1/7/2024 0 Comments Efficiency speediness(See Figure 1.)Ĭlosing these satisfaction gaps represents opportunities to an organization, and these satisfaction gaps also set a limit on how much value an organization can create. We describe the satisfaction gap between a customer’s current experience (CV) and their desired experience in terms of Unrealized Value (UV). If you think of value as profit or EPS (a very limited and inward-looking view), then you might believe that “there’s never enough”, but from a customer outcome perspective, there is a point where a customer is completely satisfied, just as a diner in the best restaurant in the world will eventually find themselves unable to enjoy another bite. Understanding CV provides you with a good picture of how you’ve performed so far, but it’s not the whole picture in terms of value. Current Value (CV), as its name suggests, is the value that customers experience today, from the existing product or service. The Evidence-Based Management framework (EBM) focuses on two kinds of business value measures: Current Value and Unrealized Value. This value may be realized in terms of increased brand value, improved revenue, increased employee satisfaction, or a variety of other measures, but the source of all value is customer experience. In short, organizations create business value when they improve customer experiences. The key is to identify the ideas that don’t add value early and not develop them any further. Organizations that measure the impact of their work report largely similar results: most of their ideas fail to improve customer outcomes. You might be tempted to think that your organization does better than that, but if you’re not measuring the impact of the work that you do, how can you be sure? Perhaps you are luckier than most, but it’s very unlikely. In short, everyone has a bad idea sometimes. And it didn’t matter who conceived the ideas executives and other highly experienced, and usually highly paid individuals had no better track record in devising great ideas than relatively inexperienced and lowly-paid employees. Or to put it more simply, two-third of ideas had zero or negative business benefit. ⅓ of ideas actually made their intended measures worse.⅓ of ideas had no effect on their intended measures.⅓ of ideas improved their intended measures.In research spanning more than a decade, Ronny Kohavi found, at Microsoft, the following approximate results: And yet, by their own measures, most of their new ideas fail to achieve the goals they set out to achieve. Microsoft and Amazon are regarded as two of the most successful business organizations in the world today, if not in the entirety of history. Attend in-person at QCon San Francisco (October 24-28, 2022). Uncover emerging trends and practices from domain experts. For organizations to improve the value they deliver, they need relatively fast feedback loops that give them the ability to try new ideas quickly and determine which ones are worth further investment.Framing improvements as experiments run in fast, frequent cycles helps organizations to rapidly improve. In addition to improving the value they deliver, most organizations also need to improve their speed and effectiveness at delivering value.Setting strategic goals in terms of value helps an organization be clear about what it seeks to achieve, and helps everyone in the organization align their work toward these goals. Running these experiments as quickly as possible, and with as little effort as possible, helps the organization to dramatically improve their effectiveness at meeting customer needs. Organizations improve their performance by framing their ideas as experiments that explicitly test the ideas for the value they have to customers.As a result, much of their time, effort, and investment may be wasted. Organizations who don't measure the value of what they deliver have no idea which of their ideas are good, and which fail to meet customer needs.
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