As many as half of product development sprints are wasted due to avoidable mistakes about customer needs and market opportunities. By doing a better job of discovery and vetting projects, most companies can significantly cut product waste.
Product management guru Rich Mironov has written extensively on this issue. Inspired by his analysis, here’s a calculator that estimates the benefits you can get from cutting product waste. Fill in the following information:
- Annual cost of a squad member, including benefits, office space, and taxes. Typically in Silicon Valley that’s $200,000 – $250,000. (By “squad” we mean the group of people who work on a development project, including engineering, product management, etc. Your terminology may vary.)
- Number of people in a typical squad.
- Length of a sprint, in weeks. (If you’re not using sprints, set this to the length of a typical development project in weeks.)
- Number of squads in your product development organization.
- Percent of projects that fail or underperform. Don’t count only engineering failures; count any project that fails to meet business expectations, including:
- Projects that significantly underperform on goals
- Projects that must be reworked after release due to usability and market fit issues
- Features that do not appeal beyond a miniscule number of customers
(The typical rate of product waste is 35% to 70%, according to Mironov: “Unless we’re at the rarest of organizations, anything under 35% is probably sugarcoating or self-deception or fear of reprisal.”)
- Your goal for reducing the failure rate by doing better discovery and vetting before you start full development. According to Mironov, typical goals range from 20% to 33%.
When you’ve filled in this information, click See Benefits.