Thinking about Business Value

Alexander Nowak of the Microsoft Community of Practice of Cap Gemini Belgium has written a description of the tryout of the “Agreeing on Business Value with Systems Thinking” that will be re-run on April 1st at Mini XP Day Benelux.

In his post he describes the following main points:

  • Business Value is multi-dimensional and not always easy to express. The key lies in the measurability of things.
  • The “Business Value Model” is a technique to set the context of the “big” why and communicate this across the organization (small or big).
  • It is built around the concepts we are mostly familiar with (and borrowed from other techniques).
  • The “Systems Thinking” part comes into play to discover relationships between goals, capabilities, stakeholders and measurements and risks. When you turn a knob here, something will happen on the other end… and vice versa.
  • A business value model is not carved in stone. You must always evaluate if what is described (or better drawn) in the model actually reflects reality.
  • This visualization is important for communication. Doing the value exercise can be an eye-opener for the people in the project and/or organization.
  • The “Business Value Model” should be the origin for all user stories.

Yes. That’s it. Couldn’t have said it better myself 🙂

You can see the outputs of the workshop in a previous blog entry. Read more about it on the AgileCoach site.

Hope to see you at the conference!


Mini XP Day 2010

Portia Tung and I co-present “Agreeing on Business Value with Systems Thinking” at this year’s Mini XP Day Benelux. This is one of the twelve sessions from XP Days Benelux 2010 that have been selected to re-run.

See you on April 1st in Mechelen.


Business Value Model Gallery


In the Business Value Modelling session at the XP users group 6 teams created a Business Value Model for a mobile phone company struggling to keep customers and regulators happy while reducing call center costs. In the final step, each team had to create a poster that they could use to guide their decisions and to explain the reason behind the project.

As you can see from the session feedback everybody wanted to know if they had built the ‘right’ model. Let’s take a stroll through the business value model gallery and see how the teams did. Click on the images to enlarge.

Team 1

This team spent a lot of time discussing and didn’t have much time actually making the diagram. The large yellow Post-its contain the major goals. Small green Post-its are measures of the goal. Are small blue Post-its leading indicators? It’s not very clear. Only two goals seem to be worked out. There are four more large yellow Post-its to the side. What’s their meaning?

To make it perfect:

  • Add a legend to the diagram
  • Fully work out at least one goal
  • A Business Value Model doesn’t have to be “perfect”. Make something quickly and iterate.

Team 2

This team tells a story: we have unhappy customers and we have lots of measures that make that visible (left). We have several measures (both lagging at the top and leading at the bottom) that we can use to measure and drive improvement. Then we have several things on the right that we must comply with, either constraints or non-negotiable goals. All of this should lead to happy people (customers, employees, regulators).

To make it perfect:

  • The diagram focuses heavily on the customer. Where are the company, the regulators and the project sponsor? How could you represent their views?
  • Does the ordering of complaints have any meaning? If you could do only one thing, where would you focus?

Team 3

This is a very clear and near diagram with a business-like 4 quadrant format. Each of the quadrants represents the view of one stakeholder. I like the big, clear goals on the yellow Post-its. Each stakeholder has both constraints and measurements/tests.

To make it perfect:

  • Explain the meaning of the arrows. Am I correct in interpreting it as customers and regulators have goals which drive internal goals of the Operations Manager and IT?
  • The IT measurement “daily reporting” isn’t very actionable. What’s in the report?
  • The Operations manager measurement “Send confirmation” message sounds more like an action or capability than an measure or test. How can you test that confirmations have been sent? Why will that reduce costs?

