity, determined by using the Nickolaisen Purpose Based Alignment Model3
- Including considerations such as hitting the optimal market window, dependencies, volume, and flexibility.
Using this model, we gather the interested parties in the room and divide the work into high, medium, and low business value chunks. Now, everyone understands why items were placed in which chunk. The team then builds the first group of chunks. With the first chunks built, we restart the conversation but now consider if and how any of the decision inputs have changed. If so, we might need to reassess our chunks and their value. And, we ask “Do we have enough value to go to market? If not, at the rate we are delivering value, should we continue? If so, what should we do next?” We use the model again to group the remaining activities into the next set of chunks.
At IBM, one team builds a product roadmap every two years. It usually takes three months to do this. Using the Accelinnova model this year, it took three days! Imagine the amount of capacity this freed up. And, the team could get the product to market a full quarter sooner!