• EBM-PM is built upon EBM (an empirically-based continuous improvement approach)
• uses a continuous feedback loop to help an organization realize its goals more effectively
• Why Budgeting Should Be Separated from Investing
  • many organizations combine budgeting with making investment decisions
  • they first see how many ideas, and how much they will cost, to determine how much they should spend on those ideas
  • The main problem is that at the time budget decisions need to be made, the costs and benefits of “ideas” are largely conjecture, and more planning effort does not improve the quality of the estimates
  • Organizations spend a lot of time and effort without producing very much benefit
  • budget and project work are largely constrained by other business concerns such as profitability, business goals, and the availability of people with the right skills
  • When setting budgets, a better place is, “What is the maximum amount we can afford to spend and still meet our profitability goals?” and base their budgets on that
  • This is not to say that they will spend that amount, but only that they could spend it
  • Budgets determine how many teams an organization can fund. Teams are the engines of work, and the number of teams determines how much work can be accomplished
• Activities:
• 1. Define & Refine Goals
  • EBM focuses on 4 kinds of measures
    • CV – value that experience or obtain: stakeholders, customers, employees, investors
    • T2M - how quickly can you improve your CV
    • A2I - how effective are you at improving your CV
    • UV - the remaining opportunity in the market that you’ve not yet tapped
  • EBM-PM is focused on improving your ability to exploit opportunities represented by UV
  • GOALS:
  • Goals should target closing a gap between Current and Unrealized Value
    • Organizational goals are generally expressed in terms of closing some gap between the Current Value and Unrealized Value, usually focusing on the value that customers experience
    • Closing this gap requires improving the outcomes that customers experience
  • Goals should be strategic and measurable
    • lots of intermediate targets to achieve en route to achieving the greater goal
      • Intermediate Goals (or ITG?) like, “Consolidate cloud platforms”, or “Reduce operating expenses by 30%”, but these are things that you want to achieve on the way to achieving something greater, a Strategic Goal (or IG?) like, “Improve product affordability by 30%, to reach more customers”
      • If you are struggling with understanding the goal in customer terms, ask, “What is the single elevating benefit to a customer if we achieve this tactical target?
  • Goals will continuously evolve
    • change as the organization obtains new information about competitive threats and customer opportunities
    • As your insights evolve, you will want to revisit your goals, reordering them, adding new goals, and possibly removing goals that no longer are worth pursuing
  • Goals need to be continuously ordered and re-evaluated
    • goals evolve, based on new information, and need to re-evaluate their relative importance
    • Goal Backlog and continually refine it by
      • identifying new goals
      • shifting the relative importance of existing goals
      • removing goals that are no longer relevant
  • GOAL BACKLOG (business goal)
• 2. Examine & Abandon Excess WIP
  • Eliminate all work that you can’t connect to your goals
    • Pet projects and random ideas have a way of sprouting like weeds, and even once-valuable work can lose its way or become less relevant over time taking away from making progress on something more important
    • In addition, goals change over time and were once important may no longer
  • To ensure investments are contributing to your current goals
    • periodically take a look at everything you are doing
    • making sure that your work-in-progress is still contributing to advancing you toward your goals
    • for work that isn’t, kill it quickly
    • focus on the work that will help you to make progress toward your goals
      • Using people and resources that were being spent on non-goal work
      • look for places where you can contribute to achieving your goals faster
      • It doesn’t matter how much you have spent on something; the only important thing is what the work will enable you to achieve, and whether you have more important goals to reach
• 3. Propose Experiments
  • “bottom-up intelligence”: Because teams are closest to the work itself, they are best able to identify ideas that might enable the organization to make progress toward their goals
  • Frame these next steps as experiments with expected measures
  • measures evaluate the experiment’s success when they start gathering data on its effectiveness
  • The proposals for these experiments need to express several elements:
    • the goal
      • toward which the experiment is working
    • The groups of people
      • that the experiment is targeting
    • the outcomes
      • that the experiment hopes to improve for them
    • The thing that the experiment is going to produce
      • (such as a feature or some process improvement)
    • The measures and values
      • (including decision thresholds) that will show that the outcomes were improved
  • Teams only propose new work when they have the capacity. This prevents them from working on more than one thing at a time, which improves their focus and reduces lost time and effort due to task-switching
  • Teams consider the organization’s goals and propose work that expresses where they feel they can best contribute to reaching some goal
  • Outcome-Based Product Release Roadmaps
    • When working with defined products, organizations sometimes need to see where experiments are heading over time, so that they can understand the possible implications of going down a particular path
    • As an example, a team might propose that to improve the customer experience for an application, they want to redesign the user interface in a series of steps, each of which would be expressed as an experiment, with the results measured. If, at any step, they fail to get the hoped-for results, they might abandon the entire series of planned improvements
    • Expressing these experiments as a series of features that are planned for each release would make it hard, if not impossible, to see the real goal
    • As a result, an outcome-based product release roadmap is a more beneficial way to express the intent of the proposed work
    • TEAMS consider the organization’s goals and propose work that expresses where they feel they can best contribute to reaching some goal:
    • Release - release number or name
    • Goal - reference to goal as described in Goal Backlog
    • Beneficiaries - list of groups of people released is targeting
    • Targeted Outcome – the outcomes the experiment hopes to improve for them
    • OUTPUT - The thing that the experiment is going to produce
    • Evidence Target - what will be measured, and what values will indicate that the targeted outcome has been achieved
    • EVIDENCE GOAL
    • Threshold - measurement threshold, e.g. ±10%
• 4. Evaluate Proposals
  • Working together, executives guiding investments, and teams making proposals, evaluate where the organization should “place its bets”
  • Since the proposals typically only cover what the team will work on for the next 1-4 weeks, discussions focus on the goals the teams want to contribute to, what they will do to move the organization closer to the goal, and how they will know if their experiments are successful (or not)
  • discussions should not take long, the investment interval is short, do not delve into details about what the team will build, focus on the reasoning behind the proposed experiment, and the sort of evidence that they will collect to show progress toward their goal
  • In some cases, a team may not feel it can effectively contribute to the most important goal for the organization, then the discussion shifts to work on less important goals, or whether they need to propose some different experiment that will contribute to the organization’s top goal
• 5. Run Experiments
  • just Scrum; nothing else is required
  • When planning their Sprints,
    • think about how to measure the success of individual PBIs
    • they will need to build measurements into the product itself to collect the results to prove their experiments
  • In many cases, the only way to really gauge the value of an idea is to put it in front of customers; stakeholders, no matter how knowledgeable, are no substitute
  • building feedback collection mechanisms into the product release is an especially important tool for validating hypotheses and guiding future investments
• 6. Evaluate Progress Toward Goals
  • The investment-evaluate cycle allows organizations to inspect progress toward goals on a regular interval, and to adapt
    • Roadmaps
    • goals
  • The length of this interval varies from organizations; to be effective, at least quarterly, but organizations faced with great uncertainties or changing markets should look for ways to improve this cycle to every 1-4 weeks
  • These inspections involve all teams who are contributing to a goal, as they provide the ability to inspect results and adapt for the next step
  • provides a way to identify cross-team dependencies
  • Based on information gained by running experiments and delivering product Increments to customers, as well as new evidence, executives and teams look at the results they achieved to collectively decide if they should keep going down the path described by the Product Roadmap, to adapt the roadmap, or to adapt the Goal
  • With these adaptations, the investment cycle begins again