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, and Google/Apple Store ratings. Employee satisfaction can be measured through Employee Net Promoter Score (eNPS), satisfaction surveys, and rate of referrals. Revenue per employee is a key metric that indicates efficiency and productivity.
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, customer satisfaction gap, and opportunity scoring. Available market share refers to the difference between the serviceable obtainable market and current market share. Customer satisfaction gap is the difference between customers’ desired experience and current experience. Opportunity scoring involves asking users to score their satisfaction with key areas of the current offering and their desired level of satisfaction.
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, cash cows, bets, and distractions. Stars represent core offerings with high current value and high unrealized value. Cash cows have high current value but low unrealized value. Bets have low current value but high unrealized value. Distractions have low current value and low unrealized value.
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.
Conclusion
Business value is a powerful metric that can help us drive growth and success. By understanding current value and unrealized value, we can make informed decisions about our products and services. By prioritizing our offerings based on business value, we can optimize our resources and achieve our goals.