Have you ever been on a software project and thought to yourself, "what's the impact of the work"
"I'm doing? How much money is it really making for the business? Is it actually making our customers more successful?"
We'll stay tuned because today
we're going to talk about how impact mapping can help you be in a better position to ask for raises and promotions and
steer the company in the right direction
right after this.
Hi, I'm Jayme and at Healthy Software Developer,
I'd like to help you have a sustainable career where you don't get burned out,
you don't get pushed around by people that don't really understand software development,
and you can just make sure you have a long and healthy career.
I once worked with a software developer that made his company over
three million dollars in one year, and at the end of that year when he got his performance review
he was only given a 2% raise in his salary.
And if you want to be in a better situation where you can actually quantify how much value is the work you're doing
causing for the business, or maybe you're a product manager
and you want to make sure that the investment you're making in changing your product really hits its goals then
understanding impact mapping is really gonna
help you.
I talked about a business model canvas in my prior video which is a visual diagram with nine sections that all
approach the business from different angles
and how any work a software development team does to try to impact a product
should be looked at through the lens of one of these sections.
Before we start impact mapping to help you figure out:
"what is the impact of the work that we're doing?",
we have to pick one section in the business model canvas and set a goal. In this example
we'll pick the revenue stream section
Which is really all about
"How does this software product or service make money for the company?". And an example goal in a company that sells its product using
a subscription could be to increase the subscription revenue by 20%.
Another example might be if we targeted the channels section of the business model canvas, which is really all about
"What are the different distribution channels or ways that we could potentially reach"
customers?". And if your product for example had a half a million people out there that might buy the product
but you're only actually serving
50,000 of them, one goal could be to reach
15% more of that total market. And
finally the value proposition section of the business model canvas
Which is really about the theory the company has about why the customers would pay for the core product,
not its bells and whistles. And one example of a goal there might be let's say you were selling a mobile app or
possibly a video game
you could actually set a goal, "We'd like to reach a four star rating on the App Store."
and this would be more a goal around customer
satisfaction. But the important thing about all these goals is you need to actually have a measurable quantifiable fact that tells you
when the goal is reached.
Statements like "We'd like to increase profit", or
"reduce costs" or "improve customer satisfaction"
don't cut it here when we're impact mapping. We need to have a number that when reached we can say to everyone: "We're successful!".
So once you've picked a goal to try to achieve, what's the next step? Well eventually we want to produce
what's called an effort hypothesis and this is a statement that comes in a sentence that you replace
variables in that gives you a great way of communicating the goal and what the company's trying to do across everybody in the organization.
So if anybody needs to ask the question "Why am I doing this work?",
"What is it gonna actually result in?", and "How do we know when we're successful?", it answers these three questions.
And the statement basically goes like this. "We believe that some"
"capability, whether it's in our product or our"
"marketing channels or any aspect again of that business model canvas, will result in some"
"outcome, something new in the product some"
"improvement to a capability some better visibility with our customer",
"and we'll know when we've succeeded when some measurable signal is reached".
And this is what I was just talking about something that everybody can say "yes, this fact is now true",
"we've reached this outcome". The important thing about this statement though is it's a hypothesis,
it's a theory and you can note that by the first sentence which says "we believe".
This is an acknowledgment across the company that doing this work is not a guarantee. And this is very key to
agile and lean philosophy that when we invest in software development, there are no guarantees.
There's no certainty and that's going to have a big impact on how we budget which I'll talk briefly
about at the end of this video. The first step in impact mapping is we need to state our goal in a visual diagram.
There's many software products available that you can use to do this or you can simply just do it in Microsoft PowerPoint or keynote
from Apple or a variety of other drawing or diagramming tools.
But once we pick a goal, and we only want to pick one, in this case this we're in that revenue section of the business
model canvas: We want to increase subscription revenue by 20%.
The next step is we have to pick some actors. Actors are really just people,
groups of people, or possibly departments inside of our company or that are part of our customer base
that we're going to try to impact or influence to hit that goal.
