Friday, March 29th, 2024, U.S. bond yields remain at 5%.
Do we care?
Not really.
We are in a period of Quantitative Tightening (QT). Central banks are trying to curb inflation by limiting the amount of liquidity available to the markets.
Unlike COVID times, money is now... expensive. Companies struggle to finance themselves. And for good reason! Who would refuse to put their money into totally secure government bonds yielding 5%? The return on investment (ROI) is unbeatable, and diverts investors from companies.
Or else...
The risk taken must pay well over 5%!
That's why many tech companies are laying off and massively investing in server capabilities to run artificial intelligences. Their hope? To become attractive to investors again.
All executive directions, Product Owners(PO), and other leaders are obsessed with one thing - Time-to-Market (TTM).
What's the connection between the 5% rates and TTM?
Time-to-Market is the ability to quickly deliver new features, capabilities, products, or services. It can be expressed through answers to questions like:
How quickly can we test new ideas with our market?
How quickly can we adapt to a new market reality?
How quickly are we able to learn from new experiments or knowledge?
A short TTM contributes to a team's or an organization's adaptability. But it's also a trap.
The BlackBerry Q10, or Apple's Newton, probably scored very high on TTM, but what about their financial profitability? 😳
In a period of Quantitative Tightening (QT), companies have very little cash. Moreover, they have been facing significant inflation for over a year, inherited from the previous period (COVID) of Quantitative Easing (QE), with massive liquidity inflows into the markets.
Focusing on TTM right now is like wanting to optimize a car engine when you can't afford to put gas in it. It's not completely smart, and potentially vain.
Beware, I'm not saying that TTM doesn’t matter. It's rather that what we're interested in is bigger and more ambitious. It's the truth of a market. In QT times, one thing is sure on the indicator side, cash is king.
What is Time-To-Money?
As Product Owners, we've all presented to our acquaintances, friends, or family members new services, functions, or offers we’ve planned to deliver to the market. And generally, they found it "awesome!".
How many pulled out a bill to buy it immediately? 🫠
Well, there you go.
Money reveals the truth when economic conditions are tough. That's what we're looking for, and besides, companies need fresh money.
Time-to-Money focuses on how quickly a bet starts to pay off, and every Sprint Goal is an investment bet. Time-to-Money is a measure of the time required for a new product increment to start generating revenue.
Continuously inspecting and adapting the ability to effectively measure Time-to-Money, taking into account the unique aspects of its market, is a massive strategic advantage for a Scrum team.
It's an approach I use a lot with the teams I coach. The ROI is quite clear in this case. However, be careful not to fall into the traps of this type of indicator either.
Revenue Extraction - Yet Another Deadly Trap 💀
"Boeing said Wednesday that it would not provide financial forecasts for the full year, clearly indicating that the company is trying to assure its customers that it is prioritizing safety amid growing concerns about its popular 737 Max planes."
January 31, 2024, The New York Times
That is, in addition to public testimonies from in-house engineers regarding an overly important focus on financial revenue extraction above all else! A stunning example of a manufacturer falling into this trap. 😱
When a Scrum team or organization no longer considers stakeholder satisfaction or societal impact, but exclusively prioritizes the monetary part of the equation, it's the very future of the organization that is in peril. On the contrary, an organization generating immense satisfaction with its market easily finds ways to monetize it. We're always happy to pay for a service we adore.
Beyond Vanity
Time-to-Market, like Time-to-Money, is employed according to your context: culture, values, medium-term goals. It's about being aware of the effects of vanity and simplistic intellectual shortcuts.
Today, we all swim in a context where money is expensive, and the decisions we make cannot ignore this. If you want to avoid laying off professionals precious to the future of your product, Time-to-Money can help.
Time-to-money is a metric involving the entire value chain, while acknowledging customer contracts, payment deadlines, and the conditions of third-party financial platforms.
Helping your product move from a negative to positive cash flow literally changes the game.
Think about supermarkets that pay their suppliers in 90 days and make this positive cash flow work by selling you lucrative consumer loans. They are financially secure but play against their ecosystem; is this a viable strategy in the long run?
How would you go about measuring your Time-to-Money in your environment, and what actions would you implement to improve it?
