Whether it is for large initiatives or items on the product backlog, prioritising work is something many organisations are struggling with. Some choices will have different impacts for certain stakeholders. Often it is hard to keep things objective, since there are opinions, ego’s, status and emotions involved. Ordering by value is not always as linear as you would expect. In many cases we are comparing apples with oranges, for example how do you compare an initiative to attract new users with quality improvements? In the webinar we will look at different aspects related to comparing items and we will explain the concept of Cost of Delay and how it can be used as a prioritisation technique.

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Prioritising with Cost of Delay
30.6.2020 16:30 - 17:30 CET
Niels Verdonk / agile42 Netherlands

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On using Zoom
• In Webinar mode attendees are in chat only mode, but feel free to chat
• Please add questions with Q&A, they will be addressed after the presentation
• We are recording the session and will publish the webinar on Youtube
• An Email will be sent to participants with the link to recording and slides
• A blog post will be published in the coming days

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Niels Verdonk
Agile Coach & Trainer
niels.verdonk@agile42.com
@agile42/coaches
@nverdo
Started in Software Development
Worked as Developer/Architect/Manager
Started with XP in 2002, Scrum in 2006
Trainer/Coach for Organisations and Teams
> 50% in non-Software organisations

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Poll - 1 (30 sec)
• What is your primary role in relation to this webinar

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What affects Prioritisation?
• Increased Revenue
• Increased Brand Awareness
• Competition advantage
• Reduced Operational Cost
• New Market Potential
• Protection of Market Share

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How do you Measure it?
• Increased Revenue $
• Saved Operational Cost $
• Customer Satisfaction NPS
• Brand Awareness %
• Market Share %
• New vs Return Customers #
• Avg. Order quantity #
• Avg. Order amount $

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Buy a Feature
20/20 Vision
Examples of Prioritisation Techniques
Theme Screening
Relative Weighting
Theme Scoring
Business Value Game Kano Model
MoSCoW
Other:

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Poll - 2 (30 sec)
• We have 3 projects. In what order should we execute them?
Opportunity B
3 M revenue per month
Duration 3 mths
Opportunity C
5 M cost savings per month
Duration 3 mths
Opportunity A
3 M new market share per month
Duration 5 mths

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Calculating Delay Cost
• Consider the the example on the right:
• If we do A first we are delaying the ROI that B can bring for
the duration of A.
• If we reverse the order we see that the Delay Cost is much
lower.
Delay Cost = Cost of Delay * Duration of Delay
CD3
=
Cost of Delay
Duration

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Calculating Delay Cost
Opportunity B
3 M revenue per
month
Duration 3 mths
Opportunity C
5 M cost savings per
month
Duration 3 mths
Opportunity A
3 M new market share per month
Duration 5 mths
CD3
= 3 / 5 = 0,6
CD3
= 3 / 3 = 1,0
CD3
= 5 / 3 = 1,7

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Calculating Delay Cost
CBA: Delay Cost = 39M + 27M = 66M
Opportunity B
3 M revenue p.m
9M
Opportunity C
5 M cost savings per
month
15M
Duration 3 mths
Opportunity A
3 M new market share per month
15M
Delay Cost
9M
Delay Cost
18M

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CBA: Delay Cost = 39M + 27M = 66M
Calculating Delay Cost
Opportunity B
3 M revenue per
month
Duration 3 mths
Opportunity C
5 M cost savings per
month
Duration 3 mths
Opportunity A
3 M new market share per month
Duration 5 mths
Delay Cost
40M
Delay Cost
15M
ABC: Delay Cost = 39M + 55M = 94M

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CBA: Delay Cost = 39M + 27M = 66M
Calculating Delay Cost
Delay Cost
121M
ABC: Delay Cost = 39M + 55M = 94M
——: Delay Cost = =121M
Opportunity B
3 M revenue per
month
Duration 3 mths
Opportunity C
5 M cost savings per
month
Duration 3 mths
Opportunity A
3 M new market share per month
Duration 5 mths
Worst order is still better than doing the work in parallel!
Making the wrong choices is better than making no choice!

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So why can’t most organisations choose?
•Local Optimisation
•Marketing / Sales / etc.
•Ego / Subjective opinions
•Hippo’s
•Not killing darlings!
•High Skill specialisation
•Shared resources
•Optimized for utilisation

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Poll - 1 (30 sec)
• How is prioritisation done in your organisation for one or more products?

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Some suggestions
1. Optimise the whole, create
shared strategy and targets
2. Focus on the value stream,
optimise value delivery over
utilisation
3. Involve stakeholders in
product direction setting
4. Involve stakeholders in
ongoing prioritisation

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Example: Business Value Game
• Created by agile42 in 2007.
• Based on the ideas of Planning Poker
• Teams use it to estimate effort
• Allows teams to have the right conversations
• focusses on Business Value instead.
• Done with the main stakeholders
• Facilitates the right conversations about value
• Compares relative value of initiatives
• Absolute numbers are not very useful:
• What has is more valuable?
• An highly uncertain item of $ 1.000.000
item
Or
An almost certain $ 200.000?

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Questions? • Add your Questions in the Q&A section of Zoom

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GET IN TOUCH!
Don’t forget the Product
Owner coaching we offer
To learn more about Cost of Delay, or how to work with stakeholders,
how to make choices and how to be a good Product Owner - join a training with us!
Remember to keep learning!
Join the Certified Scrum Product Owner training
https://www.agile42.com/en/cspo-certified-scrum-product-owner-training/
If you are a CSPO, take the next steps and deep dive and join the
Advanced Certified Scrum Product Owner training
https://www.agile42.com/en/a-cspo-advanced-certified-scrum-product-owner-training/
In order to receive an A-CSPO certification it’s required to hold a valid CSPO certification with Scrum Alliance.

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Questions? • And some answers