Are you Optimizing for Cost or Optimizing for Value?

Its a case of playing not to lose vs playing to win.  Often we see this behavior because people in management have been well-rewarded for playing it safe for 20-30 years.  Thus, all of their decisions are optimized for risk reduction.

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As we all know, you have to take risk in order to reap the rewards

When it comes to Agile adoptions, the organization has taken the first step toward reaping the rewards, but often haven’t done the groundwork to ensure that middle management understands the direction, the vision, and the strategy.

This risk-averse mindset manifests itself in a few key ways

Such as outsourced development, refusal to bring in consultants/experts to help in transition (because of cost), overworked teams producing low quality products.  The low quality products mean less revenue, and less revenue means more cost cutting measures, more risk aversion, less customer satisfaction, and less ability to compete in the market.

Scrum focuses on value delivery

One of the things that demands a culture change from Scrum is the fact that in Scrum, and Agile in general, we are optimizing for value delivery rather than cost reduction.   So for companies who have a deep “cut costs” mentality this can be very frustrating.  Not only is the investment looked at with a suspicious glance,  but also results are expected NOW (You said it would make us faster!).

When all of your brainpower is focused on reducing cost and risk, you will stifle innovation, creativity, and your ability to create long term value.  Ask yourself, Are you optimizing for cost or value?

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