One of these might be corporate subscribers. This example of having a software product that customers pay for through a
subscription may have some of those subscribers pay for it because they work for companies.
There might also be individuals that pay for the product that are just commercial subscribers. And
finally there may be media subscribers or people that belong to news organizations, or they're journalists, and they may also subscribe.
Next what are some impacts we could try to cause that will affect some of those actors to reach our goal?
Well if we're trying to impact commercial subscribers one impact might be to try to get more subscribers.
Another could be to try to retain the existing subscribers and prevent them from canceling their subscription. And
finally we could also try to find ways through pricing and additional revenue streams to try to earn more per subscriber.
The last step of an impact map is to pick some features or
activities that the team is going to do to try to actually have one of those impacts.
One example might be the software development team or consultants could be invested in to try to add
Stripe payment capabilities to our product. Now stripe is just a really well-known
payment processor that lets customers use a credit card and other forms of payment easily to pay for subscriptions.
But this is just one example of something that could be done to try to have an impact to reach this goal.
Another example of a feature or activity that could be pursued to try to get an impact that reaches that same goal would be to
advertise on Facebook.
Maybe your company's never advertised their product on Facebook before or they have but they just haven't gotten the results
because they're really new to building Facebook campaigns.
But this would be a way to try to achieve the same goal, but without software development effort.
One mistake I unfortunately see many companies make when they're new to impact mapping is they try to select multiple
red squares or
multiple features or activities to perform to try to reach a goal and the problem with this is, if that
subscription revenue, that goal we're trying to achieve starts going up now you have to figure out: "why is it going up?".
Maybe we made ten changes to the product
we need to know:
"Are nine of those actually a waste and only one is positive and actually having the impact?". So you really just want to pick
one thing to try to actually do to the product at a time and then measure it as an
experiment and see if it's getting the results you want. If our example company here chose adding Stripe payment
capabilities as the thing they'd like to pursue to try to have an impact to reach their goal, the effort hypothesis
I showed you before would read like this:
"We believe that stripe payment will result in more commercial subscribers, and we'll know we've succeeded when subscription revenue
increases
20%". What's crucial is you don't stop here when you budget though.
This is only a theory remember? And the company may invest money in trying to reach this goal, and most
likely their first time trying it with their first idea and experiment is going to fail.
So rather than putting the company into a position where if they do fail,
they have to go back to the board or the CFO or whoever approves budget and basically be looked at as
"we failed!" and now we need to get more money,
how could we actually budget ahead of time to assume that we might fail and
keep the culture more healthy where people can just do work to try to reach that outcome and still stay profitable?
Well, let's say this fictional company if they were to increase their subscription revenue by 20%, that would generate an additional million
dollars for the company that year. The question becomes:
How much money is the company willing to invest to make an extra million dollars?
Let's say that answer were
"four hundred thousand dollars". The most money that the company can possibly
spend to try to make that million dollars before it starts to get a little too scary for people, and this is going to depend
on the company, would be four hundred thousand dollars. The critical thing to do here is not to spend all
four hundred thousand dollars on one thing, but rather to only spend a percentage and in this case as an example maybe
20% of that four hundred thousand dollars to do your first experiment to try to hit that subscription revenue goal.
What's great is let's say the team actually hits that revenue goal through their first
experiment and investment now there's extra money available to reward people and
Invest in future growth and if they don't succeed
they've got multiple other things they can then try and measure
Independently before the budget that's been allocated to try to hit that goal
has all really been spent. So do you know the impact of the work
you're doing? Is your company building impact maps? if not, why not? And have you thought about asking
product management if they're doing these types of things? I find if you have access to this
information you'll be in a better position to steer your company to make sure it's profitable,
you'll enjoy your job more because you'll know what you're actually
Impacting as far as the business and the customer, and you'll be in a better position to ask for raises and promotions
when you get that opportunity. If you're new to my YouTube channel go ahead and subscribe. You can also click the bell icon
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I also have these videos available on four podcast platforms if you'd rather listen there.
Google Play, Stitcher, iTunes or SoundCloud.
So until next time,
thanks.