Business value by systems thinking
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Transcript of Business value by systems thinking
Agreeing on Business Valuewith Systems Thinking
Portia TungPascal Van Cauwenberghe
Introductions
Consultant-Coach and Chief Strategy Officer
Her Blog: www.selfishprogramming.org
Consultant
His Blog: blog.nayima.be
NAYIMA
We make play work
Agile Coach.Storyteller.Games Maker. Consultant.
Project Manager. Games Maker.
(c) emergn and Nayima 2010
(c) emergn and Nayima 2010
Session Goals
Understand why we need to agree on Business Value
Show how to do Business Analysis in an Agile way Present a few techniques you can use right away Experience the process of creating a Business
Value ModelHelp you determine if your project is worth doing
(c) emergn and Nayima 2010
Contents
1. Introduction to Customer Value Analysis™2. Building a Goal Table to agree on the goals of
the example project (presentation)3. Building a Business Value Model (exercise)4. Improve the Business Value Model (exercise)5. Customer Value Analysis™ in practice
(presentation)6. Q&A
1. Introduction to Customer Value Analysis™
The Problem We Face
#!?!!#
Customer Value Analysis™
Stakeholders
Goal Table
Business Value Model
Capabilities
RisksProject Level
Stories
Iteration Level Stories
Acceptance Criteria
Development
Release
2. Understanding Project Goals
By building a Goal Table
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What will we do?
1. Set the context2. Identify the project sponsor 3. Identify the project sponsor’s goals4. Quantify the project sponsor’s goals5. Identify the customer6. Identify the customer’s goals7. Quantify the customer’s goals
1. Set the Context
Jack, Customer Operations Manager of The Mobile Phone Company:
Customers can port their mobile phone number in or out. Porting in means a customer has a phone or buys one from us; we ensure that their existing mobile phone number is transferred to their account with us. Porting out means a customer leaves us for another provider and wants to transfer their number over.
Customers don't have a good experience doing with porting their number. We know this because porting is the #2 cause of calls in our call center. [Shows spreadsheet with call reasons]. We also know that our Net Promoter Score (NPS, how likely are our customers to recommend us to their friends?) is low compared to our competitors.
Also (and this is a big concern for me) our cost of operations is too high: all those calls to the call center cost us £X on average per call. I'm under pressure to lower this, to increase our profitability.
We think that we can solve all of these problems by offering our services online to our customers.
Consultant: First we have to understand your goals. Then we need to determine how to test that the goals have been achieved, so that you will know that we've delivered what you need. We use something called a "Goal Table" to summarise the goals of the project.
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Goal TableStakeholder Goal Capabilities Tests and
MeasuresRisks
Stakeholder, n: Role, Team or Organisation involved or affected by the projectGoal, n: What a stakeholder wants to achieveCapability, n: Something we need to achieve the goal. Necessary, but maybe not sufficientTest, n: A way to decide if a goal has been achievedMeasure, n: A way to determine how close we are to a goalRisk, n: Negative consequences of achieving the goal
Identify key stakeholders and their goals
Project SponsorCustomer(s)
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Goal TableStakeholder Goal Tests and
Measures
Let’s agree on the goals first and worry about the means later
2. Identify the project sponsor
Project Sponsor
Sets the goalsSpecifies deadlines and constraints
Pays for the project
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Identify StakeholdersStakeholder Goal Tests and
Measures
Jack: That makes me the project sponsor. As Customer Ops Manager.Consultant: We’ll start by adding you to the stakeholder list, as you'll be the most important stakeholder during the whole process. We'll also add the customer to the list, as we need to ensure that their goals are met.
Jack: Of course. We should always focus on the customers’ needs.
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Identify StakeholdersStakeholder Goal Tests and
MeasuresCustomer Operations ManagerCustomer
Glossary
Customer, n : Those who buy, install and/or use the product or service produced by the project
Project Sponsor, n: Sets the goals, deadlines and constraints of the project. Pays for the project.
