When value is assymetrical

---

I've written a couple of books on project value; you can see the book covers at the end of this blog.

One of my themes in these books is a version of cybernetics:

Projects are transformative of disparate inputs into something of greater value. More than a transfer function, projects fundamentally alter the collective value of resources in a cybernetics way: the value of the output is all but undiscernible from an examination of inputs

But this posting is about asymmetry. Asymmetry is a different idea than cybernetics

"Value" is highly asymmetrical in many instances, without engaging cybernetics. One example cited by Steven Pinker is this:

Your refrigerator needs repair. $500 is the estimate. You groan with despair, but you pay the bill and the refrigerator is restored. But would you take $500 in cash in lieu of refrigeration? I don't know anyone who would value $500 in cash over doing without refrigeration for a $500 repair.

Of course there is the 'availability' bias that is also value asymmetrical:

"One in hand is worth two in the bush"

And there is the time displacement asymmetry:

The time-value of money; present value is often more attractive than a larger future value. The difference between them is the discount for future risk and deferred utility.

Let's not forget there is the "utility" of value:

$5 is worth much less to a person with $100 in their pocket than it is to a person with only $10

How valuable?
So when someone asks you "how valuable is your project", your answer is ...... ?

 

---

---

Like this blog? You'll like my books also! Buy them at any online book retailer!

Kano: Utility at work

---

"Customer value", aka "the value proposition", is complicated. 

Books fill the shelves on those topics. 

• What do 'early adopters' value?
• How does age come into play?
• Is economic willingness different from economic capability in the value equation?
• How do culture and relationships figure in the proposition?

All good questions, to be sure. 

But the missing quality is "UTILILTY", specifically "marginal utility." Marginal utility is the added satisfaction a user (customer, or consumer) gets from having one more unit of a product or service. 

Marginal utility separates the "willing" from the "capable", given the capacity to spend. The whole idea of working on the margin begs images of value plots that could be anywhere from linear (the last unit is just as valuable and desired as the next unit) to various shapes of non-linear (the last and next units' values are different)

One might ask: is there a way to map all this stuff so that a picture emerges? Yes. Kano Analysis may help see the bigger picture.

What is Kano analysis?

Kano analysis is a product feature/function evaluation tool that gives visualization to relative merit over time as trends change. The usual presentation is a four-sector grid with trend lines that connect the sectors. 

The grids are defined by the horizontal and vertical scales. Don't take the word 'scale' too seriously; for the most part the scales are non-calibrated, but informed, opinion:

• Vertical: customer attitude, feeling of satisfaction, or other elements of value appeal.'
• Horizontal: some quality (or metric) of the feature/function that's important to the customer.

 

Trends and Utility

The trends plot the utility of changing customer satisfaction (vertical) as a function of product functionality (horizontal). These plots vary from linear to nearly exponentially non-linear.  And, the utility of satisfaction need not maintain only one direction; direction can change, trending up or down, as customer/user attitudes change.

 

Developers use the Kano board with sticky notes to show how feature/function in the form of stories or narratives might play out over time.

 And, we take the trouble to do this because:

• There's only so much investment dollars available; the dollars need to be applied to the best value of the project.
  Presumably that's the "ah-hah!" feature, but the "more is better" is there to keep up with competition; and, some stuff just has to be there because it's commonly expected or need by regulation.
  
• Trends may influence sequencing of iterations and deliveries. Too late, and decay has set in and the market's been missed.
• The horizontal axis may be transparent to the customer/user, but may not be transparent to regulators, support systems, and others concerned with the "ilities". Thus, not only don't forget about it, but actually set aside resources for these 'indifferent' features and functions.
  

How far ahead of the trend can you be and not be too far ahead? Just a rhetorical question to close this out.

---

Like this blog? You'll like my books also! Buy them at any online book retailer!

Working on a proposal? Some ideas ....

---

Do you read Mike Clayton? You probably should.

Here is his idea of the 12 points of a perfect proposal, augmented and paraphrased with my spin on it.

 

You (better: your value-add)

If you've been solicited by "them" to present a proposal, then "they" already know a good deal about "you". Your (very short summary) narrative should reinforce what they already know about your value-add to their need.

But for an unsolicited proposal, "you" need an opening narrative to introduce and present your value as though you were addressing a stranger. In other words: "Why me?"

Think of this opening narrative as your "elevator speech" ... 30 seconds to set an "anchor" and make yourself "available". Typically, a headline to grab attention and then cover letter or some other means to establish your credibility - in effect, your bona fides.

You're working two biases: "Availability bias" There's value in the fact that you're here and now, so no need to look further. And "anchor bias", your "ah hah!" value hooks them on your offer.

And, in many instances, "you" may be a partnership of literally "you" and others that make up your "team" or partnership. Such makes the introduction and "why me" statement all the more complex, but perhaps all the more compelling.

