Archive for Decision Making

Swinging the axe…

To quote the insanely awesome Steve Jobs, “Deciding what not to do is as important as deciding what to do. That is true for companies, and it’s true for products.”

That’s great advice, but how do you decide?  How do you get started?  How do decide between one project or another which one gets the nudge off the plank?

Personally, I handle the project planning problem with a series of very defined steps that I’ll outline for you here.

  • Step 1: Identify and define your metrics
  • Step 2: Categorize the projects
  • Step 3: Add weights to the metrics and categories
  • Step 4: Estimate values for the metrics and categories
  • Step 5: Use some small equations to rank the projects
  • Step 6: Evaluate the rankings to decide what can be done and what can’t in the current development cycle

Most organizations at one point or another seem to gravitate to a set process like this.  Usually with a spreadsheet that allows you to calculate characteristic values, weightings, and rankings.

However, if your company is still small, you might not yet have a set procedure for project ranking and culling, but it’s good to get a procedure in place early and established because the process usually does take some tweaking as you go along.

So, let’s go through the steps and talk about each one.  I have provided a sample spreadsheet that you can look at as we talk about the process at the bottom of this post.

Step 1: Identify and define your metrics

In Step 1, what we’re trying to do is find some metrics that we’d like to use to help rank our projects.  Answering questions like, “How much will this project help us land new sales?” or “How much will this project help satisfy our current customer base?” are good questions to ask at this level.  These questions require a “thumb in the air” estimation as to the level of contribution each project makes to that particular metric.

These questions then each become columns in the spreadsheet.  Each of these columns will also have an associated weight value attached to it that will be used during the final calculation.

There may possibly also be special metrics that aren’t of the standard “thumb in the air” type.  “Cost” or “Effort” is one of these metrics.  I normally put this at the end of the list and use it as a negative metric as opposed to the other positive metrics.  In the sample spreadsheet I’ve also included a “funded” column that is used for signifying that a project is paid for by a customer.  These would be special identifiers for those projects, and this column is not weighted since these are already “must do” projects and do not need to be evaluated with the other “normal” projects.

Step 2: Identify categories for the projects

You should be able to identify categories of projects that you normally address during a development cycle.  Common project categories are projects that improve quality, projects that improve the underlying architecture, projects that improve system performance, projects that are of a visionary nature, or projects that are of a strategic nature.  These categories are “binary” in that a project either belongs to the category or doesn’t.

Like the metrics values, these categories become columns in the spreadsheet with weights attached as well.

Step 3: Add weights to the metrics and categories

Each column in your spreadsheet should now correspond to a metric or a category.  Now it’s time to think about how important each of these items is to the current release, the business goals, and the product itself.  It’s also worth thinking about the granularity of the weighting.  In most cases I use a 1-5 weighting with 1 being minimally important and 5 being maximally important.  I find that having 5 grades allows me enough flexibility without being too dense.  One could go as small as 1-3, but I find that having two more grades is usually the sweet spot for me.

Once you have the granularity of your grading system defined, you can then assign grades to each column.  You will see in the example spreadsheet that I’ve done this on a separate sheet.  you will also see that there are hidden columns associated with each of the columns in the spreadsheet that capture the calculated value after each value is multiplied by the weight.

So, to take “Cost” as an example, I would decide whether the level of resources I have available during this cycle is insufficient, sufficient, or plentiful.  If resources are insufficient, then the cost is very important (5).  If resources are plentiful, then the cost might be of lesser importance to my decision process (2 or 1).

I would use a similar process to decide upon weights for the other categories with 5 being very important, and 1 being not important.

Step 4: Estimate values for the metrics and categories

Now, we get to the meat of the process.  This is where you assign numerical values to each of the metrics and “yes” or “no” values to the characteristics.

Here is where the spreadsheet work really begins.  What you want to do is create a spreadsheet with a row across the top with headings.  These headings will correspond to each of the metrics and categories that you defined earlier.

Then, in the first column from the second row down, you want to list each of your potential projects.  (P1-P14 in the sample spreadsheet.)  These could be unique descriptive names like, “Update UI for widget X”, or they could be unique project identifiers like, “DES1967″.  Just make sure that you can identify which project you’re talking about on each line.

