Business value and kano chart

Business Value and the Kano Chart Method
Quantitative Methods in Project Management

Produced by
Square Peg Consulting
www.sqpegconsulting.com

1
Copyright John C Goodpasture, 2010 All rights reserved

Kano Method is all about user value

• Kano plots user value from ‘ah-hah!’
to ‘don’t care’
– ‘Ah-hah!’ is the break-out version of
‘more is better’
– ‘More is better’ is group-think race to
the top
– ‘Indifference’ is yesterday’s ‘ah-hah!’

2

Vision needs reality

• Kano brings reality to vision
Vision and
– Kano analysis kicks off envisioning and
exploring exploring
– Kano ‘ah-hah!’s can be the compelling vision
for an agile team
– Kano mitigates group-think

3

The objective of Kano Analysis

• To relate customer attitude to product feature and function
• To create a visualization of investment decisions and
customer preference
• To assist with program and budget development and
priorities

4

Who is Kano?

Dr. Noriaki Kano
Tokyo University

Model developed in 70s – 80s,
published in April, 1984

Model focus is on quality and
customer preference Photo: Courtesy Dr. Jack B. Revelle

5

What are his ideas?

Quality ideas:
Exciting [ah hah!]
Normal [Must be]
Expected [MIB]

Customer preferences:
Attractive [ah hah!] Photo: Courtesy Dr. Jack B. Revelle

Must be [Must be]
One dimensional [MIB]
Indifferent [IN]

6

What is value? The big idea

Every individual endeavors to employ his capital so that its
produce may be of greatest value
Adam Smith, “The Wealth of Nations”, 1776

7

What is value? Who’s involved?

Three ideas—perspectives, or views

Customer & User Project Manager Visionary & Sponsor

Feature & Function Earnable Value Business Scorecard

8

What’s their expectation?


Esteem value > $value Investment = Cost Return >
Investment


9

What is value? What do they do?


Pays for Benefit Transforms Provides
Investment to Investment
benefit potential


10

Value flow down
Value-add by Customer-valued
project outcome
Opportunity
With business
value
Goal
achievement &
Balanced Scorecard updated KPIs
business goals

Validate strategy &
Integrated strategy operations
to exploit satisfaction
opportunity

Project Balance Sheet Verify earned value
scorecard

Project
Execution

2-2
11
11

Kano Chart compares customer satisfaction with
product functionality

Customer Satisfaction
+

- Product Functionality +

Copyright John C Goodpasture, 2010 All rights reserved - Customer Dissatisfaction 12

On the Kano Chart, the upper right quadrant is
the place to be!

+

Quadrant Upper Left Quadrant Upper Right
Latent Requirements Customer Delight

- Product Functionality +

Quadrant Lower Left Quadrant Lower Right
Customer dissatisfaction Customer dissatisfaction with
with missing or withheld provided functionality
functions

Copyright John C Goodpasture, 2010 All rights reserved - Customer Dissatisfaction 13

Push out the latent requirements

• Latent requirements are
unknown until revealed by
someone else
– Who knew I needed
that?!
• Exploration and
envisioning gets the
conversation going
– The value proposition
may be very fuzzy
– Prototypes may be
needed
– Be aware of non-verbal
communication

14

Quadrant 1: Satisfaction reacts strongly to
discriminating functionality
Ah = “ah-hah!”

+

Esteem > $Value
Return > Investment

Product Functionality +

-
Customer Dissatisfaction
15

Everything loses panache over time!


+ Ah decay


-
16

The sweet spot: the ‘ah-hah!’ quadrant

• In the ‘ah-hah’ quadrant customers are interested, engaged,
and energetic
• Early adopters push the ‘ah-hah!’ curve, giving feedback at
every iteration
• Ah-hahs! will be copied by competitors
– Eventually the advantage is lost as ah-hah! becomes ‘me too!’
– Other opportunities may be closed out

17

More-is-better meets the competition with ‘me
too!’

+

MIB decay


MIB = More is
Better

-
18

More-is-better is a hazard

The more-is-better horserace leads to group-think
– The race mesmerizes

19

Customers may not pay attention to In’s or M’s
– ‘In’ and ‘M’ must be there, even without customer interest
– ‘In’ is the axis for compliance and standards

20

Even function and feature that are indifferent to
customers require investment

+

In = Indifferent axis--standards

+

-
21

Requirements indifferent to customer value

• Adherence and compliance to internal and external
standards
• Standard processes
• Differences without a distinction
• Unnoticed, even if missing

22

Must-be-present is expected!


+

M = “must be present”
Deeply disappointed
CUPHOLDERS!
if missing

-
23

M = Legacy and legacy expectations

• Former discriminating feature and function that
have now become de facto standards
• Can’t be missing and be competitive
• Strongly a ‘utility’ function
– Customer reaction is disproportionate to value,
but opposite the Ah hah!

