Each team contributes to the value that the customer receives

All organisational activity should be about generating value for our customers. Each team in your internal value chain is contributing something to that end-value. But few people are able to define ‘value’ as something that’s actually meaningful in the context of an employee or a customer, or state with any certainty where that value originates across the internal value chain.

  • How do you know if work done by a particular team results in value?
  • Is all delivered (working) functionality directly valuable to the organisation?
  • How does activity undertaken by an enabling function contribute to organisational value? What is its value?
  • How do you know which functionality has more business value over other functionality?
  • What does ‘maximizing value’ mean in terms of behaviour and decisions?
  • Are there different kinds of value? Are they equal? How do you compare them?
  • Whose perspective do we take when deciding what has ‘value’?

The work that a team does should benefit the organisation or business as a whole somehow. But this is all a bit vague. Ideally, we need a way of deciding if this is the ‘right thing to do’ and ‘is it a good time to do it’.

To do this we need an enterprise architecture against which we can objectively check if the work that creates the value is a ‘good thing’ and opex funding to underwrite the money to be spent on it. With this high-level direction, our engineering teams and enabling functions can work secure in the knowledge that their efforts are well-founded. Even if we can't pinpoint where in the value-chain value is added, at least we know that the sum of all contribution does provide worthwhile value to the customer.

What is Value?

There are several different types of Value

Commercial Value - work which results in revenue and profit, such as a new version of a product, a new product or a reduction in sales or operating cost

Market Value - work which increases the potential number of customers, such as products that appeal to a new set of customers, the availability of a product in a different market, feature that the competition can’t provide or are better implemented

Efficiency Value - work that increases efficiency and therefore decreases operating costs, such as increasing product usability, reducing time to market, reducing time to set up peak operating capability, changes which reduce calls to a help desk

Future Value - work which increases the chances of more easily achieving any of the above values in the (near) future by investing in innovation and learning; reducing technical debt.

Cumulative work on all of the above by teams across the company will create tangible value for the end-customer

Next: How do I succeed at selling?

In this post, we explored different types of value and if a proposed way of creating more value for the customer is the ‘right thing to do’ and ‘is it a good time to do it’. Up next are some thoughts on How do I succeed at selling? Back in the day, success was a queue right out of the door of your shop; today it's more nuanced. We explore how different variables in your internal value chain influence the delivery of value to the customer.

How do I succeed at selling?
If you want to win in business, you can’t rely on your monthly management reports. You need a clear perception of “what affects what”, so that you can easily tell how one factor influences another.

You might also enjoy:

Measuring customer value
Companies succeed by providing superior customer value. Value is the basic utility of the product or service, plus a customer surplus which results from the way that a company connects with its intended audience. We discuss how value is created and how it is perceived as relevant to a purchase.
Funding Teams not Projects
Projects are finite. Products represent value streams, and funding a product team makes them accountable for identifying opportunities to deliver the maximum value for the lowest estimated effort, risk and uncertainty. Stable funding enables the team to deliver ROI within their calculated capacity.