Project Customer, n: Represents the project sponsor. Works closely with the project team. Implements the goals of the Project Sponsor
3. Identify the project sponsor’s goals
For the project
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Identify GoalsStakeholder Goal Tests and MeasuresCustomer Operations Manager
Customer
Consultant: We'll fill in the goals in no particular order and prioritise them later. The first goal you mentioned was "Customer experience". The second was how likely customers are to recommend you, the Net Promoter Score. We'll add them to the list.
Project Sponsor: Yes, because when customers recommend us our revenue increases.
Consultant: Let’s add increasing revenue as a goal to the Goal Table.
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Identify GoalsStakeholder Goal Tests and MeasuresCustomer Operations Manager
Provide good customer serviceCustomers recommend our service to friendsIncrease revenue
Customer
Agree on the definition of goals by specifying tests and measures
Consultant: Can you explain what you understand by “good customer experience"?
Project Sponsor: Good customer experience means that the customer can do what they set out to do, simply, efficiently and without surprises.
Consultant: How can we measure improvement in customer experience?
Project Sponsor: That's simple: we know how many complaints there are related to porting today. If the number of complaints goes down we can conclude it’s because customers are happier.
Consultant: I'll add "Number of complaints" to the way we measure that the goal has been attained. We can take the numbers from your spreadsheet with call reasons. What would it take to make this project a success?
Project Sponsor: We've set ourselves a goal of reducing the number of calls by 50% within one year. It's an ambitious goal, but if we all work together I'm confident we'll get there.
Consultant: Okay, we’ll add that goal to the tests and measures.
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Specify Tests and MeasuresStakeholder Goal Tests and Measures
Customer Operations Manager
Provide good customer service
50% reduction of customer complaints within a year
Customers recommend our service to friends
Increase revenue
Customer
Glossary
Measure, n: How to get the numbers to verify that a goal has been met.For example: Number of complaints as reported in monthly call summary report => A number
Test, n: How to verify that a goal has been met.For example: Number of complaints as reported in monthly call summary report reduced by 50%, relative to situation on DD/MM/YYYY => Yes/No
Target, n: Specifies by when to achieve a goalFor example: By next year, number of complaints as reported in monthly call summary report reduced by 50%, relative to situation on DD/MM/YYYY => Achieved/Not Achieved
Consultant: One way to reduce the number of calls would be to have fewer customers.
Project Sponsor: That’s not funny. We mustn't do anything that drives people away!
Consultant: I'll add "Retain customers" to the list of goals. It may seem obvious, but it’s important to make the goals crystal clear. Going back to the Net Promoter score. How can we measure this and what do you want to achieve by increasing it?
Project Sponsor: We get quarterly NPS ratings. At the moment they're around 8%. I'd have to look up the exact number. Our competitors are typically above 10%. To achieve our revenue targets we need to get this number up to 15%.
Consultant: You mentioned you're under pressure to reduce cost. Will you tell me more about that?
Project Sponsor: Our cost of operations is vital to our profitability. If we reduce complaints, I expect our cost to go down, but I want to look into other ways we can reduce our costs. Reducing call center cost is one of my major objectives this year.
Consultant: How would you measure that cost?
Project Sponsor: Well, we can count the number of people working there. That's our biggest cost factor. We can look at the monthly OPEX report to get the full cost.
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Identify More Goals andMore Measures
Stakeholder Goal Tests and MeasuresCustomer Operations Manager
Provide good customer service
50% reduction of customer complaints by next year
Customers recommend our service to friends
Increased NPS from 8% to 15%
Increase revenueRetain customersLow operations cost Reduced number of call
centre staff and call centre costs
Customer
Consultant: [Summarises contents of the Goal Table]Did I understand your goals correctly?
Project Sponsor: Yes, but there’s more. We're under pressure from the regulators. It’s come to the attention of the regulators that the porting process is too slow and fails frequently.
Consultant: If I understand correctly, you need to reduce the cycle time to port a number. Is that correct?
Project Sponsor: Yes. Now it can take as long as two days. To keep the regulators off our backs we need to bring this down to one day. And fast. Customer expectation is two hours, as that's what's being offered by most of our competitors. We expect the regulators to make this mandatory in the near feature, so we need to be ready to port numbers more quickly.
