Agile portfolio planning is a great (chief) product owner tool to plan and trace initiatives across various teams. Implementing it can be difficult and cumbersome at times. This post explores the number one critical success factor to do Agile portfolio planning right; Outcome oriented decision making.
Outcome goals are valuable for streamlining your Agile portfolio planning and engaging people involved. Having them clear, enables you to judge all initiatives and ideas based on their contribution to these goals. This creates focus and clarity. For product owners this means it will be easier to explain to others where and when people will work on certain ideas, as well as saying no to the irrelevant ones. Simple two by two frameworks can help you clarify the details and course of action, be it directly product related or impacting you from the side-lines.
Introducing Lawns ‘R’ Us
Lawns ‘R’ Us, or LRU for short, is one of the largest online resellers of lawn mowers in Europe. Growth over the years meant an increase in IT development and a specializing business looking to optimize and grow the across the board. At a certain point in time LRU decided to move from their traditional PRINCE2 project organization to an Agile way of working.
That worked out great on team level. Teams were: able to deliver on time, quality improved and costs went down. But still there were issues regarding product development. Although teams were faster than before, backlogs kept growing longer and longer. This was because business changed along with market growth. More legislation, more optimization, more localization, channels, product categories and custom projects. To make things worse everything was just as important to stakeholders, all racing for “world domination” (which was the company mission set by the CEO at LRU.) In response to these developments the product owners created the LRU Agile portfolio plan. Their goal was alignment on value creation to try and get as much progress towards world domination as possible given their limited development capacity.
The LRU Agile portfolio planning solution
Agile portfolio planning is a way to plot all work related initiatives to corresponding teams. It’s often done on big charts on the wall so stakeholders can get an easy overview of which team is working on what topic. The stakeholders also liked the wall, because they can see if the portfolio plan adheres to overall priorities and discuss dependencies or issues. Teams liked it, because they can look a bit ahead and see where they are heading towards.
A so called “portfolio wall” looks something like figure 1 below. As you can see in the picture, the current sprints are planned in more detail than the items in next quarter and rest of the year. This is to keep flexibility and not spend too much time and effort on relatively uncertain work up front.
Figure 1: basic Agile portfolio plan setup
Although the theory is simple, putting (and keeping) it in practice isn’t. This is because the inflow of work towards the teams is not stable (enough). Projects and initiatives just seem to drop out of the sky to collide and impact products and the teams responsible for them.
Not being able to deliver all requests pressured the product owners at LRU and it induced some nasty behavior on stakeholder level. All projects got prioritized on their own merit and lacked shared outcome goals. Stakeholders had no incentive to co-operate. Black-market stakeholder practices and people stressing about their own concerns and interest was the result. You’d see Product Owners trying to react appropriately to the ever changing project and stakeholder arena, instead of pro-actively driving the portfolio to the desired outcome. This impacted the portfolio planning effectiveness at LRU as shifting expectations were so volatile that it was nearly impossible to keep a stable planning even in the sprint +1/+2 columns. At that point they admitted they had to change something. This is how LRU fixed it.
What LRU did to solve their portfolio problems was to add outcome focused goals. Outcome goals were important in creating concrete stepping stones towards LRU’s destination and enabled agility for course adjustments along the way.
Outcome is something different than output. Output goals are geared towards doing things: cheaper, better, faster. Outcome say something about why we want to achieve something instead of how (output). Now there is a significant difference between the two, being that outcome goals are much more engaging if backed by an inspiring strategy and vision. Forming and setting this shared destination with stakeholders made evaluating progress at LRU both easy and engaging.
LRU crafted their outcome ambition by adding strategic- and product goals. They laid out their strategic outlook and formulated accompanying goals for LRU as a whole; Grow in the business to consumer space, retain our position in key business to business segments and successfully launch 2 new product lines. Next they tried to make their goals SMART; In 2016, we want to grow our market share in B2C gardening products from 30% to 50%. So how would LRU achieve this, you might ask? That’s were their product planning came in.
There are a lot of different techniques to do product planning, but the one LRU people liked most is the classic Boston Consultancy Group (BCG) matrix (see figure 2). It was simple, easy to understand and provided an holistic overview of the product portfolio. Now I am not going to explain the details about the matrix here, but basically you have four quadrants and matching strategies. The only thing they had to was; identify their product/market combinations (LRU had various customer segments, for which they carried specific product solutions) and analyze their respective market positions. Depending on the results: cash cows you “harvest and protect”. Dogs you “divest”. Stars you “invest and grow” and question marks you try to “validate” into tomorrow’s business.
Figure 2: BCG matrix
So let’s state that “large lawn – robotic mowers” is a star product market combination for LRU. What initiatives could LRU think of for this PMC, that will help grow the overall market share by 20%. I am sure you can imagine some great ideas for this, and that’s exactly the point. Clear goals enable direction and guide autonomy in the right direction.
LRU’s decision making framework
LRU’s product owners could now evaluate the fit of each initiative within the context of the set goals. Is the initiative going to contribute and if so, how much and at what cost? Another 2 by 2 matrix helped them visualize and decide on a course of action (see figure 3). Each quadrant suggests a different course of action. Low cost, high effect initiatives would be done first (you can do a more detailed analysis of the ideas in this quadrant to prioritize amongst them). There are also initiatives that might be worthwhile to re-think to create more impact or do smarter so they cost less. The stakeholders that brought up ideas in the lower left corner just get a plain old “no” from now on.
Figure 3: the simple decision making quadrant
But what about LRU’s non-product related projects?
There were also initiatives and projects within LRU with regards to companywide operational excellence efforts or mandatory legislation that seemingly just had to be done regardless of anything else. With regards to operational excellence initiatives, the product owners response was to create the rational on how operational excellence would benefit LRU’s outcome goal. Say you were a B2B PMC product owner. Would an operational excellence initiative benefit our strategic goal of retaining our market position in B2B? I guess it could. Due to better quality and lower cost of production and service, we might just gain the upper hand against our competitors.
Legislation proved to be more difficult, but LRU could also differentiate here depending the PMC at hand. Maintaining cash cows meant investing more in licensing and external audit finds. Cash cows fueled investments in “world domination”; LRU needed to protect these. Then again, working with Stars at the same time, de-prioritizing legislation might mean taking a calculated risk for a better market position. In the end, this is what entrepreneurship was all about at LRU.
Last but not least, what if you were a product owner of an internal facing product at LRU. Then they would still rationalize towards outcome goals. Maybe you are responsible for a back-office process like customer support. What would you like your net promoter score to look like? Why is that important for world domination?
And that’s how Lawns ‘R Us solved their Agile portfolio planning. Outcome goals are valuable for streamlining your Agile portfolio planning and engaging people involved. Having them clear, enables you to judge all initiatives and ideas based on their contribution to these goals. This creates focus and clarity. For product owners this means it will be easier to explain to others where and when people will work on certain ideas, as well as saying no to the irrelevant ones. Simple two by two frameworks can help you clarify the details and course of action, be it directly product related or broader initiatives.