![]() ![]() The net effect is that cumulative gross margins are higher. Even a Minimum Viable Product (MVP) can be worth more to an early buyer than a more full-featured product delivered later. Cost, not value differentiation, then rules the day. After all, if they arrive ahead of the competition, they are worth a premium as they aren’t available from anyone else. As long as the quality is high enough, products and services delivered to market early are typically more valuable. Value is higher early on, producing higher margins over a longer periodįigure 3 illustrates another key differentiator. ![]() And there is a third factor, as shown in Figure 3. In addition, the figure above doesn’t account for the advantage of far faster feedback or the probability that the waterfall delivery would not occur on time. This difference is a material economic benefit of SAFe. Conversely, with the waterfall model, value can’t even begin to accumulate until the end of the development cycle. What’s more, this value accumulates over time: The earlier and longer the customer has it, the more value they receive. This figure shows how Lean-Agile methods deliver value to the customer much earlier in the process. Incremental development and delivery produce value far earlier The ability to deliver early and often has a direct economic benefit, as illustrated in Figure 2. By choosing a Lean-Agile path, they’re embracing a model based on incremental development and early and continuous value delivery, as Figure 1 illustrates. Deliver Early and OftenĮnterprises decide to embrace Lean-Agile development either because their existing processes aren’t producing the desired results or because they anticipate that they won’t work in the future. And although every knowledge worker needs to understand them, many of these principles are already embedded directly into various SAFe practices. This article describes the two practices essential to achieving optimum economic outcomes via Lean-Agile methods:Įach is outlined in the sections below. While many factors can contribute to failed solutions, poor economics is one of the most common. Economics should inform and drive decisions at all levels, from Portfolio to Agile Teams. ![]() Therefore, SAFe’s first Lean-Agile Principle is to take an economic view. That resulted in delays, inefficiencies, and a lack of empowerment by the people closest to the work. This meant that a worker’s everyday decisions were made without this information or escalated to those who had it. Traditionally, the budgets for their activities were known only to the decision-makers who understood the business, marketplace, and customer finances. That’s why the entire chain of leadership, management, and knowledge workers must understand the economic impact of their choices. ![]() Without that, even a technically capable system may cost too much to develop, take too long to deliver, or incur excessive manufacturing or operating costs. Realizing the goal of Lean-achieving the shortest sustainable lead time with the best quality and value-requires understanding the economics of a mission. Don Reinertsen, Principles of Product Development Flow Principle #1 – Take an economic view While you may ignore economics, it won’t ignore you. ![]()
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