Consultant: How many complaints do you get about the speed of porting numbers?
Project Sponsor: It’s the second-largest reason for number porting complaints. We think that by offering this service as online self-service option we will speed things up a lot AND we'll be able to save on call centre costs.
Consultant: I see. We already have the decreased cycle time and cost reduction goals in the goal table. What else would the online self-service option provide? How does the customer benefit?
Project Sponsor: Well, the customer would benefit greatly from having those services available to use when and where they choose. It's much more convenient than calling our call centre. And our brand would benefit: we're in the communications and internet sector; we need to be seen to embrace the latest communication channels and technology.
Find the goals behind solutions requested by the stakeholders
What benefits will the solution bring to the customer, the CFO and the CEO?
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Goals Identified So FarStakeholder Goal Tests and Measures
Customer Operations Manager
Provide good customer service 50% reduction of customer complaints by next year
Customers recommend our service to friends
Increased NPS from 8% to 15%
Increase revenueRetain customersLow operations cost Reduced number of call centre
staff and call centre costs
Short cycle time to port number
Adhere to Regulator regulations
Consumer convenience and availability of services
Quality brandCustomer
4. Quantify the project sponsor’s goals with tests and measures
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Goals Identified So FarStakeholder Goal Tests and Measures
Customer Operations Manager
Provide good customer service 50% reduction of customer complaints by next year
Customers recommend our service to friends
Increased NPS from 8% to 15%
Increase revenueRetain customersLow operations cost Reduced number of call centre
staff and call centre costs
Short cycle time to port number
Adhere to Regulator regulations
Consumer convenience and availability of services
Quality brandCustomer
(c) emergn and Nayima 2010
Quantified GoalsStakeholder Goal Tests and Measures
Customer Operations Manager
Provide good customer service 50% reduction of customer complaints by next year
Customers recommend our service to friends
Increased NPS from 8% to 15%
Increase revenue ???Retain customers ???Low operations cost Reduced number of call centre staff
and call centre costs
Short cycle time to port number Reduced from 2 days to 24 hours, eventually to 2 hours
Adhere to Regulator regulations Regulator directives met and no fines paid
Consumer convenience and availability of services
Increased # of people making online transactions
Quality brand ???Customer
Use question marks to indicate missing information
Identify the stakeholders who have the information
Gather the missing information
5. Identify the customer(s)
Who uses the services and products we deliver?
Consultant: Who are the users of these services?
Project Sponsor: They’re our customers. Or to be more exact, there are two types of customers: Existing customers who leave us and want to port their number out. New customers who want to port their number in.
6. Identify the customer’s goals
Just like we did with the project sponsor
Consultant: What do these customers want?
Project Sponsor: They want to port their number, obviously.
Consultant: What’s the benefit of porting for the customer?
Project Sponsor: They can keep their existing number. That means their contacts can keep calling them without having to update the number. These contacts shouldn’t notice that the customer has changed provider.
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Goals of the CustomerStakeholder Goal Tests and Measures
Existing Customer Remain contactable when porting out
New customer Remain contactable when porting in
7. Quantify the customer’s goals
Just like we did with the project sponsor
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Quantified Customer goalsStakeholder Goal Tests and Measures
Existing Customer Remain contactable when porting out
No perceivable outage
New customer Remain contactable when porting in
No perceivable outage
Now we’ve got an initial Goal Table...
We have what we need to createour initial Business Value model
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What have we done?
