Business: Knowledge, Risk, and Customer Value

What do knowledge, risk management, and customer value have in common? Only your business value, and here’s what it looks like:

Everything you do in a commercial sense has an effect on one or more of these three variables. Here are some examples:

  • Bring customers together and discover[1] what they need and desire => will increase Knowledge
  • Build some Architectural Runway => will decrease Risk
  • Improve a frequently used feature => will increase Customer Value ($$)

But there are some actions that can move more than one variable at the same time, consider:

  • A/B testing two features and releasing the winner => will both increase Knowledge and Customer Value
  • Address site stability/performance issues => will reduce Risk and increase Customer Value

This chart provides a way to prioritize an organization’s backlog of work by asking the following questions:

  1. What are the current values for Knowledge, Risk, and Customer Value?
  2. Which way are they heading? 
  3. What ought they be?
  4. What next steps will bring me closer to what ought be?

Alistair Cockburn has been explicitly modeling Knowledge for years, and in fact his writings considerably influenced my thinking on these three variables. See Alistair’s Knowledge Acquisition Curve for more details. Very recently David Anderson has reframed Kanban as a Knowledge Discovery Process.

Risk Management is an extremely underused tool. Usually someone, somewhere, just decides arbitrarily what should or shouldn’t be done.

Customer Value is the important to everyone, but in Agile Scrum projects it’s especially the the Product Owner who is responsible for growing that curve.


[1] Consider playing “serious games”, see Innovation Games