The document discusses prioritizing a product backlog for profit. It recommends considering three core groups when prioritizing: stakeholder alignment, strategic alignment, and driving profit. For stakeholder alignment, the backlog should include at least one item for each stakeholder group. For strategic alignment, it should include at least one item that aligns with the company's strategy. And to drive profit, it should include at least one item that generates revenue or reduces costs. The document provides various techniques for involving stakeholders, determining strategic priorities, and identifying profit drivers to create a holistically prioritized backlog.

1. Prioritizing For Profit Luke Hohmann CEO, Enthiosys http://www.enthiosys.com/insights-tools/prioritizeforprofit1of3/ http://www.enthiosys.com/insights-tools/prioritizeforprofit2of3/ http://www.enthiosys.com/insights-tools/prioritizeforprofit3of3/

2. 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

3. Services for Business Agility continuous customer collaboration to understand complex markets and provide input throughout the development process agile transformation of your entire company to leverage the power of Agile product development and management pricing, licensing and creation of business models to capture the full value of your solutions Product roadmaps for individual products and portfolios with processes and best practices to sustain them over time service design to improve the customer experience by delivering a whole product solution and additional revenue

4. Enthiosys Services

5. Agenda Creating Your Backlog Prioritizing it Challenges with ROI Managing stakeholders Aligning to strategy Driving profit Acceptance Tests

6. Why Worry About Prioritization? We’ve got 2 ½ hours planned on the topic of prioritization of the backlog. Is it worth it?

7. Cost of a Solving a Problem

8. Creating Your Backlog The first step is figuring out what your market wants!

9. Identifying Market Needs

10. Expressing Market Needs

11. 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

12. 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.

13. Market Research and User Research Differ Source: MHHE Market Research User Research Focuses 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

14. Qualitative Research with Innovation Games® Product Box Identify Exciting Features Spider Web Understand Product Relationships

15. Before the Backlog… Roadmaps!

16. Planning Time Horizons Daily Sprint Strategy Portfolio Product Release Exec PM Dev Team 2-4 wk 2-9 mon many mons years many years Iteration Plan Portfolio Map Release Plan Vision & Roadmap

17. Agile Roadmap A living document designed to answer key strategic questions: Who are my desirable markets/market segments? What do they care about? When / how often should I serve them? What technologies can I leverage? How must my current product change to deal with the answers to these questions? What are the external factors that I must address to deal with these issues?

18. Core Artifacts What markets? When? Work to be done in release Work to be done in Sprint markets to serve Daily Sprint Strategy Portfolio Product Release backlog 1. use case 2. bug fix 3. arch change market driven road maps

19. Roadmaps and Backlogs Are Independent But Linked “ infinite” backlog 1. use case 2. bug fix 3. arch change 14. this 29. that 40. the other thing market driven road maps release release release

20. Organizing Your Backlog

21. Innovation Games® Workflows and Roles Planner: Selects and defines game Invites players Post-processes results Player: Plays the game Facilitator: Facilitates the game Planning Post-Processing Playing Action! Selecting

22. Organizing the BaFO Backlog Planning Playing In Development In Production Invite Players Receive Invitation Add to Outlook Add to Outlook Invite Fac. Receive Invitation Add stock Phrases Sort Columns Start/Stop Game Join Game Auto buy Write-in Features Paid Games Planner Facilitator Player Planner Facilitator Player

23. What about Epics? Again, multiple forms of prioritization spanning different time frames. Epics = BIG Problems

24. Prioritizing Your Backlog Whether problems, stories, or epics, you need to prioritize the backlog

25. Prioritization Means Ordering Do This Do Other Do That Do This Do Other Do That Do That Do Other Do This Do Other Do That Do This ? ? ?

26. To Order You Need Attributes Do This Do That Flip Chart Exercise: Identifying Prioritization Attributes Attribute1 Attribute2

27. To Sort You Need Values Do This value Do That value value value Flip Chart Exercise: Valuing Prioritization Attributes Attribute1 Attribute2

28. 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?

29. 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 has twice the influence

30. Problems with ROI-Based Prioritization Don’t be misled…

31. ROI = (Gain – Cost) ------------------ Cost But most people can’t tell you the gain!

32. Determining ROI requires market research. But most backlog items are not what you research. (Market != Customer)

33. Comprehensive market and customer research takes too much time and costs too much money.

34. Agilists like small, independent backlog items. Customers like large, interdependent backlog “groups”.

35. Prioritizing For Profit The groups of attributes that matter the most!

36. Three Core Groups Stakeholder Alignment Strategic Alignment Driving Profit Shows how you’re meeting market needs. Shows how you align with the big picture. Shows how you’re going to make money.

37. Stakeholders Who?

38. Stakeholders External: Customer personas Partners Channel Internal: Sales & Marketing Professional Service Customer Care The System This is a partial list. Extend to meet your needs!

