Business Value vs Customer Value

[Martino Vallara]

The driver of the "impact mapping" are business goals: the business values

But, it seems to me to have grasped, that the driver of the Lean-Agile methodologies is, instead, the "customer value".

"Value proposition design" is also focused on designing customer value that is financially sustainable.

This post dated December 2011, highlights the negative side effects in designing a business starting from revenues alone. (Https://bieberlabs.com/2011/12/23/business-value-vs-customer-value/)

During the adoption of agile practices, one of the first things that needs to be done is the reframe of how people think about the work they are doing from “Business value” (revenue) to “Customer Value”. Building something your customer is willing to pay for. Thinking of it this way, “revenue” becomes a measurement of success, a “side effect” of providing value. This mindset changes the way you think about your product development and the things you do to service customers.

 

If you are viewing “business value” as revenue as an organization, you will make shortcuts in quality in order to hit the market or customers as quickly as possible – in most cases exposing quality defects that will effect the customer experience in a negative way. You will “ramp up resources” because the more people you have on the project the quicker you can get it done and usually you will short cycle things like testing, or code reviews because they aren’t serving the purpose of getting the product out so that people will use it.

Even worse, you will give up creative control of your product and add things based on requests of your highest paying customers – rather than think through the experience and do the things that provide your customers real value that they would pay for.

Revenue as the goal of doing something is the classic “Innovators Dilemma”. Companies continue trying to move up market by addressing their larger paying customers while diluting their product – as small upstarts develop products or processes that actually provide value – even though its not as much – at a smaller price tag. I think this “Innovators Dilemma” concept is what Steve Jobs was talking about in his biography by Walter Isaacson, when he said this:

“I have my own theory about why decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company. John Akers at IBM was a smart, eloquent, fantastic salesperson, but he didn’t know anything about product. The same thing happened at Xerox. When the sales guys run the company, the product guys don’t matter so much, and a lot of them just turn off. It happened at Apple when Sculley came in, which was my fault, and it happened when Ballmer took over at Microsoft. Apple was lucky and it rebounded, but I don’t think anything will change at Microsoft as long as Ballmer is running it.”

Isaacson, Walter (2011-10-24). Steve Jobs (pp. 568-569). Simon & Schuster, Inc.

Assuming that you agree with this post, how does impact mapping mitigate these side effects?

Thanks !

[Gojko Adzic]

Hi,

I think you're mixing up "business value" and "business goals" and "revenue", the three are not necessarily the same. I use impact maps in the way where the centre of an impact map is the goal of the next product milestone, not necessarily all the business goals or value a company ever has, so it's much more narrow than that. So the solution to the problem you're looking for is much on a higher level, and needs to happen before you even start to produce the map. It's not something you mitigate when doing an impact map.

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[Gojko Adzic]

That's not what I meant. I think the goal of a milestone needs to be decided before you start impact mapping, and any kind of risk mitigation for short term goals that would cause problems such as the one highlighted in that post should happen before you decide on the next milestone goal. 

there are many categories and stages of products, and driving based on customer value is certainly valid for a whole range of contexts, but is not the only possible choice. for example, if you have a declining service that just needs to get a bit of extended lifespan, minimising operational costs is a perfectly valid milestone goal although it provides no value to customers. having a milestone that protects marketshare against competition is also a valid choice for established products, and has zero customer value.

gojko

On Wed, Jun 27, 2018 at 5:32 PM Martino Vallara <martino...@gmail.com> wrote:

Basically, if the business model is driven by the value to the customer, the negative effects mentioned in the post are not presented. (?)

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