Learning about Creating Agile Organizations

Free CAO guide

The CAO book

CAO and DAO courses

Requirement Areas vs. Value Areas: Different Perspectives, Both Essential

In organization design, one thing you need to do is evaluate which activities your group needs perform to deliver on its purpose. Based on these activities you can then find the parts (roles, teams, processes, systems) in your organization required to deliver on the purpose. Once you have done that you likely end up with lots or people. The question then becomes how do I group all of these people into effective agile units that deliver value?

The answer: By analysing the types and strengths of dependencies between these units in the light of the creation of end-to-end value., and then applying the Creating Agile Organizations (CAO) Guidelines. One out of many guides that CAO provides to think about this are: Value Areas.

Now, in LeSS there is the structure called Requirement Areas. A lot of people still confuse the CAO Value Areas with LeSS Requirement Areas. So, here is a short post about the different between them

LeSS Requirement Areas

Straight from the less.works site: Requirement Areas are scaled-up feature teams. They’re organized around customer-centric requirements. Think customer-first, using their language and they are temporary. They evolve over the product’s lifetime.

Examples:

  • Trade Processing>
  • New Market Onboarding

These are solid LeSS Requirement Areas.

CAO Value Areas

Now let’s look at Value Areas (as explained on creatingagileorganizations.com). These groupings are all about outcomes. They’re focused on measurable customer and business results. That means you need to attach business metrics to these areas—something that proves you’re making an impact on customer experience or the bottom line.

Examples:

  • Ensure My Trades Are Fast & Reliable
  • Provide Me Confidence in My Trades

Translating Requirement Areas to Value Areas

How do you map a Requirement Area to a Value Area? 

See the table below:

As you can see in this example the Requirement Area is split into 2 Value Areas, each with specific metrics.

To summarise

Both views are valuable. One isn’t “better” than the other—it’s all about context. Stronger even, when writing the Value Areas Scrum patterns I was very much inspired by the concept of Requirements Areas.

  • Requirement Areas: Works great for systems that integrate software, hardware, and physical processes. It gives teams clear customer-centred domains to focus on, avoiding fixed structures.
  • Value Areas: Fits perfectly for digital services and information systems. Organizes around outcomes like customer retention or satisfaction, and are measured and optimized across domains.

Different perspectives for different product contexts—and that’s a good thing. Instead of debating which is “better,” use the one that fits your product’s needs. Sometimes, you might even use both.

Learn more about CAO

HR’s Role in Agile Success

HR’s Role in Agile Success by Cesario Ramos. Over the years, I’ve had many management conversations about HR policies in Agile setups. Questions like: “How should performance appraisals work in...

read more