Estimate Value to Deliver Value: Effectively Estimate the Value of Requirements with the Experience Canvas

agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
Estimating Value to Deliver Value
EFFECTIVELY ESTIMATE THE VALUE OF REQUIREMENTS
WITH AN EXPERIENCE CANVAS

The Sky is Falling! The Sky is Falling!
Applying the Scientiﬁc Method to
Software Development
Incorporating Learning into Product
Development
A Last Note on Shorter Feedback
Loops

“No matter how good the team or how
efﬁcient the methodology, if we’re not
solving the right problem, the project fails.”
Woody Williams

http://www.archives.gov.on.ca/english/on-line-exhibits/d-day/big/big_03_airline_assembly.aspx
Archives of Ontario, Reference Code: C 190-5-0-0-21 
Assembly Line Manufacturing
has a high cost of change

• In software development,
(presumed) high cost of
change leads to long delivery
cycles
• Any and every idea has to be
captured in the ﬁrst version of a
requirements speciﬁcation
• This creates waste - bloated
documents, unwanted features
and entitlement thinking
Inclusive thinking
Feature usage in
enterprise software
Never
Rarely
Sometimes
Often
Always
Standish Group - CHAOS Report, 1995, 2002

Cost of
Change
Detail of
Requirements
Hypothesized
Requirements
Capture all
possible needs

Software Development has
commoditized cost of change
Continuous
Delivery
Ruby on Rails
Coﬀeescript
jquery
Object-oriented
languages
DevOps
Automated
Tests

Cost of
Change
Detail of
Requirements
Evolving
Requirements
Hypothesized
Requirements
Emerging needs
as development
progresses
Capture all
possible needs

Usability Testing - c.2000

Usability Testing - today
http://welovelean.wordpress.com/2012/01/29/15-essential-tools-every-lean-startup-cant-li/

• If change is cheap,
requirements can change
continuously
• We can evolve our thinking as
we learn more about the product
we are building
• Maximizing Return-on-
Investment requires validating
new features early, before the
total investment cost has been
spent
Changing paradigms

Cost of
Change
Detail of
Requirements
Validated
Requirements
Evolving
Requirements
Hypothesized
Requirements
Lean Startup
experiments
Emerging needs
as development
progresses
Capture all
possible needs

Designed by KISSmetrics

Theory
Prediction
Experiment
Observe
Use the theory
to make a
prediction
Design an
experiment to
test the
predictionRun the
experiment
Modify or change
your theory
The Scientiﬁc Method

The Theory of General Relativity
Einstein’s Theory of
General Relativity
Light bends in a
gravitational ﬁeld
Solar Eclipse of 1919
Observations validated
General Relativity
Einstein’s
prediction
(1907)
Wait for 1919 solar
eclipse to observe
whether or not light
bends around the sun
Arthur Eddington
observed that Light did
bend around the sun
Gradual acceptance of
General Relativity over
Newtonian Mechanics
http://thethoughtstash.wordpress.com/2011/01/03/how-eddington-demonstrated-that-einstein-was-right/

User Model
Prediction
Experiment
Validate
Use the model
to make a
prediction
Design an
experiment to
test the
predictionRun the
experiment
Modify or change
your user model
Applied to an Online Experience

Vision Planning
Roadmap Planning
Release Planning
Release PlanningItera3on
Planning
Daily
Planning
Five Levels of Planning
Annually Deﬁne a vision
Bi-annually
Rank features in order of
delivery
Quarterly
Plan stories to be delivered
during next release cycle
Bi-weekly
Sprint planning, focussing on
delivery of sprint goal
Daily
Focus on daily planning of
team activities
Vision Planning
Roadmap Planning
5 Levels of Agile Planning: From Enterprise Product Vision to Team Stand-up, Hubert Smits (2006)

Vision Planning
Roadmap Planning
Release Planning
Planning
Daily
Planning
Long-term
Deﬁne & reﬁne behavioural
models we are testing?
Pivots happen here.
Medium-term
Validate understanding with
Lean (or Customer
Experience) Canvas
Regularly
Minimum Viable Product.
Validate ideas before fully
committing investment
Bi-weekly
Sprint planning, focussing on
delivery of sprint goal
Daily
Focus on daily planning of
team activities
Vision Planning
Roadmap Planning
Learning