Once you have the header row and the project column filled out you can begin entering values for each of the projects in the columns.

For normal metric values, I again use a scale of 1-5 with 1 meaning that the project minimally conforms to that metric, and 5 meaning that the project definitely helps/conforms to that metric.

For the category columns, I place a 1 or X in each category that applies to that particular project.

Special categories like “Funded” get an X since this is a binary value, but other special columns like “Cost” might get a number.  In the case of the example spreadsheet, I used “Person Days” values.  The units aren’t really important just as long as they’re all the same.  What you’re really interested in is the relationship between the various values, not so much the values themselves.

Step 5: Use some small equations to rank the projects

Now that you have your spreadsheet filled out, you can do some simple math to organize and rank the projects.  You’ll see that in my example spreadsheet I’ve hidden a series of columns (C, E, F, etc.)  These columns are simply there to aid with the math.

The equation I used in my example spreadsheet works like this…

For each of the “metrics” columns (Sales importance and Customer importance in the example spreadsheet), I take the value in the column and multiply it by the weight for that metric.  I then add those together in a running total.

For each of the “categories” columns (quality, performance, etc.), I take any columns with an X or 1 and add the weight value from that column to the running total.

I ignore special columns like “funded” in the calculation since these are not there to add weight to the calculation, but are to specify a special project.

For the “Cost” or “Effort” column, I multiply the value by the weight for that column, and then I SUBTRACT that value from the running total.  I do this since the cost is something negative associated with the project where as the metrics and categories add value to the project.

This weighted running total of the metrics and categories with the cost subtracted is then my final ranking.

I have also seen some people use a division instead of a subtraction.  I’m not sure that either one is better than the other.  Dividing leads to fractional numbers and the cost having a higher influence, subtracting leads to possible negative numbers and cost having an influence more equal with the other factors.  I used subtraction in my example, but you may feel that division is more correct for your situation.  Again, adjust the method as necessary for your situation.

Step 6: Evaluate the rankings to decide what can be done and what can’t in the current development cycle

Once the final score has been calculated, you’re ready to rank the projects according to score.  This will allow you to see which projects are more important to accomplish according to the metrics, characteristics, and weights you’ve identified.

The final part of the process will be to calculate the resources available to you during this cycle and to estimate where the axe begins to fall.  Once you run out of resources, then you have to start making hard decisions.

In my example spreadsheet, I’ve identified the number of resources on the weights sheet.  Then I’ve used some conditional formatting to turn the numbers in the “Cost” column red when the resources run out.  This tells me where the “red line” is and which project is the first to fall off the map for this release.

Then I can begin to make hard decisions about whether the last project above the line is really more important than the first project below the line, or whether a project below the line can be moved up to be in-scope considering whatever resources I have left, etc.

Conclusion:

Using a regimented method such as this at least allows you to compare apples to apples, and gives you a quantifiable, defensible method for deciding which projects get to stay and which ones get deferred until later.

You can see an example of this with my PM Survival Kit item #5: Project Planning & Scoring Template

As with all of my templates, this template is released under the Creative Commons license as I expect that you’ll need to modify the template to fit the needs of your particular business, company, or situation.  All I ask is that if you make major improvements, you send them back to me at ae@ashleyeckhoff.com so that I can update the template and supply any worthwhile changes to the wider Product Management community.

UPDATE : I had the honor of giving a presentation about this subject at Product Camp St. Louis 2013.  You can find a copy of the presentation I gave here:

Voted off the Island: Deciding which projects make the grade

And a note to anyone who attended my session…  Please feel free to leave me feedback in the comments.  I’m especially interested in any constructive criticism so that I can improve and hopefully deliver even more value at Product Camp next year.  Thanks again!

Wow! That’s quite a performance!

In order to maximize the performance of a product, you first have to measure the performance.

So, how do you measure performance?  Well, with an athlete, you might time their run over a specific distance.  With an automobile, you might calculate the horsepower or the fuel consumption.  With a detergent you might observe the number of stains removed from a specific material.

But what do all of these things have in common?  They all consist of statistics, measurements, and data.

Data is the cornerstone of performance measurement.

So, what can you measure for a product to determine its performance?  And where do you get that data?

