Estimate Value to Deliver Value: Effectively Estimate the Value of Requirements with the Experience...
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agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Estimating Value to Deliver Value
EFFECTIVELY ESTIMATE THE VALUE OF REQUIREMENTS WITH AN EXPERIENCE CANVAS
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2014
The Sky is Falling! The Sky is Falling!
Applying the Scientific Method to Software Development
Incorporating Learning into Product Development
A Last Note on Shorter Feedback Loops
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
“No matter how good the team or how efficient the methodology, if we’re not
solving the right problem, the project fails.”
Woody Williams
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
http://www.archives.gov.on.ca/english/on-line-exhibits/d-day/big/big_03_airline_assembly.aspx Archives of Ontario, Reference Code: C 190-5-0-0-21
Assembly Line Manufacturing has a high cost of change
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
• In software development, (presumed) high cost of change leads to long delivery cycles
• Any and every idea has to be captured in the first version of a requirements specification
• This creates waste - bloated documents, unwanted features and entitlement thinking
Inclusive thinkingFeature usage in
enterprise softwareNeverRarelySometimesOftenAlways
Standish Group - CHAOS Report, 1995, 2002
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Cost of Change
Detail of Requirements
Hypothesized Requirements
Capture all possible needs
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Software Development has commoditized cost of change
Continuous Delivery
Ruby on Rails
Coffeescript
jquery
Object-oriented languages
DevOps
Automated Tests
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Cost of Change
Detail of Requirements
Evolving Requirements
Hypothesized Requirements
Emerging needs as development
progresses
Capture all possible needs
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Usability Testing - c.2000
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Usability Testing - today
http://welovelean.wordpress.com/2012/01/29/15-essential-tools-every-lean-startup-cant-li/
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
• If change is cheap, requirements can change continuously
• We can evolve our thinking as we learn more about the product we are building
• Maximizing Return-on-Investment requires validating new features early, before the total investment cost has been spent
Changing paradigms
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Cost of Change
Detail of Requirements
Validated Requirements
Evolving Requirements
Hypothesized Requirements
Lean Startup experiments
Emerging needs as development
progresses
Capture all possible needs
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2014
The Sky is Falling! The Sky is Falling!
Applying the Scientific Method to Software Development
Incorporating Learning into Product Development
A Last Note on Shorter Feedback Loops
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Designed by KISSmetrics
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Theory
Prediction
Experiment
Observe
Use the theory to make a prediction
Design an experiment to
test the predictionRun the
experiment
Modify or change your theory
The Scientific Method
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
The Theory of General Relativity
Einstein’s Theory of General Relativity
Light bends in a gravitational field
Solar Eclipse of 1919
Observations validated General Relativity
Einstein’s prediction
(1907)
Wait for 1919 solar eclipse to observe
whether or not light bends around the sun
Arthur Eddington observed that Light did bend around the sun
Gradual acceptance of General Relativity over Newtonian Mechanics
http://thethoughtstash.wordpress.com/2011/01/03/how-eddington-demonstrated-that-einstein-was-right/
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User Model
Prediction
Experiment
Validate
Use the model to make a prediction
Design an experiment to
test the predictionRun the
experiment
Modify or change your user model
Applied to an Online Experience
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2014
The Sky is Falling! The Sky is Falling!
Applying the Scientific Method to Software Development
Incorporating Learning into Product Development
A Last Note on Shorter Feedback Loops
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
VisionPlanning
RoadmapPlanning
ReleasePlanning
ReleasePlanningItera3onPlanning
DailyPlanning
Five Levels of Planning
Annually Define a vision
Bi-annuallyRank features in order of delivery
Quarterly Plan stories to be delivered during next release cycle
Bi-weeklySprint planning, focussing on delivery of sprint goal
DailyFocus on daily planning of team activities
VisionPlanning
RoadmapPlanning
5 Levels of Agile Planning: From Enterprise Product Vision to Team Stand-up, Hubert Smits (2006)
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
VisionPlanning
RoadmapPlanning
ReleasePlanning
ReleasePlanningItera3onPlanning
DailyPlanning
Five Levels of Planning
Long-termDefine & refine behavioural models we are testing? Pivots happen here.
