VBD in a Nutshell
This is a summary of how VBS is constructed and why it looks this way. There are many additional details that need to be filled in order for VBD to really work. I will be exploring them in separate posts. For now, assume this method works—I’ve run many workshops to arrive at its current shape and the method I based it on ( Tom Gilb’s Evo) has a track record which is decades-long. This text provides “the big picture”.
The fundamental purpose of VBD can be summarized as follows:
To help a group of people make an informed decision about “What should we do?”
VBD as a whole or its parts can also have other uses. For example, is equally useful for solo decision-makers and each of its steps (described below) has value on its own. Still, its core strenght is facilitating a meaningful discussion using precise terms to decide on a course of action. I’ll explain the details in a moment but first, we need some foundations.
Assumptions about the decision-making process:
We want to identify ideas, solutions, alternatives etc. that provide the most value for the least of resources (time, effort, money…). In other words, we are looking for the best return (of business value) on investment (of resources).
We define “value” of a solution as an impact it has on stakeholders’ needs.
I imagine the very succinct statement above is not immediately clear, so let’s explore it a bit. If what I wrote above is clear to you, feel free to jump to the VBD Steps section below.
Stakeholders and their needs
Every solution, idea, project, endeavour etc. will impact some people. This is why we are contemplating doing it in the first place. We want to make someone’s life better by better meeting their needs.
In reality, however, we will impact not only the customers we target but also a whole bunch of other people. Once we introduce something new to the market someone in our organization will have to maintain it, answer customers’ questions, complaints etc. There will be also external stakeholders that will influence you even of your solution doesn’t target them at all. Think of regulators, law makers etc.
All these groups are composed of people. What, do you think, will happen if your new solution has a negative impact on their lives? Suppose you are a marketeer and in order to maximize the number of leads you bring you have figured out how to attract many new people but who will actually never buy anything from your company. How will the sales people judge your idea? Most likely they will become fierce critics. Hopefully of your idea, not of you.
The message here is that you have important stakeholders beyond just your customers and how much your solution impacts their needs is part of your solution’s value. If your solution addresses the needs of these “other” stakeholders positively you generate more value. If you make someone miserable, your solution’s value is lower.
For the purpose of clear explanation, I wrote the following steps as a sequence. In practice, you, indeed, proceed in this order but you will be looping back and jumping between the steps as your thoughts and findings refine.
Identify the stakeholders
At this point, we want a complete list of stakeholders. We will not analyze all of them but by making the list as complete as possible we want to make sure we are not forgetting anyone important. For example regulators often get forgotten if you don’t have a lawyer on the team.
Figure out the needs of your stakeholders
If your goal is to fulfill stakeholders’ needs you need to know what they are. In this step we are looking for descriptions of these needs.
Make sure you have a shared understanding of stakeholders’ needs
Unfortunatelly, we cannot base assessment of our ideas on the descriptions from the previous step. The problem is that our brains don’t naturally try to communicate precisely and we need precision if we want to agree on the value of one solution against another. An example “need” that surfaces at this VBD step is something like “better user experience of the system UI”. This is a very ambiguous statement and every person at the table will have a different interpretation of what it means. It could be about fixing interface ergonomics, bringing the looks to the corporate standard, processing things faster or an easier learning curve for new users. What happens if we don’t agree on the meaning of “better user experience” at this point? Once we start discussing solutions every person will lobby for solutions that fit their understanding of this term. What’s worse, nobody will know why they are all pulling in different directions.
The best way of making sure we have the same understanding of stakeholders’ need is to quantify it. In other words, “put a number on it.”
Assess the impact of your ideas on stakeholders’ needs
Finally, when we know which—unambiguously defined—needs we are going to address we can assess the impact of each of our potential solutions on each of the needs we have chosen to consider. This combined impact on all the needs we have selected is the business value of this solution.
By following these four steps we have defined the value of each of our solutions and now we can have an informed discussion about which one we want to implement. Or about the order of their implementation. We have brought “uncomparable” ideas like “hiring two new researchers” vs “investing additional $20.000 in marketing” to a common denominator: their business value defined as the magnitude of their impact on important stakeholders’ needs. I’m sure figuring out their cost is something you can do already and if you now divide the business value of each solution by its cost you will see your projected return on investment.
What you also will have acquired by now is alignment between the people who did this exercise on a level they have never felt before.
You are now also ready to have a good discussion with anyone who wishes to question your choices. It is possible you haven’t identified a stakeholder’s need correctly. It is possible that you have overestimated the positive impact of your solution on one of the needs. Or underestimated the cost. But it is not a big problem any more because you can show your reasoning to an expert or your boss and if they realize they have better information you will get exactly what you need. What you will not get is a heated debate during which all the arguments essentially boil down to “my ideas are better”.