How to create business understanding in your software development team?

Business focused development teams.

It is sometimes quite hard for developers to understand the business. Business and Engineering has actually a lot of common practices, but the jargon, making it very difficult to talk on common terms.

Business model canvas is a great tool that can help your development team to understand business dynamics.

Business_Model_Canvas

The best way to start is making 4-8 developers group and making them come up themselves to fill the current business model of the company. You should even make a competition between the groups. The best business model wins a dinner out. Little gamification doesn’t hurt.

Let’s break down the business model canvas, and explain as briefly as possible. If you want a detailed version, I strongly recommend Business model generation book: http://businessmodelgeneration.com/book

Another very good resource is http://www.peterjthomson.com/2013/11/value-proposition-canvas/

Customer segment: Who are our users? Who are our most important customers. There are many types of customer segmentation and to identify yours clearly as possible gives a very strong edge to your developers.

Value propositions:  What value do we deliver to the customer? Which one of our customers’ problem are we helping to solve?

Channels: How we are reaching to our customers? Which one works best?

Customer relationship: What type of relationship does each of our Customer Segment expect us to establish and maintain with them?

Revenue steams: How does our customer pay for our services and products? How much each revenue stream contributes to overall revenues?

Key resources: What are assets we need in order to support value creation?

Key activities: what is our distribution channel, customer relationship? Revenue streams?

Key partners: Who are our key suppliers, which key resources are we acquiring from partners?

Cost structure: What are the most important costs inherent in our business model?

Once the team learn, play and experience with business model canvas, start discussing new ways.

If you have a big development team, I suggest taking all day out and start even experimenting new business models.

Use subtraction to generate brainstorm sessions. You can start by removing one of the items and ask the team to come up with new ways of solving the missing item.

Where is your business core?

Product innovation; will help you to have an early market entry where you can enjoy charging premium prices and acquiring a large market share if you are quick enough. You need to compete for talent, defend for low barriers to entry and many smaller players will try to beat you. You need to center your organization around employees and try creating starts in your organization.

Customer Relationship Management: high cost of customer acquisition makes it imperative to gain large wallet share, You will battle for scope, you need rapid consolidation. A few big players to dominate. Highly service important oriented, Customers come first.

Infrastructure Management: High fixed costs make large volumes essential to achieve low unit cost. You will battle for scale, rapid consolidation. You need to focus on the cost, predictability and efficiency are the key for success.

During the meeting you might hear some of the following questions,

What can we sell more? How can we reach customers more efficiently? What relationships do we need to establish with customers? How can we make money from our customers?

These are all valid natural questions, but if you want to increase the value creation, you should challenge your team to think more customer centric, for example starting with asking questions like below.

What jobs do our customers need to get done and how can we help them? What are our customer’s aspirations and how can we help live up to them? What are our customers prefer to be addressed? How do we, as an enterprise best fit into their routines? What relationship do our customers expect us to establish with them? For what values are our customer truly willing to pay?

Setting your customer in to focus will create ownership of the team, also you should aim to create channels for your development team to talk to users.

Agile software development, and having only product managers talking to users, or product owners talking to users are not enough. In order to create a strong purpose, your development teams should know your business.

When we do appraisals, it is very important for us to say to developers that we are expecting business understanding, and these processes are part of this process.

Thanks for reading.

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