Evidence-Based Management
A data-driven approach to measure value delivered to customers.
Evidence-Based Management (EBM) is an empirical approach that provides organizations with the ability to measure the value they deliver to customers and the means by which they deliver that value, and to use those measures to guide improvements in both.
EBM consists of four Key Value Areas (KVAs)
Key-Value Area
Unrealized Value
Suggests the potential future value that could be realized if the organization could perfectly meet the needs of all potential customers.
The goal of looking at Unrealized Value is for the organization to maximize the value that it realizes from the product over time.
Questions that organizations need to continually re-evaluate for unrealized value are:
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Can any additional value be created for our organization in this market or other markets?
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Is it worth the effort and risk to pursue these untapped opportunities?
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Should further investments be made to capture additional Unrealized Value?
These questions can’t be completely answered in isolation from the UV of other products; the decision to invest in one product means not investing in others. Considering both CV and UV provides organizations with a way to balance present and possible future benefits.
For example, a product may have a low CV, because it is an early version being used to test the market, but very high UV, indicating that there is great market potential. Investing in the product to try to boost CV is probably warranted, given the potential returns, even though the product is not currently producing high CV.
Conversely, a product with a very high CV, large market share, no near competitors, and very satisfied customers may not warrant much new investment; this is the classic cash cow product that is very profitable but nearing the end of its product investment cycle.
A sample of Agile Tools metrics in this Key-Value Area
Market Size
What is your potential?
Revenue Growth
Is your business growing?
Scope Change
How good is your Product Backlog Item prioritization?
How is EBM related to OKRs?
Each metric can be classified in one (or two) EBM Key-Value Areas. By using metrics in your goal's key results, you can see in which of the four EBM areas you try to create an impact.