April 25, 2016

How to measure value? – Part 1

BY :     April 25, 2016

When I wrote the blog ‘Measuring performance is an act of sabotage’,  I did realise I should also give people a means to measure value. Even though I expect a Product Owner to know his or her business and Scrum does not give an answer on how to measure value because this is different for every business. In this series of blogs I will give you a few hands-on ways to measure value.

Value is not something that is singular. In fact, for everyone value can be something else. Quality time spent with your significant other can be way more valuable than spending more time at work to earn more money. For every company value is different as well.

Non-profit companies will not care about

profit (duh). For profit companies may, but sometimes they see more value in a growing market share. I should emphasise that offering customer satisfaction may go a long way in achieving long term success for a for-profit and service company.

I’ve worked in many different companies, some were government companies, railroad and airline companies, energy companies, non-profit and profit. All see value differently, yet many choose to work Agile to achieve goals they would not be able to achieve in the current ever changing market.

There are several ways you can measure value. The simplest one to understand is getting the product out there and seeing if it sells. This works well for small product that get an immediate return on investment metric. In todays world you see this simple scheme often in the app market.

You think of a concept that might help smartphone users. Something you think they will pay for. You invest time in writing an app for one or more types of phone and you publish the app on the phone providers’ app-shop or store.

If the app is useful people will buy it. If they like it they may even write an evaluation (if the store supports it). They may grade the app and that might push your rating up and generate more visibility for other users.

For small businesses and one man companies this may work fine. For larger companies this may work if they offer the app as a service or as a side product. When I speak to Product Owners they usually want more though. Their job is to do market research, to figure out what brings most value.

Agile and Scrum don’t tell you how to do your business. They do however strive to support your quest for making the most business you can. The Agile Manifesto even has a principle that explains that: “Welcome changing requirements, even late in development. Agile processes harness change for the customer’s competitive advantage.”

In my next blog posts I will explain several ways to measure value. I hope this will help you get your own competitive edge.

One suggestion I would like to make now is to look into Business Value poker.

Look here for one version of it: http://www.agile42.com/en/agile-coaching-company/agile-scrum-tools/business-value-game/

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