Intro to BV Engineering Montreal
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This document introduces business value engineering (BVE) as an approach to continuously improving how businesses deliver value to customers. It discusses how BVE comprises values, principles and practices to incrementally deliver more value from a team. The document calls for starting basic BVE practices, which can yield good results, and outlines some problems currently preventing accurate measurement of success in delivering customer value. It proposes making processes, assumptions and failures more visible to facilitate continuous learning and improvement through action.
![What is it?
BV Engineering comprises the values,
principles and practices that enable us to
deliver more and more Business Value [from a
given team] as we improve.
A learning and incremental improvement
approach to giving customers more of what
they really want, looking at the whole process,
end-to-end.
© Joseph Little 2010
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![Joe Little, CST & MBA
Agile Coach & Trainer
20+ years in senior level consulting to well-known firms in New York,
London and Charlotte
Focus on delivery of Business Value
CST, CSP, CSM
Was Senior Manager in Big 6 consulting
Head of Kitty Hawk Consulting, Inc. since 1991
Head of LeanAgileTraining.com
Started trying to do [Agile] before reading The Mythical Man-Month
– http://agileconsortium.blogspot.com
– jhlittle@kittyhawkconsulting.com
© Joseph Little 2010
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Intro to BV Engineering Montreal
- 1. AN INTRODUCTION TO BUSINESS VALUE ENGINEERING Montreal, June 30, 2010 © Joseph Little 2010 1
- 2. What is it? BV Engineering comprises the values, principles and practices that enable us to deliver more and more Business Value [from a given team] as we improve. A learning and incremental improvement approach to giving customers more of what they really want, looking at the whole process, end-to-end. © Joseph Little 2010 2
- 3. Do we do it now? Well, kind of..... Some businesses and business areas already have lots of discipline for parts of this. (Think: Proctor & Gamble.) In fact, I believe some people are actually doing this pretty rigorously, but I have not actually found any. © Joseph Little 2010 3
- 4. Call to action We have a serious need for action. IMO. Starting basic action is quite simple and easy to do. And will yield good results almost surely. In this talk, we barely start with the practices © Joseph Little 2010 4
- 5. Why do I call it BVE? Scrum: Continuous Improvement Engineering rigor © Joseph Little 2010 5
- 6. Attributions Some people who directly or indirectly contributed: Ken Schwaber, Jeff Sutherland, Kent Beck, Peter Drucker, Takeuchi & Nonaka, Jim York, Chris Mats, Kent McDonald, Womack & Jones, Mary & Tom Poppendieck, Taiichi Ohno, some friends at “a large financial institution in Virginia”, and many others. © Joseph Little 2010 6
- 7. Joe Little, CST & MBA Agile Coach & Trainer 20+ years in senior level consulting to well-known firms in New York, London and Charlotte Focus on delivery of Business Value CST, CSP, CSM Was Senior Manager in Big 6 consulting Head of Kitty Hawk Consulting, Inc. since 1991 Head of LeanAgileTraining.com Started trying to do [Agile] before reading The Mythical Man-Month – http://agileconsortium.blogspot.com – jhlittle@kittyhawkconsulting.com © Joseph Little 2010 7
- 8. A Start “You’ve got to be very careful if you don’t know where you’re going, because you might not get there.” Yogi Berra © Joseph Little 2010 8
- 9. 6 Blind men and an elephant © Joseph Little 2010 9
- 10. My main stance “I’m mad as hell and I’m not going to take it anymore.” (movie quote) “The biggest thing to fix is how we do BV Engineering.” © Joseph Little 2010 10
- 11. What are the numbers for your team? Cost per year NPV delivered per year Derive: “The multiple” © Joseph Little 2010 11
- 12. Let’s do the math... Assume team costs $1,000,000 per year Assume normal multiple is 3x (ie, delivers $3,000,000 in BV) Assume the “real work” itself does NOT get any faster © Joseph Little 2010 12
- 13. Could a better Product Owner make a difference? We make the stories 20% better We use Pareto’s “85-33” rule to get more done in less time We identify more high value epics We motivate the team, so that they are more productive We assure that we actually hit the mark, rather than just say that we did What’s that worth? 3X more BV? © Joseph Little 2010 13
- 14. One version.... Year 1 Year 2 Year 3 Cost of Team $1,000,000 $1,000,000 $1,000,000 Orig Value Delivered per Year $3,000,000 $3,000,000 $3,000,000 NPV $7,460,556 ID Better Stories (+20%) $3,600,000 Deliver Top 33% (85% of BV) $3,060,000 Deliver Top 33% again $3,060,000 Deliver Top 33% again $3,060,000 TOTAL FIRST YEAR $9,180,000 $9,180,000 $9,180,000 Better NPV $22,829,301 Better/Original 3.1 © Joseph Little 2010 14
- 15. BVE Is a basic framework, like Scrum A bit of process flow Make basic assumptions visible Fight and argument and move on Always improve. Always. Always. Add to the framework ‘Show me the money’ frequently Do it as a Team Very limited on prescriptive solutions © Joseph Little 2010 15
- 16. Now let’s change subjects... To think practically, let’s use this framework... © Joseph Little 2010 16
- 17. © Joseph Little 2010 17