Team 4

This team used a concentric circles model: on the outer circle we have the viewpoints of the stakeholders. The pink Post-Its represent a stakeholder goal; the attached blue Post-its are the measures for the goal. I’m not clear what the yellow Post-Its in the center mean. This team added a new goal that wasn’t in the original assignment: “Increase Antenna Coverage”. Apparently lots of people call in to say they can’t call 🙂

To make it perfect:

  • Show some relationships between the different items so that it clear what belongs where. For example who wants to “Bill correctly”? The customer or the organisation? Who wants to port numbers quickly? The customer or the regulator?
  • Explain the meaning of the yellow Post-its in the center
  • Instead of the “Atern” Post-its (some leftovers from the Agile Business Conference), draw the stakeholders

Team 5

Another diagram that uses the concentric circles (or maybe a Mandala) idea. At the outside (the small yellow Post-Its) we see the stakeholders. Big bold yellow Post-its show the goals with attached measures. The Blue arrows indicate that achieving some goals helps achieve other goals. Big red Post-its indicate constraints.

To make it perfect:

  • Make the stakeholders stand out more by drawing them or having larger Post-Its. Everything we do starts with the stakeholder.
  • Add a small legend: for example what are the green lines?
  • You don’t have to reuse the Post-its. Why not just redraw the goals and measures neatly?

Team 6

The last team had a completely drawn business value model. The central metaphor of the scales can be very powerful: by working on one side we can influence the other. Here: by increasing usability of the service, we reduce the cost of the service (or “Quality is free“). On the right, we want to reduce the number of people who call in (presumably without reducing the number of customers?). This is done, on the left, by going from a situation with few computers and lots of employees to one where computers have taken over the work. Or, as the team put it succinctly: “the solution is to replace people by computers”.

To make it perfect:

  • we have one measure for cost (“# of incoming calls” on the right). How would you measure usability on the left?
  • The image on the left (“replace employees by computers”) focuses on the ‘solution’. Can you represent how stakeholders will benefit?
  • Replacing employees by computers is (for most people) not a very rousing goal. Is this the first message you want to get across when you explain your project? How do you think those employees feel? You’ll probably have to talk to them to implement the project.

At the end of the tour

What have we learned? A Business Value Model serves several purposes:

  • To make it clear why we do the project: which stakeholder goals do we want to achieve?
  • To prioritise: which goals are more important than others?
  • To have project/product acceptance criteria: how will we know we achieved the goals?
  • To show how we will steer the project: what measures/subgoals can we use to go in the right direction?
  • To understand what is out of our control: which constraints should we abide by?
  • To create a shared model of the important aspects of value and how these aspects affect each other: what is our hypothesis of how we will generate value?

What I look for in a model is:

  • It’s clear: legible writing, a legend, appropriate use of colour and size
  • It tells a story: “we focus first on <this> and then on <that>”, “if we do <this> it’ll lead to <that>”
  • It’s motivating: the goals indicate that we’re making life and work better for people, there’s more than making money
  • It’s useful: it helps me ask the right questions like “how is this feature going to help us achieve our goals?”;  helps me to make the right decisions like  “we’ll focus on area A first, because that will help us achieve our primary goal”
  • It’s temporary: this is the best model of our system for now; as soon as we learn, we’ll update our model
  • It’s shared: the whole team contributes to making and changing the model.

When is the model “done”? Ask yourself:

  • Do I want to have this displayed prominently in the team room?
  • Do I want to use this as a decision aid?
  • Do I want to use this to explain the project to my most important customer or user; to the CFO; to the CEO; to a new team member?
  • Do I know how we can test and invalidate the model?
  • Do I want to keep this up to date?

See you at the Business Value Modelling session at XP Days Benelux. I’m looking forward to seeing the models that come out of that session.


Business Value with Systems Thinking tryout

Business Value Modeling is fun

Yesterday, I did a tryout of the “Business Value by Systems Thinking” session for XP Days Benelux.

