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Hunting for Value

17 Apr 2019

| Author: Stan Wade

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Hunting for Value

All of us would agree I am sure that we need to deliver as much value as we can. Easy to say, but pretty hard to deliver and even harder to prove. When you add the complexity that value is in itself a complex concept, as I previously blogged, shouldn’t we be paranoid that we are focused on value generation? You would think so, but most Product Owners have no idea of the value they are chasing!

Think about how you approach software products in your organisation. The standard process starts with a business proposal. This often takes many days to prepare and ignoring all the detail has two major elements in there. The first is how much ‘value’ the investment will make and the second is how much it will cost to deliver. If value is greater than cost, you may have a goer. The problem is both of these numbers are complete guesses. We can have a better guess at cost. We have some evidence from the past and we may get it wrong by 100%, but that’s still reasonable when compared to estimate of value. You can look at market sizes, customer lifetime value, market share, adoption rates and lots of good things, but it all hinges on the customer wanting to use the product. If nobody uses it, all of those metrics are multiplied by 0. Ask a seasoned product manager, they count on at least 50% of their initiatives resulting in not making a penny! Of course, you won’t see that in the proposal, or it would never get accepted. The proposal will usually be optimistic and promise to deliver the moon on a stick, in a colour of your choosing. But its all based on that tiny little assumption, will people want to use it…..but back to the big success story numbers everybody! Great job done then. Let’s build build build!

So how does your company decide if people want to buy your product? In most cases I have seen there is someone with a vision and faith in what you intend to build. But faith is belief without proof. Sometimes that is enough. If the idea was truly great it will succeed whether you validate it or not. But isn’t it a good idea to test that faith and validate that people apart from the visionary share the concept of the value you are building? Well that make sense doesn’t it. Great, all we have to do is build most of it and then release something into the market and get the feedback we need to prove we were right. The problem here is you have already spent 75% of the budget and it’s a bit late to discover you have a lame duck.

Every day spent cutting production quality code without validating the product value is cumulating financial risk. If the product bombs, and statistically most do, any investment in code is pure waste and the opportunity cost of a team not doing soothing else of value is even greater. But for some reason most companies are happy to accept this risk.

So what can you do? Validate those assumptions. Refuse to accept avoidable risk. Build some prototypes as cheaply as you can. You probably don’t need code, there are great services out there to build prototypes. Talk to as many customers as you can. Try and get them to demonstrate their true interest by making a commitment of some form. Ask them to pay money, give time, refer you to a colleague, anything, even if you have no real intention of taking it. The fact that they offered means they are serious. Do whatever you can to prove in some way that the great idea actually has legs outside the head of the visionary. Then, and only then, should you think about cutting production quality code!

In general, we are great at feasibility risk (can we make it) and usability risk (can it be easily used) but we are pretty terrible at validating value risk! Do you want to build a white elephant? Do you want to ship something nobody values? Of course not, so go out and do something about it!

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Stan Wade

Stan is a highly experienced Agile mentor, with almost two decade's experience of Agile over a number of market sectors, primarily in the financial sector. He takes a business-led approach to IT, complemented by a strong development and operations background.

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