Agile: Anti-Value

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Risk Erodes Value

When high levels of risk are taken without increasing revenues or reducing costs, less value is provided to the customer. Therefore, risk management can add value to an organization. Value-Driven Delivery provides many risk reducing practices that organically minimizes a project’s exposure to risk.

The preservation or creation of value is usually the primary objective for an organization . Therefore, managing risk can add value to an organization.
This is because risk is closely related to value.

Project risk can be equated to anti-value, because the more things the can jeopardize the success of a project, that are not removed, will reduce the value of the project if they occur.

In other words, if value is the spark required to generate higher ROI for your organization, then risk is the water that can put it out.

Therefore, since risk has the potential to reduce value, we must minimize it in order to maximize value.

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Agile: Customer Valued Prioritization

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Applying Lean to Build-In Quality

In the dynamic landscape of global business, organizations face the imperative to enhance their competitiveness by embracing principles that underscore speed, efficiency, and customer value. Two formidable methodologies that have gained prominence in this pursuit are Six Sigma and Lean. These approaches serve as potent tools, facilitating improvements in quality, productivity, profitability, and market positioning.

Lean methodology, a cornerstone of process improvement, is dedicated to the reduction of production time. By meticulously identifying and eliminating waste, Lean not only accelerates production but also contributes to an upswing in quality and revenue while concurrently mitigating the adverse impact of delays. The emphasis on waste reduction encompasses a spectrum of inefficiencies, ranging from unnecessary steps in a process to idle time between critical stages.

One of the pivotal facets of Lean methodology is its commitment to optimizing the entire process flow, from conceptualization to consumption. The overarching goal is to minimize the accumulation of large inventories at various stages of the workflow. For instance, in the realm of software development, a project may have fulfilled all specified requirements. However, if the subsequent steps, such as coding or testing, lag behind, the completed requirements morph into idle inventory, potentially concealing errors within the production process. Unraveling and addressing these hidden inventories become paramount to ensuring a streamlined and error-free workflow.

Moreover, Lean methodology advocates for the active involvement of customers in the improvement process. This collaborative engagement empowers customers to prioritize the value they seek in the final product. The significance of customer participation extends beyond mere satisfaction; it serves as a strategic measure to align the product development trajectory with the actual needs and preferences of the end-users. By incorporating customer insights, organizations not only enhance the quality of their offerings but also steer clear of the pitfalls associated with building products that may not align with market demands. This customer-centric approach is instrumental in minimizing waste arising from the production of the wrong product.

As organizations navigate the intricate landscape of global competition, Six Sigma emerges as another influential methodology, complementing the efforts of Lean. Unlike Lean, which primarily targets waste reduction and process flow enhancement, Six Sigma is laser-focused on reducing variation through a systematic problem-solving approach fortified by statistical tools. This methodology aims to elevate processes to a level of precision where deviations from the desired outcome are minimized to an exceptional degree.

The symbiotic relationship between Lean and Six Sigma is evident in their combined impact on organizational performance. While Lean concentrates on eliminating inefficiencies and optimizing process flow, Six Sigma serves as the vanguard against variations that could undermine the consistent delivery of high-quality products and services. The synergy between these methodologies is a potent formula for organizations striving to achieve excellence in their operations.

In the realm of technology and supply chain management, the role of barcodes becomes increasingly significant within the context of Lean and Six Sigma principles. Barcodes, with their ability to encode information in a machine-readable format, contribute to the efficiency goals pursued by both methodologies. In the Lean framework, barcodes facilitate accurate tracking of inventory and materials, reducing the risk of errors and ensuring a smooth flow of goods through the production process.

Moreover, Six Sigma benefits from the precision offered by barcodes in data collection and analysis. Barcoded data provides a standardized and reliable input for statistical tools, enabling organizations to identify and address variations with a higher degree of accuracy. This integration of barcodes into the data-driven methodologies of Six Sigma enhances the overall effectiveness of process improvement initiatives.

Agile: Increase Value through Quality (continued)

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Drivers of Quality

In the previous section we examined Value Drivers, now we are going to examine several types of quality drivers.

First, there are Customers.   In a customer-driven organization, quality is established with a focus on satisfying or exceeding customer requirements, expectations, needs, and preferences.

Then, we have Products/Services. A culture of product/service-driven conformance to requirements and zero defect concepts. These types of organizations have their roots in producing product or service that meets stated or documented requirements.

Next, there is the Employee Satisfaction driver. These organization take care of employees’ needs so the employees can be free to worry about only the customer.

Last, is the Organizational Focus driver. In these organizations, the focus on total organizational quality instead of using a segmented approach to implementing quality.

