A FEW YEARS AGO, MY BOSS laid down a simple expectation: Always know what your 20 most important product enhancements are. Of course, one of the biggest challenges of product management is the struggle to prioritize. It can be tough to choose where to focus efforts from a giant list of to-dos from stakeholders, market data, customer requests and even our own brilliant business ideas that come to us in the shower.
So to meet this need, product management at Silverpop developed a scoring matrix to help prioritize our efforts. We call it the 60-second business case, and it lives at the very beginning of the product cycle.
The 60-second business case evolved from a desire for everything in development to support our key business criteria: strategic alignment, operational necessity, revenue, improving customer experience, innovation value and lowering costs.
Each of these criteria, as well as its product management priority, is scored and weighted on a 100-point scale.
As company departmental priorities shift and evolve, we can quickly adjust the weighting to reflect these changes. This leads to regular discussions that ensure everyone consistently understands where each criterion ranks in our values and priorities. We score potential projects against each criterion to see how they rank. (See Exhibit 1.)
Strategic alignment. In Exhibit 1, you can see that we want to focus on strategic alignment more than retained revenue, so we weigh it as a 15.
Now think about how difficult it can be to measure strategic alignment. That’s why we created set criteria for determining if an item has a high, medium, low or zero ranking.
“High” meets all three of the following:
- Supports company mission
- Moves toward product vision
Correlates to at least one specific strategic objective (or quarterly/annual goal) as defined by the leadership team
“Medium” meets two of those criteria, “low” meets one and “zero” obviously meets none.
Let’s say you’re a CEO who wants to reduce time to market, enter the vintage toy market or sunset legacy systems. Your product team can actually weigh these potential initiatives against whether it aligns to the company’s mission statement, product vision or one or more of your strategic goals.
Every six months, we come back and look at strategic alignment to determine what short-term goals have changed and therefore require items to be rescored.
Operational necessity. These items absolutely have to be done or our business is in significant danger immediately. We call it “keeping the lights on” and there are no distinctions of levels, but rather a yes or no designation.
Let’s take an extreme example: Say we’ve got some servers under heavy load and we need to make some code changes to keep them from coming to a grinding halt. These types of things are usually handled by our architecture and network operations department, but occasionally they may have business impacts that require product management’s detailed consideration. And when they do, we don’t try to rank them as high, medium or low. Our only goal with operational necessity is to get it out of that category. We want to put the fire out as quickly as possible.
Revenue. There originally was just one revenue bucket, but we broke it down into New Revenue Impact and Retained Revenue Impact, because they have different values. Both have the high, medium, low and zero classifications, but we rate them based on the amount of revenue per year that we believe we can attribute to an effort.
So a high is going to generate a million dollars in new revenue or retained revenue, medium is going to generate $250,000 to $1 million and low is what we call anything that has either a revenue impact that we know exists but can’t easily measure or we just don’t measure it. It’s relevant, but small and not worth trying to do a detailed projection on. A zero obviously has no expected revenue impact.
Your revenue categories will be different, and ours will certainly evolve as revenue grows too. But by creating broad categories with a wide margin, you create a scoring model that should minimize debate about the revenue implications of a decision. The purpose here is to keep the conversation quick and high level. It’s not about building a true business case; it’s about aligning everybody to an agreement of value.
Improve customer experience. This category works similarly to revenue. We’ve got very large buckets defined that are based on the percentage of customers that will experience a positive impact: High is at least 80 percent, medium is 30 percent to 80 percent, low is below 30 and zero means no impact.
Innovation value. This is also really hard to measure, since you can’t quantifiably say something is innovative. We’ve outlined additional criteria to determine this ranking.
High meets all three of the following:
- First or early to market with a feature or capability
- High visibility (PR, marketing or “buzz”) value in the marketplace
- New and positive business impact for our customer leadership team
“Medium” meets two of those criteria, “low” meets one and “zero” meets none.
Lowers cost. The buckets are a little smaller for lowers cost. High is for an effort that will save us $250,000 a year or more. It can come from many different sources—whether it’s that we need to maintain less hardware, don’t have to buy more hardware or are going to get fewer support calls—but $250,000 a year for a high cost savings is where we’ve put our line in the sand. Medium is $50,000 to $250,000. Low follows the same rules as the other monetary ones, and then there is zero as well.
Part Science/Part Art
Those business criteria are what we think of as the science of product management. We’ve figured out a way to measure each of these business criteria and each can be supported very quickly in a conversation. In defending a specific product, feature or initiative, you can walk through the spreadsheet and say something is important, because it’s got high strategic alignment and here’s how.
The last piece of this is the final column for “product manager priority.” Another way to think of it is the “fudge factor,” and it’s the art of product management. This is where you bring together the knowledge that you’ve assimilated over time, including customer interviews that helped you understand the passion that customers might have for a feature and the impact it will have on them. It’s not as easily quantifiable. And you use your product management judgment to score the outcome. This actually accounts for 25 percent of the total score in our example.
The director of product management at another company showed this model to her c-suite. The chief financial officer said he wasn’t confident that the product manager’s influence should account for 25 percent, so they had a very reasoned discussion on how much influence the director’s skill set should have. The CEO chimed in a few minutes later and said he disagreed with the CFO. “That’s what we pay these people to do,” he said. “To understand the market in a way that’s not easily attributable and make the best decisions for our company.”
Each of these categories gets converted to a score, which is basically 0-3 points multiplied by the weighting factor and totaled. Then, we simply sort the list from highest to lowest score, and—voilà—we have a value-based list of candidates.
The HiPPO in the Room
HiPPO is an acronym for the “highest-paid person’s opinion.” It is typically a strong opinion that can have a big impact. The 60-second business case can help determine if that opinion aligns with the plans for the product.
For example, one stakeholder was pushing for a particular product feature. Instead of months of research, we did a quick 60-second business case to show if the feature was aligned strategically, was a necessity, had a revenue impact and so on. It quickly came out with a low score so we focused our efforts elsewhere.
When the stakeholder came back and wanted to know why the feature didn’t make the cut, we actually were able to point out that we (including the stakeholder) had all already agreed on the way to score efforts. We then walked him through each category.
Once he understood why the feature wasn’t being considered, we discussed changing the overall weighting in an area where the product did score well: innovation. He declined and said that although he was passionate about the feature, it wasn’t the right thing to spend our time on at the moment.
The point is that we didn’t have to build a business case or have a bloody argument or a political fight. It was a reasoned discussion enabled by a tool that allowed us to walk through and systematically evaluate the value of something he felt very strongly about.
The 60-second business case can be an incredibly powerful tool to get everyone in agreement and to prioritize efforts more efficiently and effectively. I hope you put it to good use at your company.