Product Owners are responsible for top-down and bottom-up alignment of IT solution business value
This is the second of a three-part blog series about aligning IT solutions/capabilities to organizational needs via an Agile-Scrum product management approach. You’ll find the first part here.
In part I of this three-part series, I asserted that Scrum bridges the common disconnect between solutions delivered by organizational IT management and the needs and expectations of sponsors, stakeholders, customers, and end-users. I provided a sense of the magnitude of the problem by referencing analysis from the 2015 Standish Group CHAOS Report which found that less than half of all IT projects deliver business value. I then explained how Scrum’s product management mindset differs from that of traditional project management. Finally, I explained how a product management approach aligns IT product/solution vision and strategy with organizational vision and strategy based on the concept of delivering business/mission value.
In part II, I discuss how the Scrum Product Owner (PO) defines product value and maintains alignment between his/her product vision and strategy and organizational vision and strategy.
The Product Owner as Value Maximizer
In Scrum, the PO is the linchpin that connects the Scrum Team to the larger organizational product management structure. Scrum defines the PO as one of the three official roles of a Scrum Team. The PO represents the Voice of the Customer for a product/solution. The PO is responsible for fusing the various needs, wants, and perspectives of product or project stakeholders into one complete, coherent, and cohesive vision. The Development Team looks to the PO as the primary (but not necessarily the only) source of business knowledge and understanding. That understanding informs development of IT capabilities that provide maximum value to the organization and users.
In large organizations, POs may work within a product management organizational structure that coordinates product management activities across the organization. Working closely with program management offices (PMOs), product management focuses on making the right things while program management focuses on managing schedule, budget , and resource constraints.
While aligning product strategy with organizational strategy is inherently a top-down activity, both strategies must be informed by bottom-up input/feedback from development teams, customers, and end users. Product management organizations and the POs who collaborate within them are responsible for fostering and maintaining ongoing collaboration in both directions.
The Product Management Vacuum
In their book, “The Professional Product Owner: Leveraging Scrum as a Competitive Advantage,” Ralph Jocham and Don McGreal make the case that most organizations do a poor job of linking product vision and strategy to business strategy and the work performed by development teams. They call this deficiency the “Product Management Vacuum.”
The Product Management Vacuum
The authors explain that the vacuum is typically filled by traditional project management activities. Those activities lead to wasted effort and disconnect development teams from the larger organization as well as from customers and end users. By focusing on managing tasks and people, rather than on defining the product and improving development processes, traditional project managers and the development teams they manage lose sight of product value. Resulting solutions are largely disconnected from organizational vision and strategy and from customer and end-user needs.
The Product Owner Fills the Vacuum
In Scrum, the PO fills the Product Management Vacuum:
Product Vision – The PO is responsible for formulating and socializing the product vision among the Scrum Team, stakeholders, customers, and end users
Product Strategy – The PO is responsible for identifying and driving development of IT capabilities that support business goals and objectives as well as satisfy customer and end-user needs and desires
Release Management – The PO coordinates product release strategy with relevant organizational stakeholders
The PO does not carry out these responsibilities alone. The PO collaborates with the development team, sponsors, stakeholders, customers, and users but is primarily responsible for outcomes.
The Three Vs
Through their construct of “The Three Vs: Vision, Value, and Validation” Jocham and McGreal explain how Scrum maintains alignment between product vision and business value. The Product Owner leads and is ultimately responsible for the activities performed in support of the Three Vs.
Activities and Responsibilities under “The Three Vs”
The interplay between product vision, value, and validation can be summed up as:
Interplay between Product Vision, Product Value, and Product Validation
Vision drives the creation of value (features/functionality)
Value created enables validation of business assumptions behind product development choices
Validation informs changes to the product vision
On the Next Installment…
In the third and final part of this series, I will explain how POs define and manage The Three Vs by managing the Product Backlog. As part of my explanation, I will showcase three artifacts: Impact Maps, User Story Maps, and Product Roadmaps.
Conclusion
POs play a central role in aligning the IT solutions they shepherd through product management and development activities with organizational vision and strategy. To achieve that alignment, product management and organizational strategies require ongoing feedback and collaboration with customers and end users. The Scrum framework is optimal for achieving this top-down and bottom-up alignment for IT solutions.
Building the right thing is as important as building things right. Scrum aligns organizational strategy and IT via a product management mindset.
This is the first of a three-part blog series about aligning IT solutions/capabilities to organizational needs via an Agile-Scrum product management approach.
Information Technology (IT) management is about leveraging technology investments to address business/mission needs. IT management is responsible for ensuring that budgets spent on IT solutions result in the implementation and ongoing support of effective and economical systems and processes. Effectiveness is the degree to which such investments help the organization achieve business goals and objectives. Economy translates into the total cost of ownership (TCO) incurred from adopting a solution as well as efficiencies gained through its use. Effectiveness and economy are actually signifiers for the many elements that make up business value. Ultimately, the success or failure of any IT implementation is judged by the value it delivers.
