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The First Step to Creating Business Value

Mike Cottmeyer Chief Executive Officer
Reading: The First Step to Creating Business Value
The first step to creating business value throughout the organization is to identify the right business capabilities to organize around.

Transcript

What do you organize around if our goal is to organize around customer value? Well, it’s not super clear to start off with. You have candidates. So, if there are common services or feature sets or products or something like that, that you can naturally group into, that’s often a pretty obvious pattern. There’s still a lot of times dependencies and coordination and things like that. But if you’re in a relatively small organization or there’s parts of your app that can be carved off into really customer identifiable segments, cool, go do that. Lot of the big organizations we’re working with a couple fortune, 10 kinds of companies. And these are huge tens of thousands of people that are interacting in very, very complex systems.

And so, like the inclination, if you can’t get to a product intuitively is to start maybe hunting a value stream. Well, the problem with value stream and organizing around value streams is that often the value streams intersect with your organization and the technology in ways that actually create even more dependencies. And so, the goal of agile transformation is to really create autonomous units that don’t have dependencies between them. That’s the Holy grail of where we’re heading. And so, we want to organize in a way that gives us the possibility of ultimately transforming into a value streamed or a product aligned organization, because right now, often we’re in a project aligned organization.

And so, oftentimes the starting place for organizational structure is to look at the business architecture using a technique called business capability modeling. So, but in a nutshell, what we’re looking for, so we’ll come in early into an engagement and we’ll do a business architecture, business capability analysis of your organization. And what we’re hunting, the ideal candidate for a scrum team, in a factor, a scrum based, or a safe based organization is the intersection of dedicated people, a singular business problem, and dedicated technology. It can be all kinds of different things depending upon the organization. But you think about it, when I talk about a scrum team needing to be six to eight people, want to have everything, and everybody necessary to do it, I want to have few dependencies.

I have to have a dedicated team. I have to have ownership of the technology, and there has to be, I’m going to say, a clear backlog. But that clear backlog has to be focused on something that a product owner can own. That’s the ideal, that’s the Holy grail here. Very seldomly in large organizations, right out of the gate, is that a product or is it a value stream? It’s just usually not. And so, the thing that we hunt, like I said, is typically the business capability. So, what you can do is you can start to look at your organization as a map of different kinds of business capabilities. And those business capabilities can basically decompose infinitely, but we can start to look at all of the different business capabilities, the people that are supporting them, how they’re performing where the risk is, all that kind of stuff.

And this is a way that most organizations are actually from, a lot work with big consultancies and things like that, they’re used to looking. They don’t always know quite what to do with their business capability models, but they understand that in order to do something for this user out here, I need to have something from that business capability, something from that business capability, something from that business capability, something from that business capability, and something from that business capability. And the user actually takes a journey through all of these different parts to get anything out of it that they actually want.

And so, just as a quick aside, one of the interesting things about doing this analysis is that you’ll often find that a lot of organizations have a lot of duplicated business capabilities. And so, they’ll have a business capability, sometimes those business capabilities are supported by multiple technology platforms, multiple teams, things like that. So, by looking at your organization through a business capability lens, one of the things that often gives you the advantage of doing is being able to find places to drive efficiency. So, if you know that you’ve got a business capability over here, that’s in effect the same of the business capability over here, same as business capability over here, oftentimes you can group those into a singular team, rationalize the technology, architecture, rationalize the staffing, all that kind of stuff. And you end up with one business capability that’s doing something for the entire organization. That’s a possibility.

So, often, what ends up happening is that as you’re creating these product owner teams, they are interfacing with other business capability focused teams. So, you end with this structure that I’ve been talking about that’s largely focused around business capabilities. So, that often is a really good starting place in a large complex organization to start to get work to flow through things.

Next Do We Treat Our Internal and External Customers the Same?

Comment (1)

  1. Paul Sutton
    Reply

    Love seeing how this has evolved Mike.

    Reply

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