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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Prioritizing For Profit
Luke HohmannCEO, Enthiosys
http://www.enthiosys.com/insights-tools/prioritizeforprofit1of3/http://www.enthiosys.com/insights-tools/prioritizeforprofit2of3/http://www.enthiosys.com/insights-tools/prioritizeforprofit3of3/
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2© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
• Founder/CEO of Enthiosys– Agile Product Management consulting – Customer needs, roadmaps, business model– Product management mentoring and training
• Agile product guy– VP Bus Dev (Aladdin), VP Eng &Product Dev’t
(Aurigin), VP Systems Eng (EDS Fleet Services)– Board of Agile Alliance
• Author, speaker, blogger– “Innovation Games”– “Beyond Software Architecture”– “Journey of the Software Professional”– agile PM blog at www.Enthiosys.com
About Luke Hohmann
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3© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Enthiosys Overview
Innovation Games® to Generate Ideas
Agile Product Management to Build Products
Product Roadmaps to Plan Future Products
10101101101011
Services to Drive Products Into Markets
Business Models for Profitable Products
Innovation Games® to Refine and Prioritize Ideas with Customers
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4© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Agenda
• Creating Your Backlog• Prioritizing it
– Challenges with ROI– Managing stakeholders– Aligning to strategy– Driving profit
• Acceptance Tests
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5© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Lather, Rinse Repeat
• Identify the work that needs to be done• Express it in a way that enables your team to
understand it and build it• Prioritize the list• Confirm congruence with your roadmap• Make your cut line• Negotiate with development to ensure it fits
identified release windows during release planning• do it again, again, and again…
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Creating Your Backlog
The first step is figuring out what your market wants!
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7© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Identifying Market Needs
CustomerMarket Needs
provides
Product Mgr
feedsfe
ed
Market Research
CompetitiveAnalysis
Trends, etc.
create
Feedback
Elaboration(Generalization)
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8© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Expressing Market Needs
Product Mgr
DefectUse CaseSupplementalRequirement
Market Needs
feeds
Expression(convergent)
How Market Needs May Be Expresed
Story Sketch of a User Interface Prototype
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9© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Market Research For Market Needs
• An ongoing process of finding answers to questions that enhance your understanding of your customers / markets / offerings – reduces guesswork; increases confidence– ongoing because you, your customers, and the
larger product ecosystem are not static
• Creates quality segmentations
• Guides product management
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10© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
A Market Research Process
What are your questions? What will you do with the answers?
What data is needed to answer the questions?
Acquire the data.
Process / analyze the data.
Present results and take action.
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11© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
What Kinds of Questions?
How big is my market?
Which packaging design will
increase sales?
Which distribution
channel is best for my market?
What do customers want in the next release?
How are we perceived relative to competitors?
How are customers changing? How can I
prepare for this?
What kind of products could we add to our product mix?
What features should be in the next release?
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12© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Market Research and User Research Differ
Market Research User ResearchFocuses on the who & the what Focuses on the how & the why
Evaluates what larger samples say Evaluates what smaller samples do
Asks people about concepts, opinions and values
Observes what people do
Asks a market what they will buy Determines how a market will use
Focuses on selling & marketing the product
Focuses on the requirements of the product
Primarily drives product strategy Primarily drives product design
Source: MHHE
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13© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Qualitative Research with Innovation Games®
Product BoxIdentify Exciting Features
Spider WebUnderstand Product Relationships
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Prioritizing Your Backlog
The nest step is figuring out what order to do the work!
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15© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Prioritization Means Ordering
Do This Do OtherDo That
Do This
Do Other
Do That
Do That
Do Other
Do This
Do Other
Do That
Do This
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16© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
To Order You Need Attributes
Do This
Do That
Flip Chart Exercise: Identifying Prioritization Attributes
Attribute1 Attribute2
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17© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
To Sort You Need Values
Do This value
Do That value
value
value
Flip Chart Exercise: Valuing Prioritization Attributes
Attribute1 Attribute2
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18© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
It Helps To Group Attributes
Do This yes
Do That no
no
yes
Sales Service
Internal Stakeholders
Does this backlog item directly improve your ability to do your job?
