So many decisions, more

time than we thought

Helping Product Owners Define

Value and Prioritize Requirements
 So many decisions, more
time than we thought

Kent J. McDonald
Business Systems Coach, Knowledge Bridge Partners
Founding Partner, Accelinnova
 Overview

 Problems
 Value Models Today
 Why It Doesn’t Work
 Considerations
 Purpose
 New Models
 Example
 The Problem(s)

 “The Business”
Expects Us to Do
“The Right Things”
 Methodologies Tell
Us How to Do
Things Right
How Do We Do This?
Who Decides?
And When?
 Features and Functions
Always or Often
Used: 20%
Always 7%
Often 13%

Never Used
Sometimes 45%
16%
Rarely Used
19%

Never or Rarely
Used: 64%

Standish Group Study, reported by CEO Jim Johnson, XP2002

 Value Models

How Do You
Determine Costs?

Costs
Value
Model
Benefits

Business Value
How Do You
Determine Benefits?
 Costs

 Costs Associated with

the Team
 Hardware Costs
 Software Licensing
Costs
 Vendor Service Costs
 Impact to Operations
(Extra Staff)
 Benefits

 Increased Revenue
 Cost Reductions
 Opportunity Costs Avoided
 Fee and Penalty Avoidance
 Support of Other Initiatives
 Reputation
 Improved Customer
Satisfaction
 Value Models

Costs
Value
Model
Benefits

Business Value

This Is Hard….
 Measuring Business Value

 Many Different Approaches

 Cash Flow
 Net Present Value
 Internal Rate of Return
 Return on Investment
 These Can All Be Gamed
 Uncertainty Hard to Factor
 Other Factors Impact
Value
 Considerations Impact Value

Considerations

Costs
Value
Model
Benefits

Business Value
 Considerations

Things That Could Impact

Value:
 Risks
 Assumptions
 Constraints
 Risks

 Technical Difficulties
 Changes in Market
Conditions
 Team Makeup and
Skill Set
 Domain Knowledge
 Assumptions

 Availability of Team
Members
 Market Demand for
Product
 Team Velocity
 Understanding of
Domain Knowledge
 Constraints

 Market Window
 External Events
 Compliance Dates
 Budget Limit
 Team Members
 Technical
Architecture
 “Non Functional”
Requirements
 Collaboration Process
 Agree to Purpose of
Exercise
 Brain Write
 Stick Items on a Wall
 Group Like Items
Together
 Provide Headlines for
Groupings
 Vote for Priority
 Considerations Impact Value

That Didn’t Help Much…

Costs
Value
Model
Benefits

Business Value
Considerations

How Do You Justify a Project That Does Not

Provide Positive Business Value?
It’s a “Strategic Project”
 Value Model

Considerations
Considerations

Purpose

Value
Model
Business Value
Benefits
Costs
 Project Purpose
Optimist’s View:
What Job Is the
Project Trying to
Get Done?
Pessimist’s View:
What Problem Is
the Project Trying
to Solve?
The Key Is Common Understanding.
 Purpose

Tools to Help
Discover Purpose:
 Purpose-Based
Alignment Model
 The 5 Questions
 Elevator Statement
 Innovation Game
 Strategic Development

Mission Vision Values

Strategic

Strategic Intent ~ Strategy ~ Purpose

Long-Range Goals

SCO / 5Q

Annual Objectives
Tactical

Action Plans (what, who, when)

Individual Business Objectives

 Strategic Development

Mission Vision Values

Strategic

Strategic Intent ~ Strategy ~ Purpose

Long-Range Goals Start Here

SCO / 5Q

Annual Objectives
Tactical

Action Plans (what, who, when)

Individual Business Objectives

 Strategic Intent
Competitive Position
Cost Differentiation

Broad Cost Product

Leadership Leadership
Strategic
Scope

Narrow Best Customer Solution

Where is Your Organization ?

 Defining Strategy

Answer These Questions:

3. Whom do we serve and what do they want and
need most?
4. What services do we provide to help them?
5. How do we know we’re doing a good job?
6. What is the best way to provide these services?
7. How should we organize to deliver these
services?

Identifies Strategic Decision Filters

 Purpose-Based Alignment
High

Partner Differentiating

Market
Differentiating

Who Cares? Parity

Low

Low High
Mission Critical

Purpose Does Not Equal Priority

 Purpose Statement

Stating the Purpose:

Your Elevator Statement
For Products and Services:
 Who Is It For?
 What Do They Need?
 Key Benefit Is?
 Why Is It Different Than the
Competition?
 Purpose Statement

Your Elevator Statement

For Business Problems:
 What’s the Problem?
 Who Does It Affect?
 What’s the Impact?
 What’s a Successful
Solution?
 Purpose as a Product Box

Product Box
An Innovation Game
by Luke Hohmann
 Build Imaginary
Packaging for Product
 Customers Identify the
Problems They Want
Solved
 Identifies Expected
Benefits
http://www.jonathanboutelle.com/mt/archives/2005/11/offline_gamelik.html
 Example: Health Insurance

Health Insurance Example:

Create a 24x7 resource people could call
to get health care questions answered and
get direction to sources for care.
 Example: Health Insurance
Intent and Filters

Strategic Intent: Competitive Position

Cost Differentiation
Best Customer Solution
Broad Cost Product
Leadership Leadership
Strategic
Scope

