The Achilles' Heel of Agile Teams - Value by Daniel Walsh nuCognitive

daniel.walsh@nuCognitive.com
Agile Chicago
October 2018
@danielwalsh

@danielwalsh
<Value> Is An Elusive Concept
Difficult to define…
misunderstood …
ambiguous …
…and while we may not agree on
a precise definition for <value>,
we all kind of ‘get it.’
2 Copyright © 2018 nuCognitive. All rights reserved.

@danielwalsh
This is the journey of one
amateur axiologist that
hopes to encourage others
to follow.
“..specifying value
accurately is the critical first
step in lean thinking.”
Lean Thinking
by Womack & Jones, 1996
Reference: https://en.wikipedia.org/wiki/Axiology

@danielwalsh4 Copyright © 2018 nuCognitive. All rights reserved.
Scaling Without Getting Stupid

Misconceptions about <value>
are dangerous at scale.

@danielwalsh
Company Inertia Challenges
“… most producers want to make
what they are already making ...”
Lean Thinking

@danielwalsh
Customer Inertia Challenges
“… many customers only know
how to ask for some variant of
what the are already getting.”
Lean Thinking

@danielwalsh
Abstraction Challenges
Company Customers
Suppliers
Equipment
Materials
Supplies Products
$$$ $$$
Company CustomersSuppliers
Humanity
End Users
Nature
Sub Suppliers
Customers
Upstream
Suppliers
OutputsYouInputs
Reference: Learning to See – Value Stream Mapping

How would you define <value>?

@danielwalsh
How Do You Define <Value>?
While there are several definitions*,
value is frequently thought of as:
• a held principle or behavior standard.
Philosophical values assessed by
what is right or good (e.g. trust).
• the importance, worth, merit, or
usefulness of something.
Economic value assessed by
currency, which could be money, time
investment, reputation, attention,
personal data, access, etc. (e.g.
battery life).
Reference: https://www.merriam-webster.com/dictionary/value

@danielwalsh
What does Agile say about <value>?
11
Copyright © 2018 nuCognitive. All rights reserved.
Reference: http://agilemanifesto.org

Principles behind the Agile Manifesto
1. Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.
2. Welcome changing requirements, even late in development. Agile processes harness change for the customer's
competitive advantage.
3. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter
timescale.
4. Business people and developers must work together daily throughout the project.
5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to
get the job done.
6. The most efficient and effective method of conveying information to and within a development team is face-to-face
conversation.
7. Working software is the primary measure of progress.
8. Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a
constant pace indefinitely.
9. Continuous attention to technical excellence and good design enhances agility.
10. Simplicity--the art of maximizing the amount of work not done--is essential.
11. The best architectures, requirements, and designs emerge from self-organizing teams.
12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior
accordingly.

@danielwalsh
Extreme Programming
The customer will provide a shortlist of high-value
requirements for the system
Business sorts the user stories by Business Value
The delivery of the software is done via frequent releases
of live functionality creating concrete value
… lots of other qualifiers for different kinds of value
Reference: https://en.wikipedia.org/wiki/Extreme_programming

@danielwalsh
Scrum Guide
References to <value> increased from 11 instances (2010) to 20 instances (latest Nov-2017)
• The Product Owner is responsible for maximizing the value of the product resulting from work of the Development Team. Optimizing
the value of the work the Development Team performs.
• The Scrum Master helps everyone change these interactions to maximize the value created by the Scrum Team. Ensuring the Product
Owner knows how to arrange the Product Backlog to maximize value.
• Helping the Development Team to create high-value products
• Based on that and any changes to the Product Backlog during the Sprint, attendees collaborate on the next things that could be done to
optimize value.
• Scrum Artifacts Scrum’s artifacts represent work or value to provide transparency and opportunities for inspection and adaptation
• Product Backlog items have the attributes of a description, order, estimate, and value
• As a product is used and gains value, and the marketplace provides feedback, the Product Backlog becomes a larger and more
exhaustive list.
• The Increment is the sum of all the Product Backlog items completed during a Sprint and the value of the increments of all previous
Sprints.
• Decisions to optimize value and control risk are made based on the perceived state of the artifacts
• To the extent that the artifacts are incompletely transparent, these decisions can be flawed, value may diminish and risk may increase.
Reference: https://www.scrumguides.org

@danielwalsh
User Story Are A Common Way To Define Value
As a <type of user>, I want <some goal> so that <some reason>.
INVEST* is an acronym for a widely accepted set of criteria to assess the quality of a user story.
A good user story should be:
Independent (of others)
Negotiable (not a contract)
Valuable (vertical slice)
Estimable (approximations work)
Small (fits within an iteration)
Testable (capture success with a test)
*Reference: Bill Wake Blog on INVEST https://xp123.com/articles/invest-in-good-stories-and-smart-tasks/

@danielwalsh
How do we know if something is of value?

