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12 Key Tenets of the Value Flywheel Effect

Now that you’ve learned about what the Value Flywheel Effect is, let’s look at the 12 key tenets that support the Value Flywheel. (This post is adapted from The Value Flywheel Effect by David Anderson, with Mark McCann and Michael O’Reilly).

The Value Flywheel Effect, enabled by cloud adoption, will accelerate your business. Each phase of the Value Flywheel is anchored by three key tenets (twelve in total). These tenets will help guide you through each of the four phases of the Value Flywheel.

That said, it’s essential to understand that we are constantly evolving—these tenets may not hold in a few years. For that reason, we will also illustrate them using Wardley Maps. You should map your context and adapt these principles to work in your environment.

We’ve also broken these tenets down based on personas, or the role in an organization that would be most concerned with each phase of the Value Flywheel. The persona listed for each section is not the sole owner of these tenets, but the individual who would sleep easy if their three tenets were followed.

12 Key Tenets of the Value Flywheel

Clarity of Purpose (Persona: CEO)

  1. Clarity of purpose: A data-informed north star.
  2. Obsess over your time to value: Innovation is a lagging metric.
  3. Map the market: Can you differentiate in the market?

Challenge & Landscape (Persona: Engineers)

  1. Psychological safety: Team-first environments always win.
  2. The system is the asset: A sociotechnical systems view.
  3. Map the org for enablement: Enable empowered engineers.

Next Best Action (Persona: Product Leaders)

  1. Code is a liability: A serverless-first mindset delivers value.
  2. Frictionless developer experience: An easy path to production.
  3. Map your solution: Align on how you will serve customers.

Long-Term Value (Persona: CTO)

  1. A problem-prevention culture: Well-architected and engineered systems.
  2. Keep a low carbon footprint: Sustainability.
  3. Map the emerging value: Next-generation companies can see ahead.
12 Key Tenets of The Value Flywheel

12 Key Tenets in Detail

Phase 1: Clarity of Purpose

From a company perspective, the CEO is the individual we can use as the persona most concerned with the first three tenets. Though these tenets affect everyone in the organization, the CEO has the interest of the company at heart and can ensure these three tenets are met.

Clarity of purpose is the number one job of the CEO. The company must have a vision and not just a few words written on the wall. Clarity of purpose can be tested by creating a north star–model using the North Star Framework from Amplitude. Ideally, the north star is a lagging metric (one that takes a long time to measure), and you should be able to identify the leading metrics (actions that lead to an outcome) and the effort that will drive its success.

Many CEOs demand innovation, which often leads to innovation theater and little actual innovation. If the CEO tracks time to value instead—which means reducing the time taken from “idea conception” to “value in the hands of customers”—then innovation will happen. Innovation is a lagging metric. Rather than focusing on the nebulous idea of innovation, improve the leading metrics that you can control. 

Related to the clarity of purpose is the intellectual property of the organization. Is there clarity regarding the market you are operating in? Performing a Wardley Map on your value chain will help distinguish your differentiators and your enablers. 

Phase 2: Challenge & Landscape

The software engineer in an organization is focused on a different set of tenets than the CEO. The engineer’s responsibility is to build well, so there are specific tenets that will help set them on the right path.

Psychological safety is critical here, as it is the foundation for an environment that fosters success. Engineering requires collaboration, challenge, vulnerability, calculated risk-taking, and skill. A highly charged political environment will negatively impact the team’s success. Alternatively, a team-first environment, like in many sports, will lead to better results and engagement all around. 

Often, engineers will obsess with the code while non-engineers will consider the people. But the key contributors to any software system are the people that interact with technology. It is this combination and interrelationship between the socio (the people) and the technology that is of vital importance. If the sociotechnical system is valued and understood, then engineers can make huge impacts. If it is not, inertia will slow down your flywheel. 

The top issue for engineering teams is often friction. Decision makers in a business often try to govern and ensure compliance by restricting teams. If we Wardley Map the engineering environment, it should be clear that certain functions are stuck in the wrong phase. This map can be a valuable source of continuous improvement that will enable instead of frustrate engineering teams. 

Phase 3: Next Best Action

There are many flavors of business or product roles, but they should all represent customer value. For the third phase of the Value Flywheel Effect, the product leader, who represents the customer, is the driver. They ask the question: How can we optimize for maximum customer value? It’s important to recognize the depth of the product discipline and the many important techniques available. In The Value Flywheel Effect, we’ll focus on speed—deciding what to build is a whole other set of books!

One of the biggest misunderstandings in the world of software is the value of code. But code is a liability, as we’ll say repeatedly in this book. The more code we write, the more complexity and risk we generate for ourselves. In the modern cloud, it’s important to offload as many capabilities to the provider as possible. Less code allows teams to move faster. Taking advantage of serverless is the clearest next best action for many modern organizations. 

When teams do release new features, it’s critical that there is a frictionless developer experience. Organizations must make it easy for the engineers to make changes quickly and in a safe, secure manner to deliver value for the business and keep the flywheel moving. Automation is a key enabler in reducing developer friction. 

To embrace a serverless-first mindset (offloading infrastructure management to the cloud) it’s a valuable exercise to Wardley Map the existing technology stack with engineers. With this map, it will quickly become clear which components either slow the team down, generate little value, or are easily replaced by a cloud service. 

Phase 4: Long-Term Value

The final persona driving the Value Flywheel Effect is the CTO (chief technology officer or similar), who represents the architecture of the system. Often misunderstood, the architecture of the system should support future changes, reduce risk, and meet the business need. Like security, good architecture often results in bad things not happening, which is often difficult to measure. And good architecture leads to sustainable, long-term value versus short-term gains.

Many organizations reward teams for fixing problems. An alternative model should be to create a culture of preventing problems: reward the teams that use well-architected and strong engineering practices to prevent issues from ever occurring and lead to more reliable systems in the long term. 

Good architecture is often hard to define and measure; therefore, efficiency can be a strong measure here. And efficiency can also be represented as sustainability. Cloud providers are starting to measure the amount of carbon burned in a specific workload or system. Quite simply, if a team can reduce their carbon burn, they are providing a benefit to the customer, the company, and the environment.

A key role of architecture is looking ahead and anticipating change. One thing in technology that is certain is there will be an evolution of capability. Wardley Mapping provides the perfect mechanism to map how key capabilities in your value chain will evolve and what emerging capabilities or needs will surface in the future. Once mapped, you start preparing for evolution today instead of waiting for the future to hit you in the face. 

Read more about the Value Flywheel in the new book from David Anderson, Michael O’Reilly and Mark McCann (The Value Flywheel Effect), coming November 29th, 2022.

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