Two big features (or small initiatives) are competing for top priority. One is projected to bring in about $500k of new annual revenue by picking up an adjacent customer segment. The other addresses a problem that annoys current customers and is probably causing what could turn into a $125k decline in annual revenue as current customers leave. Both have about the same cost.
Which one is top priority?
From an ROI perspective, the question is easy. One of these is worth 4x the other. Of course, the one with the bigger return should come first.
But we’re missing a few important details the ROI calculation doesn’t reveal:
- The annoying problem that causes long time customers to churn only happens during harvest season in August and September
- New customers tend to onboard during the winter when they have time to focus on improving their tools
- It’s June, and either feature will probably take 4-6 weeks from start to production
Now, which one is top priority?
You see, value isn’t a number. It’s a function of time. To prioritize correctly, you need to know not just cost and an expected financial benefit. You need to know when that benefit can be realized. And often there’s seasonality, ramp up time, or external events that affect the shape of that value curve and, therefore, the sequence of work that’ll have the best ROI.
We work with our consulting clients to help them model value and level-up prioritization in their backlogs, including a more rigorous way to capture the relationship between time and value, but you can do the 80/20 version today:
Next time you’re stuck deciding between two equally good options, next time two stakeholders are debating whose things should go first, consider when the value will be realized. Often, one of them will show value sooner, one of them needs to align with some external event, or one of them will only show benefit in a limited window. That extra information can make your decision easier.
Need help developing a stronger prioritization capability in your org? Contact us, and let’s discuss some ways to make that happen.
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