@danielwalsh
Countermeasures to conceptualize
and understand value

Reference: Jason Davis. 15.912 Technology Strategy. Fall 2008. Massachusetts Institute of Technology: MIT OpenCourseWare, https://ocw.mit.edu.
License: Creative Commons BY-NC-SA. Image courtesy of Prof. Rebecca Henderson
How will we
Deliver value?
How will we
Capture value?
How will we
Create value?

Reference: Business Model Generation by Osterwalder & https://strategyzer.com/canvas/business-model-canvas
https://en.wikipedia.org/wiki/Business_Model_Canvas#/media/File:Business_Model_Canvas.png
How will we
Deliver value?
How will we
Capture value?

Reference: Learning to See by Rother, Shook, Womack
Image Attribution CC BY-SA 3.0 DanielPenfield https://en.wikipedia.org/wiki/Value_stream_mapping
How will we
Deliver value?

@danielwalsh
Value-Stream Mapping Example

@danielwalsh
What Is Your Team’s Value Test?
A value-added activity meets the following criteria
1. The customer must be willing to pay for the activity and
2. The product or service must change
3. It must be done right the first time
OR
4. Creates “usable” knowledge for future profitable value-streams
Non-value added activities are categorized as
Type 1: Necessary under current constraints (necessary waste)
Type 2: Not necessary and can be eliminated (pure waste)

Reference: Jason Davis. 15.912 Technology Strategy. Fall 2008. Massachusetts Institute of Technology: MIT OpenCourseWare, https://ocw.mit.edu.
License: Creative Commons BY-NC-SA. Image courtesy of Prof. Rebecca Henderson
How will we
Deliver value?
How will we
Capture value?
How will we
Create value?

@danielwalsh
Wealth of Nations
Copyright © 2018 nuCognitive. All rights reserved.26
An Inquiry into the Nature and
Causes of the Wealth of Nations
by Adam Smith 1776
Value-in-exchange (worth) as
the product’s power for
purchasing other objects
Value-in-use (outcomes) as the
goodness of a product’s use
Reference: https://en.wikipedia.org/wiki/Adam_Smith
https://en.wikipedia.org/wiki/The_Wealth_of_Nations

@danielwalsh
What is Value?
27
Presentation copyright © 2018 nuCognitive LLC. Content copyright © 2018 Erik Simmons. All Rights Reserved.
Business
Value
Ingredient
Capability
Usage
Technology
Value combines the economic and
conceptual aspects of a system
The product is an offering that serves as a
type of promise to potential customers
Value
Usage
Business
Brand
Reference: Balanced Solutions – How to deliver winning products that balance business, usage, and technology

@danielwalsh
Many Understand the Importance of Value-In-Use
64% of Features Really Rarely or Never Used1
• Data was sourced by Jim Johnson
(Standish Group)
• Presented it in a keynote at the XP 2002
conference
• Study was based on four internally
developed projects at four companies
…lots of behavioral analytics tools2
How do you measure Value-in-use?
References:
1) Mike Cohen Blog https://www.mountaingoatsoftware.com/blog/are-64-of-features-really-rarely-or-never-used
2) https://www.predictiveanalyticstoday.com/best-user-and-entity-behavior-analytics-software/

People don’t want to
buy a quarter-inch drill.
They want a quarter-
inch hole.
Theodore Levitt
Marketing Myopia, HBR 1960

@danielwalsh
Helpful metaphors…
Value-In-Exchange as potential energy: when we
purchase a product we are buying the potential to
create value so we can achieve desired outcomes
Value-In-Use as kinetic energy: when we use a
product we are creating or experiencing desired
outcomes

@danielwalsh
Value-In-Use Example
Value is created only when the mug is
experienced in some way
Value is emergent and experienced through
interactions between the users and the offer
Value-in-use shifts the focus away from
outputs (worth and exchange) toward
outcomes (experience and use)

@danielwalsh
Outcome-driven Innovation and Jobs-To-Be-Done
Outcome-driven innovation1 is built around the idea that people buy (or hire)
products and services to get jobs done and produce beneficial outcomes
References: 1) https://en.wikipedia.org/wiki/Outcome-Driven_Innovation
What Customers Want by Ulwick, Jobs To Be Done by Ulwick, Competing Against Luck by Christensen, Hall, Dillon, Duncan

Reference: Value Proposition Design by Osterwalder
https://strategyzer.com/canvas/value-proposition-canvas and Value Proposition Canvas is Copyright Strategyzer.com and Strategyzer AG.