A “Business Value Model” is one of many models our teams build to get a better understanding of the problems we need to solve. Based on the goals of our stakeholders, it shows

  • what “value drivers” (or dimensions like “income”, “customer satisfaction” or “employee retention”) are part of our shared definition of Business Value.
  • how we can measure that we get closer to (and finally achieve) our goals during and after the project
  • what constraints limit us in our search for solutions
  • how all of these things are related in a systemic model. For example, what do you think happens with employee retention if customer satisfaction goes down? What effect, if any, does shorter employee retention have on customer satisfaction? These and other causal loops may point the way to “leverage points” where we get most effect with the least amount of effort.

By building the Business Value Model we create a shared vision and align the team members. By relating all our work to the value we add, we are more motivated.


As usual, there was much too much content. Thanks to the feedback of the participants, there will be more time for exercises and explanation, we’ll go more in depth into the real subject of the session and there wil be more feedback for participants on their model.

You can download the  tryout retrospective feedback and see what the participants thought about it. I’ll publish the output of the session in the next blog entry.

Many thanks to the participants for playing along and giving useful feedback. Thanks to Cap Gemini for hosting the event.

Answering some puzzles

  • How do you prioritise based on the Business Value Model? You start with the lagging (final) goal that you want to achieve/improve first. What would it take to “achieve the goal” or “improve enough” (first define what “enough” is)? How little can we do? Do we need to mitigate some risks? Do we have enough value to release? If yes, start implementing. If no, which other goal do we need to tackle too?
  • Does “Business” Value mean only financial measures? No, we also include other measures like “customer satisfaction”, “employee retention” or “happiness” (we just built a Business Value Model with “Number of people who happily use our product to do their job” as the #1 measurement). Some of those “measures” can’t really be expressed as a number, you can only see if they improve or worsen. On the other hand, Don Reinertsen recommends “if you want to be able to make (quick) tradeoffs, you should express each measure in money” in his book “Flow”.
  • Is our model right? What is the perfect model? What should the final model look like? I really can’t answer that question. Your model is “right” (or: useful) if it helps you to make good decisions, if it helps you to explain the reason(s) behind your project, if it allows everyone on the team to make decisions. In the end, you test your model(s) by building something according and seeing if your hypothesis was correct. And even if it isn’t, you’ve learned something. What we’re doing here is using the scientific method: we build a testable hypothesis, we perform the test and we improve our hypothesis based on the results.


Usergroup meeting 26/10/2010

XP Day session tryout: Agreeing on Business Value with Systems Thinking

Cap Gemini will host the next Agile/XP Belgium usergroup meeting. This session is a tryout for XP Days Benelux.

We talk a lot about “maximizing business value”. We ask business people and product managers to prioritise by estimating the business value of user stories. But what exactly do we mean by business value?

Over the past few years we’ve worked with many teams to define their “Business Value Model”, a clear definition of the value a project will bring to the organisation. The exercise hasn’t always been easy but it has always brought significant benefits:

  • Measurable business value in units that impact the organization (such as revenue €€€, customer satisfaction, staff retention)
  • Everybody involved was more motivated because there was a clear reason for the project and they finally understood what it was
  • The whole team was aligned around one vision because we had clear criteria to define success
  • We came up with more innovative solutions because everybody on the team, not only “the business” or “product managers/owners” could take product-related decisions based on the model
  • We could deliver a lot faster than anybody expected because the Business Value Model allowed us to easily distinguish between value-adding and non-value-adding features
  • We spent a lot less time writing and prioritising user stories because we were able to derive the user stories from the value definitions
  • The Business Value Model guided us to explore new product ideas: the business value model was a hypothesis that we could test and refine each time we released or performed user testing.

In this interactive tutorial you’ll apply some Systems Thinking techniques, such as the Diagram of Effects and Intermediate Objectives Map) to define the business value model of an example project. We’ll show you the techniques we used and discuss how you can apply those techniques in you context so that you’ll be ready to start building a business value model with your team.


  • 18:00 – 19:00 – Welcome with snacks and drinks
  • 19:00 – 21:00 – Session

Address: Bessenveldstraat 19, B-1831 Diegem, Belgium

Register here for this free event