Them

"Them" are your customer. What they want to know is ... What's in it for them? It's your value-add from their point of view. Show how you have their best interests in mind with this proposal. You understand their needs and desires and know how to satisfy them better than any alternative solution can.

Focus (sans boilerplate)

Any sign of standard 'boilerplate' descriptions, arguments, or evidence will make it look less about 'Them' and more about 'anyone'. 

But focus may be a tricky thing: "They" may want a product, or a service, or product + services. They may want the product, a data package about the product for support purposes, training on operations and maintenance, a warranty, or service-after-sale. 

How does their sense value apportion among all these needs? In a competitive situation, "they" will usually signal their priorities through a list of evaluation criteria for selecting the winner. These criteria should give you guidance about where does the main focus needs to be. 

Value and Benefits

How will your proposal deliver and maximize value to them? The vast majority of business decisions revolve around the capacity to either make money or save money. 

Can you answer this question? Do they go for "best value" or "lowest cost"? If you're not the low-cost provider, then your job is to convince them that your price premium brings unpriced value.

But, if you are addressing government offices, non-profit NGOs, self-help and self-improvement, and other opportunities not oriented to financial gain, then look to the other elements of the "balanced scorecard"(*), the customer's mission and strategic objectives, and of course the evaluation criteria for where you can add value.

Emotions

All that hard evidence gives them a reason to make the decision to accept your proposal. But it may not motivate them to do so. For that, you need to tap into their emotions and biases.

Find emotional hooks into pride, fear, duty, desire, ambition, loyalty, passion... 

Exploit the biases of "availability" and "anchoring" to your idea.

Clayton's opinion: Emotions drive decisions: reasons justify them.

How

So, you also need to show how your proposal will solve their problem, deliver their joy, or enhance their reputation. Make the link between what they want and what you are proposing as clear, simple, and short as you can. .

Process

Next they need to know what will happen if (when) they say yes. What will you do, what will they do, and how long would it all take? For confidence that your is the right choice, they need to see a plan that clearly works.

Context

This section lets them understand how your proposal fits into your life and theirs - your business and their own. This shows that you and they are compatible and is the equivalent of the more traditional (cheesy) 'how we are different to the competition'. Of course this differentiates you. It shows how this proposal is right for them and for you.

Business

Don't go all techy unless they've asked for a technical proposal. Remember who you are speaking to. If your audience is a business person or a group of businesspeople, focus on the business. If your audience is software engineers, focus on the business of software engineering: not the hardware. What is their business? That's how to frame your proposal.

Structure

I get it. You have a lot of ideas to get down. But, before you start, develop a structure that makes it compelling for them to follow. If they asked six questions in a sequence, then a great structure is to answer those six questions... in the same sequence. Make it easy for them to say 'yes'.

One thing: If they have provided a proposal outline to follow, page limits, drawing or illustration or image specifications, and overall format, then don't experiment. Make it easy for them to think highly of you for making it easy for them because they can directly use your proposal materials. There is almost nothing worse than making them reformat or search for content when they told you explicitly what to do

Quality

Finally remember Mark Anthony's advice: 'The evil that men do lives on. The good is oft' interred with their bones'. People remember your mistakes and easily forget all the good stuff. Make sure you check the quality of your proposal, not once, not twice... Better still, get the pickiest, most pedantic person(s) you know to be your "Red Team". You invested all that time. Now add a little more investment, to avoid throwing it all away!

What does a "Red Team" do?

• Working from your perspective, they are editors, fact checkers, and readers for both content and flow
• Working from your customer's perspective, they are challengers to your solution, and they are challengers to whether you've checked all the boxes and met all the requirements of a specified format.

_______________

(*) Balanced Scorecard for a business: Financial, Customer Needs, Operations and Operations Efficiency, and Organizational learning and development

---

Like this blog? You'll like my books also! Buy them at any online book retailer!

Value shifting as we speak

---

I wrote "a" book on project value, "Managing Project Value", though I would like to say I wrote "the" book on project value .... but I won't go there. (See the cover image below)

Now, in that book I assert that "value" is commonly in two flavors:

• Value as a system of beliefs, " .... are a moral and ethical code of sorts; collectively, they form culture ... "
• Value as worth, " ...Value is the worth we place upon something for which we are willing to give up something else.  In other words, worth or worthiness has a transactional aspect, and thus we speak of ‘transactional value’ 

Business value begets project value
For decades, business value has been transactional, the ultimate purpose of which is to increase shareholder value in the business.

And so, we get this bit:

We posit that the best way project managers contribute to maximizing value is to deliver a “best value” outcome.

Best value is the most valuable set of outcomes possible for the available investment, risk, and constraints.

Best value is not necessarily best financial benefit; best value can be the best possible outcome of any scorecard metric.

Best value at the project level maximizes value at the business level

But, is all this still true?
Is "maximizing shareholder value" giving way to some other measurement or accountability?
Perhaps
And, can there be accountability without competition, the "Economist" editors ask.
Perhaps not
If not, then away with monopolies!

And to whom should there be accountability and for what?
Is this a new enlightenment?
Maybe the circle is widening; no longer mostly shareholders and shareholder value.
But, as I've written elsewhere, accountability to everyone is tantamount to accountability to no one. So, add carefully to shareholders those to whom you are to be accountable.

Project balance sheet
All then market, cultural, and political dynamics take us back to the project  balance sheet: business value in balance with project outcomes and risk. If one side is to change -- the  value proposition of business -- then so to must the other side.

To wit: stand by for change; stand by for challenges to project culture!

---

Buy them at any online book retailer!

A commentary on Agile

---

I was looking back at some prior essays on Agile and came across the April 2012 PMNetwork magazine. Specifically I was attracted (again) to page 58 for an interview with some agilists on the state of the practice.

Here are a couple of quotes from Jim Highsmith worth tucking away:

Agile project management embraces both “doing” agile and “being” agile—and the latter is the hardest. It defines a different management style: one of facilitation, collaboration, goal- and boundary-setting, and flexibility.

... agile is changing the way organizations measure success, moving from the traditional iron triangle of scope, schedule and cost to an agile triangle of value, quality and constraints.

My take:
Doing agile and being agile: Good insight, but these ideas are certainly agile but not unique to Agile.

• To my way of thinking, all enlightened project managers have been doing this all along, or they should have been.

Now, I certainly agree: Agile calls for a reset of manager's and management's approach (aka style) to projects.

• Fixed price, for a fixed scope, in a fixed schedule is ok if you're in "we've done it before" or some kind of production, but not if you are trying to cure cancer, etc.

Value shift: Agile shifts the discussion from fixed value to best value. And, what is best value?

It's the best the team can do, with the resources committed, towards achieving project goals that will ultimately lead to business success.

Who says what's "best"? In the Agile space, that is a collaboration of the project team, the sponsor, and whoever holds the customer/user's proxy. That's the key:

• The customer/user--through their proxy--gets an input to the value proposition because they may use or buy the outcomes, but the customer/user has no money at stake; it's other people's money, OPM
• The sponsor also gets an input  because it is their money at stake. (The sponsor may be a contracting office, as in the public sector)
• The project team gets an input because they are in the best place to judge feasibility.

Measuring success: Highsmith's second idea is certainly Agile, but it may be too agile for some. Why so? First, there's still "other people's money (OPM)".... . you can't work with OPM and not have metrics of performance to stack up against the money. So, the cost-schedule-scope tension may be hard to manage, but at least there are metrics.

I don't have a problem with another paradigm, say Highsmith's value, quality and constraints, so long as they come with metrics that align with the value that sponsors put on money.

That's why I associate myself with best value: It's OPM with metrics that align with a value proposition leading not only to project success but to business success as well.

---

Read in the library at Square Peg Consulting about these books I've written
Buy them at any online book retailer!

Read my contribution to the Flashblog

Agile in cycles

---

Agile methods are a grand bargain with the sponsor and with the portfolio manager:

In trade for latitude to encourage and accept change, the agile project manager delivers the best value possible for the allocated investment

And so, one is encouraged to ask: how does the investment for  best value -- aka: optimum capital allocation -- get envisioned and planned?

Enter: Planning cycles!

Yes, but ....

The customer (user) determines value, so how does that dynamic get cranked in ... (out yonder, beyond agile interations where, close in,  the customer dynamic is well understood)?

After all, consider: the portfolio leader must come to grip with dynamics that may affect strategic optimization and value maximization. Customer-directed value may well:

•  Introduce unanticipated “creative destruction”, or “destructive innovation”
• Affect carefully crafted portfolio coherence and coupling
• Change commitments on the business and project scorecards, and
• Affect stakeholder KPI’s

 Throughput is the big test .... throughput is what counts in the end after all the creation and innovation

Eliyahu Goldratt and Jeff Cox, writing in their business novel “The Goal”, made popular the concept of throughput when they set down their ideas for the Theory of Constraints. Throughput—a particular focus of agile methods—is defined as:

Throughput is that which is valuable to customers and users for which they are willing to pay and willing to adopt in their operations.

In agile methods, planned throughput is adjusted after each cycle or iteration. This table summarizes agile throughput.

Agile throughput
Customers	Throughput is what customers buy and use
Stakeholders	Throughput improves the business scorecard
Project	·   Each agile iteration produces throughput ·   Each iteration consumes resources, and … ·   Depletes the business balance sheet
Business	Throughput restores business balance sheet over time

Need more? Chapter 11 in my book "Managing Project Value" will give you all you can handle.

---

Read in the library at Square Peg Consulting about these books I've written

Buy them at any online book retailer!

Read my contribution to the Flashblog