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

Where is the value?

Back in the early days of computers, or so the legend goes, when an entire room housed less computing power than in today’s iPhone, a large government agency had a serious problem: their computer system stopped working. Though it was only three weeks since the system had been certified, the startup sequence refused to complete, leaving the agency lacking critical operational capabilities. Work on the project ground to a halt while every engineer on staff checked and rechecked wiring, tubes, and relays to find the issue. But two weeks of troubleshooting amounted to nothing, and the Director of the agency was beside himself with frustration. He decided to hire the worldwide expert on such computer systems, a retired professor who was known for his sense of humor.

The professor arrived on site in a white lab coat, was briefed by the Director, and immediately asked to be given access to the computer room. Once there, he proceeded to walk around the room from cabinet to cabinet. The Director and his staff watched with increasing curiosity as the professor paused before each cabinet for a moment, scratched his beard, muttered under his breath, and moved on to the next cabinet. Finally, after forty five long minutes of this, the professor stood up more erect, smiled at the Director and his staff, withdrew a piece of chalk from his coat pocket, walked over to one machine cabinet and marked a large “X” on the side of the cabinet. “Your problem is in here,” he said confidently. And, sure enough, as the technicians opened up the marked cabinet, they discovered a subtle wiring issue that had been missed by all previous inspections. Gratefully, they fixed the problem and were able to resume operation. “Please, send me your bill – whatever it is, I’ll see that it is paid promptly,” said the Director.

The professor sent a bill to the agency, a one-line invoice for “troubleshooting: $1000”. Unfortunately, as government policy dictated, the Director needed a detailed itemized invoice, and he was forced to delay payment and request the proper details from the professor. The professor’s corrected invoice arrived, and it read as follows:

One piece of chalk, with which to mark the problem: $0.01
Knowing where to place the mark: $999.99

The real value to your customers is in knowing how to fulfill their needs. All the rest is a commodity.