39. Customers  Personas M arket 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.)

40. Organizational Structure How to get the team consistently involved

41. Whole Product Concept Source: Levitt Generic Product Augmented Product Expected Product Potential Product

42. Whole Product for Technology The Product Hardware Software Networks & peripherals Templates Consulting Where you can show you understand customer’s business problem and its solution Where you can show you have committed to solve problem and have a pre-engineered solution What your in-category competitors have in common with you Source: The Chasm Group Legacy interfaces Pre-sales services Post-sales service & support

43. Product Councils / Whole Product Teams Operations Development Service & Support Legal Marketing Sales Product Mgt

44. Product Council Responsibilities Remain aware of roadmap and backlog Come prepared to represent your organization during prioritization meetings Sales: Critical deals that might influence roadmap Cust Support: Pareto chart of key problems Prof Serv: Field marketing research Legal: Regulatory or license agreement Finance: Analysis of business models

45. 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 case bug fix arch change do this do that the other thing

46. Some Techniques Same Time Different Time Same Place Different Place Face to Face Interactions Innovation Games® Buy a Feature 20/20 Vision Prune the Product Tree Joint spreadsheet ranking Online Interactions Innovation Games® Buy a Feature Prune the Product Tree Joint spreadsheet ranking Shared State (physical) Innovation Games® Prune the Product Tree Project boards Shared State (electronic) Innovation Games® Prune the Product Tree Wiki’s Commenting systems email / workflow

47. Prune the Product Tree -- Preparing Planners define layers and regions so that they will know where players are placing their ideas. Planners choose images to represent growth. Planners select the kind & number of items that can be placed on the image during the game.

48. Place Initial Items Any existing ideas or roadmap items are placed on the tree.

49. Playing the Game! Players collaborate in real-time to place features/benefits (leaves/apples) on the tree. An integrated chat facility enables you to understand player motivations. Players label and describe their ideas All information is recorded and available for analysis

50. Create Interpretations from the Results of Multiple Games Game 1 Results Game 2 Results Interpretation Game results are merged into a new game – which you can edit and shape, further process, or play with additional players.

51. Tabular Representation of Items for Post-Processing Layers and regions enable planners to quickly determine where players have placed their items. You can ask questions like “What are all of the features customers want in 2010?”

52. Step 2: Collaborative Shaping Once ideas have been identified they are shaped by the project/product teams into a backlog Existing tools, such as shared wikis, shared documents, emails, and chats, help teams shape concepts The process typically produces a candidate list of projects and/or product features that is greater than available resources “ infinite” portfolio local project expensive project big project other project another project the other thing

53. Step 3: Collaborative Prioritization Where is the “ Voice of the Customer? “ infinite” backlog use case bug fix arch change do this do that the other thing Goal? is to take large list and prioritize to a manageable set. Common Approach Problems Single expert Do they have the knowledge and trust of the organization to make the hard choices? Small groups Tradeoffs are not clear Large groups Insufficient tools!

54. Some Techniques Same Time Different Time Same Place Different Place Face to Face Interactions Innovation Games® Buy a Feature 20/20 Vision Prune the Product Tree Joint spreadsheet ranking Online Interactions Innovation Games® Buy a Feature Prune the Product Tree Joint spreadsheet ranking Shared State (physical) Innovation Games® Prune the Product Tree Project boards Shared State (electronic) Innovation Games® Prune the Product Tree Wiki’s Commenting systems email / workflow

55. 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” ideas Online Captures data for sophisticated analysis of preferences Preliminary trials indicate faster/more accurate results than traditional tools Goal: Prioritize Product Backlogs / Project Portfolios

56. Buy A Feature Online - Preparing A list of features with prices. This example is for product concepts for a pair of internet sunglasses “ Shirt Sizes” help you quickly price your features – or you can enter a price directly!

57. Buy A Feature Game Play Participants. Planner sets their budget. An integrated chat facility enables you to understand participant motivations. Here, we learn that participants dislike learning a rental car’s navigation system. Participant bids. Highly desired items are purchased.

58. Buy A Feature Online - Results Results of many games played, sorted by number of times purchased.

59. Many Ways to Play: Parties, Galas, and Tournaments What is it? Who plays? Facilitated? Number of Items? Number of players? Party A “dinner party”. You select and control participants Yes 12..20 5..8 Gala An “open seating event” Random participants based on a shared URL No 12..20 9+ Tournament A combination of parties! You control and select participants Yes 20+ Based on number of items and number of tournaments

60. Tournament Structure Play many tournaments to control for “bracket strength”.

61. Strategic Alignment Why?

62. 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…

63. Strategic Alignment Do This Do That 1 Global Social Strategic Alignment 1 weight 25 15 Mobile 1 1 5

64. Driving Profit Money?

65. Flip-Chart Exercise What are the primary drivers of profit? How could you reflect that you’re driving profit in your backlog?

66. 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

67. Business Model Framework Driving Profit means prioritizing to your business model! Customer ROI Model Quantifies Return Enforcement Protection of Rights Licensing Terms and Conditions of Use Type of Value Exchange The way you make money Profit Engine Causes More Money Making Events Customer Value Analysis Identifies Value Pricing How much money you make

68. Core Value Exchange Models Time-based access Transaction Meter Percentage of revenue gained / costs saved Hardware Service Data / Content Charity?

69. 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...

70. 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

71. 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)

72. 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

73. 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

74. 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, training or implementation fees, or ongoing management costs. - June 29, 2005, San Jose Mercury News

75. 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

76. 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

77. Putting It All Together

78. Your Job… use cases bugs features enhancement requests updates stuff… to do… markets to serve money to make market driven road maps pile of stuff to do backlog 1. use case 2. bug fix 3. arch change

79. A Backlog Prioritized for Profit Stakeholder Alignment Strategic Alignment Driving Profit At least one item for every stakeholder. At least one item that aligns to strategy. At least one item that drives profit.

80. Contact and Content Reach me at [email_address] More about agile and business models: agilePM blog and Product Bytes newsletter at http://www.enthiosys.com/insights-tools/ www.innovationgames.com