As product managers, we often try to think practically about what gets built first. There are many components to a product, and all can seem equally important. However, not all features will be built together. How do you determine the cost of delay to order priorities? TIFIN Product VP Abhinav Gupta shares how to take the economic value of a product feature and quantify the cost of delay.
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On Why the Cost of Delay Is Important
The most important part of being a product manager is asking the why. That question is the focal point of the process, including the idea of exploring the cost of delay.
“Every question, every feature, every solution that we’re trying to build, we need to define and ask these questions as product managers. It is why we want to do it and what we want to do. That is the first question.
“Why are we talking about the cost of delay? Even in your product, whenever you’re trying to build a new feature, just ask this question, ‘why do you want to do this?’. Then, later on, figure out what, and then, later on, figure out how you’re going to do it. I think for product managers, the question of how definitely is not something that they should be very close to. That’s more for an engineering team to figure out the technical designs and stuff like that, and then actually do delivery. Why is the holy grail of everything that the product manager always has to think about inside their heads?
“Product managers are usually racing with time. You might have 20 open Chrome browser tabs, and 30 open Excel sheets, and you will always have your calendars filled. You will have all these conversations with sales, marketing, engineering, UI, UX, and others. There’s so much that is coming your way. You are basically a conductor of that orchestra around that entire thing that you’re trying to build. You will have that overarching view of that particular product. This is very important.
“You don’t let the ideas and list of features that someone is requesting stop flowing into your backlog at some point. You also want to prioritize because there are always so many ideas. There is so much information that is out there for a product manager to absorb and then prioritize. So that is one of the very important reasons why we want to talk about why the cost of delay.”
On How To Calculate The Cost of Delay
It seems like calculating the cost of delay can be complicated, but it really isn’t. Abhinav gave a few examples of how to see this in your work life and which numbers are most important.
“Let’s make it more simplified in general. So the simplified version is to estimate the revenue per unit time for what that new project would generate. You’d have to just do a micro project within that particular product that you’re trying to build, or micro-feature or whatever you want to call that. You want to also ensure that whatever feature that you’re trying to build, and you’re trying to add to the product, it has to ultimately earn revenue. When you’re shipping a particular feature, it has to add particular revenue to the entire scheme of things, whether it is in terms of the direct dollar cost, or it kind of solves the current problem on a larger scale of things so that customers don’t get grumpy about certain things. The keyword over here is you have to define that unit time that you want to measure it.
“You also want to estimate the amount of time your team needs to complete that particular project. There has to be an estimation done by the team. I am not going to my sales rep and say to give me some numbers from the air. Instead, I’ve done my validation with my teams, internal UI UX, engineering, and all of those teams. Then I come back with a particular number that says this is the time that I would require to build that particular thing. Finally, I divide that entire number with your time duration.”
“Make sure to stack it with the overall impact that a particular feature would have. You have already determined what my cost of delay is, and then you’re determining the impact of that particular feature that is going to make.”
On How To Start Prioritizing With The Team
The final step in cost of delay is getting buy-in from the team by creating a huddle, laying out all the ideas, and voting together on what to prioritize.
“Then you go back to that particular drawing board with your team. You’ve calculated the numbers, you already have the list of ideas. You have calculated values, you’re trying to stack them up. You are then taking a conscious call with the entire team about why you think that you’re going to make that particular decision. For most of the products that we are building now, you don’t have to go with one particular strategy.
“The features that can deliver the maximum cost of delay in the shortest duration of time need to be brought in first. You want to make sure that the impact of every single feature that you’re trying to build is the highest: highest to the customer, highest to yourself as a product owner.”
“This is a very mathematical and a very easier way of sticking a particular number to a particular feature list. Then you actually analyze and get the vote from your entire team. Do you think that scope is going up or going down? You then have buy-in from the entire team ecosystem.”
About the speaker
Abhinav Gupta is a Fintech Product Leader and an engineer by qualification, having built several Fintech products ground up. He has more than 18 years of experience in the FinTech industry and has managed and planned products and services for Fortune 500 companies. Abhinav is currently the Vice President of Products at TIFIN, an AI- and investment-intelligence-driven financial services company. Before this role, he was the VP of Product Management at State Street. He loves to speak to customers, and design a customer journey, identifying product-market fit, and he specializes in product design and product monetization strategies that help build/design products that will last. Over the years he has managed products across continents (India, USA, Denmark, UK, and France) and has set up, managed, and grown remote teams. He also has won numerous awards for his work in the FinTech industry and is a regular speaker at various industry forums. Abhinav likes to read books and blogs about innovation to stay in the present and keep his eyes on the future. He is an avid cook, traveler, and audiophile, and writes blogs about product frameworks.