IT’s (Poor) Record at Delivering Value
Unfortunately, IT management’s track record for delivering value is lack luster. According to the 2015 Standish Group CHAOS Report:
Only 29%
of IT projects are successful.
Successful projects are delivered within estimated time (OnTime), within
budget (OnBudget), and satisfactorily (Satisfactory). The Standish Group defined satisfaction as
the level of customer and user satisfaction achieved, regardless of how much of
the original project scope was delivered.
52% of IT
projects are challenged. Challenged
projects are delivered but miss the mark on at least one of the three criteria
above.
19% of IT
project fail. Failed projects fail
to deliver any capability.
Along with the three measures listed above, the Standish Group also measures how valuable the implementation is deemed to be (Valuable) and how clearly defined the business objectives were for the project (OnGoal):
59% of IT projects are considered valuable
62% of IT projects align to clearly-defined business objectives
So, based on the polling, of the 81% of projects that deliver some level of capability, 59% are considered valuable. This translates into less than half of all IT projects delivering value.
Scrum’s Product Management Mindset
A major difference between Scrum and traditional IT project management is Scrum’s product development/management mindset. Agile in general and Scrum in particular have deep roots in product management and Lean. Two fundamental principles of both Agile and Scrum exemplify their alignment with modern product management:
Focus on delivering value and evaluate progress based on actual value delivered rather than tracking progress on planned activities
Team Self-Organization – Development teams manage their work, determine technical approaches, estimate their work, report their progress, and help define the product
A good way to illustrate the differences between product management vs. project management mindsets is to compare the core functions performed by product managers and project managers. While their work often overlaps, their primary responsibilities compare as follows:
Product Management vs. Project Management
It is important to note that the scope of what constitutes product management is much bigger than Scrum. Scrum is a way of developing products, including software, that dovetails nicely with the philosophy and practice of modern product development and product management..
The Product Management Approach to Value
The predominant trend across software development companies is a shift away from traditional project management to Agile. Companies are making the shift to:
Address rising expectations of demanding customers
Compete in fast-changing markets
Fundamentally, this is a shift away from predictive project planning to adaptive product management.
Product Management for Organizational IT
However, IT management and portfolio management are firmly in the sphere of organizational IT. Development of organizational IT solutions is different from for that of product solutions for the following reasons:
Most organizational IT initiatives are system integration efforts
System integration efforts are driven by sponsor organizations
Sponsor organizations decide which capabilities to develop or acquire, how much budget to allocate, and when new IT capabilities are due. Unlike products, these decisions are not shaped primarily by market demand
Most IT solutions are highly customized implementations tailored to the needs of the sponsor organization, rather than designed to compete in a generalized market
IT solutions integrated into enterprise environments are typically much more constrained technically and organizationally than green-field product development efforts
So if product and system integration efforts are so different, does product management apply to organizational IT? Whether an organization is a business, a government entity, or a non-profit, product management activities occur to some extent as part of deciding what IT capabilities to develop or acquire. The term “product” can refer to any technical product/solution, business process, or a combination of the two.
Defining Value
Equating the value of a technology solution or service to its cost is a mistake. The world is littered with all kinds of expensive solutions that yield little to no value for their owners or users. How we define value is at the heart of how we link IT investments to organizational needs because the value of any particular solution is inextricably tied to the value provided by the organization.
A solution is valuable when it benefits those who acquire it and use it (customers) and those who create it (producers). Benefits to customers boil down to what they care about or makes them happy. Benefits to profit-driven producers map to outcomes necessary for sustaining and growing the business: revenue, profit, cost savings, increased market share, customer loyalty, etc. Benefits for non-profit producers (e.g., government agencies, charities) align with mission execution and accomplishment: protecting lives, promoting health, caring for the needy, etc.
These categories of value are not isolated. A business that focuses on providing excellent
value for its customers, gains a following, and experiences increased revenue
and profit. A charity that fails to
raise money or mismanages its budget is soon in no position to provide aid to
anyone. Organizations that focus on
pleasing customers at the expense of the wellbeing of their employees
eventually suffer morale problems and employee turnover that cripple their
effectiveness.
Organizations can experience negative value. Negative
value occurs when:
Organizational or technical problems diminish the value provided or achieved
Actualized outcomes do not align with expected/preferred outcomes
Examples of negative value accrual:
A website that stores customer credit card
information is hacked
A charity spends significantly more on operating
expenses and salaries than on providing services to people in need
Organizational Vision
The value an organization attains or provides by acquiring or developing IT solutions must align with that organization’s vision. The organizational vision serves as the organization’s North Star as it navigates decisions towards an envisioned future state. The vision answers, clearly and concisely:
What is the organization’s reason for
existence? What contribution or impact
does it intend to make and to what end (purpose)?
What is the organization working towards
becoming? What will set it apart from
competitors or alternatives in its market or mission space?
The organizational vision should inspire and motivate people. A vision that fails to connect with people emotionally will fail to muster the enthusiasm and perseverance needed to overcome difficulties and achieve challenging goals.
