Sunday, 13 July 2014

stakeholder value

Willy the CEO slammed down his mobile after another ear bashing from his biggest investor. He took a breath, dialled the newly appointed CTO and explained the situation. “We’re in the last chance saloon, RJ. The board have given us six months to fix what we’re delivering from Engineering. We need to prove our value and fast!” Willy sighed and continued, “They’re pushing me to consider outsourcing everything.”

Sitting in his office, RJ took a deep breath and thought about his team’s performance, “My teams are solid. We deliver on time and we deliver high quality, well-tested code but still the stakeholders complain about the product. What’s going wrong?” He reached for the phone and called Colin, the coach.

Sitting in RJ’s office some days later, Colin explained to RJ about stakeholder value, “Stakeholders sponsor a product because they believe it will give them benefit or value, if you like. Your teams need to focus on delivering this value to the stakeholders.” “I thought we were doing that,” said RJ sounding confused. “You’re focussed on building things for end-users; you need to understand stakeholders are customers, too” said Colin.

He stood and moved to the whiteboard. He wrote one line,

“How Do You Measure Stakeholder Value?”

RJ looked blankly at him, “What do you mean?”

“Another way of putting it is; how do we know we’re building the right thing?” replied Colin. “But we place a very high emphasis on quality; we have thousands of tests to prove we’re building the right thing!” said RJ.

Colin took a deep breath, “What you have are thousands of engineering tests. Engineers created those tests for their benefit and they are extremely valuable but they can only tell you if you’ve built the thing right, they can’t tell you if you’ve built the right thing.” He paused while RJ thought about this. “Without stakeholder input you can never know if you’ve built the right thing, you’re just stabbing in the dark.”

“So we need to introduce stakeholder tests?” asked RJ. “That’s only part of it,” continued Colin. “We also need to make sure the thing we’re building right is the most valuable thing we can build. It’s no good building a perfect thing that nobody wants,” he said with a grin.

RJ arranged for Colin to meet with Lana, the Business Analyst and some key stakeholders at their own offices. With everybody seated round a table, Colin took a handful of features and got the group to rate them on scale of 1 to 5. After some bickering amongst the group, five features scored as highly valuable. Of these, the group picked ‘Clicks-to-Cash’ as their most valuable feature.

Colin then started to ask questions about the value of the feature. “According to our site analytics, about 30% of customers with more than three items in the basket drop out before payment.” said the Head of Marketing, “the checkout process has far too many clicks and is losing us sales. I can get you actual figures if you like.”

“Thanks, I’d appreciate that. We can judge the success of ‘Clicks-to-Cash’ simply by recording what percentage of customers with more than three items in the basket drop out before payment after the fix compared to the percentage before the fix.” Suggested Colin.

The meeting continued, dealing with every item on the feature list. Later, Colin discussed the outcome with RJ, “Now we know what the most valuable things to work on are. We’ve also agreed with the stakeholders what they will look like – acceptance criteria, if you will. Lastly, we’ve agreed how to measure the success of the features. All of these have to be known and agreed if we’re to deliver stakeholder value”

After re-scheduling the work, RJ’s teams continued delivering high-quality code but this time, he knew they were also delivering high-value features. If they continued with this approach, the board would soon change their minds about outsourcing them.

“It seems so obvious now,” said RJ to Colin. “I can see that before we were building high quality features we thought might be wanted and might be valuable. We didn’t ask the stakeholder’s opinion because they were too busy to come to us but now I realise we have to go to them.

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