Project vs product teams

One of the hardest things for companies trying to be agile is how to structure teams. Back in the bad-old days, teams would form around a project. Then six months later, everyone would dissipate and go onto new teams. By the time a team has formed and become effective it is ripped apart again. You get no sense of ownership, no continuity.

Nowadays everyone knows that projects are bad, you need scrum teams instead. So a scrum team is formed with a product owner to prioritise the work. But what often happens is that what gets prioritised onto the backlog is a project in bite-size pieces. For example, I saw one team that ran out of work to do. The backlog was empty because, except for bugs, none of the outstanding projects had been signed off. There’s that word again. Project.

Behind the scenes a scrum team often becomes a slightly better way of delivering projects. You get the benefits of team consistency and continuity and the added benefit that the business can carry on thinking of the work in terms of projects. The downside of this approach is the scrum team can lack clear focus: there’s no overarching goal for the team. From sprint to sprint the focus might change as the relative importance of different projects changes. This makes it hard for the team to feel committed to a big idea, to some greater purpose. It ends up an endless procession through the backlog.

Why does this happen? I think it comes down to money. Somebody, somewhere is watching the money. Somebody wants to know “if I spend £x here, how much am I going to make back and by when?” The idea of the project is very easy to fit into this model. The team costs £x per day. The project is estimated to take n days. It’s expected to deliver £y profit. From this we can calculate the expected return on our investment. The trouble is, most of these numbers are entirely made up. If not fundamentally unknowable.

Let’s start with the obvious one: how long is the project going to take? Really, we still actually ask this question? Have we learnt nothing from agile? It seems not: many, many people still think about the world in terms of delivery dates and certainties. When will we learn that the best way is always to deliver a little, inspect the results; then decide whether to keep on the same path or deliver something different. You can’t have an end date with this approach — it’s not even meaningful. Keep on delivering one thing until there’s something better you could be doing, then go do that. Rinse, repeat.

What about the other question: how much profit will this project make? Well, let’s assume for now that the entire project, as originally conceived, will actually be delivered (as if this ever actually happens in software). Can you tell how much money it’s made you? Really? Independent of every other change that the organisation has made at the same time? From software to operations to marketing?

Now sometimes you can come up with a good estimate of expected returns, but often it’s just a pipe dream. But, if you’re vigorously disagreeing with me: I assume you’re religiously tracking actual costs and feed that back into future project planning? I have seen very, very few companies actually do this. If you’re not actually measuring how much you made from a project, how do you know your original estimates were any good?

So we have two made up numbers, both almost certainly unachievable in practice — but we use this to dictate the team’s priority order. I once saw a project signed off and jump to the top of the priority order because it predicted something like a 10% uplift in revenue for the company. This was a very large number for a single project and clearly ridiculous to everyone involved, but it was signed off and duly implemented. Revenue projections later that year were re-estimated downwards and downwards due to difficult market conditions. And some blatant over-estimation. And yet, this non-science is what passes for return on investment planning in all-too-many organisations.

What’s the alternative? The best teams I’ve seen have been structured around products. Give the team complete ownership of one or more products. Any and all changes to those products go via the product team. A product owner guides product direction. As an area expert they are entrusted to decide what are the most important things to work on. They can discuss long term directions with the team and have a consistent, coherent vision for where the product will evolve towards. While, inevitably, some changes are large and sufficiently inter-dependent that they become a project (if one part is delivered then it all must be); the team understands the business benefit of the solution and can evolve the implementation to meet the underlying business need, instead of trying to satisfy some arbitrary internal project deadline. This gives teams the complete freedom to inspect and adapt each iteration. With an understanding of the business priorities for their products they can make sensible trade-offs as each iteration surfaces more information.

What about the money? It’s hard, but let’s be honest about it: return on investment is not clear with the project model of software delivery, so accept that it isn’t clear. The hard thing is working out which products are making you money and which could make more money if more was invested. The trouble is I’ve worked in teams where, honestly, the product was so profitable with so little scope for uplift that the most cost-effective thing to do would have been to fire the dev team and just keep milking the cash cow.

So how can we decide where to spend our money? I think the empirical model of agile could fit here perfectly well. Let’s assume for a minute that the amount of money you have for the delivery team as a whole is fixed — your only choice is where to put it. How much to spend on product A vs how much on product B. Can you estimate how much money each product is making for the business? How is it changing over time?

If one product is making more profit each month — if it’s a growing product — then invest more resources there, to accelerate the growth. If a product is slowing down, with smaller increases in profit each month, or even with profit decreasing — then stop spending so much money on it. This naturally means that your money goes where it seems to be delivering the biggest return. Put your money where it seems to be delivering results.

The hardest thing with this is that it takes time to get the feedback: changing resource allocation could take months to show up on the bottom line. But at least we’re being honest about the impact our decisions have. Instead of trying to micro-manage delivery via projects, manage where resources are put and let the product owner manage the priority order.


Originally published at blog.activelylazy.co.uk on January 18, 2017.