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What is Long Term Value – Phase 4 of the Value Flywheel?

Reading Time: 8 minutes


Guess what, we have a book coming out! We’ve spent the last couple of episodes talking about the value flywheel effect and the value flywheel itself. There are four phases: Clarity of Purpose, Challenge, Next Best Action and Long Term Value. We’ve been talking through each of these phases in detail. And today, we’re going to talk about phase four, which is Long Term Value. So the simple question is, what is long term value?

What is Long Term Value – Phase 4 of the Value Flywheel

Mike O’Reilly
Great question. We talk about the the flywheel and keeping momentum to keep it going. Over time, how do you keep going in a sustainable fashion? How do you keep going and always focus on the next best thing or next best action? This part of the flywheel talks about ways in order to do that. And obtain that momentum. Keep that ability to focus on what’s coming next through various techniques.

We talk about the importance of well architected. And making sure what we’re building is set up for the future. 10 years down the line or even two months down the line, you don’t want to have to go back to tweak, revisit or invest time on ops.

Long Term Value is about Discipline

This portion of the flywheel is about discipline. And investment into engineering excellence. It’s taking the TLDR view.

Mark McCann
Long term value means that it continues to deliver value for the medium to long term, because you’ve invested in a sustainable way of working. You have invested in well architected and paid down your technical debt to get long term value. And you’re not going to hit a wall in the short term, because you’ve not built in quality or architected appropriately or built a sustainable solution.

As you go forward make sure that all of your systems are built to deliver long term value. You have got to have that rigour of discipline. And you have got to do it continuously. You can’t decide to just do it at the end. It’s got to be baked in.

Architecture is continuous practice

Dave Anderson
You can’t do it at the end. The big thing to grasp is architecture as continuous practice. We talk about well architected, and specifically the well architected framework from AWS, which is six pillars. If you bake these things in continuously and always look at them, there’s a huge amount of value.

Architecture used to be a weird thing that no one understood. But it’s actually quite straightforward. It’s security, cost optimization, operational excellence, reliability, performance, and sustainability. The new one is sustainability. You’ve low carbon in your workload. SCORPS is the acronym we’ve been using. There’s a lot of goodness in those six simple pillars. So why is it important?

Mark McCann
If you don’t invest in long term value and the well architected framework, you’ll hit the wall. You might go fast for a quarter or two, or a sprint or two. But sooner or later, it’s going to catch up to you. You may be going fast and delivering value, but you’re not doing it on a sustainable way. You’re not paying down those debts. And you’re not building things that are resilient, scalable, performant and cost effective.

You may go fast for a few months or even a few years. But eventually it catches up with you. And then you crash, you stop and you can’t deliver any value anymore.

Make space to Innovate, Leverage and Commoditize

Dave Anderson
What you’re doing is creating space for innovation. And again, they make that more straightforward. It’s called that ILC cycle: Innovate, Leverage and Commoditize relating to turning the flywheel. Your innovative idea is built quickly, so you can leverage it. If it’s well architected, there’s more chance you can commoditize and move on to the next cycle. And get ready for the impactful thing.

If you build well you’ll be able to do that. You’re effectively building quality. And you can go again. You get ready for your next turn of the flywheel. And you can look to see the new clarity of purpose? Or what else do we need to do?

Investing in Long Term Value keeps you from firefighting

Mark McCann
If you invest in this, your team are thinking about delivering differentiating value instead of firefighting. You’re solving issues and trying to see why things don’t work or resolving customer issues. Because you’ve invested in this you have capacity for impactful, meaningful and differentiating work. And not just run work or busy work to keep the lights on.

Dave Anderson
Not to get too philosophical! But you’re always going to have unknown unknowns. There are things that will happen that will take you by surprise. Some of the things we talk about are known unknowns. If you don’t look after reliability, performance and security, something’s going happen. That’s just a fact. You are better to squirrel away early. And then you can focus on the stuff that no one has thought of.

Mark McCann
Even one of the most basic pillars we love is Operational Excellence. Do you have observability? And do you know where your value is coming from? Or do you know where your next round of value is coming from? Good observability helps to point you in the right direction for where you should invest. In the next wave of well architected improvements that keep the flywheel turning.

The challenge is getting teams on board

Dave Anderson
And what about our ‘Wee Jimmy’ story: Wee Jimmy built a fantastic system and knows how it works. Wee Jimmy is a genius and does not need to document anything. But Wee Jimmy leaves the company, and no one knows how it works?

Mike O’Reilly
Speaking from our own experience the challenge is getting teams embedded into it. And getting them into the right cadence and adopting it. But when that happens it frees up architecture. And it give teams more autonomy. It fuels the overarching pyramid.

When you’re looking at broader cloud controls and constraints. And building a more functional, productive organisation, it drives all of that. You don’t have to have an architect on every squad. You can scale in that way. It’s all about efficiency, throughput and looking after the longer term.

Make your teams lives infinitely better

Mark McCann
It democratises a lot of architectural concerns. And enables teams to think about them in a way that’s productive, useful and enjoyable. Whenever we take teams through this, they really get it. And they really enjoy it and embrace it. They see the value of bringing it in. And they see the improvements that it makes so they see how their lives become infinitely better. Because they are not chasing their tail and trying to firefight issue after issue.

