If you who haven’t read Project to Product yet or any of my previous posts on the four key flow items from the Flow Framework™, let me give you a bit of background. There are four flow items that provide value to the end-user of your software product: features (new business value), defects (quality), technical debt (removal of impediments to future delivery) and risk (security, governance, compliance).
Dr. Mik Kersten—the author of the Amazon best-selling book and creator of the pioneering framework—goes into incredible detail explaining this concept. The framework, he expounds, can be used to gain real-time business insights into the product development process to improve the flow of business value across the IT organization.
While scrutinizing Mik’s assertions, however, I realized these flow items have very similar concepts to the world of financial accounting. That if great insights can be gleaned from a company’s financial statements, the same could be true for product development teams.
Features as business assets
I’m not going to go into why we build features; it’s self-evident why it’s important to continue to provide customer-facing value. What I do want to go into is how to relate features to entries on a balance sheet.
I posit that the relationship between features and a product is analogous to revenue-generating assets in a company. They are long-lived, tangible things that generate revenue. Often they are also the most expensive items purchased, but their reward is that customers pay for them and as such, they generate real direct value to the company.
It’s unclear to me at this time whether features (like real assets) depreciate over time or if they retain their value indefinitely. A killer feature that serves as a competitive advantage today will eventually turn into a table-stakes feature that’s simply expected by customers. That said, the feature is still valuable to customers and to the business.
Features are somewhat different than the other flow items in that they generate positive value to the company. For the most part, the other three flow items reduce the likelihood of negative value:
- Fixing a defect doesn’t explicitly bring in new revenue per se. It does, however, correlate to product quality, a smooth customer experience and protects the integrity of the brand. Nail these last three and customer retention rates will increase to lock-in future revenue for stronger financial planning.
- Allocating more resources to risk work isn’t necessarily going to generate more sales, but it reduces the chance of a security breach leading to a loss of customers and potential legal action.
- Shoring up technical debt isn’t going to improve the company’s bottom line this quarter, but will make it easier to generate value next quarter.
While all the flow items provide value to you and your customers, features are typically seen as more positive than other flow items. I believe this is why companies often find themselves caught in a feature death spiral.
Since features are so often prioritized as inherently more important than the other flow items, companies can focus too much on the short-term gains of pumping out features instead of taking a holistic view of their flow distribution (a measure to determine if you’re prioritizing work that is creating business value). For more on flow metrics, check out my colleague Dominica DeGrandis’ article for Dzone ‘Flow Metrics: software delivery metrics for business leaders‘.
Likewise, spending all your engineering resources to purchase features without paying down debt is analogous to cutting down the fruit tree to get the fruit faster. Yes, you get more fruit today, but tomorrow, you’ll have nothing.
Next time I’ll explore how these all fit together in a Product Balance Sheet and Product Income Statement.
The Flow Framework a year later – DevOps Enterprise Summit 2019, Las Vegas
Find out what have we learned over the past 12 months working at the vanguard of the project to product movement and by attending one of our three sessions at DOES 2019, where we’ll also be exhibiting (booth 403).
Monday, October 28 | 11:25 – 11:55 | Chelsea Ballroom
Shift Happens: Do You Have the Right Team for Managing Work by Product? – Dominica DeGrandis (Principal Flow Advisor, Tasktop)
Do new ways of working have you wondering how to structure your IT teams? As more organizations start managing work by product, some long-standing roles will become less important — and others will become mission-critical. In this talk, you’ll learn which roles are at risk and three new roles to consider for your IT organization. You’ll also learn a useful tool that helps you hire for these new roles — by starting with your own people.
Tuesday, October 29 | 2:35pm – 3:05pm | Mont-Royal 1
Using Flow Metrics to Drive an Integrated Toolchain for Service Delivery, Agile, DevOps and PPM – Nicole Bryan (VP, Product Development) and Jeff Zahorchak Manager, Enterprise Applications, Select Medical
As an IT professional, prioritizing demand while delivering exemplary customer service is always the expectation. However, completing project work, fulfilling customer requests and mitigating service interruptions while making sure that leadership is informed, and nothing slips through the cracks can be daunting. While IT teams are measuring improvements in process, productivity, quality, cost, revenue, and adherence to standards – they still can’t identify the rate of value delivery as correlated to desired business outcomes. During this session, attendees will learn about Select Medical’s journey to implement a fully automated, integrated toolchain for Service Delivery, Agile, DevOps and PPM, and how Flow Metrics are allowing for continuous optimization in the pursuit of achieving greater value to the organization, faster.
Wednesday, October 30 | 11:10am – 11:40am | Chelsea Ballroom
Project To Product: Beyond the Turning Point – Dr. Mik Kersten (CEO & Founder, Tasktop)
In many enterprises, Agile and DevOps transformations are starting to get board-level visibility as the need to become a software innovator becomes critical to company survival and success. But how many of these transformations are on track in terms of producing the results that the business is expecting? How many of these organizations are tracking the results of these transformations, rather than just the activities, such as training and tool deployments? The fundamental problem is that the way these transformations are structured has a very different meaning to the technology side than it does to the business. Key concepts that should be shared by both sides, such as technical debt, are not part of the common language. It is these disconnects that cause large-scale transformations to fall off the rails.
In this talk, Dr. Kersten will present the lessons and flow diagnostics learned from the past year of organizations’ shifts from project to product. He will then present predictions and prescriptions to help our organizations and careers thrive beyond the Turning Point.
Click on the front cover below to grab a copy of Project to Product to see how the Flow Framework can help you better manage how business value flows across your software delivery value stream: