Historically, some product owners have prioritized backlogs by making pairwise comparison of projected economic return between two items in isolation. Successful Agile teams often take a holistic approach, accounting for risk, dependencies, and the complex interplay among and across backlog items.
An article on the Scrum Alliance site by James O. Coplien, published on August 3rd, 2011, but still drawing comments, addresses changes in the updated Scrum Guide as it relates to product backlog prioritization, or as James explains, ordering.
To prioritize a list means to order its items by their importance relative to each other. Priorities drive pair-wise comparisons (by English language definition) of items on the list. Think of using bubble sort to prioritize the Product Backlog: compare the top two items and interchange them if they’re in the wrong order, and then move on to the next pair, and keep cycling through the list until everything is in its place. Prioritization and sorting go hand in hand. All the comparisons are local. This process is analogous to local optimization.
More broadly, the Scrum Team and the Product Owner in particular need to consider the entire backlog when ordering PBIs, to optimize value or ROI. Most people commonly think of ROI as the priority; however, you need to think of ROI as a long-term result of the total backlog ordering rather than just the sum of the ROI of individual items. This is true in part because the ROI of an individual item depends on its position in the backlog.
Arlen Bankston, an Agile Trainer and Consultant, further explains the need to look beyond direct ROI contribution of an item.
The value in individual stories -- especially in early stages of new product development efforts -- is often found more in the feedback they provide about features' fit and fitness to market and customer needs, than in direct contribution to ROI. This makes simple pairwise comparison of individual stories an overly narrow approach, as overall patterns of product and customer discovery must be considered in addition to income generation.
Others in the agile community have used variations on the ordering theme for quite some time. Several years ago, during conversation, Roland Cuellar explained that a better term is sequence to market, where sequence combines business, technical and other factors such as risk and dependencies. Using the word sequence helps because it allows product management to move beyond the concept that everything is high priority by stating, yes, that may be true, but let’s determine which high priority item comes next.
So, whether it is called ordering, prioritizing or sequencing, effective product owners look holistically at their backlogs to ensure that items are delivered to maximize both immediate and long term value.
What have been your experiences along these lines?