The document discusses the concept of value engineering and how it can be used to drive innovation at scale. It defines value engineering as systematically managing uncertainty and return on innovation through rapid experimentation to identify winning ideas. Key aspects of value engineering discussed include defining outcome-based metrics, driving rapid feedback, and using tools to support the value engineering cycle. Examples and case studies are provided of how various companies have leveraged value engineering approaches.
3. Agenda
Why we need to value at the center of ‘Value Engineering’
Terminology
What is ‘Value Engineering’
Examples and Case Studies
4. What you will learn
● How Value Engineering enables enterprises to systematically manage the
uncertainty and return of innovation in their organization
● Quickly and cheaply experiment to learn what are winning ideas, and what do not
deliver value and should be discarded
● How to define outcome-based metrics to build value statements, and improves
visibility and accountability across your organization
● How to drive rapid feedback to accelerate innovation and better decision-making
● How tools can play a role in the Value Engineering / Lean Thinking cycle
5. “What gets measured gets managed - even when it's
pointless to measure and manage it, and even if it
harms the purpose of the organisation to do so”
Peter Drucker
6. What is value for you?
What are the first questions your leadership and organization ask when you have a
new idea?
- How long will it take?
- How much will it cost?
How do you measure success?
- On time?
- On budget?
- On scope?
7. What is value for you?
Douglas Hubbard's book "How To Measure Anything", Hubbard's research
highlighted that people are looking at the wrong measures of success.
It’s not how long will it take, or how much will it cost.
It’s should we build it, and can we build it?
8. Outcomes over Output
Outcomes
● Increase customer subscription by 15%
● Decrease page load times by 25%
● Reduce client integration times by 15%
Output
● Compete your 5 assigned stories within the sprint
● Release the application on January 1st 2019
● Insure your cash burn rate is $100,000 per quarter
10. How is this different from agile software delivery
Investment in capabilities to make experimentation cheap
Push decision making to the team, based on leadership direction
Funding and investment accountability into the teams
Measure of success are outcome and output
12. “60%–90% of ideas do not improve the metric they
were intended to improve. Thus if we’re not
running experiments to test the value of new ideas
before completely developing them, the chances
are that about 2/3 of the work we are doing is of
either zero or negative value to our customers”
*Statistic from Ronny Kohavi
- Lean Enterprise
13. Building the Wrong ThingNot Impacting Key Metrics Catastrophic Overspend
Why Should I Care About
Value Engineering?
Tranche Funding
VS
Early Customer Feedback
VS
Outcome Driven
VS
14. Make better decisions on
what to bet on based on
the knowledge available
Learn early and often at every
level of the organization what’s
providing value and what’s not
Build a Hypothesis at multiple
levels of the organization for a
hierarchy of lean experiments
Hypothesize Bet Pivot / Persevere
Key Steps to Leverage
Value Engineering
15. "I'm not sure" is simply a more accurate
representation of the world
- Annie Duke
16. 1. Think in bets.
2. Break outcomes down into smaller experiments
3. Enable metered funding at multiple organizational levels between teams
executing on experiments and the stakeholders funding them
4. Measure what matters but also communicate value in terms of dollars and time
to give context in the language of finance
5. Empower teams with the ownership of value by embracing uncertainty at
higher levels of the organization in pursuit of outcomes
Value Engineering At Scale - The Mindshift
17. “You don’t want to be agile just for the sake of being agile.
You’re looking for outcomes. And the reason for that is in
today’s world, it’s moving so quickly, you can’t build the
perfect product.
You have to build a good product, and you have to iterate a
thousand times to perfect it. And the difference between
winners and the losers are, the winners just iterate faster.”
- CEO AppDynamics
18. Confidence Voting: Stakeholders trend their confidence scores to give a real-time
look into experiments that may have more unknowns than others
Cadence: Plan and evaluate ongoing experiments across planning increments and
releases with a halt, pivot or preserve decision point
Tranches: Monitor experiments in terms of reaching the desired MVP by the next
investment trauanch. For example, we achieve MVP1 in Q1, MVP2 by Q3, etc.
Value of Outcome: Compare value vs cost at scale to help overcome natural bias
and drive the movement of bets to align with desired outcomes
Value Engineering At Scale - A Portfolio of Experiments
19. Execution: How might we best explore the Opportunities to achieve the business
outcome? What do we hypothesize will have the most impact?
Guidance from the business: How might we achieve the business outcome?
What are the most promising opportunities to pursue?
Business Outcomes
Learnings: How might we prove our ideas right or wrong? How can we
validate/invalidate our assumptions that this is the right solution?
Opportunities
Ideas
Experiments
Increase brand loyalty by 30%
20. The earlier we can pivot or fold on bad ideas, the
less time and resources we waste, and the more
we can devote to ideas that will deliver value to
our customers
- Lean Enterprise
21. Q1 Q2 Q3 Q4
What can we learn in
a quarter?
What can we learn
in a month?
What can we learn
this sprint?
Bet: $80,000
Outcome: 3%
Bet: $120,000
Outcome: 12%
Bet: $500,000
Outcome:20%
Bet: 1.4MM
Outcome: 45%
23. “The long-term value of an enterprise is not
captured by the value of its products and
intellectual property but rather by its ability to
continuously increase the value it provides to
customers — and to create new customers —
through innovation.”
- Lean Enterprise
24. ● Building a Hypothesis
● Stakeholder Confidence Voting
● Evaluating potential investments
● Evaluating ongoing experiments
● Pivot / Persevere Visualizations
Live Scenario
25. - John Doerr
“Leaders must get across the why as well as
the what. Their people need more than
milestones for motivation. They are thirsting
for meaning, to understand how their goals
relate to the mission.”
26. Case Study: Top 10 US Bank
WE BELIEVE THAT < performing this initiative >
THEN WE WILL < achieve this result >
WE WILL KNOW THIS IS TRUE WHEN < measurable outcomes not outputs >
27. Case Study: Top 10 US Bank
WE BELIEVE THAT by leading business agility
THEN WE WILL increase adaptability and resilience
WE WILL KNOW THIS IS TRUE WHEN
‣ 80% of our customers agree that we have improved our quality of service
‣ 80% of our customers agree that we solved their issue first time
‣ 80% of our customers score as supporters on Net Promoter Scores
28. Case Study: Top 10 US Bank
WE BELIEVE THAT by leading business agility
THEN WE WILL increase adaptability and resilience
WE WILL KNOW THIS IS TRUE WHEN
‣ 80% of our teams agree collaboration has improved
‣ 80% of our teams agree transparency has improved
‣ 80% of our teams agree they have all the tools they need to perform their work to a
high standard
29. Case Study: Top 10 US Bank
WE BELIEVE THAT by leading business agility
THEN WE WILL increase adaptability and resilience
WE WILL KNOW THIS IS TRUE WHEN
‣ 80% of our teams can demonstrate meaningful progress for feedback in a timely
manner
‣ 80% of our teams aim to achieve outcomes over output as a measure of progress
‣ 80% of a teams customers agree they have increased their effectiveness in serving
their needs
32. More information
Read
● How to Implement Hypothesis-driven Development
● Managing The Innovation Portfolio
● The Most Important Metric You’ll Ever Need
Watch
● ExecCamp at The Lean Startup Conference (5 mins)
● Talks At Google: Turning Executives into Entrepreneurs at ExecCamp (45 mins)
● How High Performance Organizations Innovate At Scale (45 mins)
Contact Barry at www.barryoreilly.com/about Learn online at www.leanagile.study
