Friday, May 17, 2019

Need Gap Reduction

Let's cut straight through the bullshit. You want to become agile and ask yourself, "How do we know if we're making progress?"
This one simple metric tells you if you're moving in the right direction.



If you're not reducing the Need Gap, you're doing it wrong!

The Need Gap

A "Need Gap" exists between the time when I, as a consumer, realize that I would need something - until the need is satisfied.

The difficulty of many classical projects is that the need may be satisfied in other ways outside the project's scope or it may completely disappear even before the project's outcomes are delivered.

Why not ...

There are other common metrics. Couldn't we also choose them?
Okay, I'm cheating a bit here. The "Need Gap" is two-dimensional, so it's actually two metrics, so I'm not ditching common agile

Time-To-Market

Time-To-Market is simply an incomplete metric. It doesn't account for the (potentially massive) time lapse between making the solution available and the solution achieving its purpose.

Value

Value is related to wealth obtained by providing the solution, although the amount of wealth benefit that can be monetized depends on many factors. To avoid having to go into a full economics discourse on game theory, we can simplify this by saying that value is again an incomplete metric.

Learning

In a business context, "learning" is related to an unfocused metric that needs to have context. Things we might want to learn should ultimately lead to a bottom line.
For example, learning:
  • Expressed, unexpressed and upcoming needs
  • Better ways of meeting needs
  • Monetizing customer wealth gain
Ultimately, learning is an enabler to addressing the Need Gap.


The Need Gap

A need gap indicates both a delay in satisfaction and an impact on wealth.

Time to Satisfaction

The time to satisfaction is the lead time plus delivery time plus customer reception time, including any potential feedback cycles until the customer is happy with the outcome.

Impact on Wealth

Customer wealth is a function both of money and other factors. 
Cost reduces wealth - as does the unmet need itself, whereas the customer's own ROI increases their wealth.
Economic customers are looking to increase their wealth, so the cost spent on meeting the need should be lower than their loss of not having met the need.



Rising Need Gap

The need gap grows in multiple ways:
  • When the time between feeling a need and meeting its need, the need gap grows
  • When the customer's wealth is reduced
As the need gap grows, the customer's self-interest in discovering alternate solutions also grows. 

Reducing the Need Gap

Ideally, there is no "Need Gap" from a customer - by the time a customer realizes a need, they have their need met:

  • When the Need Gap is low, there is little customer benefit to making changes in the way of working.
  • When the Need Gap is high, the customer benefits from making changes that reduce this need gap.
  • When the Need Gap doesn't get reduced, then the customer has no benefit from any change made in the process.
A reduction of need gap implies the goal-focused
  • increase in customer value, 
  • reduction of processing time,
  • keeping of development cost to lower than the delivered benefit,
  • improvement of value management and discovery,
  • closure of feedback loops,
  • optimization of monetization

Measuring the Need Gap

The Need Gap is quite easy to measure - look at the time between when people first speak of a need until people stop talking about it and how (un-)happy customers are during that time.









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