1. Set the context2. Identify the project sponsor 3. Identify the project sponsor’s goals4. Quantify the project sponsor’s goals5. Identify the customer(s)6. Identify the customer’s goals7. Quantify the customer’s goals
Exercise 1
Build a Business Value Model
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Building a Business Value Model
• Work in groups per table• Use Post-Its to make model easy to change• When you have a question or an issue– Write it on a red Post-It– Continue working– Resolve issues and questions when we come
round to your table
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Building a Business Value Model
1. Choose a small (4-6) number of measures– Balanced: financial, people, organisation
2. Identify relationships3. Build a model that you can use to:– Determine successful outcome– Steer the project
4. Add more measures if needed
Generic example
A B C
D
Organisation People Financial
For example
Unit Test coverage
# of Issues found by customer
Customer Satisfaction
Velocity Project CostUnit Test Quality
Organisation People Financial
(c) emergn and Nayima 2010
Building a Business Value Model
1. Choose a small (4-6) number of measures– Balanced: financial, people, organisation
2. Identify relationships3. Build a model that you can use to:– Determine successful outcome– Steer the project
4. Add more measures if needed
Time’s up! 6 min
Present your model
A few examples of Business Value Models
Exercise 2
Improve your Business Value Model
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Improving a Business Value Model
1. One person per table goes to the next table– To bring fresh perspective and ideas
2. Ensure we have indicators to– Determine successful outcome (late, lagging)– Steer the project (early, leading)
3. Identify constraints, things we can’t change– Regulations, goals of other projects, company values– How do you measure them?
4. Add constraints them to the model– How are they related to the goals?
For example
Unit Test coverage
# of Issues found by customer
Customer Satisfaction
Velocity Project CostUnit Test Quality
LaggingLeading/LaggingLeading
For example
Unit Test coverage
# of Issues found by customer
Customer Satisfaction
Velocity Project CostUnit Test Quality
LaggingLeading/LaggingLeading
Speed of ServiceMust integrate
with System XYZ
(c) emergn and Nayima 2010
Improving a Business Value Model
1. One person per table goes to the next table– To bring fresh perspective and ideas
2. Ensure we have indicators to– Determine successful outcome (late, lagging)– Steer the project (early, leading)
3. Identify constraints, things we can’t change– Regulations, goals of other projects, company values– How do you measure them?
4. Add constraints them to the model– How are they related to the goals?Time’s up! 6 min
Present your model
A few examples of Business Value Models
Exercise 3
More stakeholders and goals
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More stakeholders
• Who else is involved to provide porting in/out service to customers?
• What are their goals?• How do we know we’ve achieved them?• How does that impact our Business Value
Model?
Time’s up! 6 min
Customer Value Analysis™ in practice
The Logical Thinking Process
The Logical Thinking Process
Intermediate Objectives
Map
Current Reality Tree
Conflict Resolution
Diagram
Future Reality Tree
Prerequisite/Transition
TreeWhat is our goal?What are we missing?
Why don’t we have what we need?
What could be done to resolve the underlying fundamental conflict?
Would that work?What could possibly go wrong?
How do we get there?In small steps.
Using the Logical Thinking Process
Intermediate Objectives
Map
Current Reality Tree
Conflict Resolution
Diagram
Future Reality Tree
Prerequisite/Transition
Tree
Business Value Model
Stakeholder Goal Capabilities Tests and Measures
Risks
Plan
Context Diagram
Writing stories made easy
Stakeholder Goal Capability Test and measure
Risk
TO ACHIEVE ...
AS A ...
I NEED ...
IT’S DONE WHEN ...
TO NOT ACHIEVE ...
PASSES
I NEED ... Another capability
AS A... TO ACHIEVE... I NEED... I KNOW I GOTIT WHEN...
GOTCHAS
User Story Carpaccio
Goal Table Project Level StoryProject Level Story
Project Level StoryProject Level Story
Release Level Story
Release Level Story
Release Level Story
Release Level Story
Iteration Level Story
Iteration Level Story
Iteration Level Story
Iteration Level Story
Iteration Level Story
Iteration Level Story
Iteration Level Story
Iteration Level Story
Kanban board
TODO BUSY RFT DONEIterationReleaseProject
Work in Progress limits
TODO BUSY RFT DONEIterationReleaseProject
Yeah-but, no-but, yeah-but!
