Before we dive into some tips on (Business) Value, let us discuss some context first! In Scrum, the Product Owners' main responsibility is to maximize the value for the Product, in order to create, deliver and maintain a successful Product. But what is 'value'? That's a question I get often in my Professional Scrum Product Owner trainings, so let us elaborate a little on this.
Value comes in many different forms, value is context dependent and the definition of value in a certain context may change over time! What? Yes, that's right! What 'value' is, or what it means, is firstly context dependent. In a marketing context for example, value may be related mostly to getting exposure in the marketplace, to gain a better reputation and/or to increase online presence (besides many other options). Value in an online, web-based games company could fore example be the income generated by in-game advertisements, which could for example be increased by the time that people spend playing online games. An important value metric in such a case could be the 'Daily Active Users' or the 'Daily Active Minutes' metrics for example. In other contexts, there may be other types of value and other ways to measure them.
Also, value is time-dependent. When you start building a new mobile app for example, value may in the first period be to actually get people to download the app from the App or Play Store. When you see people are downloading the app, there seems to be an interest in the product. When this interest is observed, the definition of value in that context may change to a definition that people aren't only downloading the app, but that they actually start using it more. So in such a case, you may want to focus more on usage. When you notice that people start using the app more, it may become more relevant to increase the users' satisfaction. And after that maybe focus more on increasing revenues for example. So as you see, what value is, may change over time!
So there's a lot to talk about regarding the subject of 'value', and therefore, we'll cover 10 tips about value in this blog. Also check out my other blogs with tips for the Product Owner (see the links at the end of this blogpost). I hope you enjoy them!
10 Tips about (business) Value:
1. Steer on value!
This may be an open door for some of you, but we meet loads of Product Owners who are focussed more on effort and story points than on actually delivering business value! As a Product Owner, your role is to maximize the value that's delivered for your customers and users. What value is, depends on the context which you're in. Value may be 'value for the business', 'value for customers', 'knowledge value' and 'technical value' for example. Your can measure value in many different ways, but what's most important is that you actually measure and steer on value. Find a Key Value Indicator (KVI) for your product, which can be measured early and often, like the KVI's: Daily Active Minutes (DAM) and Daily Active Users (DAU). Make sure that you deliver stuff that really have an impact on your KVI(s), so that you are consciously steering on value.
2. Start measuring value (the right way)
What value is, or rather what valuable is for your product, depends on the context you're in and the Product you are developing. So I can't provide you with a list of metrics you should measure for your Product. Since we're operating in complex environments, there are no 'best' practices you can adopt. There are some good practices, but mainly emerging practices (things you discover along the way). The same goes for measuring value. You can start with some of the practices and metrics I've used in the past, but don't treat them as 'best' practices. Go out there and discover what metrics are most suitable for your own context!
Some good practices I found valuable in the past as a Product Owner were metrics like Daily Active Users (DAU), Daily Active Minutes (DAM), conversion rates (%), Time-to-Learn and also the metrics as described by Evidence Based Management (check out the EBMgt guide here), such as Innovation Rate, Installed Version Index and Usage Index.
3. Measure value (KPI's/KVI's) early and often
As a Product Owner, you are hopefully releasing new features and/or functionalities every Sprint, to maximize value for your customers and users. In order to learn what they find valuable, you have to measure wether or not value has been delivered of course! This may not be something new. What I encounter in daily practice however, are Product Owners that are measuring KPI's like NPS (Net Promoter Score), customer satisfaction, cost savings or profit gains. This is of course not wrong... However,... These KPI's are often only measured once every while... I've trained and coached organizations, who measured the NPS twice a year. And I've coached organizations who put cost savings in the books, even before a project had started. This is impossible people! You have to find KPI's or KVI's that can be measured much more often, preferably with little effort (for example by automating the feedback process).