Recognize there are gaps in your
vision/business model, and look to
ﬁll those gaps in as quickly as
possible
Known Unknowns
Map of Africa, 1824
http://culturalstudieslectures.blogspot.com/2012/01/
lecture-one-on-question-what-is.html

“In a nutshell, the job of the product
organization is to make that vision a
reality.
So we don't work for a few weeks or even a
few months and then just declare it's not
happening and we should do a pivot.
We will typically work hard for many
months on a product vision and not even
entertain the possibility of giving up.”
Marty Cagan
http://www.infoq.com/news/2013/07/pivoting-product-development

Vision Planning
Roadmap Planning
Release Planning
Planning
Daily
Planning
Long-term
Deﬁne & reﬁne behavioural
models we are testing?
Pivots happen here.
Medium-term
Validate understanding with
User Story Mapping and
Lean Canvases
Regularly
Minimum Viable Product.
Validate ideas before fully
committing investment
Bi-weekly
Product Owners, Delivery
Team
Daily
Product Owners, Delivery
Team
Vision Planning
Roadmap Planning
Learning

User Story Mapping is a
powerful tool for understanding
your product from the
perspective of the user

agile42 | The Agile Coaching Company www.agile42.com | All rights reserved. Copyright ©2007-2016.
Photo: Rory Mizen
Highest
Paid
Person’s
Opinion

Validated Learning
• Understand the problem a
feature will solve
• Decide how to ask if your
customer cares
• Validate before investing
complete cost

1.
Problem
top 3 problems
Exis3ng
alterna3ves
4.
Solu3on
top 3 features
8. Key
metrics
e.g. AARRR
3. Unique
value
proposi3on
Clear compelling
message. Why
makes you
diﬀerent?
2.
Customer
segments
Target customers
Early adopters?
9. Unfair
advantage
Not easily copied
or bought
5.
Channels
Path to customers
7. Cost Structure
Customer acquisi3on, distribu3on, people,
etc.
6. Revenue streams
Revenue model, life 3me value, revenue,
gross margin
Lean Canvas: Ash Maurya
Lean Canvas, from Ash Maurya: Running Lean. Licensed under Crea3ve Commons-Aribu3on-Share Alike 3.0
Product Market

Customer Experience Canvas™ has been created by agile42 as an extension to the Business Model Canvas of Alex Osterwald and is licensed using Creative Common 3.0 with attribution (by), non
commercial usage (nc) and share alike (sa) options. You can reuse and modify the template with the logo as often as you wish.
Customer Experience Name (title)
1. Opportunity 2. Customer Segments
What is the problem to be solved? What type of customers & users will
benefit from this solution?
How is the customer solving the
problem right now?
5. Business Readiness
What steps are required from the
business side to be able to use this
capability?
4. Benefits
What are the benefits for the
customers?
What are the benefits for internal
stakeholders?
6. Measuring Success
What metrics will be best measure the
success of the feature?
3. Possible Solution
What are the key points of a possible
solution to the presented problem?
7. Cost of Delay
Which profile better represent the cost
of delay (CoD)?
8. Costs Structure
How does the cost structure look like for such a feature? One time, ongoing
costs, contractors expenses, development costs?
9. Value to Customer and Business
What are the expected incremental revenue for selling this feature, and what are
the strategic and tactical benefit? What are the intangible values (usability,
performance, customer knowledge obtained...)
Customer Experience Canvas

time
linear
delaycost
time
must do now
delaycost
time
logarithmic
delaycost
time
intangible
delaycost
Cost of Delay is the cost we incur by delaying delivery of a product, due to lost
revenue or unrealized cost savings.
Cost of Delay proﬁles
time
fixed date
delaycost
Kenny Rubin: Essential Scrum

42 Investment Group: building a luxury resort hotel
Goals:
• Luxury
amenities &
activities
• Destination
hotel
• Repeat
customers
• Proﬁtable in
1st year
https://www.ﬂickr.com/photos/28685147@N04/

