The Art of Business Value

🚀 The Book in 3 Sentences

It is a book that wants to define the concept of Business Value in the context of software mostly. It also delves into the different ways of working and how it affects business value.

🎨 Impressions

Business value is a very abstract concept. Sometimes it is money, sometimes other things. One point to mention is that we do not know what is business value, we assume that it is something and therefore most of the business value and business cases are a hypothesis. I liked the book but as business value, it is also a bit vague. Sometimes I felt like there was too much talk about frameworks such as agile rather than defining or methods to define business value.

✍️ My Top Quotes

• To those who are deploying code. We can talk all we want about business value, but they are the ones creating it.

• It didn’t make much difference to us in a Waterfall world—we cared about schedule and cost milestones. But in Agile practice, we only care about the delivery of business value. Which means we care about . . . what?

• A core principle of Agile and Lean theory is that software development projects should seek to maximize business value.

• DevOps, in a sense, is about setting up a value delivery factory—a streamlined, waste-free pipeline through which value can be delivered to the business with a predictably fast cycle time.

• The thirteenth “elephant in the room,” according to Kruchten, is that business value is “mentioned everywhere, but not clearly defined, or pushed onto others to resolve.”

• “the product owner is responsible for making sure the project earns a good return on the investment made in it.”

• The Problem: business value, critical but elusive, remains at large. Our first set of clues leads nowhere.

• First learn the meaning of what you say, and then speak. Epictetus, The Discourses

• Family-run businesses account for 70–90 percent of global GDP.

• Any notion of business value as NPV, SVA, or ROI would have had them divest the business. The moral of the story is that, as the owners of the company, they had the right to declare business value to be anything they wanted. It was their company!

• *Michael Porter, a Harvard Business School professor and a leading authority on competitive dynamics, argues that there are really just three generic competitive strategies a business can adopt: cost leadership, differentiation, and focus.

  • To pursue a cost leadership strategy, the company focuses all of its efforts on keeping its costs lower than those of its competitors.
  • A differentiation strategy requires that the company provide something that is considered unique across the industry—design, brand image, feature set, technology, or dealer network, for example.
  • With a focus strategy, the company zeros in on a particular target market or geographical area and serves it better than the competitors.

• The product owner must be a single person with authority over all questions of value. “For the product owner to succeed,” according to Ken Schwaber and Jeff Sutherland, the founders of Scrum, “the entire organization must respect his or her decisions.”

• Ries is suggesting that the business does not even know what will generate business value; instead, it entertains a series of hypotheses about value and then attempts to confirm or disprove them, arriving at a finer and finer understanding throughout the process.

• Each problem that I solved became a rule, which served afterwards to solve other problems. René Descartes, Discourse On Method

• Large organizations tend to steer toward bureaucracy as a way to maintain standards of behavior. Hating bureaucracy is a bit like hating the law of entropy. It is simply a fact, a method of imposing order on chaos (okay, that makes it the opposite of entropy). That doesn’t mean that there isn’t much to hate about poor bureaucracy or poor uses of bureaucracy.

• Schein also points out that a normal part of organizational growth is the creation of rules and paperwork to make up for the loss of face-to-face contact.

• Sine ira et studio—that is, “without anger or bias.”

• “Bureaucratic administration means fundamentally the exercise of control on the basis of knowledge.”

• The Rules: we stumble upon a number of rituals conducted by the organization. From where did these practices emerge? Could this be yet another clue?

• “In high-performance organizations today,” he says, “people who design, build, and run software-based products are an integral part of the business. They are given—and accept—responsibility for customer outcomes.”

• At last I will devote myself sincerely and without reservation to the general demolition of my opinions. René Descartes, Meditations On First Philosophy

• Business value is not a simple formula somehow known by the business. It shouldn’t be confused with customer value or user value. High-level business goals like “maximizing shareholder value” must still be interpreted into concrete formulations of business value. These concrete interpretations of business value are not always explicit and often must be discovered. Bureaucracy and culture seem to contain clues to what the organization values.

• The Waterfall model was based on taking a point-in-time snapshot of the information we know and using it to create a long-term plan that we would adhere to. The Agile insight was that we should change our notion of what features will create business value over time as more information becomes available and, in fact, that it can be worth an investment even just to increase learning, thereby reducing uncertainty and opening a space in which innovation can occur.

• “Self-organizing teams do not just happen, they need the right environment. The organization is responsible for supporting the team development by creating the conditions needed for teams to succeed.”

• *In his textbook on managerial accounting, Charles Horngren identifies five techniques used to incorporate risk into investment decisions:

  1. Insist on a shorter payback period
  2. Increase the discount rate
  3. Reduce projected cash flows by a percentage
  4. Perform a sensitivity analysis
  5. Use probability weightings of different cash flow scenarios to derive an “expected” outcome

• Cost of Delay was introduced by Donald Reinertsen in his book Product Development Flow. In order to demonstrate that organizations should invest in reducing lead times in the product development process, Reinertsen proposes calculating the cost of delaying the introduction of features into production

• The greatest challenge to any thinker is stating the problem in a way that will allow a solution. Bertrand Russell (perhaps apocryphal

• Treat the Enterprise Architecture as an asset with economic business value, both realized and latent. The latent value is something like a real option.

• Continuous Delivery creates almost a “calculus” of smaller and smaller batches, with correspondingly smaller risk as individual units.

• In To Sell is Human, Daniel Pink reports that his studies show that people who are in non-sales positions actually spend about 40 percent of their time at work engaged in sales activities: persuading, convincing, and influencing people.