If you do this right, it goes right into the team. And enables and empowers teams to deliver well architected solutions that deliver the long term value that you’re looking for.

Dave Anderson
If every team needs an architect, then who’s going to draw the picture? Engineers need to draw the pictures themselves. So who’s going to draw on the whiteboard?

Mike O’Reilly
That’s just enough design. Is that right?

What is Long Term Value on The Serverless Edge
Photo by Jonatan Pie on Unsplash

What happens if you ignore Long Term Value?

Dave Anderson
What happens if we don’t do it? You see teams in a false economy where they get their first or second build done quickly. And it seems great. But then things start going wrong. And you build up technical debt very quickly. Things start to go wrong. You end up firefighting. And it really slows down.

It’s the perfect velocity thing. You start off quite fast. But it starts to slow down rapidly as things start to creek. Is there anything else you can think of that happens if you don’t think about this?

Mark McCann
Your business, execs and key stakeholders start to wonder why am I not getting value out of meetings anymore? Where’s the next differentiating capability? And where’s my next feature? Or my next capability that can differentiate us in the marketplace? I’ve got the same teams and they were good last month. Why are they not delivering this month. Or they were good last year? Why are they not delivering this year.

You’ll have a lot of noise from the execs wondering why is it not working anymore?

Follow the growth versus run numbers

Mike O’Reilly
In most modernisations, you’ll deal with a part of the org that doesn’t leverage well architected. You may have heritage style apps. And they are all good at what they do. But if you look at the run/grow type numbers across that part of the organisation versus a well architected area of the organisation or application. You will see that the grow on the well architected/serverless first side is much higher than the run.

Whereas on the older side, the run is to compete for growth capacity. You see it in the numbers. Delegate as much as possible to the cloud provider. And adopt well architected practices to always focus on value. And not on run or paths that don’t add value. If you’re not doing that, you’re going to struggle. Your growth is going to always struggle against run costs.

Ignoring Long Term Value leads to System Rewrites

Mark McCann
Your team’s typically know the business as well as anybody in the business. They are part of the business. If they don’t invest in long term value. they will spend their cycles doing things that aren’t innovative or creative. And aren’t going to help business growth. You’re going to be doing stuff to keep the lights on. So you’re missing out on innovation and value add. Because they have done it right. They have freed up capacity and cycles to think about the future. And think about what’s next? What are the opportunities on the horizon?

Dave Anderson
The problem is the dreaded rewrite a couple of years in. And realising that this big ball of mud just needs somebody to take a sledgehammer to it. You turn around and talk to your stakeholders because you are going to want to do next generation version of this. It’s going to be brilliant. With all of the same functionality. But it’ll be better.

And the response is: ‘why would I pay you to build it again? You built this five years ago, why are we building it again?’. That’s a very difficult conversation. And the real answer is we didn’t bother doing architecture, so we have to build it again. That’s not a good place to be.

Long Term Value is about turning the value flywheel faster

Mark McCann
It all ties together with the value flywheel. Once you have clarity of purpose in a good environment for challenge with the psychological state, you understand what the next best action should be. You can start to invest in long term value. Because you can see key input metrics to start influencing.

And you can see what you’re trying to improve as the flywheel turns. So it’s critical to have all of these together. Because your long term value is really how can we turn the flywheel faster? How can we improve the metric? And how can we deliver more value, more quickly to your users and customers.

Mike O’Reilly
A team that’s leveraging and operating the flywheel will see their software appreciating in value over time. As opposed to depreciate. If you’re not thinking about long term value your system is always depreciating. You are going to have to invest in patching, upgrading and dealing with issues.

Long Term Value is about minimising liabilities and offloading responsibility to your Cloud Provider

Mark McCann
The tems we use is ‘code is a liability’ and ‘the system is the asset’. You need your teams focused on the system delivering the value. And removing as many code liabilities as they can. And this phase of the value flywheel is about minimising liabilities and offloading more responsibility to the cloud provider. Or how can we leverage managed services and SAS providers. To remove custom build and evolve into a commodity. So all of those things are at play in this phase of the value flywheel.

Dave Anderson
Through architect eyes you can spot when a system isn’t built for long term value. It’s a software engineering thing. You just know something’s not built well. And you get a feeling that doesn’t feel right. It’s sometimes hard to put your finger on it. Sometimes you can explain to more junior engineers why it’s not right because it is going to be a disaster in two years time. I get a feeling when I see that. It’s sometimes hard to put into words. But you now they are not thinking about long term value. They are just thinking about the delivery date at the end of them month.

That’s the craic. And that’s the whole value flywheel effect and all our four phases: Clarity of Purpose, Challenge, Next Best Action and Long Term Value. Our book is out in November 2022. So have a look at the blog on TheServerlessEdge.com. Follow us on Twitter @ServerlessEdge and on YouTube and the Serverless Craic podcast as well. Thank you very much.

Transcribed by https://otter.ai

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