Category: Value Driven Delivery

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

Applying Lean to Build-In Quality

In order for organizations to be globally competitive, they must focus on speed, efficiency, and customer value. Six Sigma and Lean are both powerful tools for improving quality, productivity, profitability, and market competitiveness. While Lean focuses on eliminating waste and improving flow, Six Sigma focuses on reducing variation using a problem-solving approach and statistical tools.

Lean “process improvement” reduces production time. As a result, quality and revenues increase, while decreasing waste caused by delays.
Lean also focuses on maximizing the efficiency of the entire process flow, from concept to consumption; doing so minimizes large inventories between each step. For example, a set of requirements for a project may be fully completed, but if code is not designed or tested, then the idle requirements become inventory in the software development process. Additionally, these hidden inventories hide errors in the production process.

It is also critical to involve customers during the Lean “improvement process”. This will allow them to prioritize the value in their product, which will not only increase quality, but also reduce waste that results from building the wrong product.

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

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.

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

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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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.

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

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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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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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.

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

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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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.

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