The Product Owner, or the Product Manager, has the responsibility to prioritize value delivery in an agile environment. This is one of the most-challenging and most-important jobs in the stream of product development.
Before we tackle how we decide value delivery priorities, let’s first focus on what value means in an agile environment.
Value can be viewed from customer perspective and business perspective. In other words, we need to keep thinking and delivering value that will increase your customer experience, and we also need to work on areas that will help build an environment which will enable us to deliver more value to our customers.
According to the Evidence-Based Management Guide available at Scrum.org, there are four types of value to consider.
The Four Types of Value
There are four types of value in an agile environment: Current Value, Unrealized Value, Time-to-Market, and Ability to Innovate.
To help understand these types of value, let’s imagine a banking company, HomeMoney, and their HomeMoney mobile app.
Current Value
This is the value that your product delivers right now. It’s not concerned about the future or the potential of the product, but only considers how happy customers, employees, and stakeholders are with the product’s current performance.
Investigating a product’s current value helps you better understand the customer and user experience today.
In our imaginary example, the current value of HomeMoney may include all of the app’s current features, including users ability to view transactions, ability to deposit checks into an account using a phone’s camera, and the autopay feature for bills linked to a user’s account.
Unrealized Value
When you consider the other ways a product might meet the needs of your customers, you’re thinking about the product’s unrealized value. The EBM describes unrealized value as the gap between the experience customers have, and the experience customers would like to have. This gap is an opportunity for growth, a place to improve the relationship your customers have with your product.
Thinking about a product’s unrealized value gives you a chance to investigate potential new markets for a product, and places where investment in the product gives your business a chance to grow.
For example, the HomeMoney banking app lacks a function that lets users directly transfer money to another user at a different bank. Users can’t view their old statements on their mobile device. That’s an unrealized value that our imaginary tech developers could explore for their product.
Time-to-Market
Time-to-market measures how long it takes your team to deliver value in the shape of new capabilities, products, or services.
This factor depends a lot on your team and process efficiency. If there is a lot of wait time in your development process (due to approval and testing and release protocols, for example), then your time-to-market suffers. An organization should measure their feature request to delivery to release time to see consistent reduction in lead time.
Understanding your time-to-market helps you know how fast you can adapt to market trends and customer needs. It also helps you track how quickly you can have products for customers to test, and how soon you can make changes based on those test results.
The HomeMoney development team takes close to seven weeks to take an idea from the board to the marketplace. What can be done to reduce this time? Although it may not impact customers directly, it certainly adds to the cost-of-delay for the feature delivery.
Ability to Innovate
Your team’s ability to innovate is the measure of how effectively you deliver new capabilities that customers find useful.
Taking a critical look at your ability to innovate helps you understand the obstacles that block your team from taking advantage of opportunities to deliver new customer experiences.
The team should consistently look out for new technologies that can be leveraged as well as the technical debt of the current application. Technical debt may prevent teams from innovating. Team skill set also plays an important role in this area.
HomeMoney’s development team should tap into the latest and greatest banking technologies available and consistently monitor its technical debt which should help HoneyMoney to innovate more on its banking app.
In prioritization, striking a right balance between user value and business value is the key.
Current value and unrealized value can be categorized as user or customer value and time to market and ability to innovate can be considered as business value.
Every Product Owner must decide where the team’s energy can best add value to their project. This is one of the most difficult, and most important, elements of a Product Owner’s job.
The decision is made complicated by the fact that prioritization is relative. There is no perfect answer, no absolute to follow, when setting value priorities. There are always conflicting priorities that the Product Owner must navigate.
As a Product Owner, do you know the outcome?
The secret to prioritization is to prioritize your outcomes first.
The Product Owner must always be aware of the desired outcomes for their product. Outcomes might include:
- Increased Mobile User Base
- Increased Bill Payments from Mobile apps
- Reduce Technical Debt
- Try out Zelle for Bank Transfer
The Product Owner must understand these desired outcomes, and the methods being used to measure them.
Based on outcomes, prioritize relevant outputs—like features, stories, and enablers—with those goals in mind.
Remember, the key is to optimize value by taking into consideration different viewpoints and potential outcomes. By carefully thinking about all the ways you can add value, you’re less likely to miss opportunities for growth.
Prioritizing Value: Things to Remember
A good Product Owner prioritizes value based on the maturity of the product.
New products require more focus on the unrealized value. The basic, essential features of the product should be made functional first.
As a product matures in the marketplace, value delivery must be constantly reviewed.
Good Product Owners ensure that each new cycle includes consideration of all four types of value.
Optimize Your Value Delivery
Too often, Product Owners focus on current value and unrealized value, ignoring time-to-market and the ability to innovate. Because they are more technical, those last two types of value tend to fall through the cracks.
Neglecting to prioritize time-to-market and ability to innovate affects a team’s ability to make new features for a product.
You’ll find that focusing solely on current and unrealized value leads to a stage where even small changes to a product take too long to develop.
A product’s economic value to a company decreases as it costs more and more to make changes to that product when we neglect time-to-market and the ability to innovate.