@danielwalsh
Elements of Value1
lists categories for
how products and
services create value
for customers and
users.
References:
1) http://www.marketingjournal.org/the-elements-of-value-an-interview-with-jamie-cleghorn/ &
https://hbr.org/2016/09/the-elements-of-value
2) https://hbr.org/2018/03/the-b2b-elements-of-value
B2C Value Categories1
Self-transcendence
Provides Hope
Self-Actualization
Motivation
Heirloom
Affiliation and
Belonging
Reduces Anxiety
Rewards Me
Nostalgia
Design and
Aesthetics
Badge Value
Wellness
Therapeutic Value
Fun & Entertainment
Attractiveness
Provides Access
Saves Time
Simplifies
Makes Money
Reduces Risk
Organizes
Integrates
Connects
Reduces Effort
Avoids Hassles
Reduces Cost
Quality
Variety
Sensory Appeal
Informs
B2B Value Categories2
Purpose
Hope
Social Responsibility
Network Expansion
Marketability
Reputational Assurance
Design and Aesthetics
Growth and
Development
Reduced Anxiety
Fun & Perks
Time Savings
Reduced Effort
Decreased Hassles
Information
Transparency
Availability
Variety
Configurability
Responsiveness
Expertise
Commitment
Stability
Cultural Fit
Risk Reduction
Reach
Flexibility
Component Quality
Improved Top Line
Cost Reduction
Product Quality
Scalability
Innovation
Meeting Specifications
Acceptable Price
Regulatory Compliance
Ethical Standards

@danielwalsh
Some Implications…
Products may have worth at the point of
exchange by may NEVER actually create
value for users (e.g. uneaten food,
miswanted products)

@danielwalsh
Mini-exercise
Let’s consider a ride share offering (e.g. Lyft, Uber, …)
What are the
outcomes of the
experience?
functional,
emotional,
…
???
→
→
→
→
→
→
→
What are the
components of the
solution?

@danielwalsh
Implications of Value As Co-creation
Users co-create value with offerings through
resource integration and experiential use to
achieve outcomes in context
• Users co-create value with the offering
• Value creation occurs at the point of
experiential use
• Users need to access their own resources
and integrate other resources in order to
create value
→Users as system integrators
→Offerings as resources for value co-creation
in context

@danielwalsh
Implications of Value-In-Context
The ability to serve contexts where both
exchange and need are aligned usually creates
a higher willingness to pay
The closer Value-In-Exchange point is to
Value-In-Use → the more the offering is worth
E.g. bandages at a festival
HMW - give customers a choice of buying in
advance AND on-demand?
E.g. temporal pricing by Zoom and Lyft

@danielwalsh
Summary
Agile concepts tend to focus on the delivery of value as
outputs
• Agile Manifesto: “Our highest priority is to satisfy the
customer through early and continuous delivery of
valuable software”
• Scrum: “The Product Owner is responsible for maximizing
the value of the product resulting from work of the
Development Team”
• XP: sort the user stories by Business Value
Overly focusing on <value> as delivery of output
and as value-in-exchange is risky

@danielwalsh
Possible Next Steps
In order to be successful, organizations will need to understand value
in terms of the goodness and outcomes that users co-create with
their offerings, rather than in terms of the worth that is generated
through exchange
• Value-in-exchange → Value-In-Use
• Offerings as resources for the co-creation of value by users
• Users as system integrators for the co-creation of value in context
• Value-Driven Development (VDD)
• Write the “tests” for value first (Both for VIE AND VIU)
• Build an MVP(Minimum Valuable Product) to make the test pass
• Refactor

Q&A
Feel free to follow up with us at
daniel.walsh@nuCognitive.com
linkedin.com/in/danwalsh1115
The Achilles’ Heel of Agile Teams… Value
http://bit.ly/walshslides

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