Agile Development : Fanatical About Adding Value

For those who have been following the tech start-up funding news it might feel like money indeed grows on trees. Every week there are companies closing multimillion dollar rounds. For those that don't follow tech news it might be worth your while to review the archives of VentureBeat for a couple minutes. As you scroll through take notice of how many companies have dedicated themselves to providing metrics. It would seem the market is crowded, yet the funding is still available for these B2B companies.

Metrics are the key to determining how well you are serving your customers, what their preferences are, how much time they spend on your site, and all manner of other data that can help a company refine their business and improve the experience they provide to their customers. The successful companies are fanatical about the value they provide to their customers and rely on these metrics for real time feedback on how well they're doing.

The above lies in stark contrast from other sectors of the business world where the key has been to find out what the absolute minimum level of value is they can provide to their customers before they jump ship. There is a good discussion of this in How Companies Win. In the book they illustrate how companies fell for the value extraction model and then reinvented themselves by following a demand chain analysis. It's very compelling.

This value extraction method is the model that afflicted the world of real estate development and has helped keep it in the doldrums these past few years. Instead of being fanatical about how they could add value for their customers they sought ways to minimize expenditure and hopefully increase the profitability on each unit sold. This was a process which only concerned itself with customer experience peripherally. Sure, there was a need to have an attractive product, but it only needed to be good enough.

I was told on more than one occasion to think in terms of the savings multiplied times the 'x' number of units they were building. My response was typically to think of the value added, not only multiplied times the number of units, but compounding annually. Building something of lasting quality and beauty, even on a small scale, will pay lasting dividends for decades yet to come.This, however, was not their concern as they would not be around to profit from this increased value. The rest, as they say, is history.

This current market condition is an opportunity to attempt a better way since there are so few developers who have built their business around the concept of continually adding value to their customers and then choosing to stick around long enough to benefit from their efforts. This will entail a major rethink in how development companies are formed and how they execute their business plan. The process may be painful considering the amount of unlearning that needs to be done, but the path has already been cleared. We only need look to the successful business models of the tech sector and how they manage to fanatically add value.

Posted via email from Kenneth Hitchens