Medium-termValidate understanding with Lean (or Customer Experience) Canvas
RegularlyMinimum Viable Product. Validate ideas before fully committing investment
Bi-weeklySprint planning, focussing on delivery of sprint goal
DailyFocus on daily planning of team activities
VisionPlanning
RoadmapPlanning
5 Levels of Agile Planning: From Enterprise Product Vision to Team Stand-up, Hubert Smits (2006)
Learning
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Recognize there are gaps in your vision/business model, and look to fill those gaps in as quickly as possible
Known Unknowns
Map of Africa, 1824http://culturalstudieslectures.blogspot.com/2012/01/
lecture-one-on-question-what-is.html
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“In a nutshell, the job of the product organization is to make that vision a reality. So we don't work for a few weeks or even a few months and then just declare it's not happening and we should do a pivot. We will typically work hard for many months on a product vision and not even entertain the possibility of giving up.”
Marty Caganhttp://www.infoq.com/news/2013/07/pivoting-product-development
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VisionPlanning
RoadmapPlanning
ReleasePlanning
ReleasePlanningItera3onPlanning
DailyPlanning
Five Levels of Planning
Long-termDefine & refine behavioural models we are testing? Pivots happen here.
Medium-termValidate understanding with User Story Mapping and Lean Canvases
RegularlyMinimum Viable Product. Validate ideas before fully committing investment
Bi-weeklyProduct Owners, Delivery Team
DailyProduct Owners, Delivery Team
VisionPlanning
RoadmapPlanning
5 Levels of Agile Planning: From Enterprise Product Vision to Team Stand-up, Hubert Smits (2006)
Learning
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
User Story Mapping is a powerful tool for understanding
your product from the perspective of the user
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Photo: Rory Mizen
Highest Paid Person’s Opinion
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Validated Learning
• Understand the problem a feature will solve
• Decide how to ask if your customer cares
• Validate before investing complete cost
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1.Problemtop3problems
Exis3ngalterna3ves
4.Solu3ontop3features
8.Keymetricse.g.AARRR
3.Uniquevalue
proposi3onClearcompellingmessage.Whymakesyoudifferent?
2.Customersegments
Targetcustomers
Earlyadopters?
9.UnfairadvantageNoteasilycopied
orbought
5.ChannelsPathtocustomers
7.CostStructureCustomeracquisi3on,distribu3on,people,
etc.
6.RevenuestreamsRevenuemodel,life3mevalue,revenue,
grossmargin
Lean Canvas: Ash Maurya
LeanCanvas,fromAshMaurya:RunningLean.LicensedunderCrea3veCommons-A\ribu3on-ShareAlike3.0
Product Market
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Customer Experience Canvas™ has been created by agile42 as an extension to the Business Model Canvas of Alex Osterwald and is licensed using Creative Common 3.0 with attribution (by), non commercial usage (nc) and share alike (sa) options. You can reuse and modify the template with the logo as often as you wish.
Customer Experience Name (title)
1. Opportunity 2. Customer SegmentsWhat is the problem to be solved? What type of customers & users will
benefit from this solution?
How is the customer solving the problem right now?
5. Business ReadinessWhat steps are required from the business side to be able to use this capability?
4. BenefitsWhat are the benefits for the customers?
What are the benefits for internal stakeholders?
6. Measuring SuccessWhat metrics will be best measure the success of the feature?
3. Possible SolutionWhat are the key points of a possible solution to the presented problem?
7. Cost of DelayWhich profile better represent the cost of delay (CoD)?
8. Costs StructureHow does the cost structure look like for such a feature? One time, ongoing costs, contractors expenses, development costs?
9. Value to Customer and BusinessWhat are the expected incremental revenue for selling this feature, and what are the strategic and tactical benefit? What are the intangible values (usability, performance, customer knowledge obtained...)
Customer Experience Canvas
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time
linear
dela
y co
st
time
must do now
dela
y co
st
time
logarithmic
dela
y co
st
time
intangiblede
lay
cost
Cost of Delay is the cost we incur by delaying delivery of a product, due to lost revenue or unrealized cost savings.
Cost of Delay profiles
time
fixed date
dela
y co
st
Kenny Rubin: Essential Scrum
agile42 | The Agile Coaching Company www.agile42.com | All rights reserved. Copyright ©2007-2016.
42 Investment Group: building a luxury resort hotel
Goals: • Luxury
amenities & activities
• Destination hotel
• Repeat customers
• Profitable in 1st year
https://www.flickr.com/photos/28685147@N04/
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Portfolio of Projects / Features
• 18 hole golf course• Jacuzzi tubs in guest rooms• Valet Parking• Free internet access • On-site tailor shop• Child care centre• Pet spa• Mini golf
• Bungee jumping tower • Full service spa• Healing mud baths• Swim with dolphins• Concierge service• Live music nightly• Amusement park & roller
coaster• Themed guest rooms
agile42 | The Agile Coaching Company www.agile42.com | All rights reserved. Copyright ©2007-2016.
