I discussed how to calculate the Costs of Delay in the previous three posts, and then offered an example in Part 3. Notice that the example uses cycle time or how the team feels about the remaining time to think about the value in order to rank the work. (The links to all the posts are at the bottom of this post.)
Cost of Delay focuses on a short-term prediction of value, not project/feature time or cost. That's why we can use CoD to rank features in a backlog or projects in the portfolio. We make decisions for now, not forever, and all based on value.
There are other positive effects when we focus on value, including:
- While cost or time does tend to change, value tends not to change—unless the item ages past its value. That's why these are short-term decisions that require the team delivers something “soon.”
- Value is the language of the business. When we focus on value, we see how the flow metrics matter for everyone, teams and managers.
Let me start with a focus on value.
Focus on the Value of the Work
I'm very fortunate—since the 1970's I've worked on many projects and programs that were so important no one ever asked for any estimates. Instead, the managers asked for ways to know that the work was progressing. I used monthly demos to show progress. (Yes, incremental lifecycles allow you to show demos frequently.)
But I suspect many of you have been in the position where you're supposed to estimate the cost or the time necessary before the team starts the work. The portfolio team thinks they need those estimates or, worse, ROI, to make a decision about which project or program to fund.
But no one can know that information before the team starts the work. It's not possible. Worse, pre-work estimation supposes the team will not learn anything as they proceed. The team will not need to adjust the plan—no agility is necessary. Too often, those projects offer very little value.
That's why the Zeroth question: “Should we do this work at all?” Or its companion, “Is this work still valuable?” help us refocus on the value.
Cost of Delay thinking can help people assess the value even before they start. That allows people to understand the pressures on management and to start speaking the language of the business.
Value is the Language of the Business
In business, management is almost always under pressure to make more money (net income), acquire more customers, retain those customers, and increase the value of the customers over time. I'm not talking about a strictly transactional approach to customers. Instead, I'm talking about building relationships with customers over the long term. (See Unemployed Agilists: How to Show Your Value to Support What Managers Want, Part 1 for a brief discussion of Pirate Metrics.)
Any time we talk about those metrics, we speak the language of the business.
The flow metrics help us see and deliver value:
- Cycle time helps us create a regular cadence of delivery to customers. (See How to Move from Story Points and Magical Thinking to Cycle Time for Decisions for how to create confidence charts based on cycle time.) We might get more net income. Shorter cycle time allows us to retain customers because we continue to offer value.
- The longer an item ages, the less value it might have. This is why deciding what not to do in the project portfolio is as important as deciding what to do. While I have little trouble saying no, some people prefer to use a parking lot to say, “not yet.” (See Three Kinds of Parking Lots to Finish More Work and Reduce Decision Load.)
- The faster the throughput, the easier it is to decide on the next bit of value.
The more we focus on small deliverables of value, the faster the flow of work we have through the system. That helps with all the pirate metrics—what management wants.
Make Decisions Based on Value
Very few decisions are easy to make. That's one of the reasons consultants often say, “It depends.” However, the more we consider value as we choose what to do and when, the more likely we can make better decisions.
That's why I suggest using Cost of Delay as soon as you answer the Zeroth question with a “yes.” Cost of Delay will help you say, “no” or “not yet” to more work. And it might help you make the case for less multitasking and lower cycle time.
Good luck.