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Objections to Customer Value Analysis™
• “We’ve spent 6 months on analysis already”• “Business Value is impossible to measure”• “All stakeholders must be identified upfront”• “It’s too structured”• “This is waterfall analysis, it’s not agile”• “This is too hard”• “Doing this with the whole team is a waste of
time”
Why we do Customer Value Analysis™
The Startup Bank
Situation• It’s December 1999• “It has to be in java” (why?)• We have to build an online
bank• The launch press
conference is booked for end of February 2000
• We have 2 developers
Outcome• We launched on time• Full-featured frontend• Combination of manual and
automated processes• One country at first, then
expanded to Europe• All manual processes were
automated gradually as customer base grew
A Commercial Bank
Situation• Mythical belief in the value
of the project • Project attempted 3 times
previously• Estimated development
cost continued to go up during analysis
• Unclear project goals • Competing stakeholders
Outcome• Determined the validity of
the existing business case of the project
• Reduced the scope by 40% making it eligible for the existing program
The Phone Company
Situation• Already spent 2 months on
analysis• Identified 60 features• “We need web-based self-
service”• Reluctantly agreed to do a
few days of Customer Value Analysis™
Outcome• Only 10 out of those 60
features delivered value• Identified 4 new features
crucial to the success of the project
• 25% of the value could be delivered within one month; no need for a web application
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Benefits of Customer Value Analysis™
Objection : “We’ve spent 6 months on analysis already”
Answer:“Given a project costing $1,000,000 a few days invested in Customer Value Analysis™ is a worthwhile investment”
Benefit:Reduced scope, clear and common goals, earlier delivery more than paid back the investment
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Benefits of Customer Value Analysis™
Objection : “Business Value is impossible to measure”
Answer:“If it’s important, we’ll find a way to measure it. If it’s not important, why are we doing this?”
Benefit:We talk about value before cost; we have unambiguous goals and we see we’re getting closer
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Benefits of Customer Value Analysis™
Objection : “All stakeholders must be identified upfront”
Answer:“Correct. By starting with the goals of the sponsor and the customer(s), we’ll discover everyone who needs to be involved”
Benefit:We don’t “forget” stakeholders.
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Benefits of Customer Value Analysis™
Objection : “It’s too structured”
Answer:“Structure liberates rather than constrains creativity. The techniques provide all the right questions. The answers are still up to you.”
Benefit:Provided guidance and visibility into the analysis work. We don’t have to remember too much, the models show us what we don’t know yet.
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Benefits of Customer Value Analysis™
Objection : “This is waterfall analysis, it’s not agile”
Answer:“We’ve found that this work reduces implementation time significantly and ensures that we identify what we really need”
Benefit:A day of analysis can cut weeks of implementation time. No more “It’s what I asked for”. Instead “Great! This is exactly what we need.”
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Benefits of Customer Value Analysis™
Objection : “This is too hard”
Answer:“Let’s try it on (part of) one project, you’ll be surprised how much we’ll get done in a few days”
Benefit:The small steps make analysis work accessible to everyone involved in the project, so we can use the intelligence of the whole team
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Benefits of Customer Value Analysis™
Objection : “Doing this with the whole team is a waste of time”
Answer:“We all have to understand the goal. The fastest way to do this is by building the model together”
Benefit:The whole team knows why they’re doing the project; developers and testers come up with unexpected product ideas
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A Business Value Model is a Hypothesis
• The Business Value Model is one of many models we build. None of them are perfect.
• Our model is a hypothesis, what we think will happen.
• We re-evaluate and improve the model regularly based on feedback
• It’s not a static business case. We won’t be punished if we get it wrong.
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Summary
• We build a Goal Table to understand who needs what and why they need it
• We build a Business Value Model to come to agreement on our definition of value
• We use the Business Value Model to prioritise the goals to be achieved
• We use the Business Value Model to know where we are, see whether we’re going in the right direction and know when we’ve arrived
(c) emergn and Nayima 2010
Session Goals Revisited
Understand why we need to agree on Business Value
Show how to do Business Analysis in an Agile way Present a few techniques you can use right away Experience the process of creating a Business
Value ModelHelp you determine if your project is worth doing
(c) emergn and Nayima 2010
(c) emergn and Nayima 2010
The Agile Extension to the BABOK
• Business Analysis Body of Knowledge• International Institute of Business Analysts• Methodology-neutral• The Agile extension gives guidance on how to
perform business analysis on Agile projects• Open Space workshop: Thu 10:30
Introductions
NAYIMAWe make play work
www.emergn.com www.nayima.be
For courses and workshops on Customer Value Analysis™