Measuring Business Value

Measurements is a two edged sword. On one hand you cannot see and compare something that you have not measured. One the other hand there are evidence that it generates dysfunction. Conciuosly or unconciously we tweak our ways to get good numbers. We all know and love the story about the development organisation that was to be measured on the number of comment lines in production code. The tool to insert the correct number of comment lines was available just a few days later.

We need to measure, but most organizations seem to measure the wrong things. I think Systems Thinking and Lean can teach us a bit about how to measure in a meaningful manner. Systems Thinking (and Gödel for that matter) keep pointing “one level up”, i.e. don’t measure inside the system, instead measure the system.

Lean (and Scrum and XP) indicates in various ways that we should prioritize according to business value which seems like a good proposition. So I try to convince managers in my client organizations to measure flow of value through the development organization, and as Lean puts it, measure the whole. (Which in itself can be hard, but at least it is not only the development team!)

However, the notion of business value is a fluffy one. And it is usually very hard to get anyone to assign dollars and cents to a customer request in the general case. (Unless you’re a contract developer, when it’s kind of easy, but probably wrong!)

So what I am trying now is to use business value points. In the same way as Story Points work for effort estimation, Business Value Points can be used to let marketing people, business analysts etc. assign relative values to requirements or features.

One complexity still left to address is the fact that at early stages requirements etc. are fairly large and later broken down and re-prioritized. This means that a complete “requirement” is seldom delivered. So the Business Value Points needs somehow to be split when a requirement is split into Epics and Stories.

But if we could measure the flow of value we can also optimize the whole and avoid sub-optimization and measurement value tweaking.

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