Customer Experience Canvas™ has been created by agile42 as an extension to the Business Model Canvas of Alex Osterwald and is licensed using Creative Common 3.0 with attribution (by), non commercial usage (nc) and share alike (sa) options. You can reuse and modify the template with the logo as often as you wish.
Customer Experience Name (title)
1. Opportunity 2. Customer SegmentsWhat is the problem to be solved? What type of customers & users will
benefit from this solution?
How is the customer solving the problem right now?
5. Business ReadinessWhat steps are required from the business side to be able to use this capability?
4. BenefitsWhat are the benefits for the customers?
What are the benefits for internal stakeholders?
6. Measuring SuccessWhat metrics will be best measure the success of the feature?
3. Possible SolutionWhat are the key points of a possible solution to the presented problem?
7. Cost of DelayWhich profile better represent the cost of delay (CoD)?
8. Costs StructureHow does the cost structure look like for such a feature? One time, ongoing costs, contractors expenses, development costs?
9. Value to Customer and BusinessWhat are the expected incremental revenue for selling this feature, and what are the strategic and tactical benefit? What are the intangible values (usability, performance, customer knowledge obtained...)
Activity 1: Build a Customer Experience Canvas
• Choose a project or two from this list at each table
• In groups of 3-4, write an Experience Canvas, • Problem/opportunity & existing alternatives • Customer segments • Possible solution • Business value • Cost of Delay profile
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Estimate the relative value of projects in a portfolio
100 200 500 800 1200 2000 3000
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Activity 2: Business Value Game•Play the Business Value Game with 1-2 of the groups around you •Arrange blue cards from smallest to largest value •Arrange canvases as shown in the sample here •Write the business value number on each Canvas
100 200 800 1200 2000 3000
1200
1200 2000200
200
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ROI Calculation & Project Sequencing
Project Relative Value Relative Effort (cost) Relative R.O.I. Sequence?
A 1200 3 400
B 800 3 267
C 2000 8 250
D 3000 40 75
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Activity 3: Determine How to Sequence Projects
• Write the Cost number on each canvas • Calculate Relative ROI for each canvas. Write it on
each canvas • ROI = Value / Cost
• Sequence projects based on ROI (high to low) • Consider Cost of Delay profile: does this change
the sequence?
agile42 | The Agile Coaching Company www.agile42.com | All rights reserved. Copyright ©2007-2016.
ROI calculation & project sequencing
Project Relative Value
Relative Effort (cost)
Relative R.O.I. CoD Sequence?
A 1200 3 400
B 800 3 267
C 2000 8 250
D 3000 40 75
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
VisionPlanning
RoadmapPlanning
ReleasePlanning
ReleasePlanningItera3onPlanning
DailyPlanning
Five Levels of Planning
Long-termDefine & refine behavioural models we are testing? Pivots happen here.
Medium-termValidate understanding with User Story Mapping and Lean Canvases
RegularlyMinimum Viable Product. Validate ideas before fully committing investment
Bi-weeklyProduct Owners, Delivery Team
DailyProduct Owners, Delivery Team
VisionPlanning
RoadmapPlanning
5 Levels of Agile Planning: From Enterprise Product Vision to Team Stand-up, Hubert Smits (2006)
Learning
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Zappos famously launched without stock, selling shoes from their local specialist show store
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Minimum Viable Product
A Minimum Viable Product may be an entire product or a sub-set of product (such as a feature):
• Product - The canonical MVP strategy for a web application is to create a mock website for the product and purchase online advertising to direct traffic to the site. The mock website may consist of a marketing landing page with a link for more information or purchase. The link is not connected to a purchasing system, instead clicks are recorded and measure customer interest.
• Feature - A link to a new feature in a web application might be shown in a prominent location on the website. The feature is not implemented, rather an apology, mock-up, or marketing page is provided. Clicks of the link are recorded and provide an indication as to the demand for the feature in the customer base.
It is ALWAYS smaller than you think!
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• In 2009, Google ran approximately 12,000 experiments, of which about 10% led to business changes
• Linus Pauling famously said, "The best way to have a good idea is to have a lot of ideas."
