business value and kano chart

1Copyright John C Goodpasture, 2010 All rights reserved

1

Business Value and the Kano Chart MethodQuantitative Methods in Project Management

Produced bySquare Peg Consulting

www.sqpegconsulting.com


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Kano Method is all about user value

• Kano plots user value from ‘ah-hah!’to ‘don’t care’

– ‘Ah-hah!’ is the break-out version of

‘more is better’

– ‘More is better’ is group-think race to

the top

– ‘Indifference’ is yesterday’s ‘ah-hah!’


3

Vision needs reality

• Kano brings reality to vision

– Kano analysis kicks off envisioning and

exploring

– Kano ‘ah-hah!’s can be the compelling vision

for an agile team

– Kano mitigates group-think

Vision and exploring


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The objective of Kano Analysis

• To relate customer attitude to product feature and function

• To create a visualization of investment decisions and customer preference

• To assist with program and budget development and priorities


Who is Kano?

5

Photo: Courtesy Dr. Jack B. Revelle

Dr. Noriaki Kano

Tokyo University

Model developed in 70s – 80s,

published in April, 1984

Model focus is on quality and

customer preference


What are his ideas?

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Photo: Courtesy Dr. Jack B. Revelle

Quality ideas:

Exciting [ah hah!]

Normal [Must be]

Expected [MIB]

Customer preferences:

Attractive [ah hah!]

Must be [Must be]

One dimensional [MIB]

Indifferent [IN]


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What is value? The big idea

Every individual endeavors to employ his capital so that its

produce may be of greatest value

Adam Smith, “The Wealth of Nations”, 1776


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What is value? Who’s involved?

Three ideas—perspectives, or views

Customer & User Visionary & SponsorProject Manager

Feature & Function Earnable Value Business Scorecard


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What’s their expectation?


Return > Investment

Investment = Cost


Esteem value > $value


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What is value? What do they do?


Pays for Benefit Provides Investment

Transforms Investment to

benefit potential



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Project Balance Sheet

Integrated strategy to exploit opportunity

OpportunityWith business value

Balanced Scorecard business goals

Project Execution

Verify earned value scorecard

Validate strategy & operations satisfaction

Goal achievement & updated KPIs

Customer-valued outcome

Value-add by project

2-2

Value flow down


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Customer Satisfaction

+

Customer Dissatisfaction

Kano Chart compares customer satisfaction with

product functionality

-

Product Functionality- +


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On the Kano Chart, the upper right quadrant is

the place to be!

-


+

Quadrant Upper RightCustomer Delight

Quadrant Upper LeftLatent Requirements

Quadrant Lower LeftCustomer dissatisfaction

with missing or withheld

functions

Quadrant Lower RightCustomer dissatisfaction with

provided functionality


Product Functionality- +


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Push out the latent requirements

• Latent requirements are

unknown until revealed by

someone else

– Who knew I needed

that?!

• Exploration and

envisioning gets the

conversation going

– The value proposition

may be very fuzzy

– Prototypes may be

needed

– Be aware of non-verbal

communication


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Quadrant 1: Satisfaction reacts strongly to

discriminating functionality


Product Functionality

+

-

Ah = “ah-hah!”


+

Esteem > $ValueReturn > Investment


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Everything loses panache over time!



+

-

Ah decay


+


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The sweet spot: the ‘ah-hah!’ quadrant

• In the ‘ah-hah’ quadrant customers are interested, engaged, and energetic

• Early adopters push the ‘ah-hah!’ curve, giving feedback at every iteration

• Ah-hahs! will be copied by competitors

– Eventually the advantage is lost as ah-hah! becomes ‘me too!’

– Other opportunities may be closed out


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More-is-better meets the competition with ‘me

too!’



+

-

MIB = More is Better

MIB decay


+


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More-is-better is a hazard

The more-is-better horserace leads to group-think

– The race mesmerizes


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Customers may not pay attention to In’s or M’s

– ‘In’ and ‘M’ must be there, even without customer interest

– ‘In’ is the axis for compliance and standards


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Even function and feature that are indifferent to

customers require investment


+

-

In = Indifferent axis--standards


+


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Requirements indifferent to customer value

• Adherence and compliance to internal and external standards

• Standard processes

• Differences without a distinction

• Unnoticed, even if missing


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Must-be-present is expected!



+

-

M = “must be present”


+

CUPHOLDERS!Deeply disappointed

if missing


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M = Legacy and legacy expectations

• Former discriminating feature and function that have now become de facto standards

• Can’t be missing and be competitive

• Strongly a ‘utility’ function

– Customer reaction is disproportionate to value, but opposite the Ah hah!


