In the last few weeks in meetings in Malaysia and Singapore the topic of whether making money should be top priority for an Agile Team has come up. For purposes of this discussion we will assume that the Agile team is a part of a larger business or organisation, and is not a stand-alone group. So the larger question would be is making money the most important thing for the business or organisation that the Agile team is a part of.
From an Agile perspective we always focus on delivering value for the business or organisation (http://agilemanifesto.org/principles.html). So let’s define value. In most cases if the business is a for-profit company or organisation value takes the form of producing better bottom line results. This could be reducing costs, increasing revenue, increasing customer satisfaction, or improving employee morale in the company. These may also apply to a non-profit organisation that seeks to break even, but not necessarily make a profit. There are of course other areas where a team could deliver value, such as increasing market share, or improving company image.
So in order for an Agile team to deliver value to the business and organisation one of these areas should be improved by the team’s work. Now the question is which of these or other ways of delivering value to the organisation is most important. Let’s start with reducing costs, and proceed through the others. If the team develops a productivity improvement that reduces costs for the company, then the organisation should be more profitable, and this will show as better bottom line results (i.e. company keeps more of the revenue it generates). So reducing costs is directly related to making money.
Next we have increasing revenue. This also is directly making more money for the company. So work by the Agile team that increases revenue is also focused on the organisation making more money. Increasing customer satisfaction means that likely more customers will use the organisations product or service. Satisfied customers are happy spending their money on the company’s products and services. So customer satisfaction, while initially measured potentially by a survey or some other measure, in the end also results in the company making more money.
Now let’s look at improving employee morale. It can be said that if employee morale improves that happy employees will create better products and take pride and ownership in the work that they produce. Now better products, and happy employees likely will lead to the company making more money, but it can be argued that improved employee morale does not always lead to the company making more money. Happy employees also tend to be more likely to stay with the company, and attract others to the company. This saves money for the company in its recruiting and related costs of finding and retaining talented people. However, let’s say for now that employee morale is not always measurable in bottom line results.
Increased market share, likely will result directly in the company making more money from more people buying its products or services. An Agile team contributes to increased market share by creating great features and services that are valuable in the market place. So again increased market share (in a well run company) should lead to the company making more money. Lastly I mentioned improving company image. This could take the form of better brand position in the market, or better brand recognition. When more people know your company (hopefully for the right reasons) the company is again likely to make more money, through more people choosing to do business with the organisation.
Now, this is certainly not an exhaustive list of value producing activities in a company or organisation, but does touch on some of the most important for a for-profit company. In addition there are non-profits, but most of these still apply, as a non-profit generally needs to break even to continue operating (this may take the form of attracting more money donations, which again would be value producing for the non-profit – take Wikipedia.org as an example).
So of our entire list just about every value producing activity for the Agile team ends up with the company or organisation making money. Arguably we could say employee morale is not directly measurable in dollars and cents, but ties to money outcomes in many ways as well. So if an Agile team is seeking to produce value for the organisation that it belongs to, it seems very likely that the value produced will have a financial or money measure. This would point to making money for the organisation being the most important activity for an Agile team.
I would add to this one final point. Even if an Agile team does not choose to focus on producing money for its organisation, the organisation will only be able to continue to operate as long as there are finances (money) to support the business as a going concern. So if an Agile team does not support the monetary success of its organisation, the team may not be able to continue as a team if the organisation it belongs to is not profitable or at least able to break-even (in the case of a non-profit).
Until next time, Stay Agile!
John.