Prioritization is a critical component of Lean Portfolio Management (LPM). With limited resources and competing demands, organizations must prioritize their portfolio epics to ensure they are investing in the right initiatives. One approach to prioritizing portfolio epics is Weighted Shortest Job First (WSJF). In this chapter, we will explore what WSJF is and how it can be used to prioritize portfolio epics.
What is WSJF?
Weighted Shortest Job First (WSJF) is a prioritization technique that helps organizations determine which initiatives to tackle first. WSJF takes into consideration the size of the opportunity, the cost of delay, and the risks involved. The formula for WSJF is as follows:
WSJF = (Size of Opportunity + Time Criticality + Risk Reduction) / Cost of Delay
The size of the opportunity represents the potential value of the initiative. Time criticality refers to the urgency of the initiative, while risk reduction considers the potential risks associated with the initiative.
The cost of delay is the cost of waiting to implement the initiative.
How to use WSJF to prioritize portfolio epics?
To prioritize portfolio epics using WSJF, the first step is to identify all the epics in the portfolio. Once you have identified the epics, you can then calculate the WSJF score for each epic. The higher the WSJF score, the higher the priority.
To calculate the WSJF score, you will need to estimate the size of the opportunity, the time criticality, the risk reduction, and the cost of delay for each epic. You can estimate these factors using a variety of techniques, including expert judgment, market research, and customer feedback.
An Example of WSJF
To better understand how WSJF works, let's consider a practical example.
Suppose you are a product owner for a software development team, and you have five potential portfolio epics to prioritize.
Portfolio Epic 1: Create a mobile app for the company's e-commerce platform
Size of opportunity: $10 million
Time criticality: High
Risk reduction: High
Cost of delay: $100,000 per week
Portfolio Epic 2: Upgrade the company's IT infrastructure
Size of opportunity: $2 million
Time criticality: Medium
Risk reduction: High
Cost of delay: $50,000 per week
Portfolio Epic 3: Improve the customer service system
Size of opportunity: $3 million
Time criticality: Low
Risk reduction: Medium
Cost of delay: $30,000 per week
Portfolio Epic 4: Launch a new product line
Size of opportunity: $8 million
Time criticality: Medium
Risk reduction: Low
Cost of delay: $80,000 per week
Portfolio Epic 5: Upgrade the company's website
Size of opportunity: $1 million
Time criticality: Low
Risk reduction: Low
Cost of delay: $20,000 per week
Using WSJF, we can calculate the priority of each epic:
Epic 1 WSJF = ($10 million + High + High) / $100,000 per week = 110
Epic 2 WSJF = ($2 million + Medium + High) / $50,000 per week = 44
Epic 3 WSJF = ($3 million + Low + Medium) / $30,000 per week = 133
Epic 4 WSJF = ($8 million + Medium + Low) / $80,000 per week = 100
Epic 5 WSJF = ($1 million + Low + Low) / $20,000 per week = 50
Based on the WSJF scores, we can see that Portfolio Epic 3 (improving the customer service system) has the highest priority, followed by Portfolio Epic 1 (creating a mobile app for the e-commerce platform), Portfolio Epic 4 (launching a new product line), Portfolio Epic 2 (upgrading the company's IT infrastructure), and finally, Portfolio Epic 5 (upgrading the company's website).
By using WSJF, we can prioritize portfolio epics based on their potential value, urgency, risk, and cost of delay. This approach helps ensure that the organization is focusing on the most important initiatives that align with its strategic goals and objectives.
Conclusion
Prioritizing portfolio epics is a critical component of Lean Portfolio Management. WSJF is a useful technique for prioritizing portfolio epics based on their potential value, urgency, and risk reduction. By using WSJF to prioritize their portfolio epics, organizations can ensure they are investing in the right initiatives and achieving their strategic objectives.
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