How do you define value?

We launched a new Advanced Certified Scrum Product Owner (A-CSPO) cohort last week. Week 1 of our program focuses on modeling and communicating about value. Participants noted that, in their experience, when you don’t have a clear, shared way to talk about value in an organization, you end up just responding to the loudest or most powerful voice in the room. You don’t necessarily focus on the most valuable things. You focus on the things that today’s loudest voice says are valuable. Those may or may not be the same.

In the A-CSPO course, we teach a 5-step process for getting increasingly clear on the value of a feature or initiative. Step 2 is what we call “articulate a theory of impact.” Theory of impact in this context means a model for how you believe we would get from some problem or opportunity today to some ultimate desired outcome by building the feature. It’s the hypothesis for a chain of cause and effect from “we build the thing” to “this meaningful business outcome happens.” Typically, the desired outcome is something like increasing/protecting revenue or reducing/avoiding costs.

Let’s look at an example…

Richard has a software startup offering a productivity tool called Ditto that serves event professionals (like Humanizing Work’s ops team, wedding planners, university event managers, etc.). He acts as Product Owner for Ditto. Like most POs, there’s way more to do than development capacity to do it all, so prioritization is a challenge. Recently, Richard had to decide whether to move a feature about daily email digests for users to the top of the Ditto backlog. The theory of impact helped clarify the business value.

A theory of impact starts with the current problem or opportunity. What is the current state that makes us want to build this thing? In this case, the current state is that Ditto users who visit their dashboard get a lot of value out of the tool, but busy people who do event logistics part-time can forget to log in for several days (or longer).

The next step in the theory of impact is the proposed intervention. In this case, send out an email at the end of the day each day with a digest of relevant events and tasks to pay attention to tomorrow.

Why is that valuable? Well, it should help protect revenue—keep users from canceling their subscription, what’s called churning in the software-as-a-service world—by getting them to log into the tool and find it valuable more often. But that’s not enough. The theory of impact needs to connect those dots. How does this intervention lead step-by-step through a chain of cause and effect to produce that desirable outcome of protecting revenue?

define value

Of course, this is just a hypothesis. Or, really, a set of hypotheses. Once they’re laid out in a cause and effect diagram like this, we can have a conversation about how likely the hypotheses are to be true, how we might test them, and whether the value is enough to be worth building the feature now.

When there are two features competing for top priority, especially when they’re proposed by two different stakeholders, looking at their respective theories of impact allows us to have a much better conversation about value than the typical:

“I think X is most important”
“No, I think Y is more important”
“No, it’s really X…”

Notice that we didn’t have to make elaborate quantitative value models in a spreadsheet to improve our decision-making about value. We’re predicting the future here, so it’s hard to be precise about dollars and cents. Too often, detailed quantitative models provide an *illusion* of knowledge—they’re way more precise than what we can actually know about the future. Building a logical model, however, makes visible the hypotheses people hold in their minds and allows us to reason about them together. It’s the quickest win we know of when it comes to communicating more effectively about value.

Try this with your team. When you’re considering whether to build a particular feature or you’re deciding which of two features should go first, visualize the theory of impact for the feature and let that be the centerpiece of your conversation about value.

Let us know how it goes and what questions come up in the process.

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Advanced Certified Scrum Product Owner (A-CSPO)

And another thing

In the U.S., we just celebrated Cinco de Mayo. Cinco de Mayo is a celebration of Mexico winning a single battle in 1862 against the French army. It was a lead domino, in hindsight. The French still controlled Mexico for a few more years, but the unlikely win at the Battle of Puebla kicked off a series of events that made the larger win possible. It proved the French army could be beaten, something that hadn’t really happened for almost 50 years. It created motivation to continue the fight. And it began to forge a sense of Mexican national unity after many years of civil turmoil.

We’re ponding how to create more lead dominos, and thinking about the challenge that often happens after the first small win. Now what? Should we call it enough and renegotiate our bigger goal, or use that to generate momentum for the next bigger win. Often, there’s a huge emotional challenge after a win, and pushing through that to the next goal makes the difference between “that was cool” and major long term impact.

We had a great discussion about this in our Humanizing Work Conference alumni community session last week. If you’ve been in a workshop with us, you’re eligible to join one of our communities of practice. Contact us for more info or to sign up.

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