The Achilles' Heel of Agile Teams - Value by Daniel Walsh nuCognitive

1. daniel.walsh@nuCognitive.com Agile Chicago October 2018 @danielwalsh

2. @danielwalsh <Value> Is An Elusive Concept Difficult to define… misunderstood … ambiguous … …and while we may not agree on a precise definition for <value>, we all kind of ‘get it.’ 2 Copyright © 2018 nuCognitive. All rights reserved.

3. @danielwalsh This is the journey of one amateur axiologist that hopes to encourage others to follow. “..specifying value accurately is the critical first step in lean thinking.” Lean Thinking by Womack & Jones, 1996 3 Copyright © 2018 nuCognitive. All rights reserved. Reference: https://en.wikipedia.org/wiki/Axiology

7. @danielwalsh Customer Inertia Challenges 7 Copyright © 2018 nuCognitive. All rights reserved. “… many customers only know how to ask for some variant of what the are already getting.” Lean Thinking by Womack & Jones, 1996

8. @danielwalsh Abstraction Challenges 8 Copyright © 2018 nuCognitive. All rights reserved. Company Customers Suppliers Equipment Materials Supplies Products $$$ $$$ Company CustomersSuppliers Humanity End Users Nature Sub Suppliers Customers Upstream Suppliers OutputsYouInputs Reference: Learning to See – Value Stream Mapping

10. @danielwalsh How Do You Define <Value>? While there are several definitions*, value is frequently thought of as: • a held principle or behavior standard. Philosophical values assessed by what is right or good (e.g. trust). • the importance, worth, merit, or usefulness of something. Economic value assessed by currency, which could be money, time investment, reputation, attention, personal data, access, etc. (e.g. battery life). 10 Copyright © 2018 nuCognitive. All rights reserved. Reference: https://www.merriam-webster.com/dictionary/value

13. @danielwalsh Copyright © 2018 nuCognitive. All rights reserved.13 Principles behind the Agile Manifesto 1. Our highest priority is to satisfy the customer through early and continuous delivery of valuable software. 2. Welcome changing requirements, even late in development. Agile processes harness change for the customer's competitive advantage. 3. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale. 4. Business people and developers must work together daily throughout the project. 5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done. 6. The most efficient and effective method of conveying information to and within a development team is face-to-face conversation. 7. Working software is the primary measure of progress. 8. Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely. 9. Continuous attention to technical excellence and good design enhances agility. 10. Simplicity--the art of maximizing the amount of work not done--is essential. 11. The best architectures, requirements, and designs emerge from self-organizing teams. 12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly. Reference: http://agilemanifesto.org

14. @danielwalsh Copyright © 2018 nuCognitive. All rights reserved.14 Principles behind the Agile Manifesto 1. Our highest priority is to satisfy the customer through early and continuous delivery of valuable software. 2. Welcome changing requirements, even late in development. Agile processes harness change for the customer's competitive advantage. 3. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale. 4. Business people and developers must work together daily throughout the project. 5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done. 6. The most efficient and effective method of conveying information to and within a development team is face-to-face conversation. 7. Working software is the primary measure of progress. 8. Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely. 9. Continuous attention to technical excellence and good design enhances agility. 10. Simplicity--the art of maximizing the amount of work not done--is essential. 11. The best architectures, requirements, and designs emerge from self-organizing teams. 12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly. Reference: http://agilemanifesto.org

15. @danielwalsh Extreme Programming The customer will provide a shortlist of high-value requirements for the system Business sorts the user stories by Business Value The delivery of the software is done via frequent releases of live functionality creating concrete value … lots of other qualifiers for different kinds of value 15 Copyright © 2018 nuCognitive. All rights reserved. Reference: https://en.wikipedia.org/wiki/Extreme_programming

16. @danielwalsh Scrum Guide References to <value> increased from 11 instances (2010) to 20 instances (latest Nov-2017) • The Product Owner is responsible for maximizing the value of the product resulting from work of the Development Team. Optimizing the value of the work the Development Team performs. • The Scrum Master helps everyone change these interactions to maximize the value created by the Scrum Team. Ensuring the Product Owner knows how to arrange the Product Backlog to maximize value. • Helping the Development Team to create high-value products • Based on that and any changes to the Product Backlog during the Sprint, attendees collaborate on the next things that could be done to optimize value. • Scrum Artifacts Scrum’s artifacts represent work or value to provide transparency and opportunities for inspection and adaptation • Product Backlog items have the attributes of a description, order, estimate, and value • As a product is used and gains value, and the marketplace provides feedback, the Product Backlog becomes a larger and more exhaustive list. • The Increment is the sum of all the Product Backlog items completed during a Sprint and the value of the increments of all previous Sprints. • Decisions to optimize value and control risk are made based on the perceived state of the artifacts • To the extent that the artifacts are incompletely transparent, these decisions can be flawed, value may diminish and risk may increase. 16 Copyright © 2018 nuCognitive. All rights reserved. Reference: https://www.scrumguides.org

