The value of value delivery
How incremental development helps to generate real business value
There are many reasons to improve your team’s ability to iterate quickly on features and products. In ‘Evolution of a product feature—Assessments,’ I wrote about reaching your product’s final form through iterative development and feedback. To get feedback, you have to give something to your customers. This means moving quickly, being adaptive, and reassessing often.
However, the benefits go beyond early feedback. Iterative development empowers you to decrease complexity and risk, prevent customers from being overwhelmed with massive changes, and stay ahead of the competition. It also provides the added benefit of getting value to your users faster, driving value for the business.
What is value delivery?
Value delivery, in essence, is about maximizing the value your users receive in the shortest possible time. Consider a feature under development for six months, providing no value to your users until it’s finally released. Value delivery aims to bring that value to your users sooner. One effective way to achieve this is through well-executed slicing of your features.
Calculating value delivery
Let’s look at the following grossly simplified view of two contrasting release cadences. Each horizontal block represents one sprint. Each green block represents the value after the increment is delivered. Early increments accrue value over time after their release at 100k per sprint. The $ value shown is the accrued value over time.
In the winning example (fig. 1. a.), the value is delivered incrementally, accruing over time after each sprint. The result? A clear winner with a value of $1M. In the losing example (fig. 1. b.), you miss out on a significant value of 900k during development. This stark contrast often leads to discussions on the merits of agile development vs. waterfall. However, you may have experienced, that unlocking and calculating that value can be a complex process..
Prioritizing based on value
Value is a useful factor in many feature prioritization frameworks, but calculating business value can be difficult, and in the case of customer-centric development, we rarely have dollar-based value estimations we can use to make decisions.
Instead, it’s helpful to think of the resulting business value created by serving the customer. Let’s consider some ways we can tie a number to the value we're creating. In all of these cases, think about how you would measure the business value.
Things you might do to add value for the customer:
Solve a problem
Improve a process
Improve the user experience
Help new users find the product
Enhance user onboarding
Provide better security
Offer better pricing
Increase reliability
And here are some things you can do that add value to the business. Some of these have a very obvious dollar value, so think about how these options might relate to the customer-centric value items:
Reduce churn
Generate net new revenue
Increase average order value
Improve customer satisfaction scores
Increased market visibility
Improved sustainability
Capture market share
Sign new partnerships
Reduce costs
Let’s look at some concrete examples of calculating value from my own experiences:
I worked at a company where the business value was migrating users to the new platform. Every month without completing this transition was a month we paid to run our old app.
In another case, a missing feature was causing frustration, resulting in user churn. Solving this problem meant real value, calculated by the percentage of SaaS customers retained.
Ok, those are easy, but how do you calculate the value of something like sustainability? By assigning a cost incurred from technical debt for every new feature built. Solving that technical debt now might take one sprint, saving two days of development costs every future sprint.
Hopefully this exercise has helped you think outside the box and find a way to calculate the value you’re delivering. Still, there are times when even our best predictions don’t play out as planned.
The challenges of value delivery
Remember how we saw (in fig. 1. a.) the value benefits of incremental delivery? It’s possible to release the first increment of a feature and not receive value until after the final increment is delivered. It can take time for your users to learn about it. Or, your first increment might miss the mark, taking several more increments before your customer sees the value. Value isn’t always guaranteed.
Still, estimating value is an essential aspect of product roadmapping and planning, and delays can have a tangible impact on business value. This value can often be calculated ahead of time and should be tracked after its release. And when in doubt, tie your customer value back to the business value.