Perception of Value in a CAS

It has been said that “Value is in the eye of the beholder.” Our perceptions drive our understanding of value, according to psychologists, and perhaps marketers. What makes great marketing at a company and positive sales can also have a negative effect on the product development organization itself. A double-edged sword of sorts, as humans and our perceptions, assumptions, and emotions travel with us to work. Long after that impulse purchase of the latest iPhone or other gadgets we are still creatures of habit.

The same behaviors that make us vulnerable to marketing manipulation also make product development companies vulnerable to diminished truth and performance in execution. The reality is that we are navigating complex adaptive systems (CAS) within systems. The system (organization) we work within, the product (a system), our team (a system), and ourselves (a system). The causes and effects of movement or change in and around the systems are where we must build discipline, manage assumptions, and rationalize, validate (/in-) through experiments. These validations become part of our imprint, our perceptions, or mental models (schemas). But what if our rationalization or validation was incorrect? Our experiment flawed. How would you know?

This is an organizational aspect too. The organization is the symbiosis of its people and their behavior and mental models.

For example, what is the value of a spare tire when you are purchasing a new car?iu

Does the spare tire affect the decision-making process of buying the car? What about the price of an average spare tire ($30-$100) and its effect on the decision-making process to buy a car?

The reality for most of us is that we don’t even consider a spare tire as a feature of a new vehicle (itself an assumption) in 2019. We have been trained through decades of product offerings and increased tire quality to make assumptions about the car (system) and its state relative to our observations and experience with other purchases and use of vehicles. When we are excited about that new car purchase, the value of the spare tire is negligible. If every buyer knew that no spare tire was included in the vehicle would it change the perception of value at the time of purchase of the system? I posit that no, it wouldn’t change the equation.

Now, let’s fast forward to your appointment with a roofing nail. A few miles later, the head of the nail has worn off and you have a leak, then a flat.


Now, what is the value of a spare tire? Very high. Especially if you are in the wrong place. So what has really changed in the spare tire? Its relative location to your vehicle is still the same — far away. This is an academic point – it’s obvious that when you need a spare tire it is much more valuable.

The focus of this article is to observe that organizations decision-making processes often execute in the simplified model of the car purchase described earlier. The true value of the spare tire is not evaluated properly because of assumptions, both known and unmanaged, and missing context.

Unmanaged assumptions and missing context drive the cost of incorrect decisions up exponentially.

This underscores the importance of building an economic framework that establishes patterns that address both simple to complex decision contexts while acknowledging assumptions. The decision-making process itself must be adaptive to common contexts and uses for the object being valued. Otherwise, we risk oversimplifying the value of business features, or we could miss complexities that drive context based value that would have affected the origin decision.

#SAFe #Reinertsen #CAS #Agile #Scrum #productdevelopment #OrgMindset #organizationalagility


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