The path for the enterprises to become digital transformation is to be innovative, fast, value centric, and adaptive.
To start on something new seems to be hard already but the more challenging points to success could be how to learn from those path and adapt to those emerging opportunities “fast enough”.
In digital era, Enterprise should be driven by vision & goals, and measure value and success by actual results. To do so, a structure for continuous integrating new findings and evaluating new ideas is crucial. One way to achieve that is to build a value-driven portfolio by using Outcome Based Strategy — one approach is to use LEAN VALUE TREE.
What is Lean Value Tree?
Lean Value Tree (LVT) is a tool which is used to capture and share the organisational vision and strategy from the executive business vision and then frame in terms of outcomes, so the expected value is clear and able to be measured at every levels of the tree. Then the ideas and plan could be transformed into an actionable strategy.
The lean value tree consists of the following layers:-
Vision
The overall vision at the top of the tree sets a guiding direction toward which investment should contribute.
From the second layer onwards, some alternative labels/concepts could be called/named as following according to your organisational context:-
Goals
Describes how the organisation intends to realise the vision. It’s the view of the high-level business strategy. Goals should be defined in terms of desired outcomes and expectations, rather than a specific solution, product ideas or features.
Bets
Describes a hypothesis of value. It’s the areas where the organisation is willing to invest to see if the goal could be achieved; it could be a continuous investment to further a goal or even stop the investment if the the bet does not seem to worth it.
Initiatives
Describes what to build to prove out a bet; the actions that deliver tangible value. It’s typically in a form of a series of smaller hypotheses (or experiments) that have a clear measure of success to enable teams to make decisions on whether they’re able to prove or disprove the hypothesis.
Each level of the tree describes the portfolio; the linkages between each level show which effort furthers which goal.
The Lean Value Tree should be reviewed and updated regularly. Prioritisation decisions should be decided based on value — as new information becomes available.
- Goal — when market insights change or a new opportunity emerges
- Bet — when there’s changes in relative value ranking with other bets on the backlog, or expansion of the scope or funding for a goal
- Initiative — when the value hypothesis of the overall initiative is proven or disproven
What is Measures Of Success?
MoS is a measurement of something that a customer sees as valuable. Without the MoS, it means there is no actionable statements to see if it’s a success or failure.
Measures are often characterised as either leading or lagging indicators.
Measures of success should represent value at every level in order to see the incremental progress of value and manage prioritisation to reach the most valuable items first.
More importantly, a combination of leading and lagging indicators would result in enhanced business performance overall.
In conclusion,
Lean Value Tree could be used to create an outcome-oriented measures of success to help prioritise the work within the portfolio. Together with regularly review cycles, then the portfolio will be updated and reprioritised accordingly in order to produce the maximum value.
With the prioritisation approach, it helps the organisation to realise the value fast enough so that they can tackle/change the investment strategy either to further the goal or time to stop investment at the competitive time to market.
Main source of information is from EDGE — leading your digital transformation with value driven portfolio management by JIM HIGHSMITH | LINDA LUU | DAVID ROBINSON