17. @danielwalsh User Story Are A Common Way To Define Value As a <type of user>, I want <some goal> so that <some reason>. INVEST* is an acronym for a widely accepted set of criteria to assess the quality of a user story. A good user story should be: Independent (of others) Negotiable (not a contract) Valuable (vertical slice) Estimable (approximations work) Small (fits within an iteration) Testable (capture success with a test) 17 Copyright © 2018 nuCognitive. All rights reserved. *Reference: Bill Wake Blog on INVEST https://xp123.com/articles/invest-in-good-stories-and-smart-tasks/

20. @danielwalsh20 Copyright © 2018 nuCognitive. All rights reserved. Reference: Jason Davis. 15.912 Technology Strategy. Fall 2008. Massachusetts Institute of Technology: MIT OpenCourseWare, https://ocw.mit.edu. License: Creative Commons BY-NC-SA. Image courtesy of Prof. Rebecca Henderson How will we Deliver value? How will we Capture value? How will we Create value?

21. @danielwalsh21 Copyright © 2018 nuCognitive. All rights reserved. Reference: Business Model Generation by Osterwalder & https://strategyzer.com/canvas/business-model-canvas https://en.wikipedia.org/wiki/Business_Model_Canvas#/media/File:Business_Model_Canvas.png How will we Deliver value? How will we Capture value?

22. @danielwalsh22 Copyright © 2018 nuCognitive. All rights reserved. Reference: Learning to See by Rother, Shook, Womack Image Attribution CC BY-SA 3.0 DanielPenfield https://en.wikipedia.org/wiki/Value_stream_mapping How will we Deliver value?

24. @danielwalsh What Is Your Team’s Value Test? A value-added activity meets the following criteria 1. The customer must be willing to pay for the activity and 2. The product or service must change 3. It must be done right the first time OR 4. Creates “usable” knowledge for future profitable value-streams Non-value added activities are categorized as Type 1: Necessary under current constraints (necessary waste) Type 2: Not necessary and can be eliminated (pure waste) Copyright © 2018 nuCognitive. All rights reserved. Reference: Learning to See by Rother, Shook, Womack

25. @danielwalsh25 Copyright © 2018 nuCognitive. All rights reserved. Reference: Jason Davis. 15.912 Technology Strategy. Fall 2008. Massachusetts Institute of Technology: MIT OpenCourseWare, https://ocw.mit.edu. License: Creative Commons BY-NC-SA. Image courtesy of Prof. Rebecca Henderson How will we Deliver value? How will we Capture value? How will we Create value?

26. @danielwalsh Wealth of Nations Copyright © 2018 nuCognitive. All rights reserved.26 An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith 1776 Value-in-exchange (worth) as the product’s power for purchasing other objects Value-in-use (outcomes) as the goodness of a product’s use Reference: https://en.wikipedia.org/wiki/Adam_Smith https://en.wikipedia.org/wiki/The_Wealth_of_Nations

27. @danielwalsh What is Value? 27 Presentation copyright © 2018 nuCognitive LLC. Content copyright © 2018 Erik Simmons. All Rights Reserved. Business Value Ingredient Capability Usage Technology Value combines the economic and conceptual aspects of a system The product is an offering that serves as a type of promise to potential customers Value Usage Business Brand Reference: Balanced Solutions – How to deliver winning products that balance business, usage, and technology

28. @danielwalsh Many Understand the Importance of Value-In-Use 64% of Features Really Rarely or Never Used1 • Data was sourced by Jim Johnson (Standish Group) • Presented it in a keynote at the XP 2002 conference • Study was based on four internally developed projects at four companies …lots of behavioral analytics tools2 How do you measure Value-in-use? 28 Copyright © 2018 nuCognitive. All rights reserved. References: 1) Mike Cohen Blog https://www.mountaingoatsoftware.com/blog/are-64-of-features-really-rarely-or-never-used 2) https://www.predictiveanalyticstoday.com/best-user-and-entity-behavior-analytics-software/

30. @danielwalsh Helpful metaphors… Value-In-Exchange as potential energy: when we purchase a product we are buying the potential to create value so we can achieve desired outcomes Value-In-Use as kinetic energy: when we use a product we are creating or experiencing desired outcomes 30 Copyright © 2018 nuCognitive. All rights reserved.

31. @danielwalsh Value-In-Use Example Value is created only when the mug is experienced in some way Value is emergent and experienced through interactions between the users and the offer Value-in-use shifts the focus away from outputs (worth and exchange) toward outcomes (experience and use) 31 Copyright © 2018 nuCognitive. All rights reserved.

32. @danielwalsh Outcome-driven Innovation and Jobs-To-Be-Done Outcome-driven innovation1 is built around the idea that people buy (or hire) products and services to get jobs done and produce beneficial outcomes 32 Copyright © 2018 nuCognitive. All rights reserved. References: 1) https://en.wikipedia.org/wiki/Outcome-Driven_Innovation What Customers Want by Ulwick, Jobs To Be Done by Ulwick, Competing Against Luck by Christensen, Hall, Dillon, Duncan

33. @danielwalsh33 Copyright © 2018 nuCognitive. All rights reserved. Reference: Value Proposition Design by Osterwalder https://strategyzer.com/canvas/value-proposition-canvas and Value Proposition Canvas is Copyright Strategyzer.com and Strategyzer AG.

34. @danielwalsh Elements of Value1 lists categories for how products and services create value for customers and users. 34 Copyright © 2018 nuCognitive. All rights reserved. References: 1) http://www.marketingjournal.org/the-elements-of-value-an-interview-with-jamie-cleghorn/ & https://hbr.org/2016/09/the-elements-of-value 2) https://hbr.org/2018/03/the-b2b-elements-of-value B2C Value Categories1 Self-transcendence Provides Hope Self-Actualization Motivation Heirloom Affiliation and Belonging Reduces Anxiety Rewards Me Nostalgia Design and Aesthetics Badge Value Wellness Therapeutic Value Fun & Entertainment Attractiveness Provides Access Saves Time Simplifies Makes Money Reduces Risk Organizes Integrates Connects Reduces Effort Avoids Hassles Reduces Cost Quality Variety Sensory Appeal Informs B2B Value Categories2 Purpose Hope Social Responsibility Network Expansion Marketability Reputational Assurance Design and Aesthetics Growth and Development Reduced Anxiety Fun & Perks Time Savings Reduced Effort Decreased Hassles Information Transparency Availability Variety Configurability Responsiveness Expertise Commitment Stability Cultural Fit Risk Reduction Reach Flexibility Component Quality Improved Top Line Cost Reduction Product Quality Scalability Innovation Meeting Specifications Acceptable Price Regulatory Compliance Ethical Standards

35. @danielwalsh Some Implications… Products may have worth at the point of exchange by may NEVER actually create value for users (e.g. uneaten food, miswanted products) 35 Copyright © 2018 nuCognitive. All rights reserved.

36. @danielwalsh Mini-exercise Let’s consider a ride share offering (e.g. Lyft, Uber, …) 36 Copyright © 2018 nuCognitive. All rights reserved. What are the outcomes of the experience? functional, emotional, … ??? → → → → → → → What are the components of the solution?

37. @danielwalsh Implications of Value As Co-creation Users co-create value with offerings through resource integration and experiential use to achieve outcomes in context • Users co-create value with the offering • Value creation occurs at the point of experiential use • Users need to access their own resources and integrate other resources in order to create value →Users as system integrators →Offerings as resources for value co-creation in context 37 Copyright © 2018 nuCognitive. All rights reserved.

38. @danielwalsh Implications of Value-In-Context The ability to serve contexts where both exchange and need are aligned usually creates a higher willingness to pay The closer Value-In-Exchange point is to Value-In-Use → the more the offering is worth E.g. bandages at a festival HMW - give customers a choice of buying in advance AND on-demand? E.g. temporal pricing by Zoom and Lyft 38 Copyright © 2018 nuCognitive. All rights reserved.

39. @danielwalsh Summary Agile concepts tend to focus on the delivery of value as outputs • Agile Manifesto: “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software” • Scrum: “The Product Owner is responsible for maximizing the value of the product resulting from work of the Development Team” • XP: sort the user stories by Business Value Overly focusing on <value> as delivery of output and as value-in-exchange is risky 39 Copyright © 2018 nuCognitive. All rights reserved.

40. @danielwalsh Possible Next Steps In order to be successful, organizations will need to understand value in terms of the goodness and outcomes that users co-create with their offerings, rather than in terms of the worth that is generated through exchange • Value-in-exchange → Value-In-Use • Offerings as resources for the co-creation of value by users • Users as system integrators for the co-creation of value in context • Value-Driven Development (VDD) • Write the “tests” for value first (Both for VIE AND VIU) • Build an MVP(Minimum Valuable Product) to make the test pass • Refactor 40 Copyright © 2018 nuCognitive. All rights reserved.

41. @danielwalsh Copyright © 2018 nuCognitive. All rights reserved.41 Q&A Feel free to follow up with us at daniel.walsh@nuCognitive.com linkedin.com/in/danwalsh1115 The Achilles’ Heel of Agile Teams… Value http://bit.ly/walshslides