business value and kano chart
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The business plan and the Kano chart work together to plan the projectTRANSCRIPT
1Copyright John C Goodpasture, 2010 All rights reserved
1
Business Value and the Kano Chart MethodQuantitative Methods in Project Management
Produced bySquare Peg Consulting
www.sqpegconsulting.com
2Copyright John C Goodpasture, 2010 All rights reserved
2
Kano Method is all about user value
• Kano plots user value from ‘ah-hah!’to ‘don’t care’
– ‘Ah-hah!’ is the break-out version of
‘more is better’
– ‘More is better’ is group-think race to
the top
– ‘Indifference’ is yesterday’s ‘ah-hah!’
3Copyright John C Goodpasture, 2010 All rights reserved
3
Vision needs reality
• Kano brings reality to vision
– Kano analysis kicks off envisioning and
exploring
– Kano ‘ah-hah!’s can be the compelling vision
for an agile team
– Kano mitigates group-think
Vision and exploring
4Copyright John C Goodpasture, 2010 All rights reserved
4
The objective of Kano Analysis
• To relate customer attitude to product feature and function
• To create a visualization of investment decisions and customer preference
• To assist with program and budget development and priorities
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Who is Kano?
5
Photo: Courtesy Dr. Jack B. Revelle
Dr. Noriaki Kano
Tokyo University
Model developed in 70s – 80s,
published in April, 1984
Model focus is on quality and
customer preference
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What are his ideas?
6
Photo: Courtesy Dr. Jack B. Revelle
Quality ideas:
Exciting [ah hah!]
Normal [Must be]
Expected [MIB]
Customer preferences:
Attractive [ah hah!]
Must be [Must be]
One dimensional [MIB]
Indifferent [IN]
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7
What is value? The big idea
Every individual endeavors to employ his capital so that its
produce may be of greatest value
Adam Smith, “The Wealth of Nations”, 1776
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8
What is value? Who’s involved?
Three ideas—perspectives, or views
Customer & User Visionary & SponsorProject Manager
Feature & Function Earnable Value Business Scorecard
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9
What’s their expectation?
Three ideas—perspectives, or views
Return > Investment
Investment = Cost
Feature & Function Earnable Value Business Scorecard
Esteem value > $value
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10
What is value? What do they do?
Three ideas—perspectives, or views
Pays for Benefit Provides Investment
Transforms Investment to
benefit potential
Feature & Function Earnable Value Business Scorecard
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11
Project Balance Sheet
Integrated strategy to exploit opportunity
OpportunityWith business value
Balanced Scorecard business goals
Project Execution
Verify earned value scorecard
Validate strategy & operations satisfaction
Goal achievement & updated KPIs
Customer-valued outcome
Value-add by project
2-2
Value flow down
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12
Customer Satisfaction
+
Customer Dissatisfaction
Kano Chart compares customer satisfaction with
product functionality
-
Product Functionality- +
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On the Kano Chart, the upper right quadrant is
the place to be!
-
Customer Satisfaction
+
Quadrant Upper RightCustomer Delight
Quadrant Upper LeftLatent Requirements
Quadrant Lower LeftCustomer dissatisfaction
with missing or withheld
functions
Quadrant Lower RightCustomer dissatisfaction with
provided functionality
Customer Dissatisfaction
Product Functionality- +
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Push out the latent requirements
• Latent requirements are
unknown until revealed by
someone else
– Who knew I needed
that?!
• Exploration and
envisioning gets the
conversation going
– The value proposition
may be very fuzzy
– Prototypes may be
needed
– Be aware of non-verbal
communication
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15
Quadrant 1: Satisfaction reacts strongly to
discriminating functionality
Customer Satisfaction
Product Functionality
+
-
Ah = “ah-hah!”
Customer Dissatisfaction
+
Esteem > $ValueReturn > Investment
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16
Everything loses panache over time!
Customer Satisfaction
Product Functionality
+
-
Ah decay
Customer Dissatisfaction
+
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17
The sweet spot: the ‘ah-hah!’ quadrant
• In the ‘ah-hah’ quadrant customers are interested, engaged, and energetic
• Early adopters push the ‘ah-hah!’ curve, giving feedback at every iteration
• Ah-hahs! will be copied by competitors
– Eventually the advantage is lost as ah-hah! becomes ‘me too!’
– Other opportunities may be closed out
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18
More-is-better meets the competition with ‘me
too!’
Customer Satisfaction
Product Functionality
+
-
MIB = More is Better
MIB decay
Customer Dissatisfaction
+
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19
More-is-better is a hazard
The more-is-better horserace leads to group-think
– The race mesmerizes
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20
Customers may not pay attention to In’s or M’s
– ‘In’ and ‘M’ must be there, even without customer interest
– ‘In’ is the axis for compliance and standards
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21
Even function and feature that are indifferent to
customers require investment
Customer Satisfaction
+
-
In = Indifferent axis--standards
Customer Dissatisfaction
+
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22
Requirements indifferent to customer value
• Adherence and compliance to internal and external standards
• Standard processes
• Differences without a distinction
• Unnoticed, even if missing
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23
Must-be-present is expected!