- 18. Scrum is a Simple Framework Product Backlog Scrum Product Owner Sprint Backlog Artifacts Roles ScrumMaster Burndown Chart Team Imped Meetings List Sprint Daily Sprint Retro- Planning Scrum Review spective © Joseph Little 2010 18
- 19. Lean Value stream mapping Do it quickly. Identify the single stupidest thing Use it to make one improvement at a time Like Taiichi Ohno’s idea of having the team write up and continuously improve their process © Joseph Little 2010 19
- 20. Toyota Way: Learn by Doing Fujio Cho, Board Chairman • We place the highest value on actual implementation and taking action. Agile Principle #1 • There are many things one doesn’t understand, and therefore we ask them why don’t you just go ahead and take action; try to do something? Agile Principle #3, #11 • You realize how little you know and you face your own failures and redo it again and at the second trial you realize another mistake … so you can redo it once again. Agile Principle #11, #12 • So by constant improvement … one can rise to the higher level of practice and knowledge. Agile Principle #3 "Anyone who has never made a mistake has never tried anything new." Albert Einstein © Joseph Little 2010 20
- 21. The biggest problem People don’t want to admit stupidity People don’t want to make visible their inability to predict how the business will work © Joseph Little 2010 21
- 22. BVE: First Guess BV Engineering Customers The Business External Customer facing people & The Team Internal Internal groups (Firm oriented) Content © Joseph Little 2008
- 23. Some problems We set up the telephone game Customers are not consistent The needs of the customers and of the firm are sometimes in contradiction (or at least somewhat antagonistic) It is difficult to accurately measure success © Joseph Little 2010 23
- 24. Some more problems La donne e mobile The customer is always changing his mind & who the customers are is always changing Stuff is happening out there Everything in the environment, both for the customers and for us, is changing Wow, this technology stuff is always changing A brilliant product today is yesterday’s news tomorrow “I know it when I see it” The customers can’t tell you what they want “What we’ve got here is a failure to communicate” It is impossible to accurately convey what you want © Joseph Little 2010 24
- 25. The other big problem Thinking in the sky Useful thoughts In theory there is no difference between theory & practice. In practice, there is. (Yogi Berra) To know and not to do is not to know. (A martial arts master) © Joseph Little 2010 25
- 26. Is it better this way? Customers The Business External Customer facing people & The Team Internal Internal groups (Firm oriented) Content © Joseph Little 2008
- 27. The Deming Cycle Plan (the experiment) Do (the experiment) Check (the results) Act (think about what you’ve learned and act) AKA -- The PDCA Cycle Content © Joseph Little 2008
- 28. Hallmarks of real BV Engineering! 1. The process is visible and articulated & improved 2. Failures in BV communication are identified and corrected frequently, quickly 3. There is a theory, and a concerted attempt to prove out the theory 4. There is appropriate dynamism and change 5. Business & Technology are partners 6. Success is forecast and also measured after the fact 7. Human judgment is involved (it’s not just the numbers) © Joseph Little 2010 28
- 29. BVE is simple Yes, in its basics, like all important things, very simple. And VERY hard to do well. © Joseph Little 2010 29
- 30. Stopping Point... Any questions now?? © Joseph Little 2010 30
- 31. Two opposite approaches Proctor & Gamble: A ‘traditional’ but highly disciplined approach. “What does the customer want?” “How do we advertise our product?” Google: A new (or old?) approach. Let’s try something, and see if they like it. If so, then we’ll build on it. © Joseph Little 2010 31
- 32. Proctor & Gamble Full marketing program Focus groups, customer interviews, observation, customer segmentation (& lots of other tools) Financial (& other numeric) forecasts Multiple experiments, high rigor Advertising © Joseph Little 2010 32
- 33. Google Let employees create what they want Get a prototype out there “in the real world” See who bites Develop product incrementally based on customer input Monetize later (after we have a real product that a bunch of people really want) Get more “at bats” © Joseph Little 2010 33
- 34. How do I start to act on this? © Joseph Little 2010 34
- 35. In the Workshop: Exercise #1 What is Business Value for us? First pass at the BV Model. © Joseph Little 2010 35
- 36. BV Model: Simple definition Function(s) (Var-1, Var-2,....) = Key BV Result Typically, the Result is NPV (ie, $$$) Or could be: Change in Net Promoter Score. Or could be: Other.... A way of measuring learning (or failure) © Joseph Little 2010 36
- 37. The BV process is visible and articulated Do you understand your’s, end-to-end? Customers The Business External Customer facing people & The Team Internal Internal groups (Firm oriented) © Joseph Little 2010 37
- 38. In the Workshop: Exercise #2 Map out the BVE process is your specific area.... Identify people involved Make plain the theories used (some very stupid) Make plain the assumptions Make plain the BV Model (second pass) See the single biggest thing to improve © Joseph Little 2010 38
