Shipping features is easy. Creating value is hard. This article suggests a practical framework that hopefully will be useful for every product owner (PO).
While working on our products we face very similar questions:
- What (which feature) should we develop next?
- How do we justify our plans (the product roadmap)?
- How do we balance (and compare) initiatives that generate revenue and that bring technical improvements?
- How do we communicate to stakeholders that reducing technical debt is equally valuable as building new functionality?
- And maybe the most important one: How do we know if we create value at all?
Teams, while working on their products, estimate business value, prioritize features, deliver functionalities, and than move to the next backlog item. The challenge is that these activities are rarely connected into a continuous value management process.
The proposed framework connects three essential activities performed by every PO. Together, these activities create a continuous feedback loop that supports informed product decisions rather than intuition alone.
- Value Estimation – understanding the expected value delivery for every initiative.
- Feature Prioritization – deciding which initiatives to be delivered first.
- Value Tracking – verifying whether the expected value has actually been realized.
Value Estimation
We need to think what does “value” actually mean before discussing value delivery. One can intuitively associate value with revenue. However, in reality products create value in multiple ways.
Some initiatives generate new business opportunities such as increased revenue, new customer acquisition, higher retention, or faster market expansion. Other initiatives improve the operation of organization by e.g. reducing infrastructure costs, lowering licensing costs, reducing development effort, lowering cost of poor quality (CoPQ). Both are valuable.
POs deciding between new functionality and annual cloud costs reduction will make exactly the same decision. They will need to choose where should the organization invest its limited development capacity. Thus, value estimation requires looking beyond financial metrics alone as successful products create value for both the business and its users.
Feature Prioritization
When the value has been estimated, the next challenge is deciding what should be done first. Fortunately there are several frameworks (e.g. Weighted Shortest Job First, WSJF) that can be very handful. Traditional WSJF evaluates such aspects as Business Value, Time Criticality, Risk Reduction or Opportunity Enablement, and Job Size. It has been successfully implemented in many organizations as it balances value against effort.
However, modern digital products face another important aspect. Business value is rarely created directly and it is realized through successful customer and user interactions. Basically it means that no adoption means no revenue, no task completion means no productivity improvement, no engagement means no retention. One needs to acknowledge that customer value precedes business value. This observation brings the need to extend the traditional prioritization approach to consider both business outcomes and user outcomes.
Value Tracking
Delivering a feature does not necessarily mean that value has been delivered. In many organizations one can see that the value is not measured any longer when the feature is put into production. In product management that should not be of common practice.
Instead, every business initiative should answer three questions:
- Did we deliver it?
- Did users actually adopt it?
- Did the expected business outcomes materialize?
These questions correspond to three different kinds of evidence. This closes the feedback loop. The results of value tracking become inputs for the next round of value estimation. Based on that Product Owners can improve future prioritization using evidence rather than assumptions.
References
- K. Schwaber, J. Sutherland, “The Scrum Guide. The Definitive Guide to Scrum: The Rules of the Game,” November 2020.
- Scaled Agile Framework (SAFe) Knowledge Bas, “Weighted Shortest Job First,” , SAFe 6.0.
- K. Rodden, H. Hutchinson, X. Fu, “Measuring the User Experience on a Large Scale: User-Centered Metrics for Web Applications,” in Proceedings of the 28th Annual Meeting on Human-Computer Interaction (HCI), 10-15 April 2010, Atlanta, Georgia, USA.