24

Put it all together

Ah = “ah-hah!”

Ah decay to In or M
+

MIB decay to
M or In
In = Indifferent axis
M = “must be present”
MIB = More is
Better

-
25

Program and Budget implications
The Kano Pie—5 slices

1. Ah Discriminators – Kano Pie
Envisioning and exploring – Ah
hah!
2. MIB Meet Competition – More 20%

is better B 35% Discriminators
Meet Competition
3. In Standards adherence – Ah Standards
Indifferent to customer 12% M
Legacy

4. M Legacy compliance – Must In Benefits
MIB
be there 13%
20%
5. B Benefits refreshment – Anti-
decay defensive measure

26

Investing in discriminators

• Segments that create value that Kano Pie
customers will pay for
• Attractive to investors and
sponsors 20%

Discriminators
• This is how we win 35%
Meet Competition
Ah Standards
12% M
Legacy
In Benefits
MIB
13%
20%

27

Funding standards and legacy compliance

• Less attractive to investors and Kano Pie
sponsors
• Investment without
discriminating value 20%

• Everyone’s ‘me too’ 35% Discriminators
Meet Competition
• Can’t do with out it! Ah
Standards
12% M
Legacy
• Customers will punish In Benefits
MIB
if missing 13%
20%

28

Anti-decay refreshment

• Funding from returns on benefits Kano Pie
• Defensive
• Preserve market share
20%
• Keep barrier to entry high
B 35% Discriminators

• Attract the late Ah Meet Competition
Standards
adopters M
12%
Legacy
In MIB Benefits

13%
20%

29

Put it all together

• Benefit: Customer advantage Kano Pie
– Esteem
– Function and feature
– Payment stream 20%

• Investment: Business B 35% Discriminators
scorecard Ah Meet Competition
– Funding 12% M Standards
Legacy
– Returns
– Intangibles In MIB Benefits

13%
• Cost: Earnable value of the 20%
invested funds
– Investment funding
– Deliverables cost
– Timely benefit rollout

30

An amplifier of investment
Ah = “ah-hah!”

Return from Investment

Investment

31

An amplifier of investment
Ah = “ah-hah!”

Investment
ROI

Investment

32

An attenuator of investment

Investment

Return from
M = “must be present” Investment

33

Overcome attenuators Beneficiary

Kano Lens Kano Lens ROI
Sponsor Project

Ah Ah Ah

MIB
MIB B MIB

In
B B B
M

34

Overcome attenuators Output

Kano Lens Kano Lens Value-
Input Transform Added

Ah Ah Ah

MIB
MIB B MIB

In
B B B
M

35

WBS and Kano

• Kano distinctions are one view of the WBS
• Other views: Process, OBS, Temporal phases, Product
structure
• WBS traditionally stove-piped and hierarchical
• Views add relationships among hierarchic structures

36

Cost accounts have relationships to Kano

PMO Sys Dev Data Support

Ah Hah!

MIB

Must

Indiff

Refresh

37

How to go about it

“People are led;
things are
managed”
Rear Admiral Grace Hopper

38
Image Credit: WWW.THEGOLDENGUYS.BLOGSPOT.COM

Think images!

• Reduce everything to ideas that image the vision
– If you can’t draw it, you probably can’t write it!
• Frame all the ideas with architecture
– Every product has architecture!
– Stress cohesion and loose coupling

39

Think images!

• Allocate all tasks and deliverables to the Kano
categories
• Resolve budget allocations according to
importance, priority, and sequence

40

From Kano comes the business case

• Scope ah-hah! as the project
theme
– Functional, feature-rich,
compelling
• Complete the scope with In, M,
MIB, and B
– Can’t forget these just because
they are not exciting

41

From Kano comes the business case

• Estimate the investment
– New to the world
– Similar to-
– Parametric factors
• Assume benefits pay for
refreshment

42

Benefits are the ultimate reward

• Propose benefits at
milestones
– Who’s in the
community of
beneficiaries?
– What’s their value
proposition?
– Show value roll-out
at milestones

43

Read more!

• “Quantitative Methods in Project Management” ,
Chapter 1
• http://people.ucalgary.ca/~design/engg251/First
%20Year%20Files/kano.pdf
• www.slideshare.net/jgoodpas
• www.pmi.org Goodpasture, J. “Make Kano
Analysis part of your New Product
Requirements” PMNetwork, May 2001 [copy
available at PMI.org]
• http://en.wikipedia.org/wiki/Kano_model
• http://en.wikipedia.org/wiki/Noriaki_Kano

44

Business value and kano chart

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Viewers also liked

Viewers also liked (7)

Similar to Business value and kano chart

Similar to Business value and kano chart (20)

More from John Goodpasture

More from John Goodpasture (20)

Recently uploaded

Recently uploaded (20)

Business value and kano chart