Customer Satisfaction
Product Functionality
+
-
M = “must be present”
Customer Dissatisfaction
+
CUPHOLDERS!Deeply disappointed
if missing
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M = Legacy and legacy expectations
• Former discriminating feature and function that have now become de facto standards
• Can’t be missing and be competitive
• Strongly a ‘utility’ function
– Customer reaction is disproportionate to value, but opposite the Ah hah!
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Put it all together
Customer Satisfaction
Product Functionality
+
-
M = “must be present”MIB = More is Better
Ah = “ah-hah!”
In = Indifferent axis
MIB decay to M or In
Ah decay to In or M
Customer Dissatisfaction
+
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Program and Budget implications
The Kano Pie—5 slices
1. Ah Discriminators –Envisioning and exploring – Ah
hah!
2. MIB Meet Competition – More is better
3. In Standards adherence –Indifferent to customer
4. M Legacy compliance – Must be there
5. B Benefits refreshment – Anti-decay defensive measure
Kano Pie
35%
20%13%
12%
20%
Discriminators
Meet Competition
Standards
Legacy
Benefits
Ah
MIBIn
M
B
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27
Program and Budget implications
Investing in discriminators
• Segments that create value that
customers will pay for
• Attractive to investors and
sponsors
• This is how we win
Kano Pie
35%
20%13%
12%
20%
Discriminators
Meet Competition
Standards
Legacy
Benefits
Ah
MIBIn
M
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Program and Budget implications
Funding standards and legacy compliance
• Less attractive to investors and
sponsors
• Investment without
discriminating value
• Everyone’s ‘me too’
• Can’t do with out it!
• Customers will punish if missing
Kano Pie
35%
20%13%
12%
20%
Discriminators
Meet Competition
Standards
Legacy
Benefits
Ah
MIBIn
M
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29
Program and Budget implications
Anti-decay refreshment
• Funding from returns on benefits
• Defensive
• Preserve market share
• Keep barrier to entry high
• Attract the late adopters
Kano Pie
35%
20%13%
12%
20%
Discriminators
Meet Competition
Standards
Legacy
Benefits
Ah
MIBIn
M
B
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30
Program and Budget implications
Put it all together
• Benefit: Customer advantage– Esteem
– Function and feature
– Payment stream
• Investment: Business scorecard– Funding
– Returns
– Intangibles
• Cost: Earnable value of the invested funds– Investment funding
– Deliverables cost
– Timely benefit rollout
Kano Pie
35%
20%13%
12%
20%
Discriminators
Meet Competition
Standards
Legacy
Benefits
Ah
MIBIn
M
B
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31
An amplifier of investment
Ah = “ah-hah!”
Investment
Return from Investment
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32
An amplifier of investment
Ah = “ah-hah!”
ROI
Investment
Investment
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33
An attenuator of investment
M = “must be present”
Investment
Return from Investment
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Overcome attenuators
B
MIB
Ah
SponsorKano Lens
B
MIB
Ah
Project
M
B
InB
MIB
Ah
Beneficiary
Kano Lens ROI
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Overcome attenuators
B
MIB
Ah
InputKano Lens
B
MIB
Ah
Transform
M
B
InB
MIB
Ah
Output
Kano Lens Value-Added
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36
WBS and Kano
• Kano distinctions are one view of the WBS
• Other views: Process, OBS, Temporal phases, Product structure
• WBS traditionally stove-piped and hierarchical
• Views add relationships among hierarchic structures
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37
Cost accounts have relationships to Kano
Ah Hah!
MIB
Must
Indiff
Refresh
PMO Sys Dev Data Support
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How to go about it
“People are led; things are managed”
Rear Admiral Grace Hopper
Image Credit: WWW.THEGOLDENGUYS.BLOGSPOT.COM
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39
• Reduce everything to ideas that image the vision
– If you can’t draw it, you probably can’t write it!
• Frame all the ideas with architecture
– Every product has architecture!
– Stress cohesion and loose coupling
Think images!
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• Allocate all tasks and deliverables to the Kano categories
• Resolve budget allocations according to importance, priority, and sequence
Think images!
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41
From Kano comes the business case
• Scope ah-hah! as the project theme
– Functional, feature-rich, compelling
• Complete the scope with In, M,MIB, and B– Can’t forget these just because they are not exciting
42Copyright John C Goodpasture, 2010 All rights reserved
42
From Kano comes the business case
• Estimate the investment
– New to the world
– Similar to-
– Parametric factors
• Assume benefits pay for refreshment
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43
Benefits are the ultimate reward
• Propose benefits at
milestones
– Who’s in the
community of
beneficiaries?
– What’s their value
proposition?
– Show value roll-out
at milestones
44Copyright John C Goodpasture, 2010 All rights reserved
Read more!
• “Quantitative Methods in Project Management” ,
Chapter 1
• http://people.ucalgary.ca/~design/engg251/First
%20Year%20Files/kano.pdf
• www.slideshare.net/jgoodpas
• www.pmi.org Goodpasture, J. “Make Kano
Analysis part of your New Product
Requirements” PMNetwork, May 2001 [copy
available at PMI.org]
• http://en.wikipedia.org/wiki/Kano_model
• http://en.wikipedia.org/wiki/Noriaki_Kano