You need to enable JavaScript in order to use the AI chatbot tool powered by ChatBot

How does business value influence the order of items in a product backlog?

Understanding Business Value in Product Backlog Management

Introduction

How does business value influence the order of items in a product backlog? This is a question that many scrum teams grapple with. Value is a key part of the puzzle, and it’s often a topic of intense discussion in both teaching and coaching environments. Unfortunately, there’s no one-size-fits-all answer. Value is determined by your product, your organization, and the current context, and it can change over time.

The Fluid Nature of Value

Contextual Relevance

Value is highly contextual. Imagine selling water at the edge of a desert. To a person who hasn’t had water in days, that first glass is invaluable. However, by the 100th glass, the value diminishes significantly. This analogy underscores how value is not static—it changes based on the situation and needs of the moment.

Dynamic Backlogs

The product backlog should reflect this dynamic nature of value. It is essentially a list of everything you think you need to do to deliver the current product goal. As your goals and understanding evolve, so too should the order of your backlog. The simplest principle to follow is to prioritize items that offer more value for less effort.

Calculating Value

Bang for Buck

A practical approach to prioritization is to consider the value-effort ratio—often referred to as “bang for buck.” This means looking at the value divided by the size of the work. This simple calculation can provide a rough idea of what to do first:

  • High Value, Low Effort: Do these items sooner.
  • Low Value, High Effort: Question whether these items need to be done at all.

Beyond Simple Metrics

While the value-effort ratio is helpful, it’s not the sole determinant. Other factors must be considered, such as strategic alignment, risk, and dependencies.

Defining Value

Sector-Specific Value

Value varies significantly across different sectors. In the finance world, monetary gain often drives value. In charities, value might be measured by the impact per dollar spent, such as the number of people provided with clean water.

Personal Example

One charity I worked with focused on maximizing the impact of every pound spent to deliver clean water. Their value measure was the number of people who received clean water for each pound. This metric guided their decisions and backlog prioritization.

Collaboration for Clarity

The first step in leveraging value for backlog management is to clearly define what value means for your product. Ideally, this should be done by a knowledgeable product owner. However, since this isn’t always straightforward, it’s crucial to involve stakeholders, sponsors, and other relevant parties in this process.

Lean Principles

According to Lean principles, the first step in delivering value is to define it. This is often overlooked but is essential for effective backlog management. Work with your product owners and stakeholders to get a clear understanding of what drives value for your product and how to measure it.

Measuring and Tracking Value

Key Drivers and Metrics

Identifying the key drivers of value and establishing how to track them is fundamental. Clear metrics and drivers help in making informed decisions about backlog prioritization. For instance:

  • Customer Satisfaction: Metrics like Net Promoter Score (NPS) can help gauge the impact of features on customer happiness.
  • Market Demand: Insights from market research can indicate which features will drive the most value.
  • Cost Efficiency: Assessing the cost-effectiveness of delivering certain features helps in prioritizing them.

Continuous Re-evaluation

Value and effort are parts of a constantly changing puzzle. Regularly re-evaluating these factors in the context of your current product goal ensures that your backlog remains relevant and effective.

Conclusion

Value plays a significant role in determining the order of items in a product backlog, but it’s not the only factor. By defining value clearly, collaborating with stakeholders, and continuously re-evaluating both value and effort, you can ensure that your backlog prioritization aligns with your current product goals.

Remember:

  • High Value, Low Effort: Prioritize these items.
  • Low Value, High Effort: Question their necessity.
  • Continuous Evaluation: Regularly reassess both value and effort to keep your backlog relevant.

By focusing on these principles, you can effectively manage your product backlog to deliver maximum value with optimal effort. 📝🚀

author avatar
John McFadyen Managing Partner
John McFadyen is an Executive and Enterprise Agile Coach with proven experience working on some of the UK and Europe’s largest, most complex Agile Transformations. As a Certified Scrum Trainer, John brings a wealth of experience as an Agile coach, Agile practitioner and software developer into each of the four core courses he provides. The war stories, the insights into successful Agile transformations and everything he has learned from coaching high-performance Agile teams combine to provide course delegates with a unique, compelling training experience that transforms as much as it empowers.

Like this post? Share with friends & colleagues using the share buttons below.

Facebook
Twitter
LinkedIn

Related Blog Posts

Deploy + Improve Scrum
John McFadyen
Deploy + Improve Scrum
John McFadyen
Deploy + Improve Scrum
John McFadyen
Deploy + Improve Scrum
John McFadyen