Prioritization

Business value is not what you think it is

And that’s why your priorities are wrong

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Are you prioritizing it all wrong? Probably.

I believe that you, your team, your product owner, and their managers, are likely mistaking “business value” for “customer value.” Why do I think you are doing it? Because I see it all over, in other blogs, in different organizations, different teams.

You should be prioritizing your work according to business value, NOT the value to the customer.

The symptoms of not getting Business Value right

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  • It holds you back from reducing organizational risks.
  • Your team accumulates technical debt systematically because every feature you have worked on is urgent, as will be the next one. The cost of technical debt and the value of paying it is never perceived as business value because it doesn’t add value to customers.
  • You never find time to improve your processes, improving your productivity. Productivity increase doesn’t add to customer value.
  • Your team never starts any cost-reducing maintenance work.
  • Features nobody uses are never deprecated and removed; your codebase only increases, as well as your regression effort, performance test time, etc.
  • Features that only one or an insignificant number of customers will benefit from being built and maintained.
  • Work that supports the achievement of organizational goals falls behind in priority to features.
  • Your backlog is all about features, jumping from one feature to the next, and all of them are urgent. If anything is not a new feature or an enhancement to an existing one, it will be at the bottom.

What will happen to your organization if you don’t fix it?

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If you lose a customer because you didn’t work on a specific feature, your business is not necessarily facing a problem. I’ve seen businesses fire customers because those customers didn’t align with the target audience the company is trying to serve; therefore, satisfying them meant withdrawing resources that would benefit most of their clients. It’s about strategy.

However, if you don’t start working on those items you are neglecting, you will lose on the cost of opportunity. You will lose competitiveness, and your competitors will catch up and steal clients away. You will have image and credibility losses due to low quality. You will have increased costs with payroll as you have increased maintenance work. Your team will miss Time-to-market deadlines.

Your organization REALLY needs to get this right. So…

What Business Value entails?

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Organizational value

  • Company reputation: Negative impacts on the organizational image will impact current and future market share, as well as investment opportunities. Part of it is quality. The quality aspect is your responsibility as an engineer, especially in a management/leadership role. Don’t expect anyone else to look after this for you.
  • Cost of Opportunity: Choosing what will maximize your value and balancing short-term and long-term value plays a significant part in prioritization. This is what Product Owners usually hear when you talk about technical debt: “While you do this to change something that is already working, we are wasting the chance to build something new.”
  • Revenue growth/loss: This is straightforward. The amount of revenue growth or loss needs to be estimated and compared.

Product value

  • Total Cost of Ownership (TCO): This is the cost to keep your product running. It will directly affect the profit and your capacity to reinvest. It will include training the staff and even clients/customers. If that’s the case, prioritizing UX or updating your tech stack may reduce TCO. As an engineer, especially in a management/leadership role, you are the best person to manage this.
  • Customer satisfaction: It’s much harder to get a new customers than keep existing ones. It’s even harder to bring back a lost customer. Word-of-mouth is stronger when they dislike something than when they like it. Part of it is quality. The quality aspect is your responsibility as an engineer, especially in a management/leadership role. Don’t expect anyone else to look after this for you.
  • Market Share increase/decrease: Also straightforward. The higher the market share, the better.
  • Return on Investment (ROI): Prioritising higher ROI is not the same as prioritizing higher returns. If the cost of investing is too high, you might want to go for lower-hanging fruits.

Risk Avoidance or Mitigation

All these things may happen and cause you losses if you don’t mitigate or avoid them.

  • Service Level Agreement (SLA) and outage penalty/bonus
  • Legal, regulatory and Contractual Compliance
  • Product reliability and safety

Capability

  • Expense reduction/increase: It will limit how much you can reinvest.
  • Productivity increase/decrease: If you have a lot of technical debt, your competitors will catch up with your market advantage (or you won’t reach your competitors). As an engineer, especially in a management/leadership role, this is your responsibility. Don’t expect anyone else to look after this for you.
  • Employee satisfaction: If your employees are unhappy, you will have knowledge losses and turnover costs).

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References

Alex Brown’s “Calculating Business Value” presentation on Agile 2014 (Jul 28 -Aug 1, Orlando, FL):

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