The Business of IT

The value of planning for unplanned value

Your organization has one job: Deliver value to your customers. But not all kinds of value are the same, and not all manners of working to deliver value are equivalent. Do you know where your organization is devoting its resources? Let’s examine these parameters and how you can improve the way you work to deliver both kinds of value.

Value and Work

There are two types of value you can deliver: You can maintain old (already-delivered) value, for example you can restore your website when it goes down or you can repair a failed product. Or, you can develop new value, for example performing R&D for new or improved products. Both types of value are important to customers.

Likewise, there are two ways you can work to deliver value: in a planned fashion—following a product roadmap or pre-scheduled plan, or you can perform unplanned work, addressing acute issues as they arise—for example changing dead batteries or replacing depleted printer toner cartridges. Both manners of working are necessary and important.

Value vs. Work

Let’s take a look at the diagram showing Shlomo’s Value Investment Vault for some interesting insights. In the top left quadrant you have planned work that maintains existing value. We all know that light bulbs and printer ink will eventually need replacement, and we could (given the discipline and metrics) plan to replace them on a schedule. This kind of work is repetitive and enervating, devoid of creativity, but performing it in a planned fashion is preventive and avoids frustrating interruptions. Such work is ripe for automation and robotics.

In the lower left quadrant lies unplanned work that maintains  existing value. Most often we don’t know when the website will suddenly go down or the truck will get a flat tire, yet we must repair them in order to restore service. This kind of work is characterized by interruption, frustration, and urgency. While there is no way to eliminate this type of work, you can reserve enough extra capacity in your organization so it does not unduly impact planned work.

The upper right quadrant is where innovation happens. Your products and your teams improve in measured, planned steps. But don’t forget about serendipity: The lower right quadrant is where you can capitalize on discovering new value from previously unknown or unpredictable situations.

How is this Useful?

Use the Value Investment Vault as a diagnostic tool to analyze your current activities. How much of the work your organization performs falls in each of the above quadrants? Poor performers find themselves on the left side of the diagram most often, and seldom have the capacity to innovate, let alone exploit and discover new opportunities. Elite performers spend most of their time on the right hand side—and most of that in the upper right quadrant delivering innovation—and they reserve enough capacity to easily handle unplanned work.

If you need help getting there, you know whom to call.

The Business of IT

Cost vs. Value

Are you in an organization that can not or will not fund improvements because there is zero cost-savings accrued as a result? Are important decisions forcefully hammered flat into a single-dimensional cost metric? Must you justify every action with a business case that boils down to a price tag? If so, I feel sorry for you. The most respected organizations in every field take a more mature view: Value, not cost, is king. And value attracts business.

Value is not cost. Your organization already knowingly or unknowingly invests in value without knowing the associated cost or without being able to guarantee a monetizable benefit. Consider these activities:

  • Improving customer loyalty
  • Delivering innovation
  • Assuring quality of product or service
  • Maintaining relationships with partners
  • Fostering employee satisfaction
  • Improving relationships with suppliers

None of these activities would ever be conducted if cost-savings was the yardstick by which the decision was made. If you do not invest in earning customers, you will have no customers whose satisfaction matters. In fact, no new venture would ever begin if cost-savings was the overriding criteria. And if cost-savings is your only criteria for operating an existing venture, then your venture is not accruing value—it is stagnating, slowly dying in place. You can’t cut your way to growth.

Explore these and other dimensions of value when you next consider a business decision. Business is about more than maximizing revenue and minimizing cost. Business is about value, and value is multidimensional.

The Business of IT

Innovation Motivation

Have you ever seen someone sporting the latest and greatest in technical wizardry—perhaps they are very proud of their new iWatch—but you are unimpressed by it? Sure you have. You have also seen someone sporting the latest and greatest in technical wizardry—perhaps in 2007 you thought this about the brand new product called the iPhone—and you thought to yourself, “that really solves a problem I have; I need that.” What differentiates those two types of products? What can a producer do to ensure customers have the latter reaction, and not the former? I call the distinction Innovation Motivation, and it is described well by Shlomo’s Innovation Motivation Matrix (IMM).

The IMM shows how customers react to different types of innovations. Horizontally, we have two different types of motivations for innovation: The innovation being introduced can be motivated by the wish to help the customer, or by the desire to use new technology. Vertically, we have different degrees of novelty being introduced in the product: Either low novelty, which represents incremental improvements to existing products, or high novelty, representing dramatically different capabilities.

When the producer introduces new products with low novelty and motivated by the desire to adopt technology, as depicted in the lower left quadrant, the customer is puzzled. Who needs a toaster with an internet connection? Of what use is a coffee machine that snaps a photo each time you load it? These products fail to connect with the customer because they are conceived without the customer and deliver no special benefit.

In the top left quadrant, the company introduces great novelty, but for the sake of the technology, not the customer, and the result is customer alienation. Personal 3D printers might be technologically new and cool, but they are (as of today) hardly useful for the general public. Roomba, the giant hockey puck that autonomously vacuums the floor, is amazing technology, but in every household I’ve seen it, it sits in a corner gathering dust once the novelty has worn off. It’s not very useful, the customer regrets spending money on something so cool that quickly becomes so useless, and so they feel alienated from the company, unlikely to buy anything from them again.

But when the company focuses on the customer in developing new products, great things can happen. At the very least, the product will offer satisfaction, shown in the IMM’s bottom right quadrant. RFID-enabled luggage tags are an incremental improvement to the traditional luggage tag, and they deliver great benefit to the customer: reduced anxiety about, and incidence of, lost luggage. Fitbit is not very novel, but customers love tracking their vitals and challenging themselves to meet fitness goals.

At the best, when the customer is the focus and the novelty is high, the product can deliver amazement. 2007’s iPhone was truly revolutionary, and everyone had to have one. The Dyson hair dryer is orders of magnitude better than the standard appliance, and worth the matching price tag. Amazon’s Alexa is a completely new class of device, and it delights customers with its ability to orchestrate so many elements of the household.

The lesson for product companies is clear: Focus on the customer, not on the technology, in your innovation. The early 2010s saw many software companies avidly adopting cloud computing—a technology—for its own sake, without pausing to consider why the customers would care. Predictably, these companies failed to impress customers and sank into irrelevance.

If any of the following signs are true about your product development efforts, you are likely puzzling or alienating your customers:

  • The product label or advertisement contains jargon or three-letter-acronyms (TLAs).
  • You can’t explain why customers will continue to use this product a year later, after the novelty wears off.
  • The customer’s emotional state is not altered significantly by the product.
  • Customers have not been involved in the product design and development.

Where do your company’s products fall on the IMM? What motivates your product development efforts, and how novel are they? Answering this will help you discern what you need to do to satisfy and amaze your customers.

The Business of IT

You don’t need a cloud strategy

It may sound strange, but your organization does not need a strategy for cloud computing. You no more need a strategy for cloud computing than you need a strategy for toothbrushing: as long as your teeth are healthy, who cares if you brush from top to bottom or from left to right, or what brand of toothpaste you use!

So it is with cloud computing: your organization has a business strategy (if not, give me a call). Does that strategy include developing enhanced agility, improved time to market, and increased innovation? If so, then take a deeper look at cloud computing, and build a concrete plan to use cloud computing to fulfill your business strategy.

You don’t need a cloud strategy. You need a business strategy, and a concrete plan to achieve it. If cloud supports that business strategy – then go for it.