Tuesday, January 08, 2013

Requirements for Product Owner: Common Pitfalls

Recently during a leadership workshop an engineering manager complained that his Scrum teams deliver the product and that it was not what the customer wanted. He thought this was a problem with Scrum.

I pointed out that the Product Owner determines what is DONE at the end of a sprint and if it is not what the customer wants, the Product Owner should declare it NOT DONE. I suggested he might have a Product Owner problem. Scrum doesn't magically make your problems go away, it makes them clear and you know immediately where to look for responsibility.

The engineering manager confessed that they had underinvested in the Product Owner function. The Product Owners are not fully dedicated and are not doing the job. It only took about 5 seconds to diagnose the problems with his Scrum.

The majority of Scrum teams worldwide (and I survey multiple times every month in multiple countries) do not have good Product Backlog Items entering the sprint. In addition to cutting velocity at least in half (a minimum loss of about $75K per month per team), it leads to the customer not getting what they want. At OpenView Venture Partners we think we can hire a new manager and a new Product Owner for $75K a month, but I digress ...

An adequate Product Owner needs to meet these minimal requirements:

1. Knowledgeability
2. Availability
3. Decidability
4. Accountability

Knowledgeability

If the Product Owner does not know the market, the customer, the product, and the competition, the team will lose confidence in their leadership. This will lead to slow down and disagreement over priorities. It is not possible for a new Product Owner to know everything. They need help from management and the team to ramp up their capability. This needs to be built into their job description.

Availability

The best Chief Product Owner is often a business leader (like Steve Jobs). The Product Owner spends half the time working with the customer and the market and the other half working closely with the team. If the business leader has to be part-time, she or he needs a full-time Product Owner to do the day-to-day work. Failing to do this will lead to problems like the one described above. The customer will not like the result, and more work will need to be done. It is cheaper to hire a Product Owner than deal with the damage later.

Decidability

The Product Owner owns the final decision on the ordering of the Product Backlog. Failure to do this will cause priority conflicts and cut team velocity in half. It is cheaper to hire a new Product Owner than to let this happen.

This means the Product Owner needs the confidence of the stakeholders (and the team). If they don't have it, they can't do the job.

Accountability

The Product Owner owns the business plan and is accountable for driving revenue (or whatever value your organization is producing). It is not helpful for a hyperproductive team to deliver many features if the revenue per point is minimal. The Product Owner should be measured on revenue per point and how much the revenue per point is increasing over time.

The Scrum Inc. Product Owner regularly monitors metrics like revenue per point to better order the Product Backlog.

Very few Product Owners know their revenue per point. For this reason, at Scrum Inc. we have developed a management dashboard that shows sprint to sprint revenue per point. Just as the Scrum Master needs to know velocity sprint to sprint, the Product Owner needs to know revenue sprint to sprint. We will hold a webinar on this topic in February with a demo of our management dashboard.

Meanwhile, I strongly encourage all organizations with Product Owner issues to send their key people to our Certified Product Owner workshops in Boston at our venture group headquarters. At a minimum you might save $75K per team per month. The upside revenue would likely be much more than that.

This page has been translated to Serbo-Croatian by Anja Skrba

2 comments:

Ones Self said...

Hi,

Very nice article. I was wondering how one would calculate revenue per point? I was hoping you might have a different article on this that I was not able to find.

Thank you.

Jeff Sutherland said...

Revenue per point calculations will be detailed out in our March 2013 webinar. http://scrumlab.scruminc.com/index.php?/store/product/37-the-scrum-leader%E2%80%99s-dashboard-key-metrics-for-commercial-success-22713/