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Agile: Increase Value through Quality

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Quality

“Quality is the measure of value added by a productive endeavor. Potential quality is the maximum possible value added per unit. Actual quality is the current value added per unit of input. The difference between potential quality and actual quality is muda.”
– Tomas Pzydek

An integrated approach to process improvement using Lean principles, and Six Sigma, provides a holistic way to maximize the entire supply chain by eliminating waste, controlling variation, and improving quality. It accomplishes this objective by understanding the Value Stream or, more specifically, performing Value-Based Analysis.

Individually, you should note that Six Sigma provides:

A general approach to reduce muda.

A collection of methods to analyze cause-and-effect relationships.

A strategy for discovering opportunities for improvement.

Whereas Lean is a set of pre-packaged, proven techniques used to reduce muda.

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Agile: How to Identify Value (continued)

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Other Types of Value

First, the value of a melted down gold coin can be classified as Intrinsic Value.

Whereas the value that arises out of an agreement or contract, can be considered Extrinsic Value.

Then, the price that others are willing to pay for something is known as market value.

Lastly, the legally defined value of an item is known as book value.

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Agile: How to Identify Value (continued)

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Examples

For an individual to deliver value they have to increase their skills and knowledge as a means of showing they can contribute to an organization, by delivering some type of useful benefit (e.g., getting paid for a job).

For an organization to deliver value…

  1. It has to improve its value-to-cost ratio
  2. It has to deliver high value, at a low price, to be perceived as high value.
  3. Conversely, if it delivers high value, at a high price, the perceived value may be low.

Discussion Note: As a consumer, what is your personal measure of value? Time? Money? How are the projects you are currently working on being measured in terms of delivering value?

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Agile: How to Identify Value (continued)

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Value is the Mental Estimation a Consumer Makes of Something

Given that, we can refine the concept of value further by saying:

  1. The value of something is how much a product or service is worth to someone relative to other things.
  2. It may be conceptualized as the relationship between the consumer’s perceived benefits in relation to the perceived costs of receiving these benefits.And we can express value in the equation: Value is equal to something’s benefit, divided by it’s cost.

In Agile, value can be very subjective because is based on the prioritization of a collection of valuable items. Thus, the value of an iteration may be quantified based on each features return on investment (ROI)

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Agile: How to Identify Value

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Building What Matters

In Agile, prioritization can be used to establish the sequence of delivery, or to even rule out features. When the criteria for prioritization is based on the ROI, an Agile practitioner may decompose the value of a feature according to things like: company strategy, market comparison, value analysis, or user feedback. In turn, that will help you focus on building what matters, first.

The key to delivering high perceived value is attaching value to each of the customers or organizations.

You must ensure they feel that what you are offering is beyond their expectation.

You can do this by: constantly emphasizing that your objective is to solve their problems, by offering solutions that will produce the results they want, and have a happy outcome.

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Agile: Value Driven Planning (continued)

This Agile AudioCast is brought to you by: 
“Agile” Al Smith, Jr. from AgiLean.ai

Product and Innovation Development

Please pause the course and take a moment to review the diagram.

Notice that in the Plan-Driven approach, estimates to complete requirement are usually driven by cost and schedule.

When using the Value-Driven approach, estimates to complete feature are driven by value and release prioritization.

The difference between the two approaches is that Plan-Driven programs may find themselves constrained to sticking within a concrete cost and schedule structure. Meanwhile, a Value-Driven program focuses on achieving value, or a quicker ROI, by identifying and removing time-consuming concrete constraints.

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Agile: Value Driven Planning

This Agile AudioCast is brought to you by:
“Agile” Al Smith, Jr. from AgiLean.ai

Plan-Driven Planning

In contrast to Value-Driven Planning, Plan-Driven Planning focuses on simply achieving the goal.

It establishes a targeted that must be reached, and aids in devising a plan to get you there.

Items on target list become your Planning Drivers such as: completing a set of documents, completing a task, arrival of new resource, getting a document signed off, etc., and, achieving the planned goal is more valuable than how the goal was achieved.

In this case, how you achieve the goal doesn’t matter as much as simply saying that the goal has been achieved. For example, if two people are assigned the task of delivering a product within a 1-year time frame, a Plan-Driven individual would be content to use the entire time to reach the goal, whereas a Value-Driven person would not only work to achieve the goal, but also seek to reduce the amount of time it takes to accomplish the goal—and possibly release two products within one year.

Copyright 2020. All rights reserved. This content may not be reproduced without authorization from “Agile” Al Smith, Jr. For authorization please contact us at: AgiLean.ai