Nov 27, 2020
In this episode, Dan and Sam are exploring the topic of evidence-based management, which was first mentioned in Episode 101, “Are Scrum Masters Expendable?” In that conversation, they discussed some of the things that Scrum Masters could be doing beyond the team and one of them is in helping manage the product suite.
Dan and Sam unpack the concept of evidence-based management and share how this model can be used alongside Scrum to help people and organizations improve the way they deliver products and improve the value of their products.
This episode is rather timely too, with the newest edition of the Evidence-Based Management Guide just being released on Scrum.org! If you’re new to EBM (or didn’t fully understand it before) there is no better time than the present to learn about it.
What is evidence-based management?
It’s an empirical approach to help organizations
EBM provides a framework to get a better feel for what is valuable so you can base the decisions you make on actual data (rather than gut-feeling) and run experiments that improve metrics
Through intentional experimentation and evidence, EBM enables organizations to systematically improve their performance over time and refine their goals based on better information
The EBM model:
It has five key elements:
A Strategic Goal — something important that the organization would like to achieve; this goal is big and far away with many uncertainties (similar to a product goal) — because of this, the organization needs a series of practical targets, like:
Intermediate Goals — achievements which indicate that the organization is on the path to its Strategic Goal (the path to the Intermediate Goal is often somewhat uncertain but not completely unknown) (kind of like a release goal)
Immediate Tactical Goals — critical near-term objective toward which a team or group of teams will work help toward Intermediate Goals (similar to a sprint goal)
A Starting State — where the organization is relative to the Strategic Goal when it starts its journey
A Current State — Where the organization is relative to the Strategic Goal at the present time
EBM focuses on four Key Value Areas (KVAs):
These areas examine the goals of the organization
As an organization, you want to measure and evaluate these
Current Value (CV) – the current value that the product is delivering today
The purpose of looking at CV is to understand the value that the organization is delivering to customers and stakeholders at the present time
Organizations need to be continually re-evaluating and looking at customer/user happiness, employee happiness, and investor and stakeholder happiness
CV helps the organization understand the value that their customers or users are experiencing today
Unrealized Value (UV) — additional/potential value the product could realize if it was pursued
UV could be features that the organization hasn’t considered developed yet (but could) or markets that the product could serve (but doesn’t currently)
The organization should be thinking about: “Can we get any additional value out of this product?” and whether or not it’s worth it
Comparing UV and CV can help an organization decide whether or not they should continue investing in a product
Time to Market (T2M) — how long it takes the organization to deliver new value
The reason for looking at T2M is to minimize the amount of time it takes for the organization to deliver value (without it, the ability to sustainably deliver value in the future is unknown)
Ask: “Are we spending too much time estimating?”
Questions the organization needs to continually re-evaluate for T2M are: “How fast can the organization learn from new experiments and information?”, “How fast can you adapt, based on the information?”, and “How fast can you test new ideas with customers?”
Ability to Innovate (A2I) — the effectiveness of the organization at delivering value
The goal of A2I is to maximize the organization’s ability to deliver new features and capabilities that customers will find valuable
When evaluating A2I, an organization should be asking: “What is preventing us from delivering new value?” and “What prevents customers from benefiting from the innovation?”
Having a hypothesis and executing an experiment:
A hypothesis is a proposed explanation for some observation that has not yet been proven or disproven
After forming a hypothesis, run the experiments, and then inspect the results
Was the hypothesis proven or disproved? Once you have this data you can evaluate it and make adjustments as needed
“Explicitly forming hypotheses, measuring results, and inspecting and adapting goals based on those results are implicit parts of an agile approach. Making this work explicit and transparent is what EBM adds to the organizational improvement process.” — EBM Guide
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