Review: The art of business value

Mark Schwartz is the author of The art of business value. You could see this book as his quest to the concept of business value.

Is business value the same as customer value? The question of business value is the question of purpose, motivation, mission, and direction. It is a question of value and values.

In the first two chapters the author examines many different ways how known (agile) experts use or describe ROI, NPV, MVA, Profitability Index, IRR and payback period. All these measures are really just proxies for what the company ultimately values, like shareholder value, and they are unlikely to be useful to a product owner making feature trade-off decisions.

The author abandoned the idea that business value is a simple formula, known ahead of time and simply applied to user stories, and accept that business value requires interpretation and asks himself whether the model of a product owner (or business representative) doing all the interpretation continues to make sense. Many Scrum teams struggle with getting the product owner to prioritize non-functional requirements, such as security stories, work that reduces technical debt, alongside functional user- facing requirements. Following Eric Ries’ lean start-up approach, the product owner is no longer the interpreter of business value. Instead, value is discovered by the team that does validated learning experiments and hypothesis testing.

In a next chapter bureaucracy is put in the spotlights. Bureaucracy is all about rules and proving that they have been followed. Bureaucracy often leads to compliance requirements. But what if those requirements actually are adding business value?

Management, just as culture and bureaucracy are often viewed as impediments. Is the CIO responsible for executing projects, or responsible for delivering business value from IT investments? The CIO’s challenge is to show that IT is adding concrete business value to the organization. The IT organization must become an interpreter of business value as well as a provider of technical skills, and its interpretation must influence not only the behavior of project teams but also the enterprise’s business strategies.

The author finally gives his definition of business value: “Business value is a hypothesis held by the organization’s leadership as to what will best be accomplish the organization’s ultimate goals or desired outcomes”. He states that the agile team will be responsible as a whole for delivering business value.

The last chapter describes thought experiments to see if they influence the way you think about business value. E.g. adopting a DevOps culture and a Continuous Delivery pipeline or six ways to think about the CIO’s role.

Conclusion: The book The art of business value is not easy to read but after you have read it and executed one or more of the experiments, you have a much better idea how to cope with business value. And it gives valuable insights in the role of the product owner and the agile team too.

To order (Amazon): The art of business value