Unlocking the Power of Business Value

In today’s fast-paced business landscape, understanding the concept of business value is crucial for driving growth and success. But what exactly is business value, and how can it be measured? In this article, we’ll explore the ins and outs of business value, its importance, and how to leverage it to make informed decisions.

The Two Buckets of Business Value

Business value can be categorized into two main buckets: current value and unrealized value. Current value refers to the value that a product or service delivers today, while unrealized value represents the potential future value that can be attained if all needs are met.

Measuring Current Value

To measure current value, we need to assess customer satisfaction, employee satisfaction, and revenue per employee. Customer satisfaction can be gauged through metrics such as:

• Net Promoter Score (NPS)
• Trustpilot rating
• Google/Apple Store ratings

Employee satisfaction can be measured through:

• Employee Net Promoter Score (eNPS)
• Satisfaction surveys
• Rate of referrals

Revenue per employee is a key metric that indicates efficiency and productivity.

const revenuePerEmployee = totalRevenue / numberOfEmployees;

Unrealized Value: The Key to Future Growth

Unrealized value is the potential future value that can be attained if all needs are met. To measure unrealized value, we need to assess:

• Available market share: the difference between the serviceable obtainable market and current market share
• Customer satisfaction gap: the difference between customers’ desired experience and current experience
• Opportunity scoring: asking users to score their satisfaction with key areas of the current offering and their desired level of satisfaction

const availableMarketShare = serviceableObtainableMarket - currentMarketShare;

Using Business Value to Make Informed Decisions

Once we have estimated current value and unrealized value, we can use a simple 2×2 chart to prioritize our products and services. The matrix will help us distinguish between four types of products:

• Stars: core offerings with high current value and high unrealized value
• Cash Cows: high current value but low unrealized value
• Bets: low current value but high unrealized value
• Distractions: low current value and low unrealized value

const businessValueMatrix = [
  ["Stars", "Cash Cows"],
  ["Bets", "Distractions"]
];

Prioritizing Product Features

The business value matrix can also be applied to prioritize product features. By assessing the current value and unrealized value of each feature, we can determine which ones to focus on and which ones to deprioritize.

const featurePriorities = [];

features.forEach((feature) => {
  const currentValue = calculateCurrentValue(feature);
  const unrealizedValue = calculateUnrealizedValue(feature);
  
  if (currentValue > 0 && unrealizedValue > 0) {
    featurePriorities.push({ feature, priority: "High" });
  } else if (currentValue > 0 && unrealizedValue <= 0) {
    featurePriorities.push({ feature, priority: "Medium" });
  } else {
    featurePriorities.push({ feature, priority: "Low" });
  }
});