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If It's Not Valuable, Why Do it?

Most companies waste a lot of time, money, and resources on initiatives that do not deliver any value. This is the tale of the feature factory, focused more on output than on outcomes. My research and conversations continually reinforce this sad state of business.


If the majority of product initiatives fail (and I have seen numbers in the 76% to 90%+ range), then the best way to improve productivity is to reduce that failure rate.


The simplest way to reverse the failure rate is investment in the strategic role of product management. Focus on outcomes not output.

Product Management is about Adding Value

If we want to make this shift to outcomes, we have to realize that the strategic role of product management is all about adding value in at least two areas: Impact to the Market and Advantage to the Company.


Ideally, adding value to both areas.


This is foundational to how we define product strategy and product lifecycle management.


A Tool to Focus Product Management on Value Creation

To help product managers and product leaders focus on the importance of value creation, Product Growth Leaders created the Value Creation Matrix. A tool to profile the value multiple initiatives create for the market and company.


The matrix plots the value, or Impact to Market on one axis and the value, or Advantage to Company on the other axis.


Plot your initiatives by impact to the market and advantage to the company
Plot your initiatives by impact to the market and advantage to the company

Impact to the Market

Rank the value in terms of impact to the market (low, medium, high).

  • It can be tangible value for customers in the market, like improved financial performance (increased revenue, decreased costs, increased profitability) or compliance.

  • Or it can be intangible addressing more social or emotional aspects like providing peace of mind, certainty, or even status.

As part of your discovery process, make sure you spend time understanding what the market of customers value and utilize that insight to help prioritize what initiatives to focus on.


Advantage to the Company

The value your initiative would create for the company is measured as advantage to the company (low, medium, high).

  • Will this initiative increase revenue, decrease costs, or increase profitability? For the top-line this could be by providing access to a new market or persona, increasing the retention rate of customers, or increasing your average revenue per customer. With respect to costs, this could be reducing the cost of goods sold, reducing the cost to deliver and support, or something else.

  • The initiative could also be something strategic, that does not deliver financial value immediately or by itself. It could be a new architecture that supports the product strategy or prevents disruption, or APIs that enable other products or features.

As you look at your product initiatives, take a moment and think about what advantage they bring to your company.


Using the Value Creation Matrix

PGL-ValueCreationMatrix
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Download PPTX • 1.28MB

Download the PowerPoint tool to use with your team.


Create post-it notes for each initiative you are considering. Project the matrix on a white board and start plotting each initiative along the Impact to the Market and Advantage to the Company axes.


Low Value to Company and Market

In the lower left of the matrix (in red) are initiatives that are low in value to both the company and the market. It is important to identify and reject the low value before wasting time and money pursuing them.

Value Creation Matrix
Low impact to market and low advantage to the company

Use this as your first filter. If you find initiatives falling in this lower left corner, stop any work on them. Do not continue any discovery. Do not even include them in your prioritization work.




High Value to Company and Market

On the opposite end are those initiatives in the upper right corner of the matrix that are high in value to both the company and the market.


High impact to market and high advantage to the company

These are initiatives have the best chance for success, as they will provide high value to both the company and the market.


You still need to do your discovery and validation work on these to confirm your initial thoughts on value. Additionally, these also need to go through the full prioritization process, but these may be initiatives that you choose to allocate more time and resources to based on the chances of success.


Uneven Value to Company and Market

Sometimes there are opportunities that create high value for either the market or company, but low value to the other. These are still viable initiatives, as value is being created. Two quick things to think about:

Uneven value to company and market
Uneven value to company and market
  1. The earlier you are in the lifecycle, the more you should focus on market value. There may not be near-term value for the organization, but there is likely longer-term value for the organization in terms of leadership or loyalty.

  2. The later you are in the lifecycle the more you should focus on value to the organization. If the market is fully penetrated, or better yet in decline, you should be focused on maximizing the remaining profits for the company.


Leverages IDEA Prioritization Method

The Value Creation Matrix is aligned with the IDEA prioritization method.


Impact to Market is the I in IDEA, and Advantage to Company is the A.


Using the Value Creation Matrix as a first pass not only helps filter out those low-low initiatives, but also provides you a head start when you get to scoring all of your initiatives.


Read Prioritization Using IDEA/E to learn more about this method of prioritization.


If you are interested in learning more about the importance of value and the Value Creation Matrix, it is a tool we teach in our Principles of Product Strategy course. Learn more about the course at https://www.productgrowthleaders.com/strategy


The Value Creation matrix is a great place to start when you are prioritizing initiatives, potentially to do a little more discovery, before wasting time and money pursuing them. Weed out those initiatives that are low value to both the company and market.

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