Evidence-Based Management (EBM) and Business Strategy
Evidence-Based Management (EBM) is an empirical approach that helps organizations to continuously improve customer outcomes, organizational capabilities, and business results. Central to EBM is the notion that using intentional experimentation and evidence will enable organizations to systematically improve their performance and refine their goals based on better information.
The Business Strategy defines, at minimum, the Strategic Goals for the organization. It may go further and also define Intermediate Goals for the organization if the Strategic Goal is so lofty and its achievement so far into the future that the organization needs nearer-term goals to guide its decisions.
The organization makes progress toward its goals when Scrum Teams deliver products to customers, measure the result, and then assess the results against their Product Goals. Collectively, the progress that all teams make toward their Product Goals should move the organization closer to achieving its goals. If it does not, the goals should be re-evaluated.
The “experiment loop” shown in the following diagram represents, collectively, all the Sprints in which Scrum Teams develop and deliver valuable product Increments.
The experimentation and feedback loops that impact the business strategy can happen on many levels within an organization. For example, they can be on the:
- Organizational level. For example, when moving from a project to product delivery model, there may be experiments related to the organizational structure. The results might impact the product portfolio and products
- Portfolio level. For example, an organization may want to validate whether expanding to new markets is the right thing to do. The findings from these experiments may impact the business strategy.
- Product levels. Scrum Teams regularly create experiments to understand if their work is closing the customers’ satisfaction gaps (for instance, reducing our customers' anxiety regarding security issues). The Scrum Teams’ findings and Increments as well as stakeholder feedback and input might impact a Business Strategy and often redefine Strategic Goals
In this way, all levels are constantly connected and influence each other through validation results, ongoing feedback and market changes.
A Strategic Goal might be easier to define (or refine) by focusing on Unrealized Value (potential, opportunities, gaps and desired outcomes) on the product, product portfolio and organizational level, Also, having current and relevant data from all 4 EBM Key Value Areas in respective products might enhance the organizational perspective, thus influencing a business strategy and product portfolio decisions.
- Unrealized Value (UV): Potential value
- Current Value (CV): Value delivered today
- Ability to Innovate (A2I): Effectiveness to deliver new capabilities to meet customer needs
- Time to Market (T2M): Ability to quickly deliver new capabilities to meet customer needs
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