Portfolio of Projects / Features
• 18 hole golf course

• Jacuzzi tubs in guest rooms

• Valet Parking

• Free internet access

• On-site tailor shop

• Child care centre

• Pet spa

• Mini golf
• Bungee jumping tower

• Full service spa

• Healing mud baths

• Swim with dolphins

• Concierge service

• Live music nightly

• Amusement park & roller
coaster

• Themed guest rooms

Customer Experience Canvas™ has been created by agile42 as an extension to the Business Model Canvas of Alex Osterwald and is licensed using Creative Common 3.0 with attribution (by), non
commercial usage (nc) and share alike (sa) options. You can reuse and modify the template with the logo as often as you wish.
Customer Experience Name (title)
1. Opportunity 2. Customer Segments
What is the problem to be solved? What type of customers & users will
benefit from this solution?
How is the customer solving the
problem right now?
5. Business Readiness
What steps are required from the
business side to be able to use this
capability?
4. Benefits
What are the benefits for the
customers?
What are the benefits for internal
stakeholders?
6. Measuring Success
What metrics will be best measure the
success of the feature?
3. Possible Solution
What are the key points of a possible
solution to the presented problem?
7. Cost of Delay
Which profile better represent the cost
of delay (CoD)?
8. Costs Structure
How does the cost structure look like for such a feature? One time, ongoing
costs, contractors expenses, development costs?
9. Value to Customer and Business
What are the expected incremental revenue for selling this feature, and what are
the strategic and tactical benefit? What are the intangible values (usability,
performance, customer knowledge obtained...)
Activity 1: Build a Customer Experience Canvas
• Choose a project or two from this list at each table 
• In groups of 3-4, write an Experience Canvas,
• Problem/opportunity & existing alternatives
• Customer segments
• Possible solution
• Business value
• Cost of Delay profile

Estimate the relative value of projects in a portfolio
100 200 500 800 1200 2000 3000

Activity 2: Business Value Game
•Play the Business Value Game with 1-2 of the groups around you
•Arrange blue cards from smallest to largest value
•Arrange canvases as shown in the sample here
•Write the business value number on each Canvas
100 200 800 1200 2000 3000
1200
1200 2000200
200

ROI Calculation & Project Sequencing
Project Relative Value
Relative Effort
(cost)
Relative R.O.I. Sequence?
A 1200 3 400
B 800 3 267
C 2000 8 250
D 3000 40 75

Activity 3: Determine How to Sequence Projects
• Write the Cost number on each canvas
• Calculate Relative ROI for each canvas. Write it on
each canvas
• ROI = Value / Cost
• Sequence projects based on ROI (high to low)
• Consider Cost of Delay proﬁle: does this change
the sequence?

ROI calculation & project sequencing
Project
Relative
Value
Relative
Effort (cost)
Relative
R.O.I.
CoD Sequence?
A 1200 3 400
B 800 3 267
C 2000 8 250
D 3000 40 75

Zappos famously launched
without stock, selling shoes from
their local specialist show store

Minimum Viable Product
A Minimum Viable Product may be an entire product or a sub-set of product (such
as a feature):
• Product - The canonical MVP strategy for a web application is to create a mock
website for the product and purchase online advertising to direct trafﬁc to the
site. The mock website may consist of a marketing landing page with a link for
more information or purchase. The link is not connected to a purchasing system,
instead clicks are recorded and measure customer interest.
• Feature - A link to a new feature in a web application might be shown in a
prominent location on the website. The feature is not implemented, rather an
apology, mock-up, or marketing page is provided. Clicks of the link are recorded
and provide an indication as to the demand for the feature in the customer base.
It is ALWAYS smaller than you think!