There are quite a few possible ways to measure a product’s performance.  In my template, I’ve separated the data into two areas.  Measurements of market performance and measurements of development performance.

For market performance, you want to determine how the product is being sold, and how it is being perceived in the market, and how it is making (or not making) money.

For development performance, you want to find out how the product is being developed.  How is the quality?  How complete is it?  How is it being marketed?  How is it being supported?

So, these are the types of data that the template attempts to organize and the types of questions it attempts to answer.

My PM Survival Kit item #4: Product Performance Analysis TemplateAssociated Spreadsheet

Since this template is centered around data, there is also an accompanying Excel spreadsheet that helps to calculate the charts that the template is based upon.

So, in this case, what you need to do is first compile the data and put it into the appropriate worksheet.  The worksheets are, of course, just a starting point.  If your data doesn’t fit the worksheet, then please do alter the worksheet so that it fits your situation, but understand that altering it too drastically might require some fixing for the word document to update properly.

But once you have the data organized and can articulate it through the charts in the template, then you can begin the process of maximizing the performance of your product.

No crystal ball? No problem!

Vision.  It’s what all psychics claim to have, what all artists try to find, and what all business executives pine for.  The terrible fact of the matter is, that the track record of people actually being able to predict the future is terrible, especially businessmen.

You don’t believe me?  Well!  How about feast your eyes on these famous zingers…

“I think there is a world market for maybe five computers.” — Thomas Watson, chairman of IBM, 1943.

“There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977.

“We don’t like their sound, and guitar music is on the way out.” — Decca Recording Co. rejecting the Beatles, 1962.

Yeah, but those guys are all from the last century.  Certainly we’ve gotten better at predicting the business climate these days, right?

Well some of the world’s most famous business leaders are guilty of making some absolutely terrible predictions even within the last 10 years or so.  Bill Gates is particularly bad at predicting the future, and seems to save his worst predictions for the World Economic Forum that’s held in Davos, Switzerland every year.  Back in 2003 he pretty much suggested that Google would be gone once Sergey Brin and Larry Page got tired of running a business.  Then in 2004, he famously claimed at that time that spam would be eradicated within 2 years.  How’s that working for you?  I thought so.

So, what’s the point of all of this?  Well, nobody has a crystal ball, but yet Product Managers are asked as part and parcel of their job to create a vision for where their product will go in the future and a strategy for getting it there.

So, without a crystal ball, how do you go about creating a vision and a strategy?  Have no fear.  There’s a template for that…

My PM Survival Kit item #3: Vision and Strategy Template

Basically, as with all of my templates, it asks you to answer a bunch of questions that outline the landscape for your product, future opportunities, the competitive landscape, and a strategy for product development.  Along the way, you’ll also define possible projects that will help your company execute on the strategy.  All of this information can then be used in a business proposal to your management.

See?  It’s not so hard.  And no crystal ball needed….

 

 

To buy or not to buy, that is the question…

At some point during your Product Management career, you will run across a situation where you’ll need to decide whether you make a solution in-house, buy a solution from a vendor off-the-shelf, or partner with a vendor for a solution to satisfy your customers’ needs.

The “Buy, Partner, or Make” (…or BPM, not to be confused with “Beats Per Minute” if you’re a music aficionado…) decision can make or break a project and can determine whether a job is done as cost effectively as possible and with the quality required by your customers.

Unfortunately, there doesn’t seem to be much common industry knowledge about how to make such a decision.

So, where to start?

My suggestion is to start by asking some basic questions to lay the groundwork for your recommendation. What are the requirements for the solution?  What is my least restrictive resource?  Effort?  Money?  Time?  Do any of our existing partners already do this?  Do we already own any solutions that are similar or work in this space?

This is the origin of my Buy, Partner, or Make template.  I just sat down and asked a bunch of questions that after answering will hopefully lead you to the correct path ahead.  I mean, in the end, that’s what you’re really doing with a BPM decision.  Just trying to collect a bunch of answers to questions that will lead you to a decision.

So, my Product Management Survival Kit inclusion #1: Buy, Partner, or Make template

As with all of my templates, the BPM Template is licensed under the Creative Commons Attribution-ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/.