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19© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Not Everyone is Equal
Do This
Do That no yes
Sales Service
Internal Stakeholders
Does this backlog item directly improve your ability to do your job?
yes no
weight 20 10
Sales hastwice the influence
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Problems with ROI-Based Prioritization
Don’t be mislead…
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21© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
ROI = (Gain – Cost)------------------Cost
But most people can’t tell you the gain!
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22© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Determining ROI requires market research.
But most backlog items are not what you research. (Market != Customer)
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23© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Comprehensive market and customer research takes too much time and costs too much money.
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24© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Agilists like small, independent backlog items.
Customers like large, interdependent backlog “groups”.
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Prioritizing For Profit
The groups of attributes that matter the most!
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26© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Three Core Groups
StakeholderAlignment
Strategic Alignment
DrivingProfit
Shows how you’re meetingmarket needs.
Shows how you align withthe big picture.
Shows how you’re going tomake money.
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27© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Three Core Groups
StakeholderAlignment
Strategic Alignment
DrivingProfit
Who? Why? Money?
Flip Chart Exercise
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28© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Three Core Groups
StakeholderAlignment
Strategic Alignment
DrivingProfit
How? How? How?
Flip Chart Exercise: How Do You Prioritize?
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Stakeholders
Who?
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30© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Stakeholders
• External: Customer personasPartnersChannel
• Internal: Sales & MarketingProfessional ServiceCustomer CareThe System
This is a partial list.Extend to meet your
needs!
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31© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Customers Personas
• Market segments are groups of customers that we use for marketing/selling
• “Market Segment” is too impersonal
• Personas are fictitious people for whom you are designing– More human/humane than “soccer moms”– Provides rich, contextual information
(photographs, family stories, jobs, etc.)
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32© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Integrating Their Feedback
• Product Management “expert” can simply prioritize based on their knowledge
• Can ask small groups to prioritize using in-person techniques
• Large groups need special tools
“infinite” backlog
use casebug fixarch change
do this
do that
the other thing
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33© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Some Techniques
Face to Face Interactions• Innovation Games®
Buy a Feature20/20 VisionPrune the Product Tree
• Joint spreadsheet ranking
Online Interactions• Innovation Games®
Buy a Feature
• Joint spreadsheet ranking
Shared State (physical)• Innovation Games®
Prune the Product Tree• Project boards
Shared State (electronic)• Wiki’s• Commenting systems• email / workflow
SameTime
DifferentTime
Same Place Different Place
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34© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Innovation Game® Buy a Feature
• A list of 12-20 items (features or projects) are described in terms of benefits and cost
• 5 to 8 invited stakeholders given limited “budget”, must reach consensus on projects to “buy”
• Captures very rich information about customer motivations, trade-offs, objections, actual collective needs
In-person• Provides rich opportunity for “new” ideasOnline• Captures data for sophisticated analysis of
preferences• Preliminary trials indicate faster/more
accurate results than traditional tools
Goal:Prioritize Backlog / Portfolio
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35© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Buy A Feature Online - BacklogA list of
features with prices.
Games can be played
multiple times to get
preferences among
different groups
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36© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Buy A Feature Game Play
Participants and their bids.
An integrated chat facility enables you to
understand participant motivations.
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37© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Buy A Feature Online - Results
Results of many games
played, sorted by number of
times purchased.
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38© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Numerous Features Compete in Tournaments
15
15
7
745
15
14 7
7
14 7
1
2
3
4
5
List of projects
14 Each dark square represents one game
7 Each light square represents the “winning” projects
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39© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Case Study: VeriSign Global Customer Support
Context 46 project ranging from small to very large.
Problem The VeriSign leadership needed to quickly identify the high-priority, most globally supported projects.
Engagement
Profile
VeriSign project managers prepared the portfolio for the games. Enthiosys structured the process into three tournaments involving ~50% of the global customer care organization and facilitated the games.
Results • Very clear separation of the “winning” projects – the original list of 46 was prioritized to the top 7 projects
• High degrees of collaboration – even when collaboration was not required to purchase an project!
• Participant chat logs provided detailed explanations behind the bidding – the meaning behind the choice.
• Participants considered the process fun.
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Strategic Alignment
Why?
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41© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Aligning to Strategy
• Get a copy of your strategy
• Work with your portfolio/executive team to understand it’s weighting
• Demonstrate alignment with backlog
…and, yes, I know, this can be really hard, especially when you don’t have a clear strategy…
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42© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Strategic Alignment
Do This
Do That 1
Global Social
Strategic Alignment
1
weight 25 15
Mobile
1
1
5
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Driving Profit
Money?
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44© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Flip-Chart Exercise
• What are the primary drivers of profit?
• How could you reflect that you’re driving profit in your backlog?
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45© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Some Primary Profit Drivers
Reduce Costs– Licensed components– Workforce– Development tools– Operations– Fewer features– Platform architectures
Increase Revenue– Time to market– Access to market– Multiple product
opportunities; product families
– Synergistic product sales – New service offerings– Enhance operations
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46© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Business Model Framework
Customer ROI ModelQuantifies Return
EnforcementProtection of Rights
LicensingTerms and Conditions of Use
Type of Value Exchange
The way you make money
Profit EngineCauses More
Money Making Events
Customer Value AnalysisIdentifies Value
PricingHow much money you make
Driving Profit means prioritizing to your business model!
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47© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Core Value Exchange Models
• Time-based access
• Transaction
• Meter
• Percentage of revenue gained / costs saved
• Hardware
• Service
• Data / ContentCharity?
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48© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Time-Based Access
• Grant “right to use” for a defined period of time (even if you don’t actually use)– Perpetual (like Microsoft Windows)– Annual (like many ERP)– Rental– Subscription
• Pay After Use...
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49© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Transaction
• Transactions: Measurable units of work
• Exchange of money is always tied to the transaction but value (and price) is often associated with an attribute– Duration of a phone call– Time of day call is made– To whom the call is made
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Meter
• Constraining a well-defined resource
• Consuming a well-defined resource– Concurrent (e.g., concurrent user)– Identifiable resource (e.g., named user)– Consumptive (e.g., you have 100 hours)
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Hardware
• Associate the amount charged for the software with some element of hardware– Software anti-piracy dongles – you pay for both
the dongle and the license SDK/run-time
• Huge challenge: software becomes “free”, especially in embedded software– Home appliances: microwave ovens– Information appliances: router/VPN server– Consumer electronics
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52© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Service
• The exchange of money is tied to a service; software is required to provide the service or is intimately related to the service– Symantec: anti-virus updates– AOL: email – Red Hat: Linux-related services
such as support or upgrades
• Often associated with subscription pricing
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53© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Revenue Obtained / Cost Saved
• Charge based on revenue obtained or costs saved, often in terms of percentages– Retail yield management
ServiceSource, with annual revenue between$25M - $50M, says it receives compensation based on the revenue it generates for its clients and charges no consulting, trainingor implementation fees, or ongoing management costs. - June 29, 2005, San Jose Mercury News
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Data / Content
• The software creates unique data/content
• The exchange of value provides access to these data– FICO scores– re-processed government data (patents,
TIGER/Line® files)
• Often associated with subscription pricing
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55© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Driving Profit
Do This
Do That 1
Increase sales via Intern’l partners
Lower Our Customers Operational Costs
Driving Profit
1
weight 25 15
Lower Our Operational Costs
1
1
5
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© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Putting It All Together
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57© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Your Job…
pile ofstuff to do
backlog
1. use case2. bug fix3. arch change
• use cases• bugs• features• enhancement requests• updates• stuff… to do…
markets to serve
money to make
market driven road maps
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58© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
A Backlog Prioritized for Profit
StakeholderAlignment
Strategic Alignment
DrivingProfit
At least oneitem for every stakeholder.
At least one item that aligns to strategy.
At least one item that drivesprofit.
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59© 2008, Enthiosys Inc. All rights reserved. www.enthiosys.com or 650.528.4000
Contact and Content
Reach me at [email protected]
More about agile and business models– agilePM blog and Product Bytes newsletter at
http://www.Enthiosys.com/insights-tools/
Join us at our booth!