Planning, prioritisation and governance are still focused around milestones and deliverables. But where is the business value?

We have the mindset but how do we enable it?

There is a long-held belief that leadership should carefully manage the teams below them and make the key decisions. This represents a rigid command and control structure that is well supported by waterfall project delivery. Most organisations are historically hierarchical in nature with programmes and projects conceived and funded with direct oversight from senior leadership. Even after transforming to ‘organisational agility’ with Objectives and Key Results (OKRs) implemented throughout, organisations often fail to let go of pre-existing hierarchical planning, prioritisation and governance forums. They fail to let go of the annual funding process, which holds teams to the expectation of delivering specific changes by a fixed point in time without considering that things can change throughout the course of a year. When the deadline is up, the ‘agile’ teams have often failed to deliver the value that was hypothesised in the business case. This could be due to the changing expectations or needs of the customer, and the team not having the flexibility to adjust the outcome accordingly. An ‘agile’ team has just delivered a waterfall project in blocks of activity. Without implementing an enterprise-wide agile planning, prioritisation and governance model supported by value-based funding no organisation will be able to realise the benefits of organisational agility.

So what do we mean?

A value-based funding model is when products, processes and/or services that deliver continuous value to the customer (otherwise known as value-streams) are funded instead of discrete projects with set start and end dates. Instead of funding specific improvements through individual projects, investment is aligned to the strategic priorities of the organisation. For example, a strategic initiative to ‘Have outstanding digital customer experience’, will empower Product Management and agile teams to decide what changes they can make to achieve that overall outcome. While annual funding will be allocated to the different value-streams, the value that each releases will be reviewed quarterly and funding re-allocated based on real-time feedback. Agile planning, prioritisation and governance aligns the company in a common direction whilst having a laser focus on value and the flexibility to pivot when required. This approach enables the organisation to stop items that deliver limited value and continue proven higher value items.