Estimating Business Value

I recently read The Art of Business Value by Mark Schwartz. In this brilliant read, the author asserts that not only is business value an ill-defined term in the Agile literature, even if we could define it clearly, how do we estimate it? For example, one of the Agile PM mantras states that the backlog of user stories is prioritized by the product owner according to “business value.” But how does she determine what this is?

Far too often in Agile projects, I’ve seen teams create a “vomit of user stories” first, and then try to estimate the value of these stories, assuming that the “golden nuggets” of business value will be among them. This seems to be putting the cart before the horse. Wouldn’t it be more efficient and strategically aligned to determine what is valued by the business FIRST and then write user stories to satisfy that value?

And even if we are able to determine what is valued by the business, it is almost never stated at such an atomic level as feature X  for product Y. When you look at the business value mantra of Agile closely, it’s not as well defined as we’ve thought all these years. Perhaps we’ve been reciting the mantra over and over without really understanding what it means.

I think we (IT and customers) need to spend more time looking at what business value REALLY MEANS in our environment. I’m not sure we have been doing a good of estimating the value of our stories.