- 39. The process is always being improved Is your process always being improved? Does everyone know that? What is the approach to improvement? Small example: Which stakeholders are involved? Do we have the right ones? Are we making the most use of them? Are we overweighted in compliance, legal, regulatory input? How good is our process of engaging them, and getting the most with the least effort? Are we creating knowledge just-in-time? © Joseph Little 2010 39
- 40. Where do you check for communication failures? And are there other points or methods? © Joseph Little 2010 40
- 41. A theory, that is being proved out Is the theory stated as such, or is it assumed to be right? How it is being proved out? What happens when (not if) it is (somewhat) wrong? © Joseph Little 2010 41
- 42. Dynamism and change The appropriate amount of dynamism and change will vary by situation. In general, my experience is that we are adapting too slowly. © Joseph Little 2010 42
- 43. Business & Technology are partners In fact, there is minimal distinction. Anyone can help a partner learn. Can question. Can propose Remember: There is no technical success The Technologists often know more about the customers than you’d think Should we talk about the failure modes here? Everyone on the Team understands what real success would be © Joseph Little 2010 43
- 44. Success is measured 1 to 3 key “end” metrics. Identified. Forecast. Then the real results are obtained. Perhaps not perfectly, but reasonably And learned from. (Was the product wrong? Was the theory wrong?) And communicated back to the Team © Joseph Little 2010 44
- 45. Human judgment Yes, stuff often happens that makes one question whether the “scientific” experiment was fair Yes, one can still have a hunch that the product will succeed later (if not now) So, metrics do not absolve managers from tough human judgment about the actuals and other information they get back © Joseph Little 2010 45
- 46. The unbearable lightness of metrics We use metrics (about the past) to take forward-looking action Metrics help us see how bad we were at predicting the future Metrics help us learn (perhaps first, by helping us see how much we don’t know) © Joseph Little 2010 46
- 47. Multiple Steps are important Some firms focus too much on one or two steps (eg, initial focus group, user story creation, the PO review of completed stories, the product launch) It is not one play; it is the culmination of plays that wins the game Examples: Understand the customer better and spend more time to assure that the Team understands the customer’s problem better and better © Joseph Little 2010 47
- 48. It is not one play... Customers The Business External Customer facing people & The Team Internal Internal groups (Firm oriented) © Joseph Little 2010 48
- 49. The BVE Framework is very simple But all of BV Engineering is not simple. And BV Engineering in your specific case will not be simple. © Joseph Little 2010 49
- 50. RESULT: Another practical use When you hear people talking about the new BVE “tool” or solution.... You now have a framework to put that tool or solution into a context. And you now know to ask, at least: “Is that the part of BVE for us that is the most FUBAR?” © Joseph Little 2010 50
- 51. The next 6 slides show some of the rich detail © Joseph Little 2010 51
- 52. Elements of BV Engineering 1 1. PO Team 2. Product Backlog 3. PB prioritized by BV 4. Priority Poker 5. Story Points (proxy for cost, for cost-benefit analysis) 6. Minimum Marketable Feature Set 7. Reprioritize before each Sprint 8. Increase velocity (remove impediments) © Joseph Little 2010 52
- 53. Elements of BV Engineering 2 1. Making the stories smaller 2. Value Stream mapping 3. Kano Analysis 4. Voice of the Customer 5. Having the team live with the customers 6. Pareto chart (eg, of causes of customer problems) 7. Process charts or high level use cases 8. Other Lean, Six Sigma, or TQM tools © Joseph Little 2010 53
- 54. Elements of BV Engineering 3 1. Understanding the importance of minimizing technical debt 2. Agile portfolio management 3. What quality means to the customer and why it is ‘free’ 4. Just-in-time knowledge creation 5. Modifying the BV model frequently (& the values in the model) 6. Removing impediments 7. Comparing our BV Engineering to theirs We’re different; what does it mean? © Joseph Little 2010 54
- 55. Elements of BV Engineering 4 1. Identifying better sources for good user stories (eg, observation, “living with”, experts, user interaction, “prototypes”, etc) 2. Identifying good user stories 3. Fleshing out good user stories with an Agile specification 4. Improving the monetization of User Stories (or themes) 5. Improving the conversations around the user stories 6. Getting better feedback faster © Joseph Little 2010 55
- 56. Some metrics I like 1. NPV (net present value) 2. ROI (return on investment) 3. Faster end-to-end cycle time 4. Increased sales 5. Increased market share 6. More eyeballs (on a webpage) 7. Improved eyeball demographics 8. Reduced costs © Joseph Little 2010 56
- 57. More metrics I like 1. Reduced risk (although I prefer if this is made more concrete by being monetized...see underwriting) 2. Net promoter score 3. Any specific metric showing higher customer satisfaction 4. Others?? © Joseph Little 2010 57
- 58. Lies, damn lies & statistics It is not having numbers... It is making good use of numbers (that are reasonably accurate) © Joseph Little 2010 58
- 59. The End For now.... © Joseph Little 2010 59
- 60. Retrospective What do you remember? What will you act on tomorrow? What thing(s) will you do to improve your BV Engineering? © Joseph Little 2010 60