If you use Scrum, you probably hear the term “business value” tossed around a lot. At Scrum Inc., we get asked about it all the time. Here are some of the more common questions:
- “Business value seems so vague, what does it mean exactly?”
- “Does lowering costs have more business value than increasing revenue?”
- “What has more business value, something important or something urgent?”
- “Should business value be realized only when it increases the customer’s experience?”
Simply put, business value is the lens the product owner uses to order the product backlog. It can be derived by lowering costs, increasing revenue, growing customer satisfaction, reducing risk or enhancing capability.
However, knowing the definition of business value doesn't necessary inform product owners about how it should be assigned. Assigning business value is a subjective task that includes a lot of variables. A good product owner needs to have strong business acumen, a complete understanding of the product’s vision and a good relationship with the customer and team.
Even with these elements in place, product owners struggle to get the most value out of the backlog. Why? Because it’s extremely difficult. Assigning business value requires balancing a lot of information based on a variety of changing priorities.
Jeff Sutherland and Scrum Inc. have a lot of experience helping product owners clarify some of the trade-offs involved. We have been offering Product Owner Classes for a while now and do to a whole lot of demand have recently increased the number of classes we offer. Catch the next one at the end of the month.
And, in an effort to make some of Jeff’s experience more accessible, next week we are offering an on-line course that specifically address how to calculate business value. The class will be taught by Jeff and hosted by Scrum Inc.’s Chief Product Owner AlexBrown. Learn how we quantify the value of potential projects; calculate cost per story point and revenue per story point and how we use an array of management metrics to get the most out of our backlog.
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