4. In order to validate value, release early and often
As I always share in my Professional Scrum Product Owner Trainings when we talk about Value, there is one thing that you as a Product Owner must remember: "You have to release a Product to customers/users, in order to find out if you have delivered value for them!". Unfortunately, I encounter a lot of Product Owners in daily practice, who think that 'working on the Product for just a couple more Sprints' will create a Product that customers/users will certainly love. Often, this results in a lot of disappointments... So, start validating value, by releasing to your customers and users early and often!
5. Redefine 'what value means' for your Product regularly
Okay, why would you regularly redefine 'what value means' for your Product? Well, guess what? Value changes over time! When you're starting out with a brand new Product, a mobile app for example, it might be very valuable for you that people are downloading the app from the app store. When you're continuing the Products' development however, the number of downloads might get less valuable. For example, when your business model is to make money from advertisements, it would probably be beneficial for you if users actually use the app multiple times per day. Or it would be more valuable if they use the app more minutes per day. Later on, when people are using the app multiple times a day, for a couple of minutes, you maybe want to focus more on customer satisfaction, or NPS maybe? So as you hopefully see, value may change over time!
6. Don't think that you can 'determine' value upfront
What many of us Product Owners do, is focus a lot on 'determining' the value of a Product Backlog Item (in Dutch: 'waarde bepalen'). This is such a shame in my eyes! There is no way you can 'determine' the value of a Product Backlog Item upfront! You could make an estimate, you can take a guess, but you can't 'determine' the value. As mentioned earlier, something is valuable, when you've released a Done Product Increment to customers/users, and they've told you that the stuff you've delivered is valuable, or if you can measure changes in your automated Key Value Indicators (such as DAM/DAU/Usage/etc)! So don't try to 'determine' value upfront! Just estimate if an item should have a positive effect on your KVI's, build it, ship it and learn from it.
7. Deliver both internal and external value
Value comes in many different forms. Value could be 'Customer Value', 'Business Value', 'Knowledge Value' and probably many other forms of value. Another way of looking at value, is to define 'internal' and 'external' value. Internal value, is the value that you deliver internally, within your organization. External value, is value that you deliver for your customers and users. A big trap regarding measuring value, is that I've met many Product Owners who are focussed on internal or external value, but often not on both. Many Product Owners measure cost savings, FTE reductions, employee satisfaction, time spend on a certain (internal) process, revenues, etc. etc. And other Product Owners only measure customer satisfaction, NPS, etc. As a Product Owner, you have to find a balance in both delivering internal value and external value.
8. Involve the Scrum Team and stakeholders in value estimation
One of the lessons we've learned as well, is that value isn't something you should estimate on your own as a Product Owner. There is a lot of knowledge, experience and there are many interesting perspectives from others you can learn from. So, estimate the value of Product Backlog Items together with your stakeholders and Scrum Team. Involve your customers, involve your users and don't forget your Developers! They may have very interesting viewpoints to learn from, which could lead to you delivering much more value, with much less effort! Isn't that what we all want? A lot of value, with very little effort? :-)
9. Don't strive for perfection in value estimation
Do I need to say more? Value changes over time, the world is complex and continuously changing. Customers' and users' minds and ideas are changing over time... So, don't try to create 'perfect' estimates of value!
10. Estimate value, but also effort and complexity
This is something many of you already do, so it may be a bit of an open door... But besides estimating and measuring value, also estimate effort and complexity. Or rather, let the Developer(s) estimate effort and complexity! Don't participate in effort estimations as a Product Owner. And don't try to make the Developers develop a Product Backlog Item in less time than they estimated! Trust the Developers that they will do their job! And if you want a feature to be build in less time, than make it smaller! After all, releasing to customers and users early and often is what you want right!?
So, these are the 10 tips for Product Owners on the topic of Value! I hope you enjoyed them and that they'll help you in becoming a better Product Owner!
Also check out these other tips for Product Owners!
Holy Guacamoly! Are there even more tips for Product Owners? Yes there are! We've described 60 more tips for Product Owners, to help you to become better in your role! We've defined 7 aspects of Product Ownership on which we have interesting tips to share with you, so check them out: