Costs as value

Last post 03:52 am July 29, 2021
by Alfredo Alcantara
4 replies
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10:13 am May 2, 2018

Hi all,

Please help to understand such case: I have a team (we are trying to work in Scrum) and our target is to decrease costs. So we do not earn money instead of this we decrease costs. So the question is next: can we measure our value by costs reducing?

On the first hand we do not earn money and our company continue to lose money. On the other hand we decrease costs and if for example before our activities company earned 100 USD in general, now they has earned 105 USD because of our work.  

10:28 am May 2, 2018

My advice is to first understand how you are measuring costs in the first place. The next step is to think about how to better understand and measure value instead, which is not the same thing. Using Scrum to reduce costs, instead of maximizing value, is unlikely to be a very rewarding activity.

10:40 am May 2, 2018

If you are building a product which is aimed at reducing or avoiding costs for the organization, I see that as value.  And it is something you can measure.  For example, let's say you are building a chatbot, where a customer can ask question on line (or to Alexa).  That may be valuable to an organization, because it deflects phone calls, hence less staffing may be needed.

10:59 am May 2, 2018

A reduction of costs is not a measurement of value.

What if the costs the organisation is spending is adding value? aren't you then by reducing costs potentially minimising the value steam? 

How are you making transparent that reducing costs is actually increasing value being delivered?  

Your team may want to look for ways to reduce waste in the system that provide more room to increase valuable output. Then use Scrum to continously inspect and adapt. 

03:52 am July 29, 2021

I am very sorry for the late reply. Thanks a lot for your answers))