Defining Business Value // #2 Customer Smile
Imagine that it is not Scarlett Johansson. Just a girl or young woman. Or maybe any customer who buys your new camera. You don’t make any profit on that camera, just she smiles.
How do we evaluate the Business Value of that smile?
“Would it have been worth it, after all,
Would it have been worth while”? (TS Eliot)
When I got my MBA at a school just off Wall Street, they said (or some of them said) that the firm was there to maximize shareholder returns. Not that that was bad, since firms in the end are owned by widows and orphans…it is they who mainly use all the value there.
But the message was: money. Measure it in money.
My ancestors are (or were) practical crazy New Englanders. (Well, crazy in the sense that they left the comforts and known-ness of England to live in strange unknown land where half of them died the first year.) They were practical. I cannot say money is bad. It is only a means; still, a very practical means.
I found out also, at that same school, that Peter Drucker (arguably the best management guru still) said that the purpose of the firm was to provide customer satisfaction. (That, for example, making money for the shareholders was a constraint, not a key purpose.) Frankly, as I get older, I tend to agree.
And one finds that firms never can charge for each specific increment of customer satisfaction. Charge, they must, at different times, but never exactly bit-by-bit for each increment of satisfaction. Can Starbuck’s charge by the sip? No, I think not.
And then one ponders, Maslow-like, the satisfactions for the producer and the wise consumer, of various products or services. Truly “satisfaction” is an inadequate word for a trip to Paris. When you buy a copy of The Count of Monte Cristo (Dumas), is it exactly satisfaction one seeks? Or adventure? Or to be at-one with others? Does one know? And how to measure it?
The metaphor of Maslow’s hierarchy of needs might be useful here.
Now, people will pay for these things. But how much to charge, and how much real “business value” they receive….these are hard things to understand. Well, indeed, a human being is a hard thing to understand. And hopefully you are in business to serve not one, but many human beings. Quite complex.
My main point today is that people must re-gain an appreciation for the difficulties of the work of understanding business value. To me, it is very very important, and also very hard to understand. So, we should start with the assumption that we need a lot, a whole lot, and I mean gobs, of feedback. To help confirm to ourselves that we have not mis-understood.
But God!, as a producer, when she (well, she, especially if you’re a man… your wife, your daughter, your girlfriend, your mother, someone you care for) when she smiles. When she is happy with what you have produced. It is a wonderful day. When you don’t get the puzzled look of “well, he tried hard, but it’s not what I want, and how will I tell him?” No, not that. But the smile of “I really like it!” It is very satisfying as a producer, is it not? (And the women readers who are producers know what I mean too. Although there are different difficulties.)
So, Scrum is trying to enable all these moments of truth to happen. To feed your head and warm your heart.