• Focus on minimizing the incremental cost of testing ideas with your customers/users
How Much Effort on ValidationFeature usage in
enterprise softwareNeverRarelySometimesOftenAlways
Standish Group - CHAOS Report, 1995, 2002
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2014
One test is worth a thousand expert
opinions.
Wernher Von Braun
Interaction Model Backlog ValidationDoing Doing Deployed
For <target group> Who <has a specific need> The <product name> Is A <product category> That <key benefit> Unlike <primary competitors> Our Product <additional advantages>
Pathway #1
Pathway #2
•Visualize your User Interaction Model and adjust it as you learn•Come up with ideas for each pathway•Prioritize experimental testing•Spend time on measurement infrastructure (a test without ability to measure = an unvalidated feature)
Level of Detail / Close to done
•Always revisit validation tests for size •The execution board is equivalent to the team’s task board, but at the Idea Card level
Idea #1.1
ExecutionValidated?
Idea
#1.2
Idea
#1.3
Idea
#2.1
Idea
#2.2
To Do Observation
Idea
#2.3
Idea
#2.4
Idea
#1.4
Idea
#1.6
Idea
#1.5
http://www.agile42.com/en/blog/2013/06/17/product-owner-board/
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2014
The Sky is Falling! The Sky is Falling!
Applying the Scientific Method to Software Development
Incorporating Learning into Product Development
A Last Note on Shorter Feedback Loops
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Economists
In November 2007, economists in the Survey of Professional Forecasters — examining some 45,000 economic-data series — foresaw less than a 1-in-500 chance of an economic meltdown as severe as the one that would begin one month later.
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
In 1940, the chance of an American being killed by lightning was about 1 in 400,000.
Today, it’s 1 in 11 million.
vs Weatherman
http://www.nytimes.com/2012/09/09/magazine/the-weatherman-is-not-a-
moron.html
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Shifting Paradigms
“I know that half of my advertising
budget is wasted, but I’m not sure
which half” Lord Leverhulme
B.G.|A.G.
http://www.marketingprofs.com/charts/2009/3161/more-smbs-use-online-media-than-traditional http://marketing.blogs.ie.edu/archives/2011/01/trends-in-online-advertising-in-2011-in-the-united-states.php
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Estimating Value to Deliver Value Effectively Estimate the Value of Requirements with a Customer Experience Canvas
Thank you @davesharrock [email protected]
agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2014
compliance international B2B MBA English IPO
agile husband start-up technology
newly-minted Canadian
executive leanstartup outsourcing father enterprise transitions
B2C data analysis kanban seismology PhD
scrum organizational excellence
[email protected] twitter: @davesharrock Certified Scrum Coach (CSC) Certified Scrum Trainer™ (CST)
Dave Sharrock
agile42 | The Agile Coaching Company www.agile42.com | All rights reserved. Copyright ©2007-2016.
agile42 The Agile Coaching Company. agile42 is a market leader in providing agile transformation services to companies looking to adopt a more efficient and adaptive way of working. By continually refining our approach, agile42 has developed a unique and proven framework for supporting organizations in realizing the benefits of a agile & lean practices. We provide assessment, strategic consulting, training, and coaching to get you results. Our customers regularly confirm that they achieve: • Accelerated revenue generation
• Faster Return-on-Investment
• Improved technical quality
• Rapid delivery to market
• Increased team motivation
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Reference Section: The process steps for sequencing projects
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Process for Sequencing Projects
1. Stakeholders and Product Owners prepare canvases. Optional: limit number per stakeholder
2. Review & validate canvases for completeness & understanding - ahead of time
3. Select appropriate group of voting stakeholders and a neutral facilitator
4. Brief “sales pitch” for each project, based on the canvas
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Process for Sequencing Projects (2)
6. Choose a baseline project/canvas, assign it a mid-range point value. Can shift up/down later if necessary.
7. Business Value GameTM,1; assign the relative value of each project, without considering cost/effort
1agile42 2Innovation Games®
Alternative to Biz Value Game: Buy a Feature / Prune the Product Tree 2
agile42 | The Agile Coaching Company www.agile42.com | All rights reserved. Copyright ©2007-2016.
Process for Sequencing Projects (3)
8. Delivery teams estimate cost/effort.
9. Calculate relative ROI: value / cost
10.Sequence projects, and/or allocate investments:
1. ROI
2. cost of delay
3. people and/or resource constraints