How do you measure business value?
People measure business value in a lot of different ways. From profit, to customer satisfaction through altruistic endeavours and personal kudos. Agile at scale helps maximise business value however you measure it.
Agile increases business value per unit of effort and risk by three important characteristics. These are smaller time to market, building the right thing and focus on outcomes rather than output.
To be clear, this is part 2 of a 3-part series. Read part 1 here (link to part 3 at the end of this post).
Smaller time to market
(Rhetorical question) What business does not want smaller time to market for its services and products?
First to market
A smaller time to market cuts ahead of competitors, gets products on shelves (on in the app stores) first and gets early adopter feedback.
Agile allows teams to deliver in shorter and shorter increments with the most popular being 2 weeks. Imagine if you could go from concept to customer feedback in just a few weeks. This is the cycle time.
Across the whole organisation
An agile organisation, with the right coaches, can align around achieving smaller and smaller cycle times, across the entire organisation. This may seem hard, but with conceptual tools such as the theory of constraints, we can identify bottlenecks to doing this and remove inefficiency and waste from the entire organisation to achieve 2 week (or faster) cycles.
Increase in innovation
Faster time to market, not only means getting into the market first, but it means getting feedback quicker too. If your product is not received well, then you have lost only a small amount of time and cost to discover this. The agile mantra of fail quickly, although it sounds odd, is meant to mean that you reduce feedback cycle time from idea to customer feedback to such an insignificant amount that the overhead in getting it wrong occasionally is small enough to risk crazy innovative ideas that might just become the next big thing. This is the premise of the Lean Start-up.
Larger business value
Smaller time to market also means that value is gained for the work you have completed and deployed much faster and this revenue of value starts building up after the first release. The aggregate value derived from software delivery is greater the smaller the time increment used to deliver it. Each business and domain has its optimal sweet spot. Driving for a smaller cycle time increases business value.
Building the right thing
Simply put, faster cycle times means feedback comes in quicker allowing change in direction to hunt down the most valuable output in the marketplace.
Who cares if you build the most technically perfect product that no one wants? Building the right thing means having the entire organisation aligned around your business outcomes. That is what scaling agile does.
With almost constant feedback about every change, it is like having someone in your company’s crow’s nest shouting down small course corrections steering your Product Owners to stay locked on to a moving target.
You can only do that if the entire organisation is aligned using the techniques we have learnt from team-level agile and applied to organisational change or scaling agile.
Focused on outcomes and output
Napoleon Hill in his book ‘Think and Grow Rich’ details how he interviewed and studied some of the most successful people of all time and he notes the single most important factor in achieving success is the ability to focus on your business outcome with such single minded determination that any set-back is just a bump in the road and a minor distraction on the path to your goal.
Scaling agile teaches us to find the outcome we should relentlessly follow. Once we know this, we try and produce the smallest amount of output to achieve the outcome.
Reducing output, eliminating waste and having the organisation aligned around the right outcomes means higher business value per input capita.
Agile at scale is more than following Scrum and XP at the team level. It is about organisation change and alignment, optimisation and reducing waste and reducing risk while increasing economic / financial outcomes.
We have discussed the WHY, if you want to find out more about the WHAT and HOW, then join our community, come on our agile training courses or read our other articles.