Business Strategy
The organizational vision informs business/mission strategy. The strategy is a roadmap of actionable objectives that culminate into achievable goals. Goals are the desired long-term business results or outcomes that incorporate the vision. Achieving them lets us know we reached the destination described in the organizational vision. Objectives are measurable milestone achievements necessary to attain organizational goals. The work and resources needed to achieve the objectives inform strategic and tactical plans implemented across the organization. Objectives are decomposed and flow down from the strategic level to the tactical level. Objectives at different levels of the organization spur the development of plans to achieve them.
Strategic Vision and Strategy Decomposition
IT solution implementations may be strategic initiatives,
tactical-level initiatives, or both.
Regardless of the organizational level they directly support, the value
provided by IT solutions must support business strategy and, by extension, the
organizational vision.
Defining IT Solutions
Similar to the organizations they support, well-planned IT solution implementations (products) follow from a well-defined product vision and product strategy. An organization may develop products for external and internal users.
Product Vision
The product vision communicates the desired end state for the product in business or mission terms. The product vision clearly and concisely answers:
Who is/are the target audience/customer(s) for
the product?
What is the product’s most important benefit or
value proposition?
How does the product differ from existing
alternatives?
What sets the product apart? What is the product’s competitive advantage?
The product vision may link to business strategy as a goal, an objective, or as an activity defined as part of a strategic or tactical plan. For example, a company selling products and services online, as its primary delivery channel, may set a goal to be the first to offer a new online service. Since it is an online company, it is conceivable that the new online service offering may rise to the level of a goal that directly supports the company’s vision. In other cases, an IT implementation may be an objective towards a strategic goal or an activity necessary for accomplishing a strategic or tactical objective.
Product Strategy
The product strategy is the roadmap towards realizing the
product vision. Considerations addressed
by a product strategy include:
What will the product be? What characteristics must the product incorporate to address customer and producer needs?
What product features would best deliver value to customers/users? How will the product differentiate itself from competitors or alternatives?
How is quality defined for the product? What characteristics and/or behavior must the product embody/demonstrate to be a quality product?
How will the product be branded or introduced to users? Which product characteristics would support the organization’s brand image, reputation, or culture?
How will a commercial product be positioned in the market? How will organizational IT solutions be acquired (contract types, source selection, budgets, etc.)?
Product Value
Returning to the topic of value, we now focus on the value the product provides. As stated earlier, value provided by IT solutions must align with the organization’s vision and business strategy. Also important to consider is the alignment of product strategy with the work performed by Agile development teams.
How do we characterize product value and, once alignment with product strategy is achieved, how do we maintain it? I will address these topics in part two of this blog series.
Conclusion
Building the right thing is every bit as important as building things right. Often, organizations hyper-focus on defining and building or acquiring technical capabilities while losing sight of whether the resulting solutions solve the right problems and address the right needs. The current pace of organizational and technological change requires that organizations adopt an IT management approach that incorporates the product management mindset championed by Scrum. Doing so helps ensure that IT investments further organizational vision and goals by creating real, measurable value for both the organization and its customers.
A look back at a 1986 Harvard Business Review article provides insight into the roots of Agile and its application.
No, there isn’t a typo in the title. 🙂 The title of this blog entry was taken (borrowed?) from a very interesting article published in the Harvard Business Review from January 1986. Scaled Agile Inc. (the developers of SAFe) references it to make a number of points concerning how to best structure Agile teams. In particular, Scaled Agile Inc. references the article’s assertion that:
The “relay race” approach to product development [i.e., Waterfall] conflicts with the need for speed and flexibility.
That a holistic or “rugby” approach [a la Agile] where, “a team tries to go the distance as a unit, passing the ball back and forth” better serves highly competitive environments.
The things that strike me about this article are:
It was published in January 1986. A good 15 years before the Agile Manifesto was published.
All of the examples are product development efforts outside the software development realm: Xerox copiers, HP printers, Honda cars, Canon cameras.
The fact that they likened the process to Rugby (a foreshadowing of Agile-Scrum).
Fostering of “Self-transcendence” – Similar to the concept of Ba: an old Lean term brought to new relevance in Agile-Scrum and SAFe circles.
Emphasis on “Cross-fertilization,” known in Agile as “Cross Functional Teams.”
The article’s concept of “Overlapping development phases” roughly translates into the Agile idea that SDLC phases (planning, analysis, design, implementation, and maintenance) should not be separate phases at all but should, instead, be performed concurrently within a specified time-box (iteration/sprint), on a small scope of work, with overall system scope accruing incrementally and iteratively.
The recognition that for all of this to work, we need management to change away from linear and static product development thinking.
The recognition that, “A different kind of learning is needed.” By this they mean engineers need to have both deep skills and broad understanding to be effective in cross-functional teams that execute in less structured environments: “T-shaped skills.”
I recommend organizational leaders and managers read the article to gain perspective on the thinking that led to Agile, so they may better understand how to adopt it within their respective organizations. Engineers of all disciplines and current Agilists will also benefit from a better understanding of how real cross-functional, self-organized teams are formed and behave.
