April 26, 2016

How to measure value? – Part 2

BY :     April 26, 2016

Cupcake ValueIn my last blogpost I mentioned that I would like to give Product Owners a tool to help them determine value with their stakeholders. One technique I referred to last time, Business Value Poker. In this post I would like to tell you about another technique: Theme Scoring

This is one of the easiest techniques to use as it gives you a firm reference with which to work.

Mind you, you still have to determine the themes for your product yourself. But that is no different from other product management work.

Say you are the Product Owner of a Cupcake factory. You have the hearty cupcake product line as your responsibility. What is the next product in your Cupcake suite of pleasure?

You determine that next to the product “Cinnamon Apple Cupcake” you want to bring out the “Liquorice Mint Cupcake” and the “Green Tea, Honey Cupcake”. One of your stakeholders has told you that there is a fandom for the “Pecan Salty Caramel Cupcake” and the “Lemon White Chocolate Cupcake”.

So you put the different Cupcake themes in a list:

Backlog

1

Cinnamon Apple Cupcake

2

Liquorice Mint Cupcake

3

Green Tea, Honey Cupcake

4

Pecan Salty Caramel Cupcake

5

Lemon White Chocolate Cupcake

Mind you, this order is fine. YOU are the Product Owner and as Product Owner the order on a Backlog is yours to determine. You can listen to your stakeholders, and act on market signals, but in the end the Product Backlog is your responsibility. You are the one that determines what’s good for RoI.

The company wants more profit in the next half year though and you want to give them that. There’s also the current customers you want to please. You want new customers but to alienate the current customer base is bad for business. It is also necessary to save on base materials; you need to be able to make profit. Last but not least is the complexity of the recipe. If it cannot be baked easily you end up bogging down the production process.

You put those aspects in a list as well:

Profit in the next half year

Important for current customers

Base material cost

Recipe complexity

These two lists have to be combined to figure out which of the themes make a chance to be worked on first by the conceptual bakery team.

So we put them in a matrix:

Cupcake Theme =>

Criteria

V

Liquorice Mint

Green Tea, Honey

Cinnamon Apple

Pecan Salty Caramel

Lemon White Chocolate

Profit in the next half year

0

Important for current customers

0

Base material cost

0

Recipe complexity

0

Result:

We know that the Cinnamon Apple is important for the product line so we will use this as a baseline. The Cinnamon Apple column will contain the score 0 for all the criteria. We score all the other Themes based on this Base Theme.

With our stakeholders we now start scoring the other themes on these criteria and compare them with the base theme. The scoring is done using three possible outcomes. The theme is either better or worse than the base theme OR it scores the same.

The result is added from the column. We add all the plusses and subtract the minuses. This leaves us with a positive or negative score per theme that we can use to rank the themes and order the backlog again.

Example:

Cupcake Theme =>

Criteria

V

Liquorice Mint

Green Tea, Honey

Cinnamon Apple

Pecan Salty Caramel

Lemon White Chocolate

Profit in the next half year

0

0

+

Important for current customers

+

0

+

0

Base material cost

+

+

0

+

Recipe complexity

0

+

Result:

-2

1

0

2

-1

We find out that Cinnamon Apple is no longer the theme that delivers the most value. We place everything in the order we find them to be in after scoring:

Backlog

1

Pecan Salty Caramel Cupcake

2

Green Tea, Honey Cupcake

3

Cinnamon Apple Cupcake

4

Lemon White Chocolate Cupcake

5

Liquorice Mint Cupcake

You will have to tell the concept bakery team that you and your stakeholders have a new order for the themes in your backlog during the Product Backlog Refinement session. You and your taste experts will work together on finding the best recipe to make the Pecan Salty Caramel Cupcake as good as possible and in the next sprint(s) your team will be working on this cupcake.

Mike Cohn provides a wonderful tool that you can use to help you visualise Theme Scoring. A link to this tool can be found here:

I’d like to thank Mike Cohn, Arne Åhlander and Jim Coplien for much insight into this hands-on tool.

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    *Opinions expressed on this blog reflect the writer’s views and not the position of the Sogeti Group