Value vs. Cost: Prioritization Simplified

Product Plan conducted a survey of 2,200+ product management professionals and discovered that the skill product managers lacked most was Prioritization (Product Plan).

23% of PMs surveyed stated that their product management peers lacked the ability to prioritize.

Prioritization is the single most important skill a PM must have — the ability to discern what should be executed today and what should be deferred to tomorrow, next week, or next year.

Defining Prioritization, generally

Let’s define prioritization by breaking it into its component parts and dissecting the difference between important vs. urgent.

As a PM, most items on your plate will be important, but it’s all relative. By asking ourselves “of the items that are important, which are the most urgent or critical”, we can start to decrease clutter and create more focus.

Prioritization in Feature Development

Now, let’s define prioritization within the context of feature prioritization. Priority should be influenced by a simple measure of Customer Value against the Cost of Delivery.

At this point, you’re wondering two things:

• How do I begin to evaluate the value of something?
• How do I begin to evaluate the cost of something?

Part 1: How to evaluate the value of a feature

You quantify the opportunity size of an initiative or feature and conduct a qualitative viability assessment to identify which opportunities are worthwhile to the customer and to the business long-term.

Quantify Scale of Impact

Quantify Exposure

Uncover Viability

Part 2: How to evaluate the cost of a feature

Quantify Engineering Effort

The cost of a feature or initiative is primarily informed by engineering effort in the form of story points, developer weeks, or developer units. Are there dependencies that will cost both the PM and the developers time?

Consider Tradeoffs

It should also be in some parts influenced by opportunity costs. What must the business or team give up, in terms of customer deliverables or milestones, in order for the particular feature in question to be realized?

If you are able to quantify cost and value in this way, you’ll be able to use this information as inputs into most of the prioritization frameworks that exist today including:

• RICE Model: Reach, Impact, Confidence, Effort
• ICE Model: Impact, Confidence, Ease
• Value-Effort: Value/Effort

There are other non-quantifiable prioritization frameworks that you can find from Roadmunk here.

Part 3: A note on leadership

Leadership, especially in growing organizations, will influence the priority of items on the backlog. Occasionally, their perspectives may be in conflict with your Value:Cost assessment, and you may need to deprioritize work your team feels is valuable.

In these instances, trust the process, elevate data as it surfaces, and use the opportunity to flex your influencing muscle if you believe the team is heading in a non-optimal direction. But, be diligent in being intellectually honest.

Closing

Sometimes, your numbers will make sense, but your outcomes will be divergent from your original assessment. At those times, note reflects on what proxies you leveraged to determine value and cost. Assess what the nuances were between what existed today and what your team developed and ensure that those learnings are surfaced in next quarter's planning.

Thanks for reading, and reach out to me on LinkedIn to chat :)