establishing an enterprise common currency

Business Agility & Alignment:

Establishing a Common Currency

Dave Ungar

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.

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.

Example:Whoah .. Turns out my suppliers want to do the same thing. They are asking for payment in mixed currencies.

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.

Do you have a currency conversion for the business value of your user stories?

"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."

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?

By limiting the number of currencies involved.

Create one epic goal.

(Such as: reach the South Pole)

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.

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?

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?

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

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 …..