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Put it all together



+

-

M = “must be present”MIB = More is Better

Ah = “ah-hah!”

In = Indifferent axis

MIB decay to M or In

Ah decay to In or M


+


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Program and Budget implications

The Kano Pie—5 slices

1. Ah Discriminators –Envisioning and exploring – Ah

hah!

2. MIB Meet Competition – More is better

3. In Standards adherence –Indifferent to customer

4. M Legacy compliance – Must be there

5. B Benefits refreshment – Anti-decay defensive measure

Kano Pie

35%

20%13%

12%

20%

Discriminators

Meet Competition

Standards

Legacy

Benefits

Ah

MIBIn

M

B


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Investing in discriminators

• Segments that create value that

customers will pay for

• Attractive to investors and

sponsors

• This is how we win

Kano Pie

35%

20%13%

12%

20%

Discriminators

Meet Competition

Standards

Legacy

Benefits

Ah

MIBIn

M


28


Funding standards and legacy compliance

• Less attractive to investors and

sponsors

• Investment without

discriminating value

• Everyone’s ‘me too’

• Can’t do with out it!

• Customers will punish if missing

Kano Pie

35%

20%13%

12%

20%

Discriminators

Meet Competition

Standards

Legacy

Benefits

Ah

MIBIn

M


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Anti-decay refreshment

• Funding from returns on benefits

• Defensive

• Preserve market share

• Keep barrier to entry high

• Attract the late adopters

Kano Pie

35%

20%13%

12%

20%

Discriminators

Meet Competition

Standards

Legacy

Benefits

Ah

MIBIn

M

B


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Put it all together

• Benefit: Customer advantage– Esteem

– Function and feature

– Payment stream

• Investment: Business scorecard– Funding

– Returns

– Intangibles

• Cost: Earnable value of the invested funds– Investment funding

– Deliverables cost

– Timely benefit rollout

Kano Pie

35%

20%13%

12%

20%

Discriminators

Meet Competition

Standards

Legacy

Benefits

Ah

MIBIn

M

B


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An amplifier of investment

Ah = “ah-hah!”

Investment

Return from Investment


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An amplifier of investment

Ah = “ah-hah!”

ROI

Investment

Investment


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An attenuator of investment

M = “must be present”

Investment

Return from Investment


Overcome attenuators

B

MIB

Ah

SponsorKano Lens

B

MIB

Ah

Project

M

B

InB

MIB

Ah

Beneficiary

Kano Lens ROI


Overcome attenuators

B

MIB

Ah

InputKano Lens

B

MIB

Ah

Transform

M

B

InB

MIB

Ah

Output

Kano Lens Value-Added


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WBS and Kano

• Kano distinctions are one view of the WBS

• Other views: Process, OBS, Temporal phases, Product structure

• WBS traditionally stove-piped and hierarchical

• Views add relationships among hierarchic structures


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Cost accounts have relationships to Kano

Ah Hah!

MIB

Must

Indiff

Refresh

PMO Sys Dev Data Support


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How to go about it

“People are led; things are managed”

Rear Admiral Grace Hopper

Image Credit: WWW.THEGOLDENGUYS.BLOGSPOT.COM


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• Reduce everything to ideas that image the vision

– If you can’t draw it, you probably can’t write it!

• Frame all the ideas with architecture

– Every product has architecture!

– Stress cohesion and loose coupling

Think images!


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• Allocate all tasks and deliverables to the Kano categories

• Resolve budget allocations according to importance, priority, and sequence

Think images!


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From Kano comes the business case

• Scope ah-hah! as the project theme

– Functional, feature-rich, compelling

• Complete the scope with In, M,MIB, and B– Can’t forget these just because they are not exciting


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From Kano comes the business case

• Estimate the investment

– New to the world

– Similar to-

– Parametric factors

• Assume benefits pay for refreshment


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Benefits are the ultimate reward

• Propose benefits at

milestones

– Who’s in the

community of

beneficiaries?

– What’s their value

proposition?

– Show value roll-out

at milestones


Read more!

• “Quantitative Methods in Project Management” ,

Chapter 1

• http://people.ucalgary.ca/~design/engg251/First

%20Year%20Files/kano.pdf

• www.slideshare.net/jgoodpas

• www.pmi.org Goodpasture, J. “Make Kano

Analysis part of your New Product

Requirements” PMNetwork, May 2001 [copy

available at PMI.org]

• http://en.wikipedia.org/wiki/Kano_model

• http://en.wikipedia.org/wiki/Noriaki_Kano

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