Business value and kano chart

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


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!’


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


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


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


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]


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


8

What is value? Who’s involved?

Three ideas—perspectives, or views

Customer & User Visionary & SponsorProject Manager

Feature & Function Earnable Value Business Scorecard


9

What’s their expectation?


Return > Investment

Investment = Cost


Esteem value > $value


10

What is value? What do they do?


Pays for Benefit Provides Investment

Transforms Investment to

benefit potential



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


12

Customer Satisfaction

+

Customer Dissatisfaction

Kano Chart compares customer satisfaction with

product functionality

-

Product Functionality- +


13

On the Kano Chart, the upper right quadrant is

the place to be!

-


+

Quadrant Upper RightCustomer Delight

Quadrant Upper LeftLatent Requirements

Quadrant Lower LeftCustomer dissatisfaction

with missing or withheld

functions

Quadrant Lower RightCustomer dissatisfaction with

provided functionality


Product Functionality- +


14

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


15

Quadrant 1: Satisfaction reacts strongly to

discriminating functionality


Product Functionality

+

-

Ah = “ah-hah!”


+

Esteem > $ValueReturn > Investment


16

Everything loses panache over time!



+

-

Ah decay


+


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


18

More-is-better meets the competition with ‘me

too!’



+

-

MIB = More is Better

MIB decay


+


19

More-is-better is a hazard

The more-is-better horserace leads to group-think

– The race mesmerizes


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


21

Even function and feature that are indifferent to

customers require investment


+

-

In = Indifferent axis--standards


+


22

Requirements indifferent to customer value

• Adherence and compliance to internal and external standards

• Standard processes

• Differences without a distinction

• Unnoticed, even if missing


23

Must-be-present is expected!



+

-

M = “must be present”


+

CUPHOLDERS!Deeply disappointed

if missing


24

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!


25

Put it all together



+

-

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


+


26

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


27


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


28


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


29


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


30


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


31

An amplifier of investment

Ah = “ah-hah!”

Investment

Return from Investment


32

An amplifier of investment

Ah = “ah-hah!”

ROI

Investment

Investment


33

An attenuator of investment

M = “must be present”

Investment

Return from Investment


Overcome attenuators

B

MIB

Ah

SponsorKano Lens

B

MIB

Ah

Project

M

B

InB

MIB

Ah

Beneficiary

Kano Lens ROI


Overcome attenuators

B

MIB

Ah

InputKano Lens

B

MIB

Ah

Transform

M

B

InB

MIB

Ah

Output

Kano Lens Value-Added


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


37

Cost accounts have relationships to Kano

Ah Hah!

MIB

Must

Indiff

Refresh

PMO Sys Dev Data Support


38

How to go about it

“People are led; things are managed”

Rear Admiral Grace Hopper

Image Credit: WWW.THEGOLDENGUYS.BLOGSPOT.COM


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!


40

• Allocate all tasks and deliverables to the Kano categories

• Resolve budget allocations according to importance, priority, and sequence

Think images!


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


42

From Kano comes the business case

• Estimate the investment

– New to the world

– Similar to-

– Parametric factors

• Assume benefits pay for refreshment


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


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

Business value and kano chart

Business

Transcript of Business value and kano chart