“Maximise customer value quickly, consistently and sustainably”
HOW TO MEASURE CUSTOMER VALUE?
Customers, whether internal or external to the Agile Team have specific value expectations that must be satisfied for the product, or service to have achieved its intended purpose. Examples include saving the customer time, saving them money, making them money, improving their health, giving them peace of mind and many more. If targets for customer value are not easily defined (or achievable), the product, or service should not be built.
HOW TO MEASURE QUICKLY (SPEED)?
The most cited goal of being agile is speed, and yet this measurement is often the most poorly defined. How fast do we need to deliver value to our customers, and what are the advantages? Should we target a one-month turnaround time for new requirements, or one week? How much additional revenue will we generate if we reduce our delivery time by half? How about support speed, should we aim for 5 minutes, 1 hour, or next business day?
There are no easy answers to these questions and yet without a clear understanding of how quickly we need to deliver value, an organisation can spend significant time and effort on time-reduction initiatives, only to find that their revenues, or customer satisfaction levels are still the same.
We recommend three considerations for establishing a sensible target: price, cost, or competitive advantage.
How much is the customer willing to pay?
The price that a customer is willing to pay is justified by the value the customer expects to receive in return. This may be a rational justification (e.g. time/cost-savings), or an emotional perceived-value (e.g. branded products).
It is important for the Agile Team to work directly with the Customer to understand how they justify pricing, before working on solutions. This is to avoid developing offerings that the Customer would never consider.
Will it save us money?
Review your product, or service efficiency by comparing the:
– costs of long manual processes and legacy software/infrastructure, with the
– cost-savings from increased automation and lean process reengineering
If the latter is more cost-effective overall, you may justify an efficiency enhancement that provides an inherent increase in speed.
How fast is our competition?
Speed can be a competitive advantage for both profit and non-profit organisations. Both of whom can utilise speed to increase brand reputation and market-share. Even government agencies that are not driven by market-share can increase their domestic and global reputation by delivering value quickly to citizens and foreign investors.
One difficulty that will need to be overcome is where to obtain the baseline data on how fast competitors, or similar organisations are. Market research organisations may have industry benchmarks that can be utilised; however, you must be sure to validate the data to conduct a reasonable ‘apples to apples’ comparison.
Time to Value
Time to value (TtV) is an end to end measurement. From the customer, to the customer. Each product, or service will have specific value streams that enables value realisation for their customer. Common examples include:
- Granting Access (e.g. signing-up, onboarding)
- Providing Something New (e.g. major or minor changes)
- Getting Support (e.g. help, assistance)
- Obtaining Information (e.g. FAQ, User Guides)
- Termination (e.g. ending a subscription, offboarding)
Each value stream can be measured, from the time the customer makes the request, to the time that value is realised. Note, that value realisation occurs after value delivery and must be confirmed each time.
HOW TO MEASURE CONSISTENCY?
Whilst consistency is often implicitly expected, it can be difficult to achieve without careful design. We recommend focussing upon two aspects of consistency: throughput and quality. Although you may add more if this adds value to the customer.
Throughput – also referred to as Productivity measures the amount of work an Agile Team can complete in a certain timeframe. For example, an Agile Support Team may be expected to resolve 100 customer incidents per week. Whilst an Agile HR Team, may be expected to process 20 job applications in the same timeframe.
It is important to consider task size, when comparing throughput numbers from one period to another.
Quality – can be measured through useability, performance, reliability and compliance. Service Level Agreements can be useful to formally establish expected quality levels and provide a method for comparing variations, when different customers have different expectations. For example, gold, silver, or bronze plans.
HOW TO MEASURE SUSTAINABILITY?
Sustainability can often be overlooked when focusing solely upon customer value. However, a ‘business’ will be unable to continue indefinitely without good financial performance, strong resilience and a sustainable impact upon the environment.
Financial Performance – can be measured by profit and loss (P&L), or justifiable costs for government and non-profits. Business Agility can provide three positive effects upon financial performance:
- Prioritisation of high-value deliverables based upon the customer’s perception of value
- Incremental and iterative delivery that reduces investment risk through faster customer validation
- Higher net present value by bringing forward future revenues
Resilience – can be measured by turnover, compliance and continuity. It is important to strike a balance between resilience at the team and organisation level to avoid duplication and overly complex governance frameworks. Both of which can negatively impact agility.
Environmental Impact – These measurements will vary depending upon the product and services being offered. For example, a tech-related product may measure the environmental impact through energy-accounting and carbon emissions. Whilst an agile training product may measure the use of sustainable paper and ink materials.
At the organisation-level, Agile Leaders may have specific targets mandated through government policy. Where this occurs the division of these targets across each product, and service can be expected.
Whilst the four measurable units are consistent, the actual targets used will vary considerably between organisations. It is not necessary or expected to identify the ‘perfect’ targets during the outset.
What is important is that the Customer, Agile Team(s) and Leaders agree upon the targets to be used. And all agree to tweak as necessary based upon data collected during the life of a product, or service.
When this collaboration is consistent, the goal will be achievable, and purposeful.