The other day I wrote a blog post about how fixed-price contracts fail clients. The reactions to that post show that there are definitely people on both sides of the issue.
It was due to this post that I was introduced to the concept of value-based pricing by Mark Richman, who hasn’t accepted my invitation to discuss on the phone how he uses this method in practice. Mark did indirectly introduce David Winch to me though, who explained the concept in more detail on a Skype call. More about that in a later post including the fundamental assumptions I’ve been making concerning using Agile methodologies.
Before I spoke with David, I had the pleasure of speaking with Marko Taipale, the CTO and co-founder of Finnish startup Huitale. Over the two hour call, I learned a lot, one point I wish to discuss in this post, and others in subsequent posts.
Marko told me how in their process – a mixture of Kanban, Scrum, and XP (more on their value stream map here) – they use what they call candidate backlogs. Candidate backlogs are kept separate from the product backlog (the “to-do” queue), and are maintained by the business. I was thinking of the power of this, and why I think it’s a great approach.
A concept in Agile development is that we do not need to have every detail of every feature spec’d out before we begin a project. That was done in waterfall projects, which mostly failed when it came to software. I won’t get into the why past saying things change and we need to be able to handle that change. Regardless, we would come up with this huge feature list, and then feel beholden to get it done. Just be taking a large amount of time to flesh out each requirement can make us feel responsible to get it all completed. After all, we just spent months or weeks doing this. We’ve got to get it done! Look at all the time we’ve invested in it!
So this calls into the question of how we handle the backlogs. In Marko’s case, he’s limited the size of their product queue to 7. But what about business? Their list could be as long as a congressional budget! And if they start detailing everything they may end up wanting it all, regardless of whether or not it’s relevant, merely because they invested their time into it!
Sound crazy and outlandish? I’ve seen this happen.
So what do we do in this case?
Going back to how Marko handled it he’s limited the number of themes that go into the process to 3, effectively limiting the WIP of the business team. By doing so, the business does not feel they have a large investment into their feature list, providing the business itself with more agility.
Less current investment allows for the business to take advantage of positive black swans, or better react to negative black swans.
I’ll end this post with a quote from Rework by Jason Fried and David Heinemeier Hansson:
When you turn guesses into plans, you enter a danger zone. Plans let the past drive the future. They put blinders on you. ‘This is where we’re going because, well, that’s where we said we were going.’ And that’s the problem: Plans are inconsistent with improvisation. And you have to be able to improvise.
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