I offered my cousin, who’s about to enter college, a motorbike or a laptop. His response was a loud “BOTH!” I replied “Choose one” in a very cool manner. 10 minutes later, he chose a laptop. I probed further and it turns out, his criteria was based on Value and Risk, which is very similar in SCRUM.
Prioritization is critical to Agile delivery. Stories in the product backlog need to be completed, but which ones should you attack first? The criteria for prioritization is based on assessing the Value and Risk. Prioritizing at the story level is way too granular. Therefore, prioritization should happen at the functionality level.
Prioritize by Value
Value is the difference between the increase in sales or reduction in costs brought in by the new functionality and the cost of producing that functionality. The increase in sales or the reduction in costs are usually estimates, however, the cost of producing the new functionality can be determined more accurately. The higher the difference; the higher the value. You could prioritize all High-Value items and give the customer the most immediate punch. But what if later on in the project you are developing a functionality, which has so much risk, that it delays the entire project?
Prioritize by Risk
There are several types of risks, such as Technological, Business and Scheduling. You could prioritize all items deemed High-Risk and deliver the project successfully. This might not be the best approach as you might deliver a High-Risk functionality that has very little value. Wouldn’t that be a wasted effort?
Dual Approach to Prioritization
As you can see, Product Owners should not prioritize based on a single parameter. While prioritizing you should consider both value and risk. Always attack the High-Risk, High-Value functionality first and then progress to the Low-Risk, High-Value functionality. Avoid the High-Risk, Low-Value functionality till such a time that it is deemed High-Value.
Going back to my cousin, it seems for him not having a laptop was:
- High Risk: Having his own laptop would mean he would not have to use a shared computer in the University labs.
- High Value: Through the laptop, he could easily make money to buy a motorbike.
Smart kid!