In the previous article, we did a deep dive into value assumptions. In this article, we zoom out to see where the product value creation plan fits in your process and who to use it to drive prioritisation, resulting in the successful execution of your product strategy.
Tracking value indicators
The Product VCP clarifies the value assumptions and defines the user behaviours the product strives to impact. With alignment on the value assumptions, we can focus our operational effort on user behaviours. The Product VCP is articulated as a list of leading metrics that indicate the status of the user behaviours we are interested in. It is vital for operational execution that these metrics are leading, so product teams can measure the impact of feature releases. Depending on the user behaviour, the metrics may have to be a guiding indicator instead of a direct measure. We call these metrics “value indicators” and share the
Product VCP as a table
If the value indicators improve, the product is positively impacting user behaviour. If our value assumptions are true, the user behaviour creates customer value - and that customer value impacts our business goals. This means the product team can operationally obsess about the value indicators.
Obviously, in line with a strategic review (which is not a weekly or monthly event), the value indicators should be reviewed and cross-referenced with lagging indicators and qualitative data to ensure they remain valid.
Prioritising what problems teams work on, or what solutions teams deliver, typically uses a framework which evaluates the value against a proxy for cost. For example, RICE, or value vs effort. Many companies fall into the common mistake of placing their attention on the cost side of the equation.
The cost typically equates to time and delays (or overspending), which appear visible and clear to measure. The reality is the actual cost is almost certainly not the size of the believed overspend, but that should be a blog post of its own! The value side of the equation gets surprisingly little attention, and the actual performance is rarely reviewed.
When the value does get explored, there is enormous ambiguity, confusion, misinformation and arguing. The impact of evaluating value with no clear value definition creates a bias in the prioritisation decision-making. The obstacles include
- Evaluating the value of work in a silo, independently from all other work (almost as a mini business case) results in tactical prioritisation.
- Value is not defined. This means whoever is best at articulating value will bias the decision, and salespeople are professionals at articulating value.
- Attributing value is really difficult. This encourages bias towards decisions with easy-to-recognise value, such as "I have a client worth £1m who will close if we build feature x".
- Loss aversion is a primitive bias we all suffer. By losing focus of the bigger goal, we quickly feel high levels of loss for a recognisable but lower value. (eg a feature to close £1m client instead of features supporting £100m growth.)
Plugging the Product VCP into your prioritisation framework
The value indicators of the Product VCP are the definitions and measures of value. The diagram below shows the steps to integrate the Product VCP into your preferred prioritisation framework.
Value is explained by scoring the item to be prioritised based on its impact on the Product VCP value indicators. The scores deserve normalising, and for large effort items validation to improve and refine confidence. The multiple scores are consolidated into a single value impact score to plug into your prioritisation framework - and only then you can make a prioritisation decision.
Hungry for more?
The next article in this series focuses on how to build a product VCP, starting with the Customer Value Mapper.
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