• In 2009, Google ran
approximately 12,000
experiments, of which about
10% led to business changes
• Linus Pauling famously said,
"The best way to have a good
idea is to have a lot of ideas."
• Focus on minimizing the
incremental cost of testing ideas
with your customers/users
How Much Effort on Validation
Feature usage in
enterprise software
Never
Rarely
Sometimes
Often
Always
Standish Group - CHAOS Report, 1995, 2002

One test is worth a
thousand expert
opinions.
Wernher Von Braun

Interaction Model Backlog Validation
Doing Doing Deployed
For <target group>
Who <has a specific need>
The <product name>
Is A <product category>
That <key benefit>
Unlike <primary competitors>
Our Product <additional
advantages>
Pathway
#1
Pathway
#2
•Visualize your User Interaction Model
and adjust it as you learn
•Come up with ideas for each pathway
•Prioritize experimental testing
•Spend time on measurement
infrastructure (a test without ability to
measure = an unvalidated feature)
Level of Detail / Close to done
•Always revisit validation tests for size •The execution board is equivalent to
the team’s task board, but at the Idea
Card level
Idea
#1.1
Execution
Validated?
Idea
#1.2
Idea
#1.3
Idea
#2.1
Idea
#2.2
To Do Observation
Idea
#2.3
Idea
#2.4
Idea
#1.4
Idea
#1.6
Idea
#1.5
http://www.agile42.com/en/blog/2013/06/17/product-owner-board/

Economists
In November 2007,
economists in the
Survey of Professional
Forecasters —
examining some 45,000
economic-data series —
foresaw less than a 1-
in-500 chance of an
economic meltdown as
severe as the one that
would begin one month
later.

In 1940, the chance of
an American being
killed by lightning was
about 1 in 400,000.
Today, it’s 1 in 11
million.
vs Weatherman
http://www.nytimes.com/2012/09/09/
magazine/the-weatherman-is-not-a-
moron.html

Shifting Paradigms
“I know that half of
my advertising
budget is wasted,
but I’m not sure
which half”
Lord Leverhulme
B.G.|A.G.
http://www.marketingprofs.com/charts/2009/3161/more-smbs-use-online-media-than-traditional
http://marketing.blogs.ie.edu/archives/2011/01/trends-in-online-advertising-in-2011-in-the-united-states.php

agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2016.
Estimating Value to Deliver Value
Effectively Estimate the Value of Requirements
with a Customer Experience Canvas
Thank you
@davesharrock
dave.sharrock@agile42.com

compliance international B2B MBA English IPO
agile husbandstart-up technology
newly-minted Canadian
executive leanstartup outsourcing father
enterprise transitions
B2C data analysis kanban seismology PhD
scrum
organizational excellence
dave.sharrock@agile42.com
twitter: @davesharrock
Certiﬁed Scrum Coach (CSC)
Certiﬁed Scrum Trainer™ (CST)
Dave Sharrock

agile42
The Agile Coaching Company.
agile42 is a market leader in providing agile transformation services to companies
looking to adopt a more efficient and adaptive way of working.
By continually refining our approach, agile42 has developed a unique and proven
framework for supporting organizations in realizing the benefits of a agile & lean
practices. We provide assessment, strategic consulting, training, and coaching to
get you results. Our customers regularly confirm that they achieve:
• Accelerated revenue generation
• Faster Return-on-Investment
• Improved technical quality
• Rapid delivery to market
• Increased team motivation

Reference Section: The process steps for
sequencing projects

Process for Sequencing Projects
1. Stakeholders and Product Owners prepare canvases.
Optional: limit number per stakeholder
2. Review & validate canvases for completeness &
understanding - ahead of time
3. Select appropriate group of voting stakeholders and a
neutral facilitator
4. Brief “sales pitch” for each project, based on the canvas

Process for Sequencing Projects (2)
6. Choose a baseline project/canvas, assign it a mid-range
point value. Can shift up/down later if necessary.
7. Business Value GameTM,1; assign the relative value of
each project, without considering cost/effort
1agile42 2Innovation Games®
Alternative to Biz Value Game: Buy a Feature / Prune the Product Tree 2

Process for Sequencing Projects (3)
8. Delivery teams estimate cost/effort.
9. Calculate relative ROI: value / cost
10.Sequence projects, and/or allocate investments:
1. ROI
2. cost of delay
3. people and/or resource constraints

Estimate Value to Deliver Value: Effectively Estimate the Value of Requirements with the Experience Canvas

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Estimate Value to Deliver Value: Effectively Estimate the Value of Requirements with the Experience Canvas