Building the Value Pyramid

Unveil the secrets of success with the Value Pyramid. Discover how aligning every aspect of your organization can drive true business value.

Ever wondered why some companies thrive while others merely survive? It all comes down to understanding and delivering true business value. In today’s blog, we’ll explore how the Value Pyramid can transform your approach and align every task with your strategic goals. Say goodbye to misaligned efforts and hello to a cohesive, competitive edge.

What is business value?

We all talk about business value, but what does it truly mean? At its core, business value is the cornerstone of success. It’s not just about having a flawlessly executed and working product; it’s about asking the right questions and meeting the needs of both consumers and businesses. Many products and their creators miss this crucial mark and end up failing.

For clarity, let’s consider a definition from the International Institute of Business Analysis (IIBA): “In management, Business Value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long run. In agile development, an output delivers business value when it increases or protects revenue or reduces or avoids costs for an organization.”

In simpler terms, business value reflects a company’s own definition of success. It encompasses both tangible and intangible benefits, such as increased revenue, market share, customer satisfaction, brand reputation, and operational efficiency. Additionally, key for understanding it in the context of the value pyramid later, the business value is not reserved for only selected hierarchy levels or roles in the organization — it should infiltrate the whole company in its “veins.”

Why do we care about business value?

Too often, business value is just a checkbox in task management tools, soon forgotten. This oversight leads to drifting from primary objectives. Defining and tracking business value is no longer a best practice; it’s essential for strategic management. It keeps companies focused on their core objective, empowers informed decisions, fosters accountability, meets customer needs, secures competitive advantages, and ensures financial sustainability. Ignoring the importance of business value can lead to misaligned efforts, inefficient resource utilization, and, ultimately, missed opportunities.

Exceptional vision, strategy, design, and execution can lead you to where no one has gone before. But that final frontier will remain an undiscovered country if these elements are disconnected or if any of them lag behind. They must be synchronized.

How can we ensure delivery of business value?

Making sure that we deliver true business value requires that we not just look at a single small piece, such as a user story or a bit of functionality. It requires that we keep sight of the big picture. And the way that we do that is by looking at those small bits through the lens of the Value Pyramid.

From foundation to peak, the Value Pyramid consists of user stories, epics, initiatives, strategy, company mission statement, and company vision statement.

We need to look at the vision statement and align everything we do with that vision statement to ensure that we are delivering value.

Each of the levels supports the one above by constructing it like building blocks do.

At the same time each of the levels feeds the one below with information (gives it instructions, a direction forward and a purpose).

The value pyramid is best utilized for implementing digital transformation when we make sure that:

1. each level encompasses its own business value
2. each piece of business value corresponds to the business values of the adjacent levels above and below

What is between the levels is equally important as what is inside of them. It serves like a binding mortar that keeps the construction even stronger.

Let’s take an example of an epic named “Customer Feedback System.” This epic could have a business value of enhancing product and service quality by systematically collecting and analyzing customer feedback, leading to higher customer satisfaction and loyalty.

Within that epic we have a user story named “Build in-app feedback form.” The story has a business value in that it simplifies the feedback process for users, increasing the volume of actionable insights that can be used to improve products and services.

By delivering on a story that helps to increase actionable insights, we also help to deliver on the value of the epic. Put all together, the business values of all the stories in the epic should equal the business value of the epic.

Each single Business value statement should be traceable to its fellow business values above all the way to the top of the pyramid. Following the example above, the story and epic could be traced to a strategy business goal named “Increase customer satisfaction” and correspond to the vision statement “We enhance patient care through innovative and user-friendly health monitoring solutions.”

This approach ensures that every task, from the smallest user story to the largest initiative, is aligned with the strategic goals of the organization, ultimately contributing to the mission and vision. Teams will also be well informed of the end goal of each user story, will be able to suggest better improvements and will be much more motivated when they’re aware of the big picture. By maintaining this alignment, product and project teams can deliver high-value solutions that meet both user needs and organizational objectives.

But before we start using the Value Pyramid, it is crucial to have an established vision and mission, accessible to company members, so that all further activities can later follow their lead. Thereafter, the Value Pyramid will enable us to ensure the alignment is done seamlessly and efficiently.

Regardless of the role you have (Manager, Product Owner, Business Analyst, Designer, Architect, Engineer, etc.), or the lifecycle phase your product is in, this approach can assist you in the process of creating a great product because the pyramid covers the software development lifecycle from start to end, from the big picture to the fine details and could be easily tweaked and transformed to suit different organizations.

Even more — the Value Pyramid will foster result–driven interdisciplinary communication and collaboration within your company.

Useful Note: The pyramid’s blocks could vary in number or could be renamed, depending on the task management software you’re using and the number of levels available in the software. The adapted pyramid will still work as well as the one described above if a clear hierarchy between the elements is established. The flow of information between the blocks in both directions is kept constant so that no gaps are formed, or misalignment occurs.

Value Pyramid and User Story Mapping

Both the Value Pyramid and user story mapping naturally complement each other. The Value Pyramid aids user story mapping sessions by bringing clarity on the overall direction and high-level goals of the product, its purpose, and reasons.

User story mapping enhances this clarity by visually organizing user stories based on priority and user flow. User story mapping’s canvas style representation offers an at-a-glance way to track the alignment of business value statements with strategic goals by providing a continuous team feedback loop, thus helping support the Value Pyramid’s implementation.

Conclusion

The Value Pyramid offers a structured approach to ensure alignment with strategic goals. Keeping track of and reaching the target Business Value makes your business stronger and even more competitive while the Value Pyramid, by guiding teams from vision to execution, enables a smooth path to success. By manifesting business value widely within the company and utilizing the Value Pyramid, organizations can maneuver through the intricacies of modern product development with clarity, purpose, and efficiency, ultimately delivering solutions that make a difference in an increasingly competitive marketplace.

Original post here.

Authored by Svetoslav Anastasov.