Decision Filter:
Narrow Best Customer Solution

Does this initiative help to

improve health care value
for our stakeholders?
 Example: Health Insurance
Purpose Alignment
High
Healthcare
Pharmacy analytics
Dental Member
focus
Market
Differentiating
Claims Processing
Disability
Enrollment
Insurance
Customer Service
Low

Low High
Mission Critical
 Example: Health Insurance
Purpose Statements
What’s the Problem?
Healthcare industry is difficult to navigate
Who Does It Affect?
Members
What’s the Impact?
Confused about appropriate place to receive care,
resulting in needless expenses
What’s a Successful Solution?
Provides members a single, trusted point of contact to
get health and wellness and urgent care questions
answered
 Example: Health Insurance
Purpose

 Provide members a
single point of entry
to heath insurer’s
health and wellness
resources.
 Answer member’s
urgent care questions
 Example: Health Insurance
Costs

 Software
Development Costs
 Vendor Development
Costs
 Ongoing Operational
Costs
 Example: Health Insurance
Benefits

 Consolidated
Member Point of
Contact
 Cost Avoidance
 Gather Clinical
Information
 Example: Health Insurance
Considerations

 Vendor Size
 Integration with
Vendor Systems
 Date Available
Commitments to
Customers
 Dependency on
Other Project to
Supply Data
 Example: Health Insurance
Is Business Value Defined?

 Costs >> Benefits

 Increased Information
About Members

 Customer
Satisfaction
 More Appropriate
Care Delivery
 Better Informed
 Example

 Do We Know What
the Right Stuff Is?
 Do We Know
What to Build First?
 Who Decides?
So Why Do We Care About
Business Value?
It’s All About Decisions
 Value Model?

Considerations
Considerations

Purpose

Value
Model
Business Value
Benefits
Costs
 Value Model!
Considerations
Considerations
What do
we do?

Purpose
When do
Value we do it?
Model

When
Benefits

do we
Costs

decide?
What Do We Do?
 Is Analysis a Lost Art?
 Do I Understand the Problem?
 Do I Understand the Guidelines For a Solution?
 Have I Consistently Described the Solution?
 Can I Verify the Solution?
 Doing the Right Stuff

 Tie Project Purpose

to Strategy
 Factor in
Considerations
 Utilize Cost/Benefit
Information
 Tie Purpose to Strategy

What Is the Project Purpose?

What
Decision
Does the Purpose Align with Filters?
Decision Filters? Does
purpose No
 Yes – Continue! meet
decision
 No – Stop! filters?
 “What Decision Filters?” – Yes
Go Back and Define Some.
Continue
 Factor In Considerations

 A Business Driven
Deadline?
 Impact on Other
Projects?
 Impacted by Other
Projects?
 Availability of Key
People?
 Impact of Regulations?
 Utilize Cost/Benefit Analysis

 Adjust for
Considerations
 Use Consistent
Analysis Between
Projects
 Understand
Uncertainty in
Estimates
 Selecting The “Right
Requirements”

 Look at the Right Level

 Put the Analysis Back
In Business Analysis
 Do the Right Stuff
 What Just Meets
Purpose?
 Requirements Levels

Why Do This Project?

Business
Requirements This Is the
Right Level

User What Do Users Want?

Requirements
What Do We Build?
Software
Requirements
The Software Requirements
Memory Jogger
by Ellen Gottesdiener
 Minimum Necessary Set

 Minimum Features to Create Value

 Minimum Features to Replace Existing
System
 Base on Project
Purpose and
Considerations
When Do We Do It?
 Prioritizing Features

 Determine Relative
Value
 Priority = Order
 Revisions to Order
Based on Technical
Considerations
 Relative Value of Feature

 Relative Benefit
Relative Cost
 Benefit Measured in
Benefit Points
 Cost Measured in
Story Points
 Resolve Outliers
 “Value” in the Extreme

 Team Discusses
Feature
 Each Member
Indicates Numerical
Estimate
 Discuss Outliers
 Outliers Indicate
Assumptions,
Considerations
 Change Feature Order Based
on Considerations
 Move Up Features That Provide Information
 Move Down Features That Depend on Others
 Group Features Together That Have Synergy
When Do We Decide?
Real Options
 Deciding Is Not a Once in a
Lifetime Event

 Knowledge Improves
 Business Conditions
Change
 Project Conditions
Change
 Do You Know Why
You Are Deciding
Early?
 Decide Who Should Decide
 Who Makes The
Decision?
 Who Makes Sure It Is
Enacted?
 Understand Before
Making Decisions
 Decision Leader
 NOT For Purposes Of
Placing Blame
 “Roles” = Who Decides?
 Many Roles for
“Business”
 Stakeholders
 Customers
 Product Owners
 Users
 Need Input From
Multiple People
 Need To Know Who
Ultimately Decides
 Some Things to Remember

 Value Impacted By
Purpose And
Considerations
 Business Value Is
All About Decisions
 Decide Wisely
 Decide Who Should
Decide Wisely
Questions?
 References

 Stand Back and Deliver, co-author,

published by Addison Wesley, due out late
2008 or early 2009
 The Software Requirements Memory
Jogger, Ellen Gottesdiener
 Innovation Games, Luke Hohmann
 Contact

Kent J McDonald:
 www.knowledgebridgepartners.com
 www.accelinnova.com
 515.229.6929
 kent@knowledgebridgepartners.com