Quantifying the Cost of Delay of the things we are working on helps us with:
- Improving the ROI delivered with a scarce resource
- Managing the demands of multiple stakeholders
- Making sensible economic trade-offs
- Changing the focus of the conversation: less on cost and dates, more on Value and Urgency.
Sounds pretty good, right? Despite what you may think, quantifying the Cost of Delay really isn’t that difficult either. Start by developing your understanding of benefits using some sort of economic framework. Then consider the impact of time on those benefits and combine this into a Cost of Delay in $/week. Most who actually give this a go discover that it’s not actually as hard as they thought. Another benefit of doing this is that surfacing our assumptions about the value means we can develop the idea in a way that quickly tests those assumptions – reducing our economic risk. It’s not about precision, it’s about doing slightly better than gut-feel.
Sometimes I hear people say this this is too hard. Usually, I find they haven’t actually tried to do it. Perhaps they are too afraid to ask difficult questions about value – preferring to act as an order-taker and transfer the risk of getting it “wrong” to someone else. Perhaps they feel that the uncertainty is so great that there’s no point in even trying. Or maybe they just can’t be bothered? What could be more important than attempting to figure out (and communicating to the team!) what value we might possibly gain from the thing that we are going to pour our precious creative energies into? And if we don’t know what the value is, how will we know if it’s working or not?
The preferred alternative seems to be to outsource the problem to someone else – make it the responsibility of someone who acts as a “proxy” for the customer. Others attempt to avoid the problem by using some alternative currency, counting in bananas, animals, relative “value points” and all sorts of frankenstein formulae that are supposed to be related to the real desired outcomes. None of these take the bull by the horns and make an attempt to shift away from using our gut-feel about value. Moving on from outsourcing it or using relative methods of ranking can be hard because it involves switching from System 1 to System 2 thinking. This usually means questioning our assumptions and what our gut is telling us – turning those into Hypotheses to be tested instead.
Surely it’s worth a try? The alternative doesn’t smell too good.