TomTom was our silver sponsor at the 3rd Agile Serbia Conference. On the EXE stage they introduced you with the workshop “Ensuring the biggest bang for buck”. Our friends from TomTom sent us a great blog post by Ana Pegan.
Mentioning of prioritization in work or in life has more or less the same meaning for everyone: determining what needs to be handled first. But from my experience, people rarely stop to ask themselves why something needs to go first. On the personal level they do it instinctively.
Determining priority is about defining what is important, what is of value. If we’re considering prioritizing items in our personal life, instinct is most of the time all we need. It pushes us to evaluate items from perspective of our personal core values for general guidance and operational daily relevance for day-to-day prioritization. Even if we can’t define our personal core values nor verbalize them, we do have them and use them daily. It comes naturally.
However, when we’re talking about prioritizing in the business environment, things are not that simple.
Even though each company should have values they represent and a business strategy to define goals they want to achieve, they usually don’t have them or they fail to communicate them across company. This leaves a very poor guidance to all professionals in position to prioritize work on some level, for others or for themselves.
The only true value that we as the project managers, product managers/product owners, service managers, managers in general have are the operational values that are relevant for any and all businesses.
Every company is in business to make money. So all the decisions you make to support this are undoubtedly the right ones.
If you’re considering a plan for a project, product or a service, you need to do a prioritization.
Whichever method you’re using to do this, you still need to evaluate items in your plan to be able to determine their importance. As a guideline to determine how valuable items you work on are, you can use these questions for the categorization as a start:
Is this item going to help
- New cash flow: get new customers, expand our market, bring a new cash flow
- Up sell: sell additional project/product/service to existing customers, bringing more money from the existing sources
- Retainment: keep the existing customers/contracts, prevent losing money
- Operational efficiency: lower the cost of operation and/or maintenance, save the company’s money
Each of the items you’re evaluating can be in multiple categories, which is then raising its value.
Example: You can have a gadget like Samsung Galaxy Gear watch, which is an add-on the the mobile device, but can be used alone. If used with mobile, you get more value out of the watch.
Watch itself will bring new customers. These customers are buying fitness watches and lifestyle watches.
It will generale new revenue flow from existing mobile users. People already using Samsung Galaxy mobiles will buy this watch.
It will also have a large impact on the retainment of mobile customers. These 2 products cover a wide range of services, they are compatible, users are already familiar with Samsung and their ecosystem. It will be highly unlikely they will leave product and brand easily.
This type of analysis can be applied for any business objective on any level.
Another metrics for evaluation to include are:
Urgency refers on the urgency of addressing an business objective, if and how a certain objective is tided to timing.
Example 1: If a broker can’t perform their services without your software product, with each day you don’t deliver they are losing millions of dollars.
Example 2: If you don’t deliver your product on time for the Christmas market, you will lose 40% of your annual sale.
Impact refers to how much of business will be impacted by the lack of the item you’re considering, how many users will be affected, what is the frequency of usage and how valuable is this to the end users.
Example 1: If your cash register product doesn’t have the option to print out receipts, this would affect all the cashiers on every transaction they do. Both volume and a frequency would be extremely high.
Example 2: If your payroll software can’t calculate the bonuses for selected employees at the end of the year, even though it’s only one transaction per year affecting only 30% of the employees, it has a huge value for the employer using our product. The impact of not having it would bring a big hit to their business.
If you want to get the value defined by categorization mentioned above you need to look at how urgently you need to deliver. If you want to know at which scale your goal will have effect, look at the impact.
Let’s take a look at the Samsung Galaxy Gear watch example once again with all evaluation measurement involved.
For the purpose of this exercise, we’ll take values from 1 to 5 to estimated, with 1 being the lowest and 5 the highest value in each category. Urgency will be addressed through descriptive values, and impact similarly.
Example: A company is working simultaneously on Samsung Galaxy mobile update version and on Samsung Galaxy Gear watch as a new product. So they want to evaluate both of them in order to prioritize their work.
If the evaluation is done like it’s shown in the table, how would you prioritize work on these 2 products?
It would actually come down to a simple math: mobile has 8 and watch 13 points out of possible 20.
This means that watch will bring 25% more value than the update of the mobile.
Watch is also expected to reach more users then the mobile, 33% more users. So the high value will be delivered to a larger audience.
Even though the urgency is a bit higher for the mobile, the value and impact are significantly higher for the watch.
The watch will most likely have the higher priority in this example.
Whatever method of evaluation you decide to use, it will always come down to deciding what is the most valuable work that needs to be done for the company at the given moment. As the situation changes so does the priorities and you need to take care of them regularly.
I hope this makes your evaluation easier and a bit more interesting and fun. 🙂