2. Example:
I own a business. What's valuable to me is profit. I can take any
form of payment: Dollars, pounds, euros, rupies, yen, .. Or even
trade for a bag of donuts.
3. Example:
But now here's some complexity… I have customers who want
to pay partially in dollars, partially in euros, partially in shekels
and partially in trade.
4. Example:
Whoah .. Turns out my suppliers want to do the same thing.
They are asking for payment in mixed currencies.
5. Example:
So not only am I going to have trouble with how much to collect
from the customers, I also have to figure out how to cover the
product cost. Which products give me the highest return? I can't
answer that question easily.
Luckily, there is an open market for currency exchange. I can
convert all of the forms of payment into a single currency to
calculate cost, margin, profit, etc. It's a lot of work to answer a
fundamental question, but it can be done with some effort.
6. Do you have a currency conversion for the business value of your
user stories?
7. "We need to do this story. The end users want it." "No, we need
to do this story first, it will reduce cost." "What about
performance? You can't operate without meeting the SLA!"
“Our biggest client needs ____…" “Our new strategy is most
important right now." "No, protecting existing revenue is most
important."
8. Those questions come up within a single product - what about
prioritization across products? What about allocating resources
to work that has no revenue? (member
services, research, advocacy, ..) How do we place a value on
these things to prioritize resources as an enterprise?
9. By limiting the number of currencies involved.
Create one epic goal.
(Such as: reach the South Pole)
10. Ideally, we have one currency. The currency can change* over
time - but in a given period of strategic alignment, we have a
single currency. (OK, if we have two or three, we can do some
conversion. Not ideal, but workable.)
*E.g. - after going to (or attempting to) get to the South Pole, go to the North Pole.
11. Examples:
(Simplistic for now…)
Any one of these could be a single goal for an enterprise in the span of a planning
cycle. (Planning cycle may be one quarter or five years, depending on size of the goal.)
But …..
Currency Alignment
Maximize Profit in the
Short Term
Which products have the highest margin? Those have
priority.
Enter new market Which initiatives get us into that market?
Improve customer
satisfaction
Where is customer pain felt? What are opportunities for
improving customer perceptions?
Improve our ability to
deliver
What slows us down the most? Where do we have waste
in our process?
12. Some of what we do may (probably does) have impact with
many currencies at once - e.g. we may want to focus on more
than one of these initiatives at a time. … or need to, to take
advantage of an opportunity.
So the crux is that we are choosing ONE of those as most
important, strategically - and the other impacts/benefits are
additional gain - we can consider that an accelerated gain in a
developing currency. OR …..
Currency Alignment
Maximize Profit in the
Short Term
Which products have the highest margin? Those have
priority.
Enter new market Which initiatives get us into that market?
Improve customer
satisfaction
Where is customer pain felt? What are opportunities for
improving customer perceptions?
Improve our ability to
deliver
What slows us down the most? Where do we have waste
in our process?
13. Investment centers can be established to parcel resources into
multiple units of currency. e.g. Existing products, New markets,
Operations. But here's the key: the resources for these
investment centers need to be separated! (..and kept separate.)
Allocated & committed. No seepage across investments.
In this example, a choice needs to be made in the Operations Investment Center.
Investment Center Currency Alignment
Existing products Maximize Profit in
the Short Term
Which products have the highest margin?
Those have priority.
New Markets Enter new market Which initiatives get us into that market?
Operations Improve customer
satisfaction
Where is customer pain felt? What are
opportunities for improving customer
perceptions?
Operations Improve our ability
to deliver
What slows us down the most? Where do
we have waste in our process?
Operations
14. Conceded:
In these examples, measures may be too general & too easy to game … but
getting down to fewer currencies helps align thought & purpose first. We
need to learn & iterate on what currency to use. Pick the currency first based
on ROM ROI & worry about measurement & ROI/selection second.
OK, now your questions …..