Tuesday, February 16, 2016

Wide-Band Delphi Estimation for Business Value - 3

This is the third in a series of three.  See part 1 and part 2. ***

How can we use the BV points

We could organize the Product backlog strictly by BVPs, at least initially.

In fact, I recommended this, to see patterns or to make any mistakes obvious.

But I do not recommend doing the work in the order of the BVPs, the story with the most BVPs first.  This is much too simplistic.

The key thing we are missing is cost.  For centuries now, man has talked about the trade-off between costs and benefits.  And in business we have the concept of return on investment.  You invest $1000 (the cost) and get $2000 back (the benefit).

Can we use that concept here?  Yes!

For each story, we can calculate an R factor by dividing the BVPs by the SPs.  This gives us a rough ROI for each story. We could call it CBA (cost benefit analysis, or bang for the buck).

We think this is useful.

By no means does the R factor completely determine the order of the Product Backlog, but one can readily see that following the R Factor could help us maximize the business value per release, other things equal. (Of course, other things are not always equal, but we will not try to address that here, except to say that the Product Owner or others must re-order the Product Backlog some to account for the other things.)

What is the value of a BV Point

Sooner or later someone will ask: What is a BV Point worth?

At first, it is relative, strictly relative.  That is Story X is 50 BVPs, which means it has half the value of the reference story (which has 100 BVPs).

But let's imagine a very simple situation and see what it shows us.

Imagine a product backlog.

Imagine it has a total of 1,000 BVPs across all the stories.

Imagine that we know that the total Product Backlog is worth $2,ooo,ooo.

In that case, we can calculate that each BVP on average is worth $2,000.

You can't cash in your Story cards at the bank for money (based on the BVPs on each one).  You must release and there are MVP or MMFS issues as well, but one can at least feel (fairly accurately) that the BVPs are not just fantasy, but actually a foretelling of a future reality.  Well, if the customer still wants it when we deliver, and if we had good BV estimators.  

Objectivity and Visibility

In our opinion, whatever business value is, it is ultimately in the mind of the customer, and in the future.

So, to us as business people trying to solve a business problem (help people and also not go bankrupt), this seems altogether too subjective.

The BVPs start to make it a more tangible thing.  And this helps.

Whatever number we decide ob is then no longer a 'feeling' inside us (or one of us), but rather a number 'out there' on the story card.

This helps.

It helps in many ways, but let's give one example.

In former days, we would ask two experts for Story X: Is it high, medium or low?  And of course they would both typically say high.  Now, we ask the two experts to vote with cards. One says 21 and the other 89.  We and they can quickly see that one high is not another high.  And they can start to have the famous conversation about how high is high.  We can laugh, but actually this is a useful conversation.

In fact, one of the most valuable things about the numbers is that it makes the conversations better.

Tacit Knowledge

We just gave the example of the more useful conversation that arises.

When they vote, and they disagree significantly (wider than 3 Fibonacci cards), we want the two extremes to talk. Others may talk as well.

What do they talk about? Well, we think it is best to think of this as sharing the Tacit Knowledge.

One definition of tacit knowledge is "all that stuff we know, but we don't even know we know it, and it has not been made explicit it."  And, obviously, this is knowledge that we think is relevant and even useful in a given domain, or to accomplish a given set of work.  Explicit knowledge is knowledge that has been written down or put in a formula.

Do you want a Team to share their tacit knowledge?  Of course! In all the relevant domains.

Is it easy to get them to do so?  NO!  It is extremely hard.  In part because they don't know what they know, and in part because each person doesn't know what the other people are missing.

Priority poker forces them, in a fun way, to share the tacit knowledge.

In my opinion, this is the most valuable thing about the whole exercise.  Not that other things would not justify it.  But the sharing of the tacit knowledge is the single most useful thing.

Helping the Product Owner

Priority poker makes the PO job easier.  And it is a very very hard job, so any help is welcome.

In what way? Without priority poker, the PO had to make tough choices in ordering the Product Backlog.

Let's assume, in former days, that he talked to all the business stakeholder individually.  And they disagreed, of course, on the values of different stories.

So, the PO has to use up his political capital in just saying: This story is #1, this one #2, etc, etc.

This was 'risky' and often there would be some tense conversations. Too often the PO would be wrongly overridden by one or two business stakeholders.

Now, with the priority poker, all the business stakeholder educate each other. (Again I say, bring the popcorn.  This is fun to watch.)

Still sometimes, in relatively rare cases, all 4 of the business stakeholders are being stupid at the same time, and the PO's number will make only a small difference in the average.  And let us assume the PO's number is right.  Only then does the PO have to use political capital to 'move' the story to a more correct BV number or more correct ordering.

This reduction in effort frees the PO to focus his work in other areas.

Overall benefits

I want to reiterate the key overall benefits I mentioned earlier.
  • They all see the same elephant (better)
  • They all are more motivated
  • They all have shared the tacit knowledge
If priority poker is done with the implementers, these benefits accrue to the whole team.  And remember that motivation is not just a 'feel good' thing; higher motivation directly leads to higher productivity from the Team.

I hope you try priority poker soon.  And tell